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1 CHANDRA BROADNAX: Good afternoon. I would like to 

2 thank everyone for participating in today's FHFA listening 

3 session on Enterprise Equitable Housing Finance Plans. 

4 I'm Chandra Broadnax, an Examination Specialist in the 

5 Division of Housing Mission and Goals, Office of Fair 

6 Lending Oversight. I'll be introducing today's discussion 

7 with several great speakers. 

8 I thank all of you for participating in the session. 

9 We know your feedback, attention, and time are invaluable. 

10 We appreciate the efforts our presenters have made, and the 

11 investment and time that our listeners have also committed. 

12 This is a long session, but there is a lot of valuable 

13 information to be shared today. We really look forward to 

14 your insightful comments, but before we get started I want 

15 to note that this session is being recorded, and will be 

16 available and posted on the FHFA website. 

17 And now, it is my sincerest pleasure to introduce our 

18 first speaker, FHFA's Acting Director Sandra Thompson. 

19 Director Thompson? 

20 SANDRA THOMPSON: Thank you, Chandra, for that 

21 introduction. 

22 One of FHFA's top priorities is ensuring that all 

23 Americans, especially those in underserved communities, have 

24 access to a fair and sustainable housing finance system that 

25 supports safe, decent, and affordable home ownership and 
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1 rental housing opportunities. Unfortunately, our housing 

2 finance system has not always served everyone equally. This 

3 was especially true in the first decades of federally 

4 supported home mortgages when public programs denied entire 

5 communities access to mortgage credit on the basis of race 

6 or other characteristics. This unfair treatment deprived 

7 people of color, in particular, of an equal opportunity to 

8 build generational wealth through home ownership. Today 

9 there continues to be significant gaps in home ownership, 

10 and, despite lots of policy attention, some have even 

11 worsened. 

12 FHFA recently published new information that highlights 

13 the need to take a new approach to closing the equity gaps 

14 in housing. This data showed that loans serving Black 

15 families, for instance, only account for 5 percent of the 

16 Enterprises' acquisitions, despite 14 percent of the U.S. 

17 population being Black. 

18 Likewise, the Enterprises' mortgage purchases were only 

19 roughly 12 percent Hispanic despite almost 19 percent of the 

20 U.S. population being Hispanic. And Freddie Mac recently 

21 published a paper finding that people of color are more 

22 likely to receive home appraisals below the contract sales 

23 price. 

24 At FHFA we think it is important to focus on the 

25 diverse needs of underserved families who are lagging 
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1 compared to others, and to design solutions that are 

2 targeted to those needs. FHFA's regulated entities have 

3 obligations to promote sustainable access to mortgage credit 

4 across the nation, and we must ensure it reaches everyone on 

5 fair and equitable terms. 

6 This is why FHFA is now requiring Fannie Mae and 

7 Freddie Mac to prepare and implement three-year plans to 

8 advance equity and sustainability in housing finance. Under 

9 our oversight each Enterprise will identify barriers to 

10 sustainable housing opportunities, they'll set goals, and 

11 take meaningful actions to address to barriers and report on 

12 its progress. 

13 The equitable housing finance plans will serve as a 

14 supplement to existing FHFA and Enterprise requirements and 

15 programs. They will ensure a focus on housing equity that 

16 is aligned with other critical objectives, including safety 

17 and soundness, and mission activities. The first set of 

18 plans will focus on reducing the ratio, or ethnic home 

19 ownership gap, and reducing underinvestment or 

20 undervaluation in formerly redlined areas that continue to 

21 be underserved. 

22 Today's listening session will give FHFA and the 

23 Enterprises important feedback to consider and use while 

24 designing, evaluating, and implementing their equitable 

25 housing finance plans. I want to thank all of our 
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1 participants for taking the time to share your expertise and 

2 thoughts and ideas with us. 

3 I will now turn things over to Karen Heidel of the 

4 Office of the General Counsel. Thank you again. 

5 KAREN HEIDEL: Thank you, Director. 

6 As she mentioned, I am an attorney for FHFA. I just 

7 have a few housekeeping pointers before we begin. 

8 We've invited you to meet with us today to obtain your 

9 input and information on the Enterprises' equitable housing 

10 finance plans. All feedback offered in today's session 

11 should be directed to FHFA without reference to the remarks 

12 of any other participant. 

13 At this time we will not discuss the status or timing 

14 of any FHFA plans with respect to policy making on these 

15 issues. The listening session is not an advisory group, but 

16 we may summarize the feedback gathered at today's meeting in 

17 any rulemaking document that might be issued in the future 

18 if we determine that summarization is necessary to provide a 

19 complete statement of the basis for a rulemaking. 

20 Nothing said in this meeting should be construed as 

21 binding on or a final decision by the FHFA director or FHFA 

22 staff. Any questions we may have are focused on 

23 understanding your views, and we do not indicate a position 

24 of FHFA staff or the agency. 

25 Now I'd like to pass it on to Leda Bloomfield, who will 
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1 proceed through the agenda. 

2 LEDA BLOOMFIELD: Thank you, Karen. 

3 Hello, my name is Leda Bloomfield, and I'm with the 

4 Office of Fair Lending Oversight at FHFA. Today we are 

5 eager to listen and receive important input from our 

6 stakeholders on what the Enterprises should consider when 

7 creating their plans, and how FHFA should evaluate and 

8 oversee limitations. 

9 Today we hear comments from 19 speakers. Each speaker 

10 will have six minutes to speak. We will try our best to 

11 stay on schedule and ask that everyone speaking helps us do 

12 so as well. I will provide a one-minute warning prior to 

13 the close of time. If someone goes overtime, I will have to 

14 interrupt in order to keep us on schedule. So, please, 

15 forgive any interruption? 

16 Let's get started. The first speakers are Pamela Perry 

17 and Alexis Sofyanos from Freddie Mac. Pam and Alexis, 

18 please, unmute your mic and begin? 

19 PAMELA PERRY: Thank you, Leda. And thank you to 

20 Acting Director Thompson for convening this session today. 

21 I'm privileged and honored, again, to have the 

22 opportunity to speak with this group of industry 

23 stakeholders, and, equally as important, listening to the 

24 recommendations from my colleagues across the industry. 

25 During my previous opportunity to address this group I laid 
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1 out my key areas of focus in terms of Freddie Mac's focus to 

2 addressing equity in its single-family mortgage business. 

3 I've been digging through causes of racial inequity in 

4 housing in preparation for proposing innovative solutions 

5 that advance home ownership and wealth in underserved 

6 communities. We're tackling our work through four initial 

7 areas of focus, barriers to loan qualification, community 

8 outreach and financial capability, appraisal gaps -- and I 

9 hope that many of you had occasion to see our research that 

10 we published recently in this arena -- and a need to address 

11 greater access to housing supply. 

12 FHFA's request that we submit a three-year equitable 

13 housing plan aligned with 14 specifically enumerated 

14 objections is a welcome opportunity for Freddie Mac to take 

15 bold steps to eliminate housing disparities. Whether that 

16 means finding solutions to down payment assistance 

17 challenges, finding community resources for financial 

18 readiness, or living in resilient homes in communities. 

19 We're tackling our work through the four areas I 

20 initially addressed, but we are focused on addressing each 

21 and every one of the objectives in the challenge that FHFA 

22 has laid out to the industry. We must move the needle to 

23 wealth creation and investment into historically underserved 

24 communities. We are committed to providing minority 

25 communities with the opportunities they need and deserve to 
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1 access credit and secure housing stability. 

2 Overhauling inequitable systems takes new ways of 

3 thinking. That isn't something that Freddie Mac can do on 

4 its own. That is something we need to do in partnership 

5 with our clients and industry partners. We as an industry 

6 cannot afford to fail at this, or to miss this moment. 

7 And to do that it's time to think differently and 

8 intentionally to effectively address racial wealth and home 

9 ownership gaps. Traditional programs and policies may not 

10 always be an answer to bring things to scale. We'd like to 

11 use this opportunity today to suggest that there's a real 

12 opportunity for success by reconsidering the ways in which 

13 we underwrite borrowers. 

14 We know that many of you have been creating your own 

15 special purpose credit programs to address this issue. I 

16 want to be very clear that Freddie Mac is open for business 

17 and very interested in purchasing loans originated under 

18 these programs. 

19 At the same time, we are also working on standing up 

20 our own product offerings and guidance consistent with 

21 ECOA's SPCP requirements. We look forward to working with 

22 all lenders and housing intermediaries in moving this and 

23 catalyzing change forward. We're hear to listen and hear 

24 how we can best move forward together to better serve 

25 underserved communities. 
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1 Thank you, and with that, I'll pass it to my colleague 

2 Alexis Sofyanos. 

3 ALEXIS SOFYANOS: Thank you, Pam, and hi, everyone. 

4 Alexis Sofyanos; I lead the Multifamily Equitable Housing 

5 team here at Multifamily, and echoing many of Pam's 

6 sentiments, grateful to be here and emboldened by this 

7 equity directive. 

8 In the Multifamily space we at Freddie Mac have three 

9 pillars of focus in our equity, borrower advancement, tenant 

10 advancement, and affordability advancement. And so for 

11 borrower advancement we aim to improve access to capital for 

12 diverse minority borrowers, particularly those that are 

13 emerging to help them grow in scale, and ultimately make our 

14 borrower base as diverse as our renter base. For tenant 

15 advancement, finding unique ways to better the lives of 

16 renters. And, lastly, affordability advancement; how can we 

17 scale unique and sustainable ways to both create and 

18 preserve affordable housing? 

19 We have several exciting efforts underway, or, in the 

20 lab, or through our thinking, within each of these, but know 

21 that we know that we can do better and we should be doing 

22 more. We are committed to expanding these efforts and 

23 finding additional ways to create a more equitable housing 

24 industry together. 

25 And so we are here in active listening mode. We are 
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1 all ears and look forward to your thoughts and feedback, 

2 but, more importantly, look forward to partnering with you 

3 going forward in this important work. So thanks, Leda; I'll 

4 go back over to you. 

5 LEDA BLOOMFIELD: Thank you. Our next speaker today is 

6 Katrina Jones from Fannie Mae. Katrina, to you. 

7 KATRINA JONES: Hi. Thank you for having me here this 

8 afternoon. My name is Katrina Jones. I lead our Racial 

9 Equity and Strategy and Impact team for Fannie Mae. 

10 I want to thank Director Thompson and the FHFA team for 

11 seeking input from such a wide group of stakeholders on this 

12 important issue. Director Thompson's leadership on the 

13 issue of racial equity is a clear call to action for the 

14 housing finance industry, and Fannie Mae is eager and ready 

15 to respond. 

