Fannie Mae, Freddie Mac Probe
Inman News Features
March 02, 2000
The U.S. Department of Housing and Urban Development is investigating whether Fannie Mae and Freddie Mac mortgage loan policies discriminate against African Americans, Latinos and other minorities.
African Americans may pay higher mortgage rates or may be turned down for mortgages in greater numbers than other groups, the Washington Post reported today.
"The absence of active involvement by Fannie Mae and Freddie Mac in these markets limits the opportunities for African American families to get conventional mortgages," William Apgar, HUD's housing commissioner, told the newspaper.
The federally chartered Federal National Mortgage Association, known as Fannie Mae, and the Federal Home Mortgage Corp., known as Freddie Mac, buy home mortgage loans from lenders and banks, allowing lenders to make more loans.
Lower loan-buying rates by the agencies in certain groups of people, however, means higher costs and rejection rates for those groups.
Fannie Mae and Freddie Mac officials ackowledged they had lower loan rates for minority groups, but claimed HUD was overstating the numbers and didn't acknowledge the agencies' programs to help minorities.
Freddie Mac officials told the paper they are barred from buying loans with down payments of 20 percent or less unless private mortgage insurance has been acquired.
Each agency gets huge tax breaks, low borrowing costs and other benefits and were chartered to increase U.S. homeowner rates.
Overall, U.S. homeownership rates are at record highs of about 67 percent. African-American and Latino ownership rates are at less 50 percent but have been growing in recent years.
Banks and lenders made more than 8 million loans in 1998 for mortgages and refinancings, with 5 percent going to African Americans.
But 3.2 percent of loans bought by Fannie Mae were for African Americans, while Freddie Mac had a 3 percent rate.
The Post reported that loan buying among Asian Americans was at an above-average rate that helped hides a below-average rate for other minority groups. ***
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