The Importance of the Housing Finance System to America’s Low-Income Families

Conversations about housing finance reform sometimes get mired in technical talk about securitization, capital markets, and regulatory requirements. Yet this jargon obscures a crucial fact: the way our nation funds its housing market drives whether families have access to affordable, quality housing. With Congress considering legislative changes to the outdated housing finance system, it’s critical that those who care about the challenges facing low-income families and communities make their voices heard.

Many people mistakenly believe that Fannie Mae and Freddie Mac have no importance to those with lower incomes – especially renters – because the federal government only supports low-income housing through direct subsidies or the Federal Housing Administration mortgage program.

In truth, while these programs are essential for millions of low-income Americans, Fannie and Freddie also play a critical role in ensuring affordable housing for low- and moderate-income families. These institutions directly support the construction and preservation of affordable rental housing, and they run programs that help lower-income families and communities access mortgage credit. Consequently, any reforms to these housing finance companies will directly impact low-income families.

This article was originally published in Spotlight on Poverty and Opportunity.