Mortgage

The place the strengths of Fannie Mae and Freddie Mac diverge in truthful lending

The Federal Housing Finance Agency released a series of fair credit statistics on Wednesday highlighting a subset of the data showing that each of the two state-sponsored companies has some groups that it offers higher approval ratings than its competitor.

Fannie Mae, for example, approves mortgage applications from black borrowers at a higher rate than Freddie Mac (82% versus 76.9%). Fannie also has a relatively higher approval rating for Hispanic borrowers of 87.3% versus 82.7%. Meanwhile, Freddie's approval rating for Asian borrowers is higher at 92.7% than it is at 90.8%. Freddie also has a relatively higher approval rating for Native American and Alaskan borrowers of 87.1% versus 86.7%.

The differences in the numbers of GSEs for approvals by racial group are similar to trends seen in general denial rates under the Home Mortgage Disclosure Act. Mortgage industry groups have attributed the persistent disparities to systemic barriers faced by many minority borrowers.

"The home ownership rate of minority families in the United States remains well below the national average," the FHFA noted in an announcement accompanying the new data.

With the exception of the Freddie Mac approval rating for Asian borrowers, which is slightly higher than for white consumers, the GSEs approval data is in line with this trend. However, both GSEs generally offer higher approval ratings for all groups than the broader market.

The release of the new FHFA data coincides with the launch of a series of initiatives by the Biden administration aimed at reducing racial disparities in housing.

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