On Oct. 25, The Pew Charitable Trusts sent comments to the Federal Housing Finance Agency in response to the agency’s request for input on the equitable housing finance plans for Fannie Mae and Freddie Mac. Pew’s letter highlighted opportunities to examine and improve equity in home financing.
Although most Americans use mortgages when buying homes, forthcoming Pew research suggests that tens of millions have used nonmortgage alternative financing arrangements, such as land contracts and rent-to-own. These arrangements often pose risks for buyers, such as hidden costs, threat of eviction, and loss of equity, and evidence shows deep disparities in usage across race, ethnicity, and geography. These challenges are particularly acute for people buying manufactured homes, a key source of housing for low- and moderate-income Americans.
Pew encouraged Fannie and Freddie to maintain a focus on the ways in which people finance their homes, particularly in communities where mortgage access is limited; address the disparities associated with various financing products; and consider four main objectives as they develop their plans:
- Evaluating housing quality.
- Understanding the rapidly expanding lease-purchase market and its outcomes.
- Conducting research on manufactured housing loan options and making the data publicly available.
- Assessing the small mortgage market and developing a pilot program to learn about lender and borrower challenges.