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An LGBT-Friendly, GOP-Authored Fair Housing Bill Is Now Waiting for Congress to Act


Unusually Low Mortgage Rates Cause Housing Market Boom
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The facts are striking: In 28 states, it is perfectly legal to deny someone housing simply because of their sexual orientation and/or gender identity; in 2013, the U.S. Department of Housing and Urban Development (HUD) found same-sex couples faced “adverse treatment” in their search for housing—a finding echoed the following year in a study conducted by Services & Advocacy for GLBT Elders (SAGE) and the Equal Rights Center, which found a staggering 48% of LGBT individuals faced “adverse differential treatment” in their search for housing.

As Log Cabin Republicans works to pass the Fair & Equal Housing Act (a GOP-authored bill that would bar LGBT housing discrimination), there’s no point in waiting to fix another barrier to LGBT individuals in search of a place to call home: a highly constrained secondary mortgage market.

This market is where banks obtain liquidity to offer loans to those with modest incomes so they can purchase affordable housing. In fact, it is the basis for the 30-year, fixed-rate mortgage that made middle-class homeownership a reality in this country.

For years, Fannie Mae and Freddie Mac, two of the world’s largest financial institutions, enjoyed a sanctioned monopoly. Confusingly, these fully private companies operated as “government-sponsored enterprises” or GSEs. The ambiguity enabled their executives to take riskier and riskier positions, while their securities were treated as if they were safe bets.

When things went bad, they went very bad. The result was a $187 billion bailout, the largest ever from U.S. taxpayers, who had no choice but to protect the global system from complete meltdown. In exchange, President George W. Bush put Fannie Mae and Freddie Mac into conservatorship.

Nine years later, the Band-Aid fix remains in place, and credit for affordable housing has become unnecessarily difficult to access.

Fortunately, there is emerging bipartisan agreement on the principles around which to structure a more robust and reliable system. From the progressive Mortgage Finance Working Group to leading business groups, nearly everyone agrees private capital is required.

Heightened competition will be essential in making a new, more diverse secondary mortgage market work. Ensuring fairness will not only benefit aspiring homeowners, it will result in a stronger system where risk is spread safely across a multiplicity of lenders and mortgage backers. Competition will also drive down prices and promote innovation and efficiency. This is good for everyone, especially low to middle-income households.

No one suggests, however, that this market should be the Wild West. An explicit government guarantee of mortgages made for affordable housing would make them an attractive investment, bringing