Last week, the regulator for Fannie Mae and Freddie Mac, the Federal Housing Finance Agency (FHFA), issued several orders impacting the Enterprises and residential mortgage markets. Some of these orders were consistent with past positions NHC has taken, and others are at odds with the longstanding positions we have held. These decisions are part of a broader agenda to reduce the regulatory role of government and eliminate policies that support so-called DEI policies promoting “diversity, equity and inclusion.” DEI has become a pejorative for some and is often used as a catch-all phrase that is applied far too broadly.
The focus of this note will be on the lender programs that expand homeownership, known as Special Purpose Credit Programs (SPCPs). With all of the attention being paid to efforts to end DEI, it’s worth noting that NHC has no DEI policies or procedures. That’s because diversity, fairness, and collaboration across all lines has been intrinsic to our mission for 94 years. For NHC, diversity is a verb. It is how we do business to best serve an unlikely coalition of diverse members with diverse constituencies.
Diversity doesn’t just mean racial diversity for us. We are also sectorally diverse, including bankers, mortgage lenders, housing developers, advocates, and housing finance authorities. We continue to seek to improve our diversity both politically and geographically. We seek to recruit new board members from the Midwest and Southwest, where we are underrepresented. Like an alloy that is stronger than its individual component metals, diversity is a concept that results in more than the sum of its parts.
In FHFA’s Directive No. 2025-145, the agency terminates the Special Purpose Credit Programs (SCPCs) at Fannie Mae and Freddie Mac (the Enterprises). In the directive, U.S. Federal Housing Director William Pulte “determined that the current level of support for SPCPs is inappropriate for regulated entities in conservatorship” noting that Enterprise SPCP programs provide “underwriting flexibilities and/or financial support such as down payment and closing cost assistance.” However, the directive makes clear that the “Enterprises may comply with any contractual provisions regarding prior written notice to lenders.”
That’s an important distinction. NHC strongly believes that the federal government should not be in the business of dictating to private companies how they expand their markets or manage their employees, as long as they are following the law. In the case of Fannie Mae and Freddie Mac, the lines are blurred since they are under federal conservatorship, and multiple FHFA directors in the Obama and first Trump administrations restricted the Enterprises ability to offer these kinds of programs as inconsistent with their conservatorship.
What it is essential is that the Enterprises continue to be allowed to purchase loans that meet the underwriting criteria of Home Possible and HomeReady, even when they are part of a lender’s SPCP. This is because SPCPs are specifically permitted under the Equal Credit Opportunity Act and are an essential component of expanding the American Dream to all Americans who are qualified to buy a home with a safe and sound mortgage, as defined by the Ability to Repay provisions of the Qualified Mortgage Rule.
Expanding homeownership and adding to our much needed stock of affordable rental housing are significant goals for NHC. When we first proposed creating the Black Homeownership Collaborative, I was frequently asked why we focused on Black homeowners. It’s a fair question. The reason is simple. The generational wealth of the black community that started during the Civil Rights Era has seen a dramatic decline within the last two decades. White millennials with the same level of education, same level of income, and same career path continue to outnumber their black counterparts in building generational wealth. This can be attributed to a wide range of issues, including access to mortgages, homeownership education, and family financial support.
Part of the reason black homeownership fell is that so many Black homebuyers were targeted by predatory lenders for equity-stripping schemes that destroyed their home’s value and left them on the edge of a cliff as the housing bubble burst. As the recession spread, a disproportionate share of them drowned in underwater homes. The generational impact of this disaster is stunning. Well over a million black millennials who are mortgage ready today have shown little interest in buying a home of their own. Having watched many of their parents, aunts, uncles, and neighbors lose their homes, it’s little wonder. They have no interest in listening to a sales pitch about housing being the most effective wealth generator, despite the fact that it is true. It’s hard to blame them, although many do.
The 3by30 initiative is an example of NHC’s approach to diversity as a verb. NHC is busy preparing for the fourth anniversary of the Black Homeownership Collaborative, more commonly known as the 3by30 initiative, as it seeks to create 3 million net new Black homeowners by the end of 2030. There, we will announce a bold new marketing initiative to help achieve this goal. The 3by30 Steering Committee is led by the National Housing Conference, the National Urban League, the Mortgage Bankers Association, the National Fair Housing Alliance, the National Association of Real Estate Brokers, the National Association of REALTORS®, the NAACP, and HOPE Enterprise Corporation, with research by the Urban Institute. It is an example of the many diverse coalitions that have been a part of NHC’s approach for nearly a century.
Special Purpose Credit Programs are an important tool to ensure we have the appropriate products available to serve diverse markets. While the Enterprises may not be able to offer their own SPCPs, they should not be inhibited from purchasing qualified loans from lenders that do.
Dr. Martin Luther King, Jr., when he was jailed in Birmingham, Alabama in 1963, wrote that all of us are “caught in an inescapable network of mutuality tied in a single garment of destiny. Whatever affects one directly affects all indirectly.” This is certainly true of efforts to make America economically stronger by expanding homeownership to those who have been denied the opportunity in the past. Walter Reuther, a long-time member of NHC’s Board of Governors, provided the bail money to get Dr. King released when then-Attorney General Bobby Kennedy feared that King might not survive his incarceration. It is part of NHC’s long and rich history and tradition, of which we are all called upon to uphold. The Black Homeownership Collaborative and our work on the 3by30 initiative are an integral part of that tradition, and lender SPCPs are an important tool to achieve our objective.