Tennessee U.S. Senator and member of the Senate Banking Committee Bill Hagerty (R-TN) led the Republican members of the Senate Banking Committee on Tuesday in sending a letter to Federal Housing Finance Agency (FHFA) Director Sandra Thompson in opposition to the agency’s racial equity housing plans, which encourage discrimination based on race.
“Yesterday, I led my Senate Banking Committee GOP colleagues in sending a letter to FHFA Director Sandra Thompson calling out racial equity housing plans that encourage discrimination on the basis of race, rather than focusing on ensuring the safety and soundness of Fannie Mae and Freddie Mac,” Hagerty said.
The letter, led by Hagerty and 10 other Senate Republican colleagues, follows a recent Supreme Court ruling, Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, against Affirmative Action, which opens a broader legal fight against race-based programs in the government.
On January 19th, the FHFA announced its intent to re-write the single-family pricing framework for the government-sponsored entities (GSEs) Fannie Mae and Freddie Mac. The policy aims to invert the risk financing structure at the GSEs to decrease mortgage rates for riskier individuals with low credit scores and forcibly raise rates for those with higher scores.
Following this announcement, the Banking Committee Republicans asked the FHFA to instead refocus their efforts on increasing the safety and soundness of Fannie Mae and Freddie Mac, which they claim the FHFA ignored and instead published a proposed rule on April 26th that codifies a requirement to develop and measure implementation of the discriminatory plans.
“We wrote to you last year and expressed our deep concern with the Equitable Housing Finance Plans (Plans) developed by Fannie Mae and Freddie Mac (the Enterprises) at the direction of the Federal Housing Finance Agency (FHFA). Though we had asked you to refocus efforts on ensuring the safety and soundness of the Enterprises, FHFA ignored our request and instead published a proposed rule on April 26, 2023, that codifies a requirement to develop and measure implementation of the Plans,” the senators said
According to the senators, the recent FHFA plans are unfair, encourage racial discrimination, are most likely unconstitutional, and violate the Equal Protection Clause.
“As we made you aware, the Plans are inherently problematic. They are manifestly unfair and encourage discrimination on the basis of race. The Plans may very well be unconstitutional and violate the Equal Protection Clause as they express a clear, discriminatory intent,” the senators said.
The senators explained their rejection of the “proposal to codify these Plans in regulation for the same reasons [they] rejected [the] plans when FHFA first required them as conservator,” and outlined specific concerns regarding legal challenges that will arise if the plans are codified.
“While perhaps well-intentioned, we have seen the consequences of relaxing underwriting criteria and lowering down payment requirements after years of record home price appreciation; many minority families lost significant, generational wealth when they were pushed into highly-leveraged home purchases shortly before the last housing crisis,” the senators continued.
Co-signing Republican members of the Banking Committee include Senators Tim Scott (R-SC), Katie Britt (R-AL), Kevin Cramer (R-ND), Mike Crapo (R-ID), Steve Daines (R-MT), John Kennedy (R-LA), Cynthia Lummis (R-WY), Mike Rounds (R-SD), Thom Tillis (R-NC), and J.D. Vance (R-OH).
The Tennessee Star reached out to Hagerty for comment but did not receive a reply before press time.
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Hannah Poling is a lead reporter at The Ohio Star, The Star News Network, The Arizona Sun Times, and The Tennessee Star. Follow Hannah on Twitter @HannahPoling1. Email tips to [email protected]
