Published: November 2017

Federal government should not be financing gentrification of low-income neighborhoods

Consumer Action joined legal service offices, housing and consumer credit counseling agencies, base organizing groups and civil rights organizations in expressing strong concerns over the Federal Housing Finance Agency's oversight of Government Sponsored Entities (GSEs) and the Federal Home Loan Bank System enabling the displacement of low-income people and people of color.

In a letter to Mel Watt, director of the Federal Housing Finance Agency, advocacy groups in a letter outlined "at least three particular and impactful ways" that FHFA is failing in its obligation to promote homeownership for low- and moderate-income households and is instead enabling the wide scale displacement of low-income households and households of color. 1) Borrowers with higher incomes have made up an increasing share of the mortgage market in the low-income areas; 2) By allowing Real Estate Investment Trusts to use Federal Home Loan Bank advances to secure large tracts of bank-owned foreclosure homes for use as rental properties resulting in the displacement of affordable rentals and the potential for first time homebuyers to buy homes; 3) Government-sponsored entities Fannie Mae and Freddie Mac are involved in inappropriate financing of bank-owned foreclosures to create rental schemes. The groups say that these uses of federally guaranteed funds are ceating an iincentive for lenders to lend to upper income borrowers in low-income areas in neighborhoods that are at-risk or in the throes of gentrification and rapidly destroying options for low income renters and homebuyers. 

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Federal government should not be financing gentrification of low-income neighborhoods   (call-on-fhfa-11102017.pdf)