On the heels of our politcal commentary about the housing market options offered to Congress by President Obama today, has come a response. The response is a joint statement by virtually every civil rights group and organization for people of color in the nation. The response states.
CIVIL RIGHTS STATEMENT ON THE ADMINISTRATION’S REPORT ON REFORMING THE U.S. HOUSING FINANCE MARKET
WASHINGTON, Feb. 11—The following is a joint statement from civil rights organizations on the Obama administration’s report on reforming the nation’s housing finance market. Organizations issuing the statement include—National Council of La Raza, National Fair Housing Alliance, Center for Responsible Lending, The Opportunity Agenda, NAACP, National Coalition for Asian Pacific American Community Development, National Urban League, National People’s Action, the Kirwan Institute, Bazelon Center for Mental Health Law, PolicyLink and Poverty & Race Research Action Council. Senior staff of some of these organizations will conduct a conference call to offer further comments on the proposal and take questions at 2:00 p.m. EDT today. Details are below.
“In its report, the Administration pledges to ensure that all communities and families have access to capital needed for sustainable homeownership and a range of rental options. Of the three options that the Administration proposes, the first two, which call for complete and near-complete privatization, will entirely fail to meet this goal and will instead marginalize communities of color. Congress should reject these two options. The third option, offering catastrophic reinsurance, inspires more confidence than the first two, but lacks important details as to how it would serve all Americans well. As the debate moves ahead and final decisions are made, our civil rights organizations will fight to secure sound lending policies for all Americans, ensuring that the families who have long been poorly served by the market will finally have a fair shot.
“For decades, America’s housing finance system has operated on a ‘dual track’ in which factors other than a borrower’s creditworthiness affect the terms of his or her home loan. People of color and other underserved borrowers are routinely steered into substandard mortgages, even when their credit warrants a prime loan. A private secondary market helped drive this process. Full privatization would leave most Americans at the mercy of Wall Street and we know from experience the devastating results that would bring.
“The secondary mortgage market must instead provide safe, decent, and affordable housing for all, eliminate housing discrimination, and promote residential integration. Fair lending rules that protect against discrimination and deceptive practices should be at the core of reshaping the housing finance market. True reform must eliminate the dual-track structure that traps qualified families in a fringe credit market and must build a more secure and accountable secondary market, preventing future crises like the one that helped bring our economy to its knees.”
We agree that there is no question that some people of color will be adversely effected by a change in housing markets with the removal of Fannie Mae and Freddie Mac. We agree that there is a definite trend in the markets to place qualified borrowers, that are people of color, in higher cost mortgages. We agree that, as in the case of the sub-prime meltdown, deceptive practices are employed more against people of color disproportionately.
At the same time we disagree with the implied message that privatizing the housing markets and removal of Government intervention is a bad thing. We further disagree that politicians who choose some, or any, of the options presented to Congress by President Obama are doing a bad thing – as we feel the statement implies as well.
There is nothing unfair in stating that not everyone is entitled to own a home. Nor is it inherently biased to state that homeowners should be aware of whatever documents they contractually obligate themselves to.
It also seems insane, to us, to expect that in a fully privatized marketplace there would not be organizations that would provide fair housing options to people of color seeking a home. In fact we would expect that in a fully private marketplace organizations would be created, and supported by the very same organizations that made the above statement, to fill any void or biased practices. Which says nothing of ther fact that such unfair practices would lead the above organizations to sue for discrimination and bias in the marketplace.
We cannot imagine the NAACP (as an example) refusing to validate, recommend, or create an organization that seeks to provide fair market housing opportunities to people of color if no other institution was doing so in their opinion. We cannot fathom why some organizations imply that there is an inherent need for Government intervention at ever step in the process of home ownership.
“Fair lending rules that protect against discrimination and deceptive practices” are what the Governmemt should ensure via regulation and law. Competition should ensure that the best options are available to anyone that qualifies for home ownership. Lawsuits and boycotts can ensure that those not following the law and regulations do not prosper.
The inclusion of Government into the private market only results in actions taken that are based purely in political reward. Decades ago, under the Clinton Administration, the seeds of the current mortgage crisis were created. The easing of regulations to benefit unqualified lower income borrowers, via Fannie Mae, Freddie Mac, and direct Government action, led directly to the current fiasco. Once those regulations were eased, NO politician dared to change the system for fear of poltical reprisal – much like the case with Social Security. Those that did fell into the wrath of polticians and the media, as Rep. Barney Frank exemplified in July 2008.
2 weeks later Fannie Mae and Freddie Mac failed. To date there has been over $150 billion used to bailout Fannie and Freddie, with continued bailouts occuring every quarter ongoing.
The key to take from the 2nd video – 3:15 in the video – “That Bill made it out of the Senate Banking Committee with a Party line vote, all of the Democrats voted against it, but fearing that they didn’t have the votes to pass it Republicans didn’t even bring it up on the Senate floor.”
Politics trumping economic policy. Government intervention effectively ensuring that the public would eventually suffer. Is this really the best option going forward?
We hope that the civil rights organizations that have made the joint statement at the top of this article do get involved in whatever changes are made to Government intervention in the housing markets. Yet we further hope that they realize that continuing to allow politics to trump sound economic policy cannot be entertained in the future.
**We have asked for comment from the NFHA and NCLR on several questions we have asked these organizations. We also hope to ask for comment from the NAACP, National Coalition for Asian Pacific American Community Development, National Urban League, Poverty & Race Research Action Council, and several other organizations about this press release. We will provide the VERBATIM response as we receive them.**
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