Opening Doors to Homeownership
Fannie Mae Foundation relies on education, outreach to help minority, low-income families become homeowners
Since the fall of 1999, Stacey Davis Stewart has presided as president and chief executive officer over the Fannie Mae Foundation based in Washington, D.C. As head of the nation’s largest foundation devoted to affordable housing and community development, Stewart oversees foundation spending that is expected to total $115 million in 2002. In addition to projects that create affordable homeownership opportunities and establishes community development initiatives, the foundation funds research at colleges, universities, and think tanks that explores the economic and social dimensions of housing and community development. A former investment banker and former executive with the Fannie Mae Corp., Stewart is credited with leading the creation of a Web-based resource for community development known as KnowledgePlex. The Knowledgeplex Web site was launched in October 2001.
Last month, Black Issues In Higher Education talked to Stewart in her Washington office about housing research, affordable housing and minority homeownership.
BI: Why is the sponsorship of housing research an important part of the Fannie Mae Foundation mission?
SDS: One of the things that the Fannie Mae Foundation does is provide leadership in the field of affordable housing. And one of the most important ways we do that is through financial support to a lot of nonprofit housing groups through grants and loans we make. But to be a real leader in the field also means providing education and hopefully helping shape opinion about the way people should think about the issue of housing. And in order to be credible in that effort, it’s very important for us to have research that is rigorous, and that can demonstrate our knowledge of the field and communicate the facts about the housing situation in America so that people will understand how to make sound and reasonable decisions based on those facts.
BI: Do you think the role of housing research is well understood by the public and policy-makers?
SDS: I think the role of housing research is well understood by a lot of folks. I think people generally understand that there’s a need for these issues to be very carefully and thoughtfully explored, and for people to understand and to be able to rely upon experts who can inform people objectively of what is going on in the housing field.
The thing that may not be as well understood is how sometimes those findings get communicated. In many cases, research can be so academically focused that it really doesn’t convey well to non-academics — those in the public sector and other policy-makers, etc., who may not be as familiar with some of the terms that are used in the housing field and may not be accustomed to reading academic-type documents. Often the research has to be distilled, communicated and conveyed in a way that means something and can be absorbed and understood by someone who is not as well-versed on the issue as an academic who researches these issues day in and day out.
BI: How would you describe the Fannie Mae Foundation’s efforts to boost minority homeownership?
SDS: The Fannie Mae Foundation is very focused on creating opportunities through education, through outreach, and through a variety of other ways to increase homeownership overall, but in particular among minorities and low-income families, immigrant families and others.
And the reason for that is the homeownership rate for minority families is dramatically less than it is for other families in this country. The national homeownership rate is about 68 percent. For African Americans, it’s 47 percent. For Latino families, it’s 48 percent. And so there’s a huge gap that needs to be made up in terms of minority families being able to own a piece of the American dream the way other families have been able to do. And so, we have made it our priority and commitment to do that.
Now, there are several ways that we do that. One is through working with nonprofit housing developers to increase the supply of affordable housing that’s available for these families to buy. But also working on the demand side by helping to educate and inform families, minority families in particular, on the steps that they need to take in order to get into a home. One of the most important ways that we do this is by educating people on the issue of credit because credit often is one of the biggest stumbling blocks for many families, minority families and immigrant families, in terms of getting into a home.
And we all know that if your credit is not in good shape, it’s going to be one of the biggest barriers into getting into a home. But we also found that a lack of information and having the intimidation of the process affecting you can sometimes stop people before they even get onto the path. Many minority families, unfortunately, feel like homeownership is not within their reach. We have been doing a lot in terms of outreach and education to reduce the intimidation barriers, increase the amount of education and information that’s available to help more minorities get on the path of homeownership.
And we’ve been able to successfully do that primarily through a consumer outreach campaign that we’ve been conducting for several years now. We’ve actually provided information to over 13 million people in this country, many of them from low-income families and minority families on all of these kinds of issues. So we feel like we’ve been successful in trying to increase the homeownership rates in particular among minority families in this country.
In fact, I think last year the big boost in homeownership in general was primarily fueled by minority families. About 40 percent of the homeownership growth in this country came as a result of more minority families becoming homeowners.
BI: How significant a public policy breakthrough do you consider the Bush administration’s minority homeownership initiative to be?
SDS: I think it’s very important that the Bush administration has focused on minority homeownership specifically as a key part of their strategy for improving the lives of many Americans in this country. It’s the first time, really, even taking into account the work that President Clinton and his administration did in focusing on homeownership, housing and community development — it’s really the first time I think that any president has really focused specifically on the issue of minority homeownership. So, this is really quite significant.
There are lots of discussions on the ways in which to make (minority homeownership) happen. A lot of it has to do with what I’ve talked about in providing education and information. But there’s also some other tools that the Bush administration has proposed that can go a long way in increasing homeownership in general in this country and in particular for minority families.
So the fact that the current administration embraces (an initiative) is a very good thing. And I think (it) can go a long way to not only increase homeownership rates, but actually reduce the wealth gap that exists in this country between minorities and White families.
