Fannie Mae, the nation's largest source of mortgage financing, has announced a 10-year, $2 trillion commitment to provide housing to 18 million American families.
At the same time, Franklin D. Raines, Fannie Mae's chairman and CEO, pronounced the congressionally chartered corporation's seven-year, $1 trillion affordable-housing initiative a success.
Raines said the goals established for the initiative in 1994 by his predecessor, James A. Johnson, had been reached eight months early.
Johnson had promised to provide housing to 10 million families. Raines said the final figure was 10.6 million.
He said the new, $2 trillion initiative would emphasize increasing homeownership among minorities, young families, families headed by women, immigrants and "others whose homeownership rates lag the general population."
The $1 trillion effort targeted families at or below median income, minorities, recent immigrants, residents of central cities and other underserved areas, and people with special needs.
Raines said this first effort "reinvented" Fannie Mae. Today, 68 percent of the corporation's annual business addresses one or more of the groups originally targeted, compared with 55 percent in March 1994.
One of the major goals of the 1994 initiative was to eliminate mortgage discrimination. One of the major goals of the newest initiative is also to eliminate bias in the mortgage market.
Fannie Mae's "American Dream Commitment" is designed to protect the rights of mortgage consumers. Raines presented a "Mortgage Consumers Bill of Rights" at January's International Builders Show in Dallas, which is designed to "reduce regulatory barriers, encourage responsible lending principles, and combat predatory lending."
The $2 trillion initiative will attempt to create five million new minority homeowners by 2010. To reach the goal, this number will grow at twice the rate that Fannie Mae expects for homeowners overall. Fannie Mae will contribute at least $420 billion in mortgage investments to this goal.
Although homeownership rates reached record levels in the 1990s, the rate for minority households is still considerably lower than the rate for whites. In 1999, white households reached a homeownership rate of 73.2 percent compared with 47.4 percent for minorities.
In 1998, 17.5 percent of Fannie Mae's single-family acquisitions served minority families. Since 1994, Fannie Mae has provided $189 billion in mortgage financing for 1.8 million minority households.
Fannie Mae is calling for the creation of one million new homeowners among households headed by immigrants, 1.5 million among new immigrants, and two million among people who live in urban areas.
To combat declining homeownership rates among young adults, Fannie Mae is setting a goal of increasing that number by 500,000 by the end of the decade.
The initiative also will focus on the housing needs of seniors and on the home ownership and community development needs of poverty-stricken areas in rural communities.
Under the initiative, Fannie Mae plans to purchase more than $100 billion in loans to low- and moderate-income rural borrowers.
In addition to focusing on individual demographic groups, Fannie Mae will target investments in selected communities around the country where the needs are greatest.
"In cities and towns, there is a critical need for private-sector capital to spur public funds and more private investment," Raines said. "We are rolling up our sleeves and digging deep in our pockets to help make this happen in neighborhoods and communities that deserve better."
Raines said Fannie Mae would achieve a leadership role in the new Internet economy as it revolutionized the mortgage finance system.
"E-commerce is driving down the costs of mortgage credit, and it is increasing the availability and accessibility of home loan financing to home buyers," he said.
"These are the fundamental objectives of Fannie Mae, and therefore, we have embraced the new world of technology as a means of carrying out our important, public mission," he said.
Finally, through its new Affordable Rental Housing Leadership Initiative, Fannie Mae will finance more than $175 billion in multifamily housing, including investments in low-income-housing tax credits and multifamily mortgage revenue bonds.
The initiative is expected to benefit four million renter households across America.
"Through Fannie Mae's American Dream Commitment, we are pledging ourselves to an extraordinary set of goals, both to increase homeownership over the course of this decade and to serve as a catalytic partner in creating and sustaining livable communities," Raines said.
"We will help ensure that everywhere we live in America is a place we are proud to call home."
