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Biden's New Dilemma: How To Slash Housing Costs For Low-Income Borrowers
[FoxBusinessNews] A long-awaited Supreme Court decision last month gave President Joe Biden the ability to remove the Trump-era leader of the Federal Housing Finance Agency, and he wasted no time.Dworkin and other housing advocates want FHFA to allow Fannie and Freddie to take on more financial risk — meaning more government intervention backed by taxpayers — in the name of expanding access to mortgages. Among their ideas: Giving Fannie and Freddie free rein to purchase mortgages with lower credit scores, allowing private lenders to make more of those loans; cutting fees; and expanding investment that supports the construction of multifamily rental properties. Advocates want FHFA to immediately do away with Trump-era limits on Fannie and Freddie's purchases of “high-risk” loans — characterized as having some combination of low credit scores and high debt-to-income or loan-to-value ratios. Allowing the companies to purchase and guarantee more of the loans could lead to lenders issuing more of them, which would extend credit to more low-credit-score, low-income borrowers without requiring higher down payments to compensate for the risk. Fannie and Freddie would pick up the tab if the loan defaulted. Dworkin said the companies today have "almost no measurable risk in their book of business," which includes borrowers who hold "extraordinarily high" credit scores and very few first-time homebuyers with low down payments. “Their job is not risk elimination,” he said. “It’s risk management. Their mission is to add liquidity to the mortgage markets, not reduce it, and they need to get back in the liquidity business and add liquidity to underserved markets.” Biden was given the opportunity to change the direction of the FHFA when the Supreme Court ruled that the agency’s leadership structure was unconstitutional and that the president should have greater authority to remove its director. Hours later, Biden fired then-Director Mark Calabria, a libertarian economist nominated by President Donald Trump who had made it his mission to shrink and shore up Fannie and Freddie so they could stand on their own as private companies. The Biden administration then appointed another senior FHFA official, Sandra Thompson, to serve as acting director. Thompson has served at FHFA since 2013, and she earlier worked for 23 years as a bank regulator at the Federal Deposit Insurance Corp., which polices lenders for safety and soundness concerns. Related: Federal Housing Finance Agency: 2011-10-25 Obama to announce actions on housing, student loans Federal Housing Finance Agency: 2011-09-03 US sues 17 big banks over financial-crisis losses Federal Housing Finance Agency: 2009-08-07 Fannie Mae Heads Back to the Well $14.8 Billion Poorer Posted by: Slavilet Chirt2694 2021-07-07 |
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