Closing Doors to the American Dream - II
Fannie Mae and Freddie Mac Still Failing First-Time Homebuyers

While much of the nation enjoys record homeownership levels, the American dream of owning a home remains beyond the grasp of millions of low- and moderate-income and minority households, particularly African-Americans and Hispanics. More can and should be done.

Congress has directed the housing GSEs, Fannie Mae and Freddie Mac, to lead the market in helping low-income and minority households buy homes. Recognizing that affordable housing loans tend to be less profitable, Congress provides the GSEs an annual subsidy of $10.6 billion according to an estimate by the Congressional Budget Office in 2000. This subsidy is supposed to be used to put more people into their own homes. But according to data submitted to the Department of Housing and Urban Development (HUD) by Fannie Mae and Freddie Mac they continue to do a poor job of funding mortgages for first-time homebuyers, all the while using more than a third of their $10.6 billion subsidy to increase profits and boost their stockholder returns. Read More

		BY A SUBSTANTIAL MARGIN, THE GSEs HELP REPEAT HOMEBUYERS MORE THAN FIRST-TIME HOMEBUYERS The FM Policy Focus Report "Closing the Doors to the American Dream II – Fannie Mae and Freddie Mac Still Failing America’s First-time Homebuyers" explains how the GSEs: Support three times as many repeat homebuyers as first-time homebuyers; As part of their overall home loan purchases between 1996-2002, purchased a declining percentage of loans made to first-time homebuyers; Together buy less than 10% of loans made by private lenders to first-time African-American and Hispanic homebuyers; and In 2002 bought nearly twenty times more loans made to absentee landlords, vacation homes, and second mortgages than first-time homebuyer loans. Read More