U.S. Sen. Richard Shelby (R-Tuscaloosa) joined his fellow Senate Banking, Housing and Urban Affairs Committee GOP colleagues in a letter opposing a new plan proposed by the Federal Housing Finance Agency (FHFA).
The proposal, called the Equitable Housing Finance Plans, was developed by federally-backed home mortgage companies and government-sponsored enterprises (GSEs) Freddie Mae and Fannie Mac.
According to a release, the proposal would use Special Purpose Credit Programs to distribute race-based subsidies to black, Latino or indigenous homebuyers. The subsidies would consist of down payment assistance, lower rates and reimbursements for appraisals.
In the letter that was sent to FHFA director Sandra Thompson, the Republican senators took issue with entrusting Freddie Mae and Fannie Mac to such a subsidy program given the institutions’ actions in the 2008 financial crisis.
Alongside the expressed economic concerns, the GOP committee members decried the proposal for excluding certain races from participating in the program.
“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.”
The letter’s authors went on to warn that the proposal could inadvertently place minority homebuyers on a risky financial footing.
“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 Republicans 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.”
Shelby was joined by U.S. Sens. Thom Tillis (R-N.C.), Pat Toomey (R-Pa.), Mike Crapo (R-Idaho), Tim Scott (R-S.C.), 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.) in sending the letter.
Dylan Smith is a staff writer for Yellowhammer News. You can follow him on Twitter @DylanSmithAL
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