The National Urban League, the nation’s largest historic civil rights and urban advocacy organization, has serious concerns regarding proposed housing reform legislation. There are plans to mobilize against it unless it includes provisions ensuring that working- and middle- class families have access to affordable homeownership.
This legislation would radically change the way most Americans buy homes. The so-called Johnson-Crapo bill would lead to cost increases making homeownership unaffordable for many families who already have borne the brunt of the housing crisis as their family wealth was wiped out by foreclosures and plunging home values.
Most alarming is that the Johnson-Crapo draft measure does not do enough to promote affordable housing for ownership. This is a fundamental issue that cannot be overlooked, underestimated or relegated to negotiation on the Senate floor. It needs to be included — now — as a core provision in any housing finance reform.
The Senate Banking Committee is expected to vote next week on legislation that could accelerate the already significant post-recession decline in homeownership among communities of color and all working and middle-class communities. It would wind down Fannie Mae and Freddie Mac and replace them with a new agency, the Federal Mortgage Insurance Corporation. The new agency would end the federal affordable housing goals that helped boost the percentage of African American homeownership to a pre-recession all-time high of 50 percent.
The most recent data from the Home Mortgage Disclosure Act clearly demonstrates that families of color have already been cut out of the housing market and the situation will only worsen if the Johnson-Crapo legislation is enacted. The HMDA data found that in 2012 there were 1.3 million conventional mortgage loans originated in the United States, but Asian Pacific Islanders received only .2 percent or 10,611 of the loans, African Americans received 2.3 percent or 29,405 loans and Latinos received 5.3 percent or 69,217 loans. The proposed legislation does not adequately address this ongoing inequity nor does it provide an inclusive way forward for working- and middle-class communities to participate in the future housing market.
A key area of concern for us is also the degree to which banks are expected to make loans in underserved communities. It is unwise to eliminate affordable housing goals and expect the market to correct itself. The Johnson-Crapo legislation does not take proactive steps to make sure lenders are serving qualified borrowers in all markets. Families of color, expected to represent seven out of every 10 families formed in the next decade, would have homeownership rates that are far below the national average. Homeownership rates among people in their 30s are at their lowest in a generation, and loans are often more expensive in both rural and urban areas.
While fully supportive of the idea of Government Sponsored Enterprise reform for Fannie Mae and Freddie Mac, the National Urban League is unwavering in the belief that it should be reform — and not retrogression. The GSEs are the most effective institutions for providing liquidity to the mortgage market for qualified low- and moderate-income borrowers.
The National Urban League and its allies cannot support the bill as designated, and strongly urges the committee to take full advantage of this opportunity by passing legislation that will help ensure access to affordable mortgage credit for all creditworthy borrowers, while at the same time protecting taxpayers from bearing the cost of a housing downturn. Maintaining reasonable and measured affordable housing goals for the GSEs will be an important step towards that goal.
We urge the Senate to recognize the impact of Johnson-Crapo on the middle class in America and not to make homeownership a luxury reserved for the fortunate few, while all others become renters. In these times of wage stagnation, declining numbers of good-paying jobs and increasing debt costs for education, shifting the risk and burden of housing finance onto regular working- and middle-class families is a bad idea. We must work toward measures that end — not expand — this trend of increasing costs. When will we stop asking working- and middle-class families to pay for a financial crisis that they did not cause — and instead support their efforts to rebuild, as we have with Wall Street?
Marc Morial is president and CEO of the National Urban League. He served as mayor of New Orleans from 1994 until 2002.
