Washington, D.C. — A new report from the Center for American Progress argues that Fannie Mae and Freddie Mac are uniquely positioned to reduce the nation’s racial homeownership and wealth gaps while promoting climate and environmental resilience in communities of color.
America’s legacy of segregation and racial discrimination in housing has made communities of color more vulnerable to the effects of climate change. Due to systemic racism, people of color are more likely to reside in neighborhoods that have fewer resources to prepare for and recover from natural disasters and environmental hazards.
Fannie Mae and Freddie Mac, which guarantee more than 60 percent of the nation’s home mortgages, could be a powerful force in supporting equitable and sustainable homeownership in communities of color while simultaneously address the growing threat of climate change to the housing market. The report lays out the following recommendations:
- The Federal Housing Finance Agency (FHFA)—which oversees Fannie Mae and Freddie Mac—should collect data to assess the risk of climate change and include climate change and environmental justice considerations when setting affordable housing goals, benchmarks, and criteria.
- The FHFA should prioritize investment activities that reverse decades of environmental racism and promote economic stability, natural disaster risk mitigation, and climate resilience in underserved communities of color. At the same time, Fannie Mae and Freddie Mac should ensure that communities of color have access to affordable homeownership in safer areas.
- The FHFA should promote and support collaboration and alignment among different agencies’ data collection and distribution, especially regarding the geographic targets set for the affordable housing goals.
- Fannie Mae and Freddie Mac should partner with the Federal Housing Administration to avoid shifting climate-related costs from the enterprises to the U.S. Department of Housing and Urban Development (HUD). In addition, the FHFA should spread the risk across the enterprises’ entire portfolio rather than price it into individual loans.
“Housing policy is at the core of both closing the racial wealth gap and mitigating the impact of climate change, said Michela Zonta, senior policy analyst for housing policy at CAP. “Because of Fannie Mae and Freddie Mac’s powerful role in the mortgage market, they are in a unique position to reduce the racial homeownership and wealth gaps in the nation while promoting climate resilience and environmental justice in communities of color.”
Read the report: “Fannie Mae and Freddie Mac Can Support Racial Equity in Homeownership and Environmental Justice Efforts” by Michela Zonta
For more information or to speak with an expert, contact Julia Cusick at email@example.com.