Skip to main content

  • Comment Detail

  • Date: 05/22/24
    First Name: Dr. Benjamin Franklin
    Last Name: Chavis
    Organization: N/A
    City: Washington
    State: N/A
    Attachment: N/A
    Number: 2024-N-5

  • Comment

    As a former public policy maker, housing advocate, and community leader this communication express thoughts regarding Freddie Mac’s request to purchase second mortgages. This proposal, although well intended, should be paused to provide more time to study the potential adverse exacerbation of the availability of homes to vulnerable and underserved communities.

    We have a housing crisis in America. The rapidly increasing costs of housing are denying millions of Americans, particularly African Americans and other minority groups, the opportunity to become homeowners. It would not be an exaggeration to describe the housing market as “separate and not equal.” Rather than confront the obvious, this proposed rule will enrich those with significant home equity, making it more difficult for others to purchase a home.

    A recent study by the National Community Reinvestment Coalition established that African American and Latino borrowers are receiving loans to purchase homes at significantly lower rates than white borrowers. Just 45% of African Americans are homeowners, as compared to three-quarters of white families.

    It is not clear if Freddie Mac’s proposal will potentially primarily benefit the homeowners who have built up equity — the people who had enough equity to buy homes during the low interest rates of the COVID era. It is not clear if this will benefit those who are still struggling to make their monthly rent payments and save up for their first home purchase.

    Home prices have surged 54% since 2019. Will this proposal lower prices? More studies should be conducted by community-based organizations to ensure that this proposal does not drive prices even higher.

    Differences in homeownership rates, home values, housing returns, and distressed home sales have already contributed to large racial gaps in housing equity wealth. The average white household and the average household of any other race already possess more housing equity wealth than the average Black and Hispanic households, no matter the age of the household head. The average white household whose head is younger than 35 has $30,000 and $20,000 more in housing equity wealth than the average Black or Hispanic household in that same age group. By the time household heads are 55 or older, these gaps will have widened to $175,000 and $145,000, respectively.

    Working-class and first-time homebuyers need a housing policy that makes homeownership more affordable, not less affordable. We need to make sure that enabling Freddie Mac to buy second mortgages for those who already owns high end homes with significant equity does not impact its ability to assist first-time low-income home buyers.

    Dr. Benjamin Franklin Chavis Jr. activist, author and journalist