The U.S. Department of Housing and Urban Development (HUD) recently put out a statement clarifying the role of Special Purpose Credit Programs as a way to tackle disparities in access to homeownership.
“…While the United States is known worldwide as the land of great opportunity, opportunities for homeownership have been deeply unequal in our country. Because of systemic discrimination in this nation’s housing and credit markets, including by the federal government itself, homeownership rates are much lower for African Americans and other people of color than for their White counterparts,” reads the HUD statement. “This was true in the 1960s before the Fair Housing Act became law, and it is even truer today—the Black-White homeownership gap is wider today than it was in 1968 when the Fair Housing Act became law.”
HUD continued, stating that much work needs to be done in the lending industry to address discrimination, with Special Purpose Credit Programs available to help “open the door to homeownership for underserved populations who have historically been denied that opportunity.”
According to HUD, Special Purpose Credit Programs are special lending programs that allow lenders and other groups to direct financial aid to groups historically locked out of homeownership, helping to reduce the racial and ethnic gap in homeownership.
How the industry is responding:
“MBA appreciates HUD’s clarification around the application of the Fair Housing Act to ECOA Special Purpose Credit Programs. SPCPs exist to help low-income and historically disadvantaged borrowers, and this clarification is an important step in providing lenders additional tools to help these borrowers purchase a home.
“We look forward to working with HUD, the CFPB, and other regulators to assist in the expansion of compliant SPCPs to meet their potential for assisting communities and reducing the racial homeownership gap.” — Bob Broeksmit, CMB, President and CEO, Mortgage Bankers Association
“The U.S. Department of Housing and Urban Development released guidance clarifying that special purpose credit programs that conform with the Equal Credit Opportunity Act and Regulation B generally do not violate the Federal Fair Housing Act. The special purpose credit program provisions of ECOA and Regulation B provide targeted means by which creditors can better serve communities who have been historically shut out or otherwise disadvantaged. I encourage creditors to explore the opportunities available through special purpose credit programs.” — Rohit Chopra, Director, Consumer Financial Protection Bureau
