Posted by Jim Lindgren:
Remembering the Attitude of the Times.
http://volokh.com/archives/archive_2009_05_17-2009_05_23.shtml#1242798791
In the course of Steven Malanga's [1]history of government policy
promoting home ownership, he describes the milieu in the early to
mid-1990s. Here is a nice example I found from the May 28, 1993
Washington Times:
Low-income homebuyers, especially blacks, Latinos and other
minorities, are being wooed in an unusual ad campaign started this
week in the Washington and Baltimore areas.
Called "Opening Doors to a Home of Your Own," the multimedia
advertising blitz runs through the July Fourth weekend and is the
work of the Federal National Mortgage Association (Fannie Mae).
The first organization listed as offering services in the brochure is
the ACORN Housing Association.
Many of 45 area mortgage lenders and 35 local nonprofit counseling
agencies are offering bilingual support for what the company
anticipates could be as many as 100,000 calls from low-income
potential home buyers in the region.
Specifically targeted are home buyers earning less than $59,200,
the median family income in the Washington area. Half of the area's
4 million people make less than that amount, and there are more
white families in that category than minorities.
But because proportionately more of the 1.5 million black, Latino
and other minorities are in even lower income brackets, Fannie Mae
sees the program as "positive outreach" into a community "too long
ignored by mortgage lenders."
"We're not fooling ourselves," James A. Johnson, Fannie Mae
chairman and chief executive officer, said at a press conference
last week to announce the program. Speaking at the firm's
Washington headquarters, the former Walter Mondale staff assistant
cautioned, "The program can't be all things to all people.
"I believe there is discrimination in the housing industry," he
told reporters, and that minorities are denied home mortgage loans
"simply because of who they are."
"Any time we see it," Mr. Johnson said, "we're going to do
everything we can to end it."
One lender taking up the offer to participate was American Home
Funding of Richmond, which placed 22,000 mortgage loans last year
totaling $2.4 billion. It has 600 employees.
Paul Reid, president and chief executive officer of American Home,
said, "We can't say enough" about the new program. American Home
sold mortgages totaling $40 million last year to minority and
low-income homebuyers, Mr. Reid said, "and we're convinced that
programs like this are the way of the future in real estate."
In fact, he said American Home recently began recruiting at
historically black colleges and other universities to hire new
minority staffers to join 300 loan officers throughout the area,
including a bilingual staff at its Annandale branch. . . .
Under laws enacted last year, lenders convicted of discriminating
against blacks, Latinos, women and others will lose access to the
secondary mortgage market, [Laura Duenes of Citibank] observed.
"Until now, we've never seen mortgage lenders, their staffs, or
Realtors, brokers or anyone else dealing in real estate who
discriminates against minorities suffer any penalty.
"Now they will," Ms. Duenes said, "and it's about time."
Part of the rush to embrace minorities and low-income people "is
directly a result of that legislation," observed Chris Lewis,
director of bank and housing policy at the Consumer Federation of
America (CFA).
Congress acted last year to codify federal obligations to Fannie
Mae and the Federal Home Mortgage Corp. (Freddie Mac), both of
which were chartered by Congress but now operate independently. In
so doing, he said, "The legislation forced the secondary market to
either help minorities or lose its federal backing."
CFA, an advocacy umbrella group of 240 organizations representing
nearly 50 million persons, closely monitors the housing market, Mr.
Lewis said. . . .
The sixth-largest corporation in America, Fannie Mae last year
financed 3 million home loans valued at more than $250 billion.
"The question," Mr. Lewis said, "is why are taxpayers subsidizing
giant corporations that discriminate against American taxpayers?"
CFA strongly supported Congressional mandates requiring that by
1994 mortgage lenders target at least 30 percent of their business
to minorities and poorer home buyers.
The legislation "could work a revolution of sorts" in the way
poorer people and minorities are treated by the real estate world,
he said.
Lenders now must track mortgage business by a borrower's race,
ethnicity, geographic location and other variables. By August, the
Department of Housing and Urban Development will report to the
nation on the performance of all mortgage lenders.
"That's when the mortgage community will have to face a new
reality," he said. Banks not reaching the 30 percent requirement
could find themselves losing federal backing in the secondary
market in 1994, "a possibility that has the mortgage-financing
world on the brink of something we've really not seen before in
this country." . . .
Not surprisingly, when the crisis hit Citibank was perhaps the most
insolvent of the mega-commercial banks. And American Home, the
organization so thrilled with the new program [2]went out of business
in the first big week of the credit crisis, August 2, 2007.
References
1. http://volokh.com/archives/archive_2009_05_17-2009_05_23.shtml#1242797168
2.
http://ml-implode.com/imploded/lender_AmericanHomeMortgageAmericanBrokersConduit_2007-08-02.html
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