16 Like all of us here today, we at Fannie Mae know that 

17 progress has been too slow for too long, and more needs to 

18 be done by our industry -- and, yes, by Fannie Mae. As our 

19 CEO Hugh Frater has said, reversing the legacy of 

20 discriminatory housing policies and practices, it's one of 

21 our greatest challenges of our time. 

22 So, we look forward to hearing from the many 

23 stakeholders on today's call and elsewhere as we build out 

24 our plan and our actions for making the housing market both 

25 stronger and fairer. So, with that, I'll give back the 
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1 balance of my time, because I'm looking forward to listening 

2 to today's presentation and assessing where and how we can 

3 lean in and partner together. Thank you, Leda. 

4 LEDA BLOOMFIELD: Thank you, Katrina. 

5 Now I'm delighted to welcome Maureen Yap from the 

6 National Fair Housing Alliance. 

7 MAUREEN YAP: Thank you, Leda. Let me just get the 

8 technology right here. Okay. Great. 

9 All right. Thanks again, Leda, and thanks to FHFA for 

10 the opportunity to comment. My name is Maureen Yap, and I'm 

11 a senior counsel with the National Fair Housing Alliance. 

12 We would like to discuss a few barriers to home ownership, 

13 particularly for borrowers of color. 

14 The first barrier is LTV, or DTI. Many potential 

15 borrowers of color struggle to meet the standard LTV or DTI 

16 ratios, which can be due to the unaffordable cost of the 

17 loan, or the lack of down payment funds. So the first 

18 recommendation is that the GSEs should support eliminating 

19 loan level price adjustments. The LLPAs were put place in 

20 the wake of the Great Recession, have an unfair and 

21 unnecessary disparate impact on borrowers of color. 

22 For example, as Black and Brown borrowers tend to have 

23 less wealth to apply to a down payment, the LLPAs drive up 

24 the cost based on a higher LTV, which may price the 

25 potential borrower right out of the mortgage market. So now 
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1 that the GSEs have fully repaid the government from the 2008 

2 bailout, the GSEs should support eliminating the LLPAs. 

3 The second recommendation is that the GSEs should 

4 support innovative programs to increase access for Black and 

5 Brown borrowers. For decades federally sanctioned 

6 discrimination largely denied borrowers of color access to 

7 home ownership and other wealth building opportunities. 

8 Moreover, the GSEs have a very disappointing record of 

9 purchasing mortgages from borrowers of color. 

10 As a result, Black and Latino families have less 

11 intergenerational wealth to use for down payment funds for 

12 themselves or their children. The GSEs should support 

13 targeting loans and down payment assistance to first 

14 generation home buyers. Further, the GSEs should ensure 

15 liquidity for these loans. Also, the GSEs should support 

16 technical solutions that can debias the automated 

17 underwriting systems. 

18 The next barrier is insufficient credit. The GSEs' 

19 current reliance on classic FICO embeds the nation's history 

20 of discrimination in financial services. For example, a 

21 borrower of color's credit score may be driven down for 

22 accessing non-traditional credit, such as payday loans, 

23 because of living in communities that are credit deserts. 

24 So the first recommendation is that the GSEs should 

25 adopt credit score models that are less discriminatory than 
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1 classic FICO. Civil rights and consumer advocates have 

2 repeatedly sounded the alarm that the classic FICO model is 

3 antiquated and has a disparate impact. Despite these urgent 

4 concerns, the GSEs validated and approved classic FICO. The 

5 GSEs should ensure that the process for approving other less 

6 discriminatory models moves as quickly as possible. 

7 The GSEs should also support pilot mortgage programs 

8 that allow the use of non-traditional credit criteria such 

9 as rental payment history, but this should not lead to 

10 increased pricing through LLPAs. 

11 The second recommendation is the the GSEs should create 

12 purchase programs for special purpose credit program 

13 mortgages. Unfortunately, the Black/White home ownership 

14 gap is as large as it was in 1968, before passage of the 

15 Fair Housing Act. It seems that race-neutral remedies have 

16 failed to close that gap. ECOA and Regulation B have long 

17 provided a path for race-conscious remedies, but lenders 

18 have been reluctant to adopt them for various reasons, 

19 including concerns about liquidity. The GSEs should move 

20 quickly to develop purchase programs that ensure liquidity 

21 for these mortgages. 

22 Another barrier is the collateral itself, which can 

23 raise various issues. Sometimes there is appraisal bias, 

24 where a home for a borrower of color or in a community of 

25 color is undervalued and may not support the contract price. 
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1 At other times the home values in communities of color are 

2 low, which may result in smaller mortgages that lenders may 

3 not want to originate. 

4 Finally, sometimes there is discrimination in REO 

5 maintenance and marketing, which may lead to under 

6 valuations and disinvestment in communities of color. To 

7 overcome these collateral barriers the GSEs should, number 

8 one, ensure that appraisal guidelines do not perpetuate 

9 bias. Number two, create programs that provide liquidity 

10 for small dollar mortgages. And, number three, ensure that 

11 policies for the maintenance and marketing of REO properties 

12 are nondiscriminatory. 

13 The last barrier we discussed today is discrimination, 

14 which continues to plague and distort the market. For this 

15 reason the GSEs should support strong oversight. More 

16 specifically, number one, the GSEs should support elevating 

17 the Office of Fair Lending Oversight to a fully staffed 

18 division on par with the Division of Enterprise Regulation. 

19 And finally, the GSEs should support increased transparency 

20 regarding the fair lending exam findings, including 

21 providing specific granular information in the annual 

22 report. 

23 Thank you again for the opportunity to comment. 

24 LEDA BLOOMFIELD: Thank you. Next speaking is Susan 

25 Stewart from SWBC Mortgage on behalf of the Mortgage Bankers 
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1 Association. 

2 SUSAN STEWART: I apologize for the delay; it's 

3 resisting me. Thank you for inviting us to speak today. 

4 We're delighted, and I'm delighted to represent the MBA and 

5 happy to speak with all of you today. 

6 Let me start by echoing recent comments made by MBA's 

7 President Bob Broeksmit in regard to the plans about ECOA 

8 housing, and to thank FHFA Acting Director Thompson for 

9 engaging the GSEs in the development of comprehensive plans 

10 to advance equity in housing finance. I think it's fair to 

11 say that this announcement represents a milestone in our 

12 nation's path for equity in housing finance and to have a 

13 more inclusive housing market. 

14 Rather than simply avoiding policies that would lead to 

15 inequities in housing finance, the GSEs will now use their 

16 formidable resources to actively break down barriers to 

17 sustainable housing opportunities. I'm excited to think 

18 about the prospect for this to move the needle on the large 

19 and stubbornly persistent racial home ownership gap, as well 

20 as to make decent, affordable rental housing available on a 

21 more equitable basis. 

22 With respect to home ownership, MBA just last week 

23 announced a new initiate on building generational wealth 

24 through home ownership. The goal of this initiative is 

25 simple, to reduce the racial home ownership gap and provide 
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1 African American and Hispanic families with opportunities to 

2 benefit from the wealth building potential of sustainable 

3 home ownership. And while the goal may sound simple with me 

4 simply stating it, achieving it is far from it. As acting 

5 Director Thompson mentioned, it is a 90-year problem and 

6 it's time for us to find a resolution. 

7 This initiate is relevant not just because of the 

8 linkage with the GSEs efforts to focus on equitable housing 

9 finance, but also because many of the MBA's policy 

10 recommendations are specific to GSE policies and programs. 

11 These GSE specific policy recommendations include increase 

12 the income thresholds on the GSE's affordable housing 

13 products, particularly in high cost areas; removing 

14 unnecessary LLPAs on rate term refinances; reverse credit 

15 score related LLPAs on low down payment products in targeted 

16 metropolitan areas; and expanding secondary market pooling 

17 options for loans to minority consumers. 

18 Together these policies should facilitate better 

19 opportunities for minority households to obtain access to 

20 affordable housing; and for those who are seeking home 

21 ownership and are mortgage ready, opportunities to obtain 

22 access to affordable credit. These policies, therefore, 

23 should be included in the plans developed by the GSEs. 

24 Additionally, the GSE plan should include ways in which 

25 the GSEs will partner with outside stakeholders to advance 
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1 equity in housing finance. A natural example is the MBA 

2 Convergence Initiative, which serves as a forum to drive 

3 collective action on housing affordability challenges. The 

4 GSEs could, for example, commit to continuing their strong 

5 engagement in Convergence's placed based efforts currently 

6 in effect in Columbus, Ohio, and Memphis, Tennessee, to 

7 contribute their expertise and their resources in developing 

8 mechanisms to increase sustainable housing opportunities. 

9 And while the first plans have not yet been issued by 

10 the GSEs, we should keep our eye on the future as well. We 

11 believe it is appropriate for FHFA to use its 

12 conservatorship authorities to establish the requirement for 

13 these plans, but it's important, also, that FHFA begin 

14 thinking about how it can ensure the GSEs continue this work 

15 post conservatorship. We do not want the end of 

16 conservatorship to mean the end of a formalized effort by 

17 the GSEs to advance equity in housing finance. 

18 Similarly, we do not want this ongoing work to serve as 

19 a reason to keep the GSEs in conservatorship longer than is 

20 necessary. In the near term, FHFA, therefore, should 

21 explore rulemaking or other options to make these efforts 

22 more durable regardless of how long the GSEs remain in 

23 conservatorship. 

24 In closing, let me thank again FHFA and the GSEs for 

25 their work on this critically important issue. I'd also 
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1 like to thank FHFA and the GSEs for several recent actions 

2 that should serve as tailwinds for efforts to promote equity 

3 in housing finance. These include the suspension of certain 

4 provisions of the PSPAs, the elimination of the adverse 

5 market refinance fee, the development of new refinance 

6 options for low-income borrowers, the development of 

7 capacity to consider borrowers' rental payment history, and 

8 a reconsideration of certain elements of the GSE capital 

9 framework. 

10 Thank you. We at the MBA appreciate the ongoing 

11 partnership and look forward to assisting the GSEs in 

12 achieving the goals laid out in your forthcoming equitable 

13 housing finance plans. Thank you. 

