HUD and FHFA join forces on fair housing enforcement

MOU represents formal, unified enforcement of Fannie Mae and Freddie Mac

The Department of Housing and Urban Development and the Federal Housing Finance Agency today announced that they will work hand-in-hand to strengthen, coordinate and increase fair housing enforcement of Fannie Mae and Freddie Mac.

HUD and the FHFA entered into the first-of-its-kind memorandum of understanding to enhance their enforcement of the Fair Housing Act and increase oversight of the entities FHFA oversees: Fannie Mae, Freddie Mac and the Federal Home Loan Banks. The agreement will promote information sharing, coordination on investigations, compliance reviews and ongoing monitoring of the GSEs, according to a press statement.

“The agencies anticipate that the MOU will lead to stronger oversight that will help advance vigorous fair housing enforcement that can begin to redress our nation’s history of discriminatory housing practices,” the agencies said in a press statement.

HUD Secretary Marcia Fudge said that strengthening the enforcement of fair housing and fair lending requirements is part of the effort to improve racial equity, which Biden has made central to his agenda.

“Stepping up our collective fair housing oversight of their activities will make an enormous impact on lives and communities,” said Fudge. “We are prioritizing the work required to remove barriers that have created separate and unequal neighborhoods and limited access to housing opportunity and wealth building.”

How increased regulation presents a huge opportunity for lenders

HW+ Managing Editor Brena Nath recently spoke with iEmergent CEO Laird Nossuli about the opportunities presented by stricter fair lending regulations.

Presented by: iEmergent

FHFA’s acting director, Sandra Thompson, reiterated her commitment to racial equity in a statement which accompanied the announcement.

“FHFA does not tolerate housing discrimination,” said Thompson. “Today’s MOU allows FHFA and HUD to share information and resources to improve fair lending oversight over the mortgage finance system. I am pleased to work with Secretary Fudge on the important work of fulfilling the Fair Housing Act’s promise of equal access to safe, decent, and affordable housing for all Americans.”

Biden appointed Thompson to lead the FHFA following the ouster of the former FHFA director, Trump-appointee Mark Calabria.

In her first statement as acting director, Thompson drew attention to the “widespread lack of affordable housing and access to credit, especially in communities of color.”

In her tenure so far, Thompson has eliminated an adverse market fee for refinancings and required agency servicers to follow a new foreclosure rule a full month before it went into effect. On August 11, FHFA announced that Fannie Mae would use rental history in its underwriting process, which the agency said will allow borrowers with little credit history to qualify for federally backed mortgages.

David Dworkin, CEO of the National Housing Conference, said the agreement is a “major change,” and questioned why the change has taken so long. The understanding will allow HUD to assess how the GSEs’ practices could be driving racial disparity.

“The difference in underwriting requirements and borrowing costs, like loan-level price adjustments, may very well have a disparate impact from the broader market, when compared to lenders making loans they hold in portfolio, and we don’t know why that is,” said Dworkin.

“But it’s now a question they’re going to have to answer,” Dworkin said. “This is no longer an intellectual exercise.”

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