April 23, 2014
The Honorable Tim Johnson
Chairman
Senate Banking Committee
136 Hart Senate Office Building
Washington, DC 20510
The Honorable Mike Crapo
Ranking Member
Senate Banking Committee
239 Dirksen Senate Office Building
Washington, DC 20510
Re: The Termination of the Affordable Housing Goals in the Housing Finance Reform and Tax Payer Protection Act of 2014
Dear Chairman Johnson and Ranking Member Crapo:
As the U.S. emerges from the housing crisis, the fundamental architecture of mortgage markets is being decided – and the National Urban League and its allies in the civil rights and housing advocacy community believe few other issues will have so profound an effect on housing, neighborhoods, and the ever-widening racial wealth gap in America. Housing finance shapes how families are sheltered, their school choices, and a wide set of other opportunity structures. It provides access to a core tenet of the American Dream – homeownership – a dream that is critically at risk of being deferred for millions of working and middle class families under the current housing finance report bill.
The reform legislation introduced by you, if enacted, would radically change the way that most Americans buy homes. 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 or GSE reform. By repealing the affordable housing goals that have been in place since the early 1990s – and through a reduced government guarantee – we are extremely concerned that the Johnson-Crapo bill will lead to mortgage and other cost increases that make homeownership unaffordable for the working and middle-class Americans who have already borne the brunt of the impact of the foreclosure crisis, largely wiping out family wealth gained over the last decade.
For this central reason, the National Urban League intends to mobilize its membership and partners in opposition to this bill – or any subsequent housing finance reform legislation – that does not include affordable housing goals.
In October 2008, I testified before the Senate Banking Committee about what I refer to as the Financial Weapon of Mass Deception: the ugly, insidious and concerted effort to blame minority and low-to-moderate income borrowers for the nation’s economic woes. Today, that myth is, as it was then, an enormously damaging and far-reaching affront that wrongly shifts the culpability for the housing crisis from too much Wall Street greed and too little Washington oversight onto middle-class families on Main Street and Martin Luther King Boulevard. These are the citizens who were the primary targets of predatory lending and other practices peddled by Wall Street investors, yet who have also been blamed and exploited in efforts to undercut affordable housing goals and most notably the Community Reinvestment Act (CRA). While Wall Street investors were the major purchasers and investors of subprime loans – not Fannie Mae and Freddie Mac, Fannie and Freddie made convenient public scapegoats for the mortgage collapse of 2008. They too have much for which to answer, but their pending demise is not something to be welcomed or applauded. While we fully support the idea of GSE reform, we are unwavering in the belief that it should be reform – and not retrogression.
Click here to read the full letter.