14 LEDA BLOOMFIELD: Thank you. Our next guest speaker is 

15 Edward Pinto for the American Enterprise Institute. 

16 EDWARD PINTO: Thank you, Leda, and thank you, Acting 

17 Director Thompson for the opportunity to participate today. 

18 Next slide, please? 

19 I'm going to talk about the actions that the FHFA 

20 itself is responsible for that constitute a violation of 

21 Fair Housing Act. The FHFA is subject, as an executive 

22 agency to the Fair Housing Act requirements, to the 

23 obligations to affirmatively further fair housing, and 

24 Executive Order 12892 from 1994. And the FHFA, as I have 

25 outlined on this -- next slide, please -- on this first 
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1 slide, outline specific items that constitute those 

2 violations. 

3 Namely that they have promoted higher risk loans during 

4 periods of booming home prices that make housing less 

5 affordable, resulting in the need for ever higher risk 

6 lending, higher default rates as I'll talk about in a 

7 moment, and these actions all have a discriminatory effect 

8 on a prohibited basis and are not justified by regulatory 

9 necessity. They do not affirmatively further the Fair 

10 Housing Act and, in fact, violate the act. 

11 Are you having trouble moving the slides? Can you get 

12 to the next slide? 

13 This has created a systemic barrier that many you are 

14 talking about today -- to sustainable home ownership and 

15 wealth creation -- by subjecting protected class households 

16 to risky lending, unsustainable price boosts and speculation 

17 in land, and home price volatility. The FHFA, as regulator 

18 and conservator, is responsible for the lending policies of 

19 Fannie and Freddie. Neither FHFA's regulation of the GSEs, 

20 nor its exercise of its powers as conservator, have ensured 

21 responsible access to credit, as the credit that's provided 

22 is highly procyclical and disproportionately harms 

23 minorities. 

24 We've analyzed loan delinquencies, which recently 

25 spiked due to the stress that resulted from COVID-19 
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1 pandemic and found that FHFA's requirement that the GSEs 

2 undertake risky loans to meet their requirements and 

3 guidance have had a disproportionate impact on protected 

4 classes compared to individuals not part of a protected 

5 class. This indicates a pattern, a practice of 

6 discrimination by FHFA and is a violation of its obligations 

7 under affirmatively to further fair housing. 

8 Since the slides aren't showing up, I'll just continue. 

9 More specifically, just in the month of June, Fannie and 

10 Freddie, using cross-subsidy policies required by FHFA, has 

11 subsidized high risk layered loans. In June they acquired 

12 22,000 thirty-year fixed-rate loans with combined LTVs 

13 greater than 95 percent, 96 percent of which went to 

14 first-time buyers. The average stress mortgage default rate 

15 on those loans was 16 percent. This is a prima facie 

16 violation of the Fair Housing Act as MBRs above 14 percent 

17 are high risk due to layering. 

18 This, again, creates the systemic barrier. Just last 

19 week -- next slide, please -- the five senators introduced 

20 the wealth building home loan LIFT home bills. There's a 

21 House bill and a Senate bill. The five senators introduced 

22 it in the Senate with the lead senator being Senator Warner, 

23 and they all had the same theme. Senator Warner said, the 

24 number one way that middle class Americans build wealth is 

25 through home ownership, an opportunity that due to racism 
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1 and structural inequality has been denied to too many 

2 families of color. 

3 Today Black families in this country have an average 

4 net worth just one tenth the size of White counterparts. 

5 The LIFT Act would help close the racial wealth gap by 

6 allowing qualified home buyers to build equity and wealth at 

7 twice the rate of a conventional thirty-year mortgage. How 

8 is that possible? It's possible with a 20-year loan where a 

9 subsidy is provided to buy down the interest rate to make 

10 the monthly payment the same on a 20-year as a 30, yet the 

11 home equity buildup is twice as fast. 

12 Senator Van Hollen went on to talk about that home 

13 ownership is key for Americans to grow their wealth and 

14 build economic stability, but for far too many people, 

15 especially people of color, this goal remains of reach. 

16 Senator Warnock said, for too long too many of our neighbors 

17 have been excluded from our nation's housing market, unable 

18 to build equity and security after buying and moving into 

19 their first home. The others went on with similar comments. 

20 We now have a path. The path is a 20-year loan for 

21 these programs that, in the past, were to make housing more 

22 affordable. In effect, all they have done is subsidize 

23 higher risk. 

24 And my last slide, actions that FHFA should take to 

25 cure their violations of the Fair Housing Act. First, they 
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1 should implement a stressed mortgage default rate limit of 

2 14 percent. Second of all they should direct cross 

3 subsidies that currently violate the Fair Housing Act to low 

4 income first-time home buyer LIFT home program based on 

5 20-year wealth building home loan. Third, they should 

6 recognize the superior performance of the 20-year loan and 

7 implement a rate and term refinance program that will 

8 substantially build generational wealth for current 

9 low-income FHA borrowers who are unable to refinance. 

10 In effect, we've determined that the GSEs could offer 

11 this financing program to about a million and a half FHA 

12 borrowers that are currently largely locked into higher 

13 interest rate loans that they can't refinance because of 

14 their credit scores. But by going into a 20-year loan the 

15 default risk on those loans would be much, much lower, and 

16 would meet, we think, Fannie and Freddie's requirements. 

17 Last, study the benefits from increased density in 

18 walkable-oriented development areas might provide a logical 

19 focus for FHFA and its effort to examine zoning constraints 

20 on supply. For example, the GSEs Home Ready and Home 

21 Possible programs might be expanded to include certain 

22 walkable-oriented development areas. And I would add, 

23 perhaps, most importantly, whatever action FHFA takes, they 

24 must not lead to the same types of unintended consequences 

25 that have plagued past efforts to make housing more 
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1 affordable, and to address ownership gaps. 

2 What is happened instead is housing has gotten less 

3 affordable, and the gaps haven't gone away. So I would just 

4 implore FHFA to make sure the unintended consequences are 

5 considered along with what they think might be the intended 

6 consequences. Thank you very much. 

7 LEDA BLOOMFIELD: Thank you, Ed, and I apologize for 

8 the technical difficulties. I just want to remind everyone 

9 that all the materials that the presenters have presented 

10 during this session will be available for public viewing on 

11 FHFA's external website following the event. 

12 Out next speaker is David Sanchez from the National 

13 Community Stabilization Trust. 

14 DAVID SANCHEZ: Great. Good afternoon and thank you 

15 for the opportunity to speak today. 

16 My name is David Sanchez, and I'm the Director of 

17 Research and Development at the National Community 

18 Stabilization Trust, or NCST, a national nonprofit that 

19 supports families and communities by restoring distressed 

20 single-family homes, strengthening neighborhoods, and 

21 increasing sustainable, affordable home ownership. 

22 NCST is strongly supportive of requiring the 

23 Enterprises to develop and implement equitable housing 

24 finance plans. However, the programs that FHFA and the 

25 Enterprises create as a result of these plans will only be 
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1 as effective as the follow through from FHFA. 

2 We strongly believe that to make the equitable housing 

3 finance program a success, leaders of FHFA must 

4 systematically empower staff that is committed to this 

5 program and that understand the Enterprises mission. We've 

6 seen examples of FHFA succeeding along these lines before, 

7 particularly with FHFA's Office of Fair Lending Oversight, 

8 which has been empowered to establish strong fair lending 

9 systems, metrics, and oversight processes. We're hopeful 

10 that recent fair lending data and research actions mean that 

11 FHFA is investing in the division of research and statistics 

12 focus on equitable housing finance issues. 

13 FHFA should also build upon its existing Office of 

14 Housing and Community Investment by giving the office more 

15 resources and greater jurisdiction over mission-related 

16 activities and programs. 

17 Before I comment on the questions raised in the RFI, 

18 I'll note that FHFA has erected a number of policy barriers 

19 that make it harder for the Enterprises to meet the goals of 

20 these plans. We and others identified some of these 

21 barriers during the Duty to Serve listening sessions, 

22 including policies regarding capital, equity investments, 

23 and pilots. 

24 We are happy to hear that FHFA is revisiting its 

25 Enterprise capital standard, but some have already suggested 
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1 that the Enterprises will be required to hold more capital 

2 than is reasonable to insulate tax payers from their risk. 

3 This will be a significant barrier to achieving FHFA's 

4 desired equity goals. Next slide, please? 

5 Next I will respond to the questions asked in the 

6 request for input, which accurately focuses the Enterprises' 

7 attention on a number of today's more critical fair housing 

8 issues. 

9 First, reducing the Enterprises AUS accept rate gaps is 

10 a critical and direct way that the Enterprises can improve 

11 racial and ethnic home ownership gaps. We also encourage 

12 the Enterprises to examine arbitrary cutoffs such as credit 

13 score floors. Moreover, it is imperative that FHFA tests 

14 the Enterprises' significant activities for fair lending 

15 violations, and that the Enterprises also self test in this 

16 regard. 

17 Second, when focusing on racial and ethnic disparities 

18 in the Enterprises' market share, FHFA should remember that 

19 this is directly tied to pricing. We believe the 

20 Enterprises have pursued excessive risk-based pricing in 

21 recent years and urge this to be reconsidered. 

22 Third, mortgage servicing is an area where we are 

23 extremely likely to see disparate impacts, given the 

24 disproportionate impact of the pandemic on communities of 

25 color. We are now in the critical period when many 
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1 borrowers are exiting forbearance and figuring out what they 

2 will do next, and it's critical that FHFA and the 

3 Enterprises monitor these trends in real time. 

4 Fourth, as COVID's impacts on foreclosures become more 

5 clear, the Enterprises should continue to reevaluate their 

6 distressed property sales practices. For example, if the 

7 Enterprises are going to sell notes, we believe in a strong 

8 purchase opportunity for nonprofits and government entities. 

9 But even more important than the identity of the purchaser 

10 is whether these purchasers and these programs achieve 

11 outcomes that support the Enterprises' other goals, namely 

12 in this context supporting equity and reducing the home 

13 ownership gap. 

14 Fifth, regarding sustainable housing opportunities for 

15 renters, we applaud Freddie Mac's recent announcement that 

16 it will only (indiscernible)** 0:36:11 manufactured housing 

17 communities that meet FHFA's tenant (indiscernible)** 

18 0:36:15 protections, and we encourage Fannie Mae to do the 

19 same. Further, FHFA should study the feasibility of 

20 strengthening (indiscernible)** 0:36:23 protections, 

21 including restrictions on rent increases and tenant right to 

22 purchase requirements. 

