Housing Regulator Nominee Will Have The Power To Reshape Homeownership In America

Sep 17, 2021
Originally published on September 17, 2021 6:25 pm
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LEILA FADEL, HOST:

The Biden administration has a remarkable opportunity to reshape homeownership in America. In the coming days, administration officials are expected to announce the nomination of a key regulator who will have a lot of power to change the $11 trillion U.S. mortgage market. To discuss, we're joined now by NPR's Chris Arnold.

Hi, Chris.

CHRIS ARNOLD, BYLINE: Hey, Leila.

FADEL: So, Chris, key housing regulator - tell us about this powerful position.

ARNOLD: Well, the administration is close to announcing its nominee for the director of the Federal Housing Finance Agency. Now, I know a lot of people are saying, what is that guy? I've never heard of that. But it controls Fannie Mae and Freddie Mac, and they are at the heart of the massive multitrillion-dollar U.S. mortgage market. They have a lot of control over who can qualify to get a mortgage and for what cost. And homeownership, we know, is the most powerful way that Americans build wealth over their lifetimes. And because of rules that were put in place after the Great Recession, the head of this agency has almost unilateral control to change policies or launch all kinds of new initiatives.

FADEL: OK, so who are we hearing might be the nominee?

ARNOLD: Well, you never know with these things. But sources tell me it's between the acting director, Sandra Thompson - she's already been at this agency, and before that, she was a banking regulator working in risk management and consumer protection, so lots and lots of years inside of government. The other is Mike Calhoun. He's the longtime head of the nonprofit Center for Responsible Lending - so also decades of experience, but more of a watchdog pushing for change from the outside. Neither had a comment. But whoever it ends up being, they're going to have a lot of powerful levers that they can pull to reshape homeownership.

FADEL: OK. You say reshape homeownership. Give us some examples of what could be done here that would make a big difference.

ARNOLD: Honestly, there are just so many things, but OK. Take the 30-year mortgage that everybody knows. That's pretty outdated. You know, people move more than they used to. They don't build up much equity in five or 10 years in that mortgage. And there are ways to make 15- and 20-year mortgages much more affordable that make a lot more sense for people. You could do things like tackle climate change - right? - I mean, better mortgage rates if you have solar panels on the roof and stuff like that. They could help the lowest-income homeowners in America - you know, people in mobile home parks - get lower-cost loans. And, of course, another really big one that folks - people talk about lately is racial inequities in housing.

FADEL: Yeah. I mean, one study after the next study confirms the racial disparity in who gets a mortgage and who doesn't. So what changes could we see there?

ARNOLD: I mean, the divide between Black and white homeownership rates - it's, like, the biggest since the 1960s, so it's really bad. Andre Perry with the Brookings Institution - he studies this. He says there's a lot that Fannie and Freddie could do without having to go through Congress.

ANDRE PERRY: I'm excited because if Biden is serious about closing these racial wealth gaps, about improving homeownership rates, he'll find a leader that will make the necessary changes.

ARNOLD: One thing Fannie Mae has already just done is they'll be looking at, you know, do people pay their rent to their landlord on time? It's, like, a new metric. Many other things could be done, though, too, Leila - money to help with down payments. And both of those things would help many people but particularly Black and Latino homebuyers because they tend to have less family wealth.

FADEL: So whoever gets picked will be facing Senate confirmation, a Democratic nominee. So what are conservatives saying?

ARNOLD: I talked that with - about that with Ed Pinto with the conservative American Enterprise Institute. He worries, look; you know, what's been tried before often hasn't worked.

ED PINTO: When the federal government tries to make housing more affordable, they do it by making it easier to get loans. That just drives prices up.

ARNOLD: But Fannie and Freddie could help more homes to get built - you know, loans to homebuilders and help them buy land. So there's all kinds of things that could happen. But a lot does depend on what the new director wants to focus on and do.

FADEL: NPR's Chris Arnold.

Thank you.

ARNOLD: Thanks, Leila.

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