BI: Does the embracing of minority homeownership reflect the fact that Americans have concerns in connection to racial discrimination in mortgage lending?
SDS: I wouldn’t necessarily suggest that the (issue of) minority homeownership reflects a concern that Americans have about racial discrimination in mortgage lending. If you’re talking about Americans in general — I’m not sure Americans in general recognize in a very significant way, or even understand, maybe the role that discrimination has played in the past, and may continue to play in mortgage lending.
I don’t think there’s really a connection between past, or even any present, discrimination in this minority homeownership initiative. I think the initiative, as I see it, is really based on an acknowledgment that if this country is going to prosper that means that everybody (has) to prosper, and that includes minority families and immigrant families. If you want to keep all boats rising, you need to focus on different strategies for the folks that actually need that support.
Having said that, discrimination in the past in mortgage lending, as other factors, has played a big role in the reason why we have such a disparity in homeownership rates today between minority families and White families. And I think there’s been a huge amount of progress that’s been made to eliminate that, but unfortunately I’m not sure that it’s been completely eliminated. And certainly our efforts — the efforts of many lenders in this country — to do more outreach into minority communities, be more active in providing mortgage products to minority families, I think have been very helpful in reducing the amount of discrimination that exists in the system.
But if there’s discrimination that exists in this country, it exists in a lot of other areas. I don’t think the housing finance system is immune to it.
BI: Given that the United States is considered the best-housed nation in the world, how concerned should Americans be that we’re experiencing an affordable housing crisis?
SDS: It is true that we are probably the best-housed country in the world. We have the best housing finance system in the world. But we do have a housing crisis that does need to be addressed. We did a survey several months ago with the U.S. Conference of Mayors that showed that working families — these are families at or making less than $54,000 a year with at least one breadwinner and one child in the home — do feel an enormous amount of concern about the issue of housing. And even when you compare it to other issues we’re typically used to hearing about — issues like health care, crime and unemployment — housing for working families ranks as a greater concern to them than health care and some of these other issues we’re so accustomed to hearing about on a daily basis.
And that was something that was very shocking to the mayors when we did this survey and announced the results to them. And it was also eye-opening to a lot of us as well. It demonstrated the fact that working families, in particular, are very concerned about housing costs. They are very concerned about the fact that incomes have not been rising as quickly as housing costs have in many metropolitan areas around the country, and that many families do not feel as optimistic about the future with respect to housing as maybe generations prior to them.
I know that over half of the families that we surveyed said that they felt it would be much more difficult for their kids to own a home in the future than it has been for them. Almost half of them as well felt that other families in a financially similar situation, if they’re trying to buy their homes for the first time, would have a very difficult time doing so in the current environment.
So there’s a lot of people that do feel very concerned about housing costs. There’s a report today by the Center for Housing Policy that showed there was a 67 percent increase over the past four years — in the number of families that are paying over 50 percent of their income for housing. Now what’s considered affordable is paying just 30 percent of your income for housing. So if you’re paying 50 percent or more of your gross monthly income for your housing expense that is considered to be very unaffordable.
When you think about the issues around welfare reform, the numbers of families, women in particular, who are coming off welfare and trying to get into the work force for the first time, starting off in lower paid wage jobs, you can see how a lot of families are really feeling the squeeze.
BI: Some analysts predict the federal government is going to make a renewed commitment to the cause of affordable housing. What policies do you think could have the greatest impact?
SDS: I think it would be inaccurate, or overly optimistic, to assume the affordable housing crisis can or will be taken up by the federal government. I think the trend over the past several decades has been for the federal government to pull back from housing. And frankly given the current situation that we’re finding ourselves in with respect to issues around terrorism, homeland security and defense, I don’t see housing and a number of other issues really being at the top of the priorities for the country at least for some time.
Nor do I believe that the federal government should take up the entire responsibility for providing affordable housing to people in this country. I think there’s a huge role for the private sector to play in it. There will continue to be a role for the nonprofit sector and the philanthropic sector. I don’t think it’s fair for any one sector to take the burden on all by themselves.
When it comes to policy and other kinds of policy tools that may have the greatest impact on the expansion of affordable housing, I would go back to one of the most successful programs that I think this country has ever really had, producing thousands of units of multi-family housing, which is the low-income housing tax credit. I think that is an incredibly successful example of how a government policy can actually provide incentives to the private sector to invest in affordable housing that has been primarily done on the multi-family side.
But there is a proposal that the Bush administration supports that was also a part of the Millennial Housing Commission report that suggests putting in place a homeownership tax credit. This would operate in sort of the same way giving incentive to private developers to actually create more housing for people to own. I think that could be a really effective policy that could produce many thousands of new units of housing for many low-income families.
It’s very difficult to find a silver bullet to this issue. But the (homeownership tax credit) is something that can be done at the federal level. State and local governments can take on their own efforts. There is a whole menu of different things from zoning changes to regulatory (measures). Other types of programs, such as downpayment assistance, can really produce more housing opportunities as well. But certainly, the federal level as well as state and local levels all have to be coordinated and have to be focused on this at the same time.
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