23 Sixth, focusing directly on Enterprise actions in 

24 formerly redlined areas and high opportunity areas is 

25 critical; however, FHFA should be mindful of the arguably 
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1 modest impact that the Enterprises have had in this area 

2 through Duty to Serve, and improve its data and methods of 

3 success in this area. 

4 Finally, we also believe that the Enterprises should 

5 focus on language access in these plans. We encourage FHFA 

6 to add a preferred language question to the URLA and require 

7 the industry to check language preference. FHFA and the 

8 GSEs should also analyze barriers to industry use of the 

9 already translated forms and takes steps to encourage their 

10 use. The CFPB appears to be a willing partner in this work. 

11 Next slide, please? 

12 LEDA BLOOMFIELD: When you begin, one minute. 

13 DAVID SANCHEZ: Oh, one minute? I'll do the next slide 

14 quickly. 

15 In addition, I believe that there are a number of 

16 important lessons from the Duty to Serve program for FHFA's 

17 implementation of the Equitable Housing Plans. A great 

18 overview of early lessons from the early years of Duty to 

19 Serve was released earlier this year by the Lincoln 

20 Institute of Land Policy. A few particular lessons to 

21 highlight from Duty to Serve. 

22 First, FHFA should provide ratings and public 

23 assessments of the Enterprises' performances. This is an 

24 extremely promising element of Duty to Serve, the use of 

25 expert program staff and outside contractors to make 
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1 judgment about the impact of the Enterprises' activities. 

2 Unfortunately, this promise has not been realized in the 

3 three and a half years since Duty to Serve launched. 

4 Second, transparency is critical. One way that FHFA 

5 should go further than Duty to Serve is by spelling out the 

6 key metrics that it believes indicates success in the 

7 Enterprises' equitable housing finance plans. 

8 Third, we believe public reporting is also critical, 

9 but the Duty to Serve is too voluminous and complex. 

10 Fourth, we are grateful for these public listening 

11 session and we appreciate the steps that FHFA has taken to 

12 structure them productively and we continue to urge FHFA to 

13 look for other ways to engage productively with the public. 

14 In that vein, FHFA and the Enterprises should consider 

15 new ways of working with outside stakeholders. For example, 

16 the Lincoln Institute of Land Policy has convened an 

17 underserved markets coalition to monitor and advocate on the 

18 Enterprises' duty to serve on equitable housing finance 

19 activities. We believe FHFA and the GSEs should work 

20 closely with this coalition. Thank you for the opportunity 

21 to speak today. 

22 LEDA BLOOMFIELD: Thank you. Our next speaker is 

23 Stockton Williams from the National Council of State Housing 

24 Agencies. 

25 STOCKTON WILLIAMS: Good afternoon. My pleasure to be 
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1 here, and I want to thank FHFA for convening this 

2 stakeholder discussion. I'm Stockton Williams from the 

3 National Council of State Housing Agencies and the first 

4 thing I would like to observe is that we see this important 

5 RFI and listening session as, on the one hand, 

6 groundbreaking, but also of a piece with the leadership and 

7 direction that Acting Director Thompson has shown already in 

8 her tenure. 

9 We have seen a revision and expansion of the affordable 

10 housing goals, an increase in Fannie Mae and Freddie Mac's 

11 capacity to invest in low-income housing tax credits, and an 

12 alignment of fair lending enforcement between FHFA and HUD, 

13 a really important and, maybe, somewhat overlooked step 

14 already taken by FHFA under the Acting Director's 

15 leadership. And all of this work, we believe, including the 

16 requirement for the GSEs to produce equity plans, is 

17 pointing in the same direction, towards insisting that we 

18 have a more equitable and accessible housing finance system. 

19 So we're excited about this opportunity. 

20 I do also want to acknowledge that, while we, I think, 

21 all agree that the GSEs have not done enough, and need to do 

22 more, we at NCSHA are encouraged by the comments from Fannie 

23 and Freddie, some of which we heard more of today. We 

24 believe that both companies are taking this new directive 

25 and this new direction seriously, and we look forward to 
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1 working with them. 

2 Our perspective is that in the state housing finance 

3 agencies, HFAs serve the renters and the homeowners who are 

4 really most disadvantaged in the current conventional 

5 housing system. Increasingly over the last 20 years that 

6 has involved very robust partnerships with Fannie Mae and 

7 Freddie Mac. They have produced results, which I'll speak 

8 to, but, more broadly, the housing finance agencies really 

9 exist to serve borrowers who don't get access as easily 

10 through the conventional market. Thirty to thirty five 

11 percent of HFA borrowers every year are households of color, 

12 and that, obviously, includes an even greater share in the 

13 HFAs' rental housing financing and subsidy programs. 

14 So the work is central to that of state housing finance 

15 agencies. In addition, housing finance agencies are serving 

16 especially lower income borrowers -- average income of 

17 roughly $56,000 in for sale housing -- purchasing homes of 

18 $160,000 to $165,000 on average, well below even the typical 

19 cost of FHA-insured homes in many markets. 

20 So one of the things that we think is most important to 

21 underscore about the request for interest and the 

22 requirement that Fannie and Freddie produce equity plans is 

23 that the document calls for meaningful actions, and it 

24 specifically directs the GSEs to submit their first plans in 

25 a matter of months. To us that suggests two things. 
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1 Number one, it suggests that there's already a 

2 tremendous amount of data and evidence of the problems in an 

3 inequitable housing system that has not provided fair access 

4 to households and communities of color. Groups -- book 'em 

5 today and we'll speak later -- the GSEs themselves, and FHFA 

6 have reams of data and evidence that outline the scope and 

7 the dynamics behind the core problem that the equity plans 

8 and the meaningful actions to address equity are intended to 

9 address. 

10 So let's not over study the issue. To be sure, there's 

11 room for more research, always, better explication of some 

12 key issues that remain not fully understood; but we know 

13 enough, Fannie and Freddie know enough, to do more starting 

14 right now. And I get to the second principle, which is FHFA 

15 ought to look to what has already worked, where Fannie and 

16 Freddie have made progress, have shown they can do more in 

17 serving people in places of color. 

18 Two examples, one the so called preferred products, the 

19 more favorably priced lending options offered by each GSE 

20 through state housing finance agencies. These long-running 

21 programs have been highly touted by the agencies. They 

22 continue to operate in the market, but in a curtailed 

23 fashion. What's the principal value that they bring? Well, 

24 it's really two fold. 

25 Number one, HFA Preferred and HFA Advantage each have 
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1 much lower loan level price adjustments. We just heard 

2 earlier about the disproportionate impact that LLPAs have on 

3 borrowers of color. 

4 Number two, HFA Preferred, HFA Advantage loans, more 

5 often than not, come with down payment assistance from 

6 housing finance agencies. We all know from the research 

7 that DPA is particularly critical for families of color who 

8 meet every other criteria to become a homeowner, but just 

9 don't have the savings required to make a down payment. By 

10 restoring HFA Preferred and HFA Advantage to levels of 

11 income and flexibility that existed just a few years ago, 

12 Fannie and Freddie could immediately expand market share and 

13 address the goals of their equity plans. 

14 Second, I want to talk about supply. It's encouraging 

15 to see -- 

16 LEDA BLOOMFIELD: One minute. 

17 STOCKTON WILLIAMS: -- FHFA and the GSEs talking about 

18 supply. Let's actually put some specific GSE action behind 

19 it. Fannie and Freddie recently were directed by FHFA to 

20 increase their investment in low-income housing tax credit. 

21 There's much more headroom for them to play a greater role 

22 in that market, and, on the for sale side, work with housing 

23 finance agencies to really look at acquisition, development, 

24 and construction lending product. Land availability and 

25 land financing is, according to an analysis by the Urban 
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1 Institute and Moody's, more important than materials, costs, 

2 or labor shortages in terms of driving outrageous home 

3 construction and development costs. 

4 Thanks very much; we look forward to working with you. 

5 LEDA BLOOMFIELD: Thank you. Our next speaker is 

6 Belinda Everette from the NAACP of Houston. 

7 BELINDA EVERETTE: Good afternoon. Thank you for 

8 allowing me to speak with you this morning. 

9 I'm the housing chair for the NAACP Houston branch, and 

10 I've spent the bulk of my career in residential lending, 

11 real estate, and (indiscernible)** 0:45:59 secondary 

12 marketing. So my perspective and the perspective of the 

13 work that we're doing with the NAACP comes from that vantage 

14 point. 

15 And while we understand the challenges, as the previous 

16 speaker has very, very successfully illuminated, we know the 

17 problems. Disparities in home ownership in the United 

18 States is a complex, multi-tiered problem rooted in years of 

19 unfair policies and practices, discrimination in lending, 

20 private and public infrastructure development that results 

21 in displacement, community blight and erasure, as well as 

22 perpetual, systemic disenfranchisement of communities of 

23 color. 

24 So addressing the home ownership disparity requires an 

25 innovate and sustainable solution that requires a shift in 
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1 paradigm, and the recognition that minority communities are 

2 not monolithic, but composed of different income and credit 

3 streams and credit profiles that include low-income, middle, 

4 upper middle, and affluent households. Historical programs 

5 and policy built on providing a pathway for low-income 

6 communities have overlooked or omitted the engagement of the 

7 minority middle class, thereby minimizing the opportunity 

8 for full participation of the pursuit of home ownership. 

9 The key points that we must consider when addressing 

10 home ownership in the United States must include an approach 

11 to addressing the abundance of aging housing stock, and 

12 we're defining that as housing stock that was built prior to 

13 1990. That creates a competitive entry point for home 

14 ownership for minority communities. If we increase and 

15 improve housing supply by renovating and, or, replacing 

16 aging housing stock, we expand the home ownership 

17 opportunity. 

18 And we cannot overlook the impact of climate change and 

19 the resulting natural disasters that have impeded the 

20 ability of minority communities, particularly unserved, and 

21 persistently poverty driven communities, to maintain decent 

22 states and sanitary housing. But because this is a 

23 multi-tiered problem, a multi-tiered approach is warranted. 

24 So we must look at targeting the complete community, 

25 kind of a circle-the-wagons approach. Unlike the top-down 
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1 theories or the grass roots bottom up, we must consider a 

2 complete community strategy to reach and engage untapped 

3 middle markets, but also all consumers, to give them a 

4 complete community within major, middle, and suburban 

5 markets in the country to expand the housing opportunity, 

6 along with a simultaneous outreach for affordable housing 

7 for 30, 50, and 80, as well as up to 160 percent AMI 

8 communities. 

