Where Fannie Mae, Freddie Mac’s strengths in fair lending diverge

The Federal Housing Finance Agency on Wednesday released a set of fair lending statistics, highlighting a subset of the data that shows each of the two government-sponsored enterprises has some groups it offers higher approval rates to than its competitor does.

Fannie Mae, for example, approves mortgage applications submitted by Black borrowers at a higher rate than Freddie Mac (82% compared to 76.9%). Fannie also has a relatively higher approval rate for Hispanic borrowers at 87.3% vs. 82.7%. Meanwhile, Freddie’s approval rate for Asian borrowers is stronger at 92.7% compared to 90.8%. Freddie also has a relatively higher approval rate for American Indian and Native Alaskan borrowers at 87.1% vs. 86.7%.

Differences in the GSEs’ numbers for approvals by racial group are similar to trends seen more broadly in Home Mortgage Disclosure Act denial rates. Mortgage industry groups have attributed persistent disparities to systemic barriers many minority borrowers face.

“The rate of homeownership for minority families in the United States continues to lag well behind the national average,” the FHFA noted in an announcement about the new data.

With the exception of the Freddie Mac approval rate for Asian borrowers, which is slightly higher than for white consumers, the GSEs’ approval data is in line with that trend. However, both GSEs generally offer higher approval rates for all groups than what is seen in the broader market.

The release of the new FHFA data coincides with the launch of a series of Biden administration initiatives aimed at reducing racial gaps in housing.