According to the National Association for the Advancement of Colored People, “the Corker-Warner bill is a threat” to the American middle-class regardless of race, but will have a higher impact on communities of color.
The association maintains the bill represents a public policy that offers little assistance to troubled homeowners and “places new roadblocks” to future access to affordable housing and homeownership, which is an important vehicle for creating and sustaining wealth, especially for communities of color in the aftermath of the housing collapse of 2007.
“Any restructuring of the housing finance industry must sustain homeownership opportunities” so next generations can prosper, said the NAACP’s SVP for advocacy, Hilary Shelton. “It will make it virtually impossible for many in the middle class, and particularly people of color, to purchase homes in the future,” because it does not assure there will be low-cost, mortgage financing available for families and individuals that have good credit histories, stable income and want to buy homes.
After the Great Depression, the nation enacted polices and incentives that made the 30-year mortgage the foundation of housing finance, he said, and lead to the creation of Fannie Mae, Federal Housing Administration, Federal Home Loan Bank System, the mortgage interest deduction and other incentives.
“Going forward, our nation's housing financing system must balance the needs of families with the needs of big banks and Wall Street.”
More specifically Shelton said, the Corker-Warner legislation must ensure “the mission of any successor to Fannie Mae and Freddie Mac” will be to provide low-cost mortgage credit to working and middle-class families.
The Corker-Warner bill created an insurance fund that does not have the objective to facilitate affordable housing for lower-income Americans so far provided by Fannie and Freddie, Shelton said. “The affordable housing entity contained in the Corker-Warner bill will not meet the housing finance needs of very low, low-, moderate- and middle-income families.”
Furthermore, access to affordable housing is not simply political.
“Middle- and moderate-income families have about $5 trillion in outstanding mortgages today,” he said. “The fund would have about $250 billion,” which also means the overall housing capital and transactions will shrink alongside the businesses that support it and the overall economy.