9 Targeting markets that have an abundance of housing 

10 that's built before 1990 creates markets that are specific 

11 to renovation and relocation that will include increasing 

12 decent states and sanitary housing, with energy efficiency 

13 and climate resiliency. Creating a resilient housing 

14 inventory will expand the opportunity for minority 

15 communities through preservation, renovation, and 

16 relocation, and the identification and designation of legacy 

17 minority communities should be established to increase 

18 sustainability. 

19 If we address equity in housing, we must require an 

20 alignment with key stakeholders. That includes funding 

21 partners, public and private program dollars that will 

22 support housing supply and redevelopment. If we implement a 

23 wrap-around services model to address housing and community 

24 development, we will include tying home ownership to 

25 community building by providing medical, educational, and 
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1 social services access within the community. Blending 

2 housing market expansion with job creation will create a 

3 workforce. Infrastructure and land -- 

4 LEDA BLOOMFIELD: One minute. 

5 BELINDA EVERETTE: Infrastructure and land development 

6 create job opportunities for skilled labor and subject 

7 matter experts. Our circle-the-wagons strategy will develop 

8 and create complete communities, which will create housing 

9 market access for millions. Thank you. 

10 LEDA BLOOMFIELD: Thank you. We will now have a break. 

11 We will return at 2:05 p.m. Eastern Standard Time. Thank 

12 you. 

13 BREAK 

14 LEDA BLOOMFIELD: Welcome back to FHFA's Enterprise 

15 Equitable Housing Finance Plan listening session. Our next 

16 guest speaker is Vickee Jordan Adams from Finsbury Glover 

17 Hering. 

18 VICKEE JORDAN ADAMS: Hello, can you hear me okay? 

19 LEDA BLOOMFIELD: Yes, we can hear you. Thank you. 

20 VICKEE JORDAN ADAMS: All right. Thanks for the brief 

21 instruction. Just to share who I am and why I'm here to 

22 speak. 

23 I am a partner with Finsbury Glover Hering, a strategic 

24 communications firm across the U.S. and globally. I have 

25 spent about the past 25 years either in the financial 
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1 services sector or serving clients in the financial services 

2 sector as a communicator and the opportunity to participate 

3 in this listening session is a high honor for me, simply 

4 because I have become a real student and interested party in 

5 housing and housing policy, and there are just a couple of 

6 comments that I wanted to be able to share with this group. 

7 First and foremost, I think it's wonderful that you are 

8 conducting these listening sessions to get input on the 

9 objectives and goals for FHFA going forward with its efforts 

10 in housing and housing equality and housing equity. I think 

11 that, unfortunately, many communities are not aware of the 

12 opportunities they have to increase their social mobility 

13 through home ownership and creating equity in their homes. 

14 And I would like to suggest that two things are critically 

15 important as this group moves forward. 

16 The first one I think that is very important is 

17 understanding zoning and making changes to zoning so that 

18 residents are more familiar with what that zoning does to 

19 the value of their property. I think when we start to look 

20 at low- to moderate-income tracts, or even minority tracts, 

21 census data is woefully behind in our ability to actually 

22 understand who is living in those communities, and it's much 

23 easier for people who are more sophisticated financially to 

24 understand how to access funds to purchase homes in low- to 

25 moderate-income census tracts, and often it leads to a great 
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1 deal of gentrification because of general awareness of the 

2 ability to qualify for loans that have been designated for 

3 those LMI tracts. 

4 So I really think we need to find a way to assure that 

5 real estate developers, cities, municipalities, states 

6 understand how to get the information out to current 

7 residents in transitional neighborhoods so that they can 

8 understand how they can apply to own their homes, maintain 

9 their equity in their homes, remodel their homes, so that 

10 we're not finding a predominance of vacation homes or second 

11 homes or rental properties in LMI neighborhoods that make 

12 those properties inaccessible for the legacy residents. 

13 So my second point builds on that, in that I think it 

14 would be critically important for this group to consider how 

15 the minority depository institutions, as well as the 

16 community development financial institutions -- the CDFIs 

17 and the MDAs -- they need funding for marketing and 

18 communications services. By that I mean they're building 

19 their portfolios, they're growing their investment, and 

20 they're serving communities that are underserved, but what 

21 they don't necessarily have the funds or resources or 

22 experience with is marketing and educating their residents 

23 in their immediate regions about the opportunities available 

24 to them for home financing. And I think if this body, as 

25 the conservator of the agencies and as an information 
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1 resource to the CDFIs and the MDAs, if there can be a way to 

2 consider providing funds for marketing communication 

3 services, particularly for the CDFI organizations, and even 

4 for the minority depository institutions, so that they can 

5 better reach the people that they are meant to serve, those 

6 underserved borrowers, those borrowers who are not as 

7 sophisticated about some of the opportunities available to 

8 them as they are residents in low- to moderate-income or 

9 minority census tracts. 

10 And with that, again, I thank you for allowing me to 

11 participate and to offer comments, and I look forward to the 

12 remaining discussion. Thank you. 

13 LEDA BLOOMFIELD: Thank you. Our next speaker is Lesli 

14 Gooch from the Manufactured Housing Institute. 

15 LESLI GOOCH: Thank you very much. I hope you can hear 

16 me. 

17 LEDA BLOOMFIELD: Yes, we can hear you. 

18 LESLI GOOCH: Okay. Very good. Thank you to the teams 

19 from FHFA, Fannie Mae, and Freddie Mac, and everyone joining 

20 the call today. I really appreciate the opportunity to 

21 share MHI's views about the Enterprises' equitable housing 

22 finance plans. 

23 My name is Lesli Gooch. I'm the CEO of the 

24 Manufactured Housing Institute. And I know you might be 

25 wondering why I'm here today, but we think that manufactured 
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1 housing is a critical source of affordable home ownership in 

2 America, and so we think that we are an integral part of 

3 this conversation. 

4 MHI is the only national trade association that 

5 represents all segments of the factory-built housing 

6 industry. Our members include all those who serve the 

7 industry, including the home builders, the suppliers, the 

8 retail sellers, the lenders, the installers, community 

9 owners and operators, and others. 

10 In 2020 we shipped almost 95,000 HUD Code homes, which 

11 is 9 percent of all new single-family home starts in the 

12 country. Our members at MHI are responsible for 85 percent 

13 of the manufactured homes that are produced every year. 

14 Manufactured housing offers value to consumers because 

15 of technological advancements and costs savings better 

16 associated with the factory-built process, and because of 

17 the efficiencies that come through the federal building 

18 code. Manufactured housing today provides an affordable 

19 form of home ownership that more than 22 million people 

20 nationwide today are enjoying. 

21 FHFA has stated that one of their goals with respect to 

22 the equitable housing finance plans is the identification 

23 and summary of barriers to sustainable housing opportunity, 

24 either directly related to the Enterprises' actions, or 

25 barriers in the housing market that can reasonably be 
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1 influenced by Enterprises' actions. Addressing systemic 

2 barriers to minority home ownership is imperative, and 

3 increasing the supply of quality affordable home ownership 

4 must be an integral part of that effort. 

5 This is where manufactured housing comes in. Unlike 

6 other affordable home ownership options, which are often 

7 aging housing stock in need of extensive improvements and 

8 rehabilitation, a family can attain home ownership in a 

9 brand new home that has the latest innovations, energy 

10 efficient features, and modern floor plans and amenities. 

11 Yet manufactured housing is often zoned out by local land 

12 use regulations, and it is imperative that the FHFA, Fannie 

13 Mae, and Freddie Mac examine these barriers and work to help 

14 us overcome them. 

15 FHFA states that the equitable housing finance plans 

16 will serve as a supplement to existing FHFA and Enterprise 

17 requirements, programs, and plans, and that they're designed 

18 to ensure a continued focus on equity. I would like to 

19 point out that the Enterprises already have an existing 

20 requirement with respect to manufactured housing that could 

21 be helpful in this conversation, and that is their statutory 

22 duty to serve manufactured housing. We have been advocating 

23 for years, since the Duty to Serve was passed by Congress in 

24 2008, that Fannie and Freddie must meet their duty to serve 

25 manufactured housing. 
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1 The 2022-2024 plans that are the Duty to Serve plans, 

2 unfortunately do not include any objectives to purchase 

3 chattel loans. Neither Fannie nor Freddie have done that, 

4 and we're very concerned about that, since the majority of 

5 manufactured homes are financed as personal property chattel 

6 loans. And this is where the mortgage is only on the home 

7 and not on the underlying land. 

8 The Enterprises cannot simply ignore this and claim to 

9 meet their Duty to Serve obligations without addressing 

10 this. The volume of activity in the land home financing is 

11 also inadequate, and we strongly encourage FHFA to continue 

12 pushing to increase that volume. As it stands, the intent 

13 of Congress from 2008 for meeting the affordable home 

14 ownership needs of America through manufactured housing have 

15 not been met. Fannie and Freddie need to reaffirm their 

16 commitment and we urge FHFA to support it as well. 

17 As part of the Duty to Serve, the Enterprises have 

18 introduced new programs that produce conventional financing 

19 for manufactured homes that are titled as real estate and 

20 have certain site-built features, and that is the MH 

21 Advantage program and the Choice Home program, and so we are 

22 excited for the support of the industry's new CrossMod 

23 homes, which have the higher roof pitches, permanent and 

24 lower profile foundations, energy efficiency, garages and 

25 car ports and porches. They're virtually indistinguishable 
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1 from site-built homes, and are at a fraction of the cost due 

2 to the efficiencies of offsite home construction. CrossMod 

3 homes are a point of entry for home buyers who are priced 

4 out of home ownership through site-built housing. Our homes 

5 are produced at below $200,000, and CrossMod homes will 

6 serve the gap in the market that is so critical. 

7 As we work to deliver -- 

8 LEDA BLOOMFIELD: One minute. 

9 LESLI GOOCH: -- CrossMod homes to more consumers, we 

10 believe the GSEs need to help ensure that appraisers are 

11 aware of these new financing programs at Fannie Mae and 

12 Freddie Mac, and how they are different from traditional 

13 manufactured housing appraisals. We need the GSEs to ensure 

14 appraisers follow their new appraisal guidelines for homes 

15 that qualify for MH Advantage and Choice Home. Under both 

16 of these programs, appraisers are permitted to use 

17 site-built homes as comparables when evaluating the homes, 

18 but since both programs are still relatively new, we think 

19 more GSE outreach to the appraisal professionals about the 

20 appraisal logistics is critical. 

