Originally Posted by The Barbarian
Bush Minority Homeownership Plan Rests Heavily on Fannie and Freddie
When President Bush announced his Minority Homeownership plans last week in Atlanta, his top priorities were new federal programs: a $2.4 billion tax credit to facilitate home purchases by lower-income first-time buyers, and a $200 million national downpayment grant fund.
But none of the new federal programs--if passed by Congress--will come even close to achieving the 5.5 million-household increase in minority homeownership the President set as his target.
Instead, most of the heavy lifting was assigned to two mortgage market players that have sometimes come under fire from Bush administration officials and Congressional Republicans: Fannie Mae and Freddie Mac.
Fannie's and Freddie's commitments are the bedrock core of the President's ambitious plans
--but didn't get the headlines. Fannie Mae agreed to increase its already substantial lending efforts to minority families by targeting another $260 billion of mortgage purchases to them during the next nine years. Freddie Mac agreed to buy an additional $180 billion in minority-household home loans during the same period.
Besides its $180 billion mortgage purchase commitment, Freddie Mac gave President Bush a promise to implement a 25-point program aimed at increasing minority homeownership. Some of the points were cutting-edge. For example, as part of an effort to remove the fear of financial loss from first-time minority home buyers, Freddie committed itself to "explor(e) the viability of equity assurance products to protect home values in economically distressed areas."
Pressed for details on "equity assurance" by RealtyTimes, Freddie Mac vice president Craig S. Nickerson said the idea is still at an embryonic stage, but might involve limited guarantees or insurance coverage to protect buyers from the possibility of loss of their initial equity stakes should property values in their neighborhoods decline.
"Thanks to our policies, home ownership in America is at an all-time high." ~ George Bush, 9.2.2004, RNC acceptance speech