The initiative from the two federally backed home mortgage companies announced Wednesday is the most sweeping overhaul since the housing crash in 2008. Some of the big-ticket items exclusively reviewed by USA TODAY include assistance with down payments, reserve funding for homeowners' emergencies and lower mortgage insurance premiums.
Fannie Mae and Freddie Mac are also rolling out a new credit reporting system that factors rent payments into creditworthiness scores, one of the biggest systemic barriers experts say keep renters of color from being able to purchase a home.
"It's really powerful, almost like the government is owning the problem," said Naa Awaa Tagoe, acting deputy director for the Division of Housing Mission and Goals at the Federal Housing Finance Agency, the independent regulatory agency that oversees the secondary mortgage market, including Fannie Mae and Freddie Mac. "This is Fannie Mae and Freddie Mac saying, 'Yes, there is an issue with equity in housing finance, and these are the steps we need to take to address them.'"
The three-year strategy also laid out plans to increase fairness in the underwriting process, address appraisal disparities in multifamily housing, and finance permanent supportive housing programs primarily geared at providing housing for people experiencing homelessness.
As part of the effort, Freddie Mac is expected to issue $3 billion in affordable housing bonds this year.
By 2024, Freddie Mac wants to fund the construction of 30,000 new multifamily units that allow credit-building for renters, accept housing choice vouchers and are designed inclusively for people with disabilities. They want to make the credit-building program available to 300,000 units.
The lender also wants to finance loan offerings in underinvested communities and neighborhoods at risk of losing affordability.
By 2024, Fannie Mae has a target of 140,000 consumers completing the first-time homebuyer process with any provider and 90,000 completing Fannie Mae's course.
Some of the measures already have been piloted. From September 2021 to May, about 2,000 applicants have benefited from Fannie Mae's credit reporting system that takes positive rental payment history into account for building creditworthiness. About 50% of applicants were racial minorities.