21 So in conclusion, FHFA and the GSEs have a great 

22 opportunity to advance their racial equity agenda, and we 

23 look forward to working with you. We urge FHFA and the GSEs 

24 to work to help support this growth of manufactured housing 

25 to increase home ownership for all Americans. Thank you 
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1 very much. 

2 LEDA BLOOMFIELD: Thank you. Our next speaker is Sarah 

3 Mancini from the National Consumer Law Center. 

4 SARAH MANCINI: Thank you so much. My name is Sarah 

5 Mancini. I'm a staff attorney with the National Consumer 

6 Law Center, and I'm grateful for having the opportunity to 

7 speak today, and we thank FHFA for convening this listening 

8 session and for generally making this proposal for equitable 

9 housing finance plans. 

10 A lot has already been said about origination policies 

11 that play a role here, so I will only briefly touch on some 

12 of those issues. First of all, we applaud Fannie Mae and 

13 Freddie Mac for their recent move towards allowing the 

14 voluntary and positive only use of rental history data. We 

15 would also suggest that the Enterprises should consider the 

16 use of other promising alternative data, such as cash flow, 

17 so long as it's voluntary with consumers. 

18 Another point I wanted to make about loan origination 

19 is the critical role that Fannie Mae, Freddie Mac, and FHFA 

20 play in increasing language access at origination. Already 

21 a lot of great work has been done in this area under the 

22 Multi-Year Language Access Plan, but more is needed. FHFA 

23 should require the Enterprises to add the language 

24 preference question back to the uniform residential loan 

25 application, the URLA, so that loan originators will be 
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1 asking applicants about their preferred language, and so 

2 that that information will be gathered. 

3 And then, also, it will enable loan originators to 

4 provide translated documents for informational purposes when 

5 they're available. And, of course, many of these documents 

6 have already been translated in the clearing house that FHFA 

7 and Fannie Mae and Freddie Mac have worked together to 

8 create. So we would like to see the Enterprises look 

9 closely at how to increase the uptake and use of those 

10 translated documents, and part of that is asking about 

11 language preference in the URLA form. 

12 I want to turn now to focus on mortgage servicing, 

13 which we at NCLC believe is extremely important to equitable 

14 housing finance policy. The question in the RFI about 

15 reducing racial and ethnic disparities in loan modifications 

16 and loss mitigation is extremely important, especially right 

17 now during the COVID-19 pandemic. 

18 As we know, this is a pandemic that has 

19 disproportionately impacted communities of color and people 

20 of color, and so having strong loss mitigation policies and 

21 reviewing loss mitigation outcomes in a way that is 

22 disaggregated by race and ethnicity is critical. The 

23 Enterprises should publicly release detailed data about loan 

24 performance and servicing outcomes disaggregated by race and 

25 geography, and they should analyze that data themselves and 
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1 ensure that servicers are implementing their servicing rules 

2 in a way that does not cause a disparate impact on borrowers 

3 of color. 

4 We are extremely grateful to FHFA, Fannie Mae, and 

5 Freddie Mac for one major change that has been made during 

6 the pandemic, which is allowing the market interest rate to 

7 be used in the flex modification, even for borrowers who are 

8 below 80 percent loan-to-value ratio. That is extremely 

9 important, and we commend the Enterprises for that change, 

10 and FHFA. 

11 The next step is to make sure that servicers are 

12 carrying out the Fannie and Freddie loss mitigation policies 

13 properly, which should include a review of servicers post 

14 forbearance scripts. At the outset of the pandemic, Fannie 

15 and Freddie were very proactive about creating scripts for 

16 servicers to use in talking with borrowers who needed a 

17 forbearance, but not much has been done about this point 

18 where borrowers are exiting forbearances. We've heard very 

19 troubling reports from consumers around the country and 

20 their advocates who are telling that people are being pushed 

21 into deferrals, even when they really need a flex 

22 modification. 

23 So it's very important that Fannie Mae and Freddie Mac 

24 actively keep an eye on servicers policies here and make 

25 sure that people are getting accurate information about 
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1 their options so that they are not led to believe that if 

2 they don't take a deferral there's not going to be any other 

3 good options. They need clear information about the fact 

4 that if they need a reduced payment, a flex modification may 

5 be available and here's how to be reviewed for that -- and 

6 to ensure that people can be reviewed for a flex 

7 modification before they exit their forbearance as well. 

8 And the other important piece is to require that there be a 

9 escrow analysis done before someone's offered either a 

10 deferral or a flex modification, and allow those escrow 

11 shortages to be included in the deferred amounts. 

12 The other really important piece here is language 

13 access in mortgage servicing. Not just at origination, but 

14 in the servicing market, the Enterprises have a crucial role 

15 to play in requiring their servicers to ask about language 

16 preference, to track and transfer that information in the 

17 servicing, and to make translated documents available that 

18 are relevant to servicing. This can include sending out the 

19 Spanish early intervention notice that the CFPB has 

20 translated, other documents that are in the clearing house, 

21 and also requiring servicers to put a link on their hardship 

22 or loss mitigation website to translated materials that have 

23 been put out there by the CFPB and the Enterprises. 

24 LEDA BLOOMFIELD: One minute. 

25 SARAH MANCINI: Finally, Fannie and Freddie have an 
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1 important role to play in putting in place equitable 

2 disposition policies. We have big concerns about the note 

3 sale program that many borrowers have had their loans sold 

4 through a pool without exhausting the Fannie and Freddie 

5 loss mitigation options, and those purchasers are not being 

6 required to comply with the COVID-19 options like the 

7 deferral and the flex mod. So that is very important. 

8 And also with the sale of REO properties, we need to 

9 ensure that those properties can be sold to nonprofits that 

10 will advance equitable housing, as opposed to investors only 

11 out for profit. Thank you very much. 

12 LEDA BLOOMFIELD: Thank you. Our next speaker is Bruce 

13 Dorpalen from the National Housing Resource Center. 

14 BRUCE DORPALEN: Excellent. Well thank you very much. 

15 I'm Bruce Dorpalen from the National Housing Resource 

16 Center. We work with housing counseling groups all across 

17 the country, and, of course, these groups have worked with a 

18 broad population of lots of low- and moderate-income people, 

19 but also, especially, people of color. It's not unusual for 

20 most years to have 60 to 70 percent of our clients be people 

21 of color. 

22 In 2020, Fannie Mae, 3.06 percent of their loans 

23 purchased were for Black borrowers, and 8.03 percent were 

24 Hispanic borrowers. Compare that to 65 percent -- 65.6 

25 percent -- of the loans went to White borrowers. For 
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1 Freddie Mac, they're kind of similar numbers. In 2020 3.28 

2 percent of loans purchased were to Black borrowers; 6.7 

3 percent were to Hispanic borrowers. Compare that to 64.6 

4 percent to White borrowers. 

5 And the average score in a Fannie Mae portfolio is 751. 

6 For Freddie Mac it's 759. Compare that to the average 

7 credit score of a Black household in the United States, 

8 which is 677, and for Hispanic households of 701. People 

9 coming from low wealth communities have lower credit scores, 

10 because credit scores are a large averaging tool, which 

11 captures broad groups of people and lumps 'em together, some 

12 of whom are maybe having trouble paying their bills, and 

13 some of whom are paying their bills on time, but don't know 

14 how to game the system. The trick of obtaining and 

15 maintaining excess credit and unused credit capacity is an 

16 important part of the factor, people with thinner credit 

17 files where a very minor ding has an outsized impact of the 

18 score. All those things accumulate and disadvantage 

19 borrowers, and, really, especially Black and Hispanic 

20 borrowers in the scoring system. 

21 And the problem is compounded by the automated 

22 underwriting systems that consider low down payment and 

23 slightly lower credit scores as layered risk. Add to that 

24 student loans and, you know, Black borrowers especially have 

25 higher levels, are more often requiring and need to have 
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1 student loans. And then other debts; those add to this idea 

2 that there's layered risk here. And this disadvantages the 

3 populations that we're most concerned about talking today. 

4 So while there are many solutions, and a number of them 

5 have been put out today, part of the solution has got to be, 

6 really, looking at how credit is approached and the credit 

7 score concept, and how that can be addressed more 

8 effectively. And so one part of it is that the automated 

9 underwriting systems, Fannie Mae and Freddie Mac, need to go 

10 lower on credit scores for low down payment borrowers. 

11 We're not going to be able to change this until they have a 

12 more, you know, positive attitude and view of borrowers that 

13 don't have quite as high a credit score, but, in fact, are 

14 coming from communities that are badly underserved. 

15 Fannie Mae's program revealing rent payments in bank 

16 accounts is very promising; like the voluntary part of it. 

17 But, plenty of low- to moderate-income people live in a cash 

18 economy. Some landlords only accept cash. And we also 

19 don't want to disadvantage people who are living with their 

20 parents, which is very common, and has gotten to be even 

21 more common now under COVID-19, and where the rules are that 

22 a rent reference is not viewed as an at-arm's-length 

23 reference. 

24 So another tool to think about is that housing 

25 counselors can do a much deeper dive on the actual credit 
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1 position of a borrower, rather than having an overreliance 

2 on this averaging and generalized nature of credit scoring 

3 programs in the automated underwriting system. So 

4 counselors can work with a complete credit report. They can 

5 do alternative credit; so, find things that don't normally 

6 show up on the credit report. So just documenting rent 

7 payments, such as furniture stores, child care; there's a 

8 range of things that we can do that will fill out the credit 

9 file. And then documenting these to create a much more 

10 robust credit profile of somebody. 

11 And the program could be that Fannie and Freddie should 

12 work with housing counseling agencies to create a greater 

13 tolerance for lower credit scores for lower down payment 

14 borrowers who have successfully completed really high 

15 quality counseling programs by HUD-approved housing 

16 counseling agencies. Fannie Mae and Freddie Mac should have 

17 a program also to address income volatility for first-time 

18 homebuyers. 

19 So, the reality is that some people do end up being 

20 unemployed, and it's not always -- it's not their fault, and 

21 if we can protect those people we can prevent both 

22 foreclosures or have the expensive process of trying to 

23 remodify a loan. 

24 LEDA BLOOMFIELD: One minute. 

25 BRUCE DORPALEN: Without increasing the cost to the 
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1 borrower, Fannie and Freddie, and Ginnie Mae, could provide 

2 protections for people who are temporarily unemployed. 

3 There's a similar program that Massachusetts Housing Finance 

4 Agency, Mass. Housing has, which has been quite successful. 

5 Programs like this can reduce risk for Fannie and Freddie. 

6 One last point is add housing counseling data fields 

7 into the new Uniform Residential Loan Application. We had 

8 an agreement on this before. It would be important to 

9 restore it. It helps streamline housing counseling into the 

10 mortgage origination, but also the mortgage servicing 

11 process, so people, when they run into trouble, can be 

12 referred back to the agency that they worked with, and that 

13 has a lot of value. 

14 But, also, really want to underscore that the provision 

15 around language preference is really important for providing 

16 access for people who are not original English speakers, and 

17 helping solve that problem during the foreclosure crisis. 

18 We had terrible problems where people were given offers in 

19 English and had no idea, because they were Korean, or 

20 Spanish, or whatever. And, you know, the servicers will 

21 always say, we have no idea what language they'd like to 

22 speak in, and this solves that problem. And with that note 

23 I would like to say thank you all. 

24 LEDA BLOOMFIELD: Thank you. Our next speaker is 

25 Shannon Snow from the Omaha Municipal Land Bank. 
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1 SHANNON SNOW: Hi, everyone. I am Shannon. I am the 

2 Executive Director here at the Omaha Municipal Land Bank, 

3 and I am not a finance professional. So I'm just going to 

4 apologize in advance that I don't have a bunch of financial 

5 acronyms for you. 

6 But I am here to provide some perspective from the 

7 ground and from the clients we serve. The Omaha Municipal 

8 Land Bank has been the beneficiary of Freddie Mac 

9 (indiscernible)** 1:31:06. This assistance provided us with 

10 tools to evaluate barriers in home ownership in our 

11 organization and really created some transformational change 

12 for us in the area of equity. We're incredibly grateful to 

13 them for the support. 

14 As a land bank, we are charged with returning 

15 properties that have been rejected by the free market back 

16 to the community. Many of these properties are in 

17 historically redlined communities and in communities where 

18 property from new housing is scarce. Returning these 

19 properties to productive reuse offers many benefits, 

20 including improved safety, while it can obviously increase 

21 affordable housing opportunities. 

22 By the time a land bank receives a property it has long 

23 been abandoned. It is rare that we get a property with a 

24 structure. Our work is focused on property preparation, 

25 making properties available for purchase and future housing. 
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1 We are successful in this mission, but frequently we sell 

2 these development ready lots to investors. 

3 Why? Well often times it's financing. 

4 (Indiscernible)** 1:32;15 from perspective buyers that the 

5 financing process is complicated and challenging to 

6 understand. Many of these interested parties are low income 

7 and people of color. If they can qualify for a construction 

8 loan, they don't have the down payment after paying for a 

9 lot. 

10 While we have many local partners that are assisting 

11 with these challenges, the availability of renting products 

12 that consider new construction as an affordable housing 

13 option, especially for first-time homeowners, should be 

14 considered. Many products lack funding for both the lot and 

15 the construction, so increasing the availability of loans 

16 that cover lot purchase, construction, and then convert to a 

17 mortgage, would make a difference in home ownership as land 

18 banks continue to bring properties back to life. 

19 Additionally, flexibility should be considered within 

20 the financing structure to allow for the use of small 

21 minority contractors, groups that are sometimes left out 

22 when financial institutions evaluate qualified builders. 

23 The second point I'd like to address as an immigrant 

24 community, we have gotten a strong amount of interest from 

25 this community, many of whom are un-bankable under current 
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1 financial practices. Frequently these are permanent 

2 residents with children, and their kids are often citizens. 

3 When I think about equity, I think about their future where 

4 everyone is treated fairly and has opportunities for 

5 success. I would encourage lending that considers the 

6 ability to build generational wealth within the immigrant 

7 community as well, a community that is often willing to go 

8 into our more challenging areas and make them a home. 

9 Outside of lending, Fannie Mae and Freddie Mac have an 

10 immense amount of resources and information. Continuing to 

11 share this information and build partnerships with 

12 organizations like ours that are able to leverage these 

13 resources and ensure the information with our clients will 

14 be key to success in creating an equitable lending strategy 

15 in the future. 

16 Finally, I would like to encourage FHFA to reach out to 

17 the National Land Bank Network housed within the Center for 

18 Community Progress. We believe much of the information that 

19 they have collected around the challenges to returning 

20 abandoned properties to the community would be informative 

21 for your efforts. Thank you for this opportunity. 

22 LEDA BLOOMFIELD: Thank you. Our next speaker is 

23 Jessie Grogan from the Lincoln Institute of Land Policy. 

24 JESSIE GROGAN: Good afternoon, and thank you for the 

25 opportunity to share my views and those of the Lincoln 
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1 Institute with you today. 

2 As Leda mentioned, my name is Jessie Grogan, and I am 

3 the Associate Director of Reduced Poverty and Spatial 

4 Inequality at the Lincoln Institute. The Institute seeks to 

5 improve quality of life and address economic, social, and 

6 environmental challenges through the effective use, 

7 taxation, and stewardship of lands. As my title might 

8 indicate, reducing poverty and inventing racial equity are 

9 fundamental goals of the institute. 

10 We are very supportive of the decision to commence an 

11 expedited racial equity strategic planning process roughly 

12 based on the Duty to Serve planning model. As we documented 

13 in detail in a Lincoln Institute working paper that I'll 

14 share in the chat after my comments, the Duty to Serve 

15 strategic planning framework is sound; however, strategic 

16 planning processes are only as good as the plans developed 

17 and implemented by the Enterprises, and FHFA's evaluation 

18 and enforcement. 

19 Based on what we've seen over the last two years from 

20 FHFA and the Enterprises, we're skeptical that this will be 

21 a credible process resulting in real change. Before any 

22 planning process is put into place, therefore, there are 

23 several changes that need to be made in advance to increase 

24 the plan's likelihood of success. 

25 Now that FHFA is run by Director Thompson, 
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1 (indiscernible)** 1:35:57 it is entirely within your 

2 discretion to make the changes that will result in a 

3 planning process that could eliminate the racial disparities 

4 in loan purchasing. Because so much policy needs to be 

5 changed by FHFA before the Enterprises would be empowered to 

6 write plans that could achieve meaningful change, I'll focus 

7 the rest of my comments on the five urgent actions that FHFA 

8 must undertake to signal to the Enterprises that it intends 

9 for there to be more loans purchased that were originated to 

10 families of color, and that this is not a hollow exercise. 

11 First, please keep it simple, with your eyes on the 

12 prize of a higher proportion of Enterprise loan purchases 

13 originated to families of color. For example, leveraging 

14 existing DTS definitions are high opportunity areas, and 

15 areas of concentrated poverty, and resisting Enterprise 

16 attempts to use process lengths or complexity to up the 

17 scape. Your decision to word the RFI to invite stakeholders 

18 to propose objectives rather than giving the Enterprises 

19 first crack is a great first step that we recommend in our 

20 working paper. 

21 Second, release more information. We applaud FHFA's 

22 release of additional data on September 8th; however, the 

23 Enterprises continue to hold as proprietary a great deal of 

24 information that would help root out appraisal bias. By 

25 sharing the enormous amount of GSA property data from the 
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1 uniform appraisal of data set. Releasing UAD and other data 

2 generated through uniform mortgage data program could shed 

3 light on appraisal policies that may contribute to 

4 discrimination against borrowers of color. Also, 

5 immediately releasing the market level and objective level 

6 ratings from 2018 and 2019 would be invaluable to the 

7 Enterprises and to stakeholders in crafting racial equity 

8 strategic plans. 

9 Third, follow through and change the capital 

10 requirements so that the Enterprises are not inappropriately 

11 discouraged from purchasing loans to underserved markets. 

12 FHFA's proposed rule shifting the focus back to risk-based 

13 capital, rather than a simple leverage ratio, is a good 

14 start, but the total capital required would remain too high 

15 under the proposal. Enterprise capital requirements can 

16 ensure safety and soundness, and remain consistent with the 

17 Enterprises' public purpose mission, to lead in reaching 

18 underserved markets. 

19 Fourth, substitute a new approach that encourages the 

20 Enterprises to engage in pilots that reach underserved 

21 markets, rather than the approach in the pending rulemaking 

22 that would essentially eliminate pilots. Without FHFA 

23 encouragement to engage in pilots, it's unrealistic to 

24 expect for the Enterprises to substantially alter their 

25 current loan purchase mix, which has not resulted in 
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1 purchasing loans originated to people of color. 

2 Fifth and finally, reject the tortured, implausible 

3 interpretation of the Enterprises' authority to make 

4 targeted equity investments that has held sway for too long. 

5 The plain of statute refutes the FHFA's general counsel 

6 interpretation and should be overruled. This targeted 

7 equity investment authority should be extended not only to 

8 Duty to Serve markets, but also to racial equity strategic 

9 planning efforts. 

10 If FHFA follows through to make these five changes, the 

11 Enterprises could be expected to develop credible strategic 

12 plans that would move forward racial equity. Without laying 

13 the groundwork described above though, any strategic 

14 planning process will fail to have sufficient impact in 

15 advancing racial equity. Thank you for considering our 

16 views. 

17 LEDA BLOOMFIELD: Thank you. Our next speaker is Alan 

18 Worden from the Community Data Platforms. 

19 ALAN WORDEN: Good afternoon. My name is Alan Worden. 

20 I'm the cofounder and CEO of Community Data Platforms, and 

21 our mission is to help leaders in housing, philanthropy, 

22 economic development organizations, and the government 

23 better understand and better serve communities across the 

24 U.S. through the power of data analytics, and we pursue this 

25 impactful work in partnership with policy makers. Our job 
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1 is to use granular data and reliable analytics to understand 

2 communities, and policy makers have the job of leveraging 

3 this evidence to serve communities through smart policies 

4 and effective programs. 

5 And we've had the opportunity to discuss this RFI with 

6 several passionate members of the Freddie Mac teams, and we 

7 are, honestly, inspired and encouraged, and we want to share 

8 some thoughts and potential approaches. And while the 

9 problems being discussed are clearly national in scope, the 

10 most effective housing solutions absolutely need to be 

11 developed locally. The needs in Charleston, South Carolina, 

12 are likely quite different from the needs in Phoenix, 

13 Arizona, and one size does not fit all. And we've been 

14 working on solving this challenge, but deeply understand 

15 people and properties at the neighborhood level. In order 

16 for this initiate to succeed, we'd argue that reliable 

17 community data is foundational, and advanced analytics are 

18 not a nice to have but they're a must have. 

19 In our work we know the vulnerable are not easily 

20 counted. The recent census challenges are just one example. 

21 But they are often not heard or understood -- but they 

22 absolutely can be. The data resources and methodologies 

23 used by the smartest and most successful companies in the 

24 world are absolutely available to help the government and 

25 community organizations serve the people who need the most 
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1 housing help. 

2 I mentioned the city of Charleston earlier, and they're 

3 working on a comprehensive plan looking ahead to 2030. But 

4 it's pretty hard to plan if you don't know where you are 

5 today. They were proudly building a few hundred units of 

6 affordable housing a year, but they didn't know the true 

7 need. By using the advanced tools that I mentioned earlier, 

8 they were able to learn several key things about Charleston. 

9 They learned they were never going to get to a fully 

10 stocked affordable inventory at the rate they were going. 

11 They were creating a couple hundred units a year, but we 

12 knew the need was 16,000 units. We were able to show 

13 specific needs by price point. It was no surprise that 

14 housing stock was deficient at 30 percent AMI, but it was 

15 surprising that at 50, 60, and 65 percent AMI there was 

16 sufficient inventory. But the other big need was at 80 

17 percent AMI, and we're quite sure it would be different if 

18 you were in Phoenix. And while this level of data at the 

19 city level is quite granular, we were actually able to focus 

20 on specific neighborhoods in Charleston. 

21 In summary, I'd agree with a few of the previous 

22 speakers. The data on the general need for housing to be 

23 equitable and affordable at the national level is crystal 

24 clear. But we would also say the specific needs at the 

25 local level are often extremely unclear. But this FHFA 
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1 effort needs clarity to be effective, and the resources are 

2 available. By matching people and properties, gaps can be 

3 identified, and policy makers can be armed with the evidence 

4 they need to develop policies and programs to serve those 

5 most in need of affordable quality housing in specific 

6 communities across the U.S. 

7 At the end of the day, you can't serve a community you 

8 can't understand. So we'd encourage Fannie and Freddie and 

9 FHFA to leverage advanced data analytics to ensure the 

10 effectiveness of this critical initiative. Thanks so much. 

11 LEDA BLOOMFIELD: Thank you. Our next speaker is 

12 Horacio Mendez from the Woodstock Institute. 

13 HORACIO MENDEZ: Good afternoon, everybody. I'm the 

14 President and Chief Executive Officer of the Woodstock 

15 Institute here in Chicago. We conduct research and advocate 

16 for consumer financial protection and community economic 

17 development. Our work seeks to combat structural economic 

18 inequities and to improve the quality of life in 

19 lower-income neighborhoods and communities of color. Our 

20 approach is collaborative. It includes community groups and 

21 activists, financial institutions, bank regulators, public 

22 officials, researchers, and others. 

23 Now let's not fool ourselves here. Changing the way 

24 our housing system works is difficult, and that's a gross 

25 understatement. We're trying to jackhammer through 
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1 calcified layers of unfortunate policy decisions that have 

2 become the foundation of the way things are, and the way 

3 things work. 

4 This goes back to our founding, and our constantly 

5 shifting definition of who is a member of society and who 

6 our social, economic, and political institutions were 

7 originally built to serve. HUD, FHA, Fannie, and Freddie 

8 are all part of the economic infrastructure that represents 

9 affirmative action towards concentrating wealth to White 

10 families. 

11 As an economist, I view these actions of these agencies 

12 and the industry they oversee as examples of market 

13 disruption. When a powerful entity, be it a company, a 

14 government agency, or a segment of society, intentionally 

15 distorts a market for the benefit of a specific few by 

16 getting in the way of a competitive market setting the price 

17 for a good or a service. Typically when that powerful 

18 entity is found guilty of disrupting the market to their 

19 benefit, there is some form of compensation for the damage 

20 that's done. 

21 In this case, though, we've institutionalized that 

22 disruption by saying, okay now, everybody stop. We have to 

23 all play by the same rules now. While some call that 

24 leveling the playing field, roughly translated in the 

25 communities we served, and then more honest language, it 
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1 means nobody can do unto us what we did unto them. The 

2 prosperity of our country is stifled when many of our 

3 residents lack significant access to capital and are unable 

4 to be financially resilient, invest in their futures, and 

5 contribute to the local economy and tax base. In economic 

6 terms, it's inefficient, and it costs our economy at least 

7 $16 trillion. 

8 Now let me emphasize that word resilience. The key 

9 risk in economic inequality is a loss of social resilience, 

10 which I define as our ability to cooperate and act 

11 collectively towards common goals. By this measure we've 

12 been in trouble for quite some time. In the last four 

13 decades alone we're growing poorer and more unhealthy as a 

14 top layer accumulates more and more wealth. This inequality 

15 has left us vulnerable to shocks that, under better 

16 circumstances, we would have been able to withstand. 

17 External shocks like COVID, or internal shocks like the 

18 murder of George Floyd. 

19 Now when the tide is rising and lifting all boats, 

20 you're less likely to complain about being in a dinghy 

21 versus a yacht. But that hasn't really been the case. As a 

22 result we can expect more of the kind of unrest we've seen 

23 recently, and as unrest over the inequitable distribution of 

24 resources, and the inequitable treatment of a large segment 

25 of our population grows, more resources go into controlling 
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1 the population than helping it, which is what we see when 

2 police budgets eclipse funding for social services and 

3 housing. 

4 So what can FHFA do about this right now? Well let's 

5 start with some low-hanging fruit and the simple stuff. We 

6 all know that homeowners of color have long struggled to 

7 accrue home equity due to a systemic undervaluing of their 

8 homes and their neighborhoods. There's no lack of research 

9 showing that current appraisal practices share much of the 

10 blame for this. As a result a large coalition of public and 

11 private organizations throughout Illinois have convened a 

12 housing policy task force to peel the layers of this onion. 

13 Over the course of the last year we've engaged with all 

14 of the stakeholders associated with formally regulating the 

15 appraisal process and appraisers. Ironically, although not 

16 considered a regulator of that sector, the GSEs have a major 

17 impact on the acceptability of appraisal reports generated 

18 for mortgage lending, and have as much impact on appraisals 

19 as the uniform standards and state regulations. 

20 One practice by the GSEs in particular works counter to 

21 the goals of building generational wealth for minority 

22 families. As we've worked to educate consumers about what 

23 appraisal discrimination looks like and how to report it, 

24 mortgage lenders recently informed us that we won't be 

25 moving the needle because of policies at Fannie and Freddie. 
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1 Specifically, if a borrower feels that their appraisal is 

2 inaccurate or biased and has the luxury and financing of 

3 affording a second appraisal, mortgage lenders have informed 

4 us that it is the policy of the GSEs to accept the lowest 

5 appraised value, thus institutionalizing the bias, hurting 

6 the buyer, the seller, and the surrounding community. Can 

7 you, please, stop that? 

8 A friend of mine who's a divorce lawyer once joked that 

9 he was considering a career change to work at HUD, FHFA, or 

10 one of the GSEs. His reasoning was that, as a divorce 

11 lawyer, he can only ruin one family at a time, but at one of 

12 these agencies, he can wipe out an entire neighborhood. 

13 Please, prove him wrong? Thank you. 

14 LEDA BLOOMFIELD: Thank you. Our next speaker is 

15 Shanta Patton, a real estate broker and HUD housing 

16 counselor. 

17 SHANTA PATTON: Thank you so much. I want to thank the 

18 Acting Director Thompson and FHFA for hosting this forum. 

19 It is an honor to contribute to the conversation. 

20 My name is Shanta Patton. I'm a real estate broker for 

21 the last 17 years, branch manager of NID Housing Agency of 

22 Southern Nevada, and a director for the National Association 

23 of Real Estate Brokers, the oldest minority real estate 

24 trade association in the country, with a focus on Black home 

25 ownership. 
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1 I would like to offer and add a few things to the 

2 conversation pertaining to home ownership in the BIPOC 

3 community, which encompasses Black, Indigenous, People of 

4 Color. The first thing is the environmental racism. When 

5 BIPOC buyers are encouraged to purchase in underserved 

6 areas, sometimes their housing options are blighted and 

7 depressed properties in areas of high climate risk, 

8 including flooding, hurricanes, and wild fires. 

9 We have witnessed over the years the impacts of 

10 appraisal gaps and historical redlining in minority 

11 communities. Due to this, it is difficult for buyers to 

12 qualify for renovation loans needed to bring these homes up 

13 to a living standard. 

14 Secondly, down payment assistance; we know that 

15 minority buyers need additional opportunities for down 

16 payment assistance. However, DPA typically comes with a 

17 higher interest rate. This defeats the purpose of the 

18 assistance if it increases the loan fees and the mortgage 

19 for the minority buyer. That makes no sense; if it really 

20 comes down to them being able to afford the home in order 

21 for them to get the assistance it costs them more money? 

22 We also need to put a greater encouragement for housing 

23 counseling. We know that 77 percent of buyers achieve 

24 credit score increases of up to 120 points after attending 

25 financial literacy counseling. So the need is great for 
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1 better partnership with housing counseling agencies. 

2 When it comes to loan officers, we also know that 

3 buyers work with people they like and trust. We know that 

4 in a minority community, specifically, it's important for 

5 them to work with people who look like them. The need to be 

6 intentional and make sure that we're putting great effort 

7 into bringing more minority loan officers to the community 

8 is one of the key ways that we can increase home ownership 

9 in those areas. 

10 Also, programming and branding; we need to be more 

11 intentional when we brand programs to make it very clear 

12 that these programs have been created for the BIPOC 

13 community. As minorities we've been conditioned to ignore 

14 things that have not been labeled specifically for us. 

15 Also, we understand that there's underwriting and credit 

16 guidelines that have been put in place to encourage racial 

17 disparities. 

18 And, finally, we need to remember that minority home 

19 ownership is truly like playing the game of Monopoly. Your 

20 opponent has already had 400 opportunities to go around a 

21 board before we were ever able to play. We've got to be 

22 intentional and united when we fight this crisis to increase 

23 home ownership in minority communities. Thank you so much. 

24 LEDA BLOOMFIELD: Thank you. We now conclude today's 

25 listening session on equitable housing finance plans. Thank 
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1 you for your time, your energy, and your willingness to 

2 engage with us on this difficult but important policy topic. 

3 We encourage any member of the public to submit written 

4 public input via FHFA's website or by mail. We ask for 

5 comments no later than October 25th. We appreciate and 

6 value your feedback. Thank you.