Scott, Tillis, and Other Senate Banking Republicans Raise Concerns with Race-Based Housing Subsidies
WASHINGTON– This week, U.S. Senator Tim Scott (R-S.C.) joined Thom Tillis (R-N.C.), and other Republicans on the Senate Banking Committee in a joint a letter to the Federal Housing Finance Agency (FHFA) Director Sandra Thompson raising significant concerns with the Equitable Housing Finance Plans that contemplate race-based housing subsidies.
The Equitable Housing Finance Plans announced on June 8, 2022 were developed by Fannie Mae and Freddie Mac (the GSEs) at the direction of the FHFA. The GSEs’ recently-released proposals would use Special Purpose Credit Programs to award race-based subsidies in the form of down payment assistance, lower rates, and reimbursements for appraisals.
“The administration’s proposal seems intent on repeating the mistakes of the recent past. It is worth recalling the GSEs’ central role in the 2008 financial crisis,” wrote the senators. “Against this backdrop, we urge FHFA to reconsider these affirmative action housing subsidy plans for the following reasons: First, the plans are manifestly unfair and should be unconstitutional. Discrimination on the basis of skin color is simply wrong. That remains true even when intended to benefit minorities.
“Second, the plans risk setting up another generation of minority borrowers for failure. Black and other minority homeowners lost significant wealth as a direct result of lax underwriting by the GSEs before the crisis,” the senators continued. “Third, the plans raise significant legal concerns. By statute, FHFA’s mandate as conservator is to conserve and preserve each GSE’s assets and restore it to a sound and solvent condition. No law authorizes FHFA to use a GSE’s assets to pursue affirmative action in housing.”
“Fourth, the plans are a return to GSE mission creep. The GSEs’ charters limit them to supporting the secondary market. These plans, however, contemplate that the GSEs would push into the title insurance market (through bulk purchases and attorney opinion letters), the appraisal market (through new valuation options), and even the lending market (through GSE-funded down payment assistance and GSE-provided homebuyer education). Finally, the plans needlessly politicize the GSEs. The administration is conscripting the GSEs as instrumentalities of its progressive racial equity agenda to achieve outcomes it cannot achieve legislatively or even legally,” the senators concluded.
The letter was also signed by Ranking Member Pat Toomey (R-Pa.) and U.S. Senators Richard Shelby (R-Ala.), Mike Crapo (R-Idaho), Mike Rounds (R-S.D.), John Kennedy (R-La.), Bill Hagerty (R-Tenn.), Cynthia Lummis (R-Wyo.), Jerry Moran (R-Kan.), Kevin Cramer (R-N.D.) and Steve Daines (R-Mont.).
Read the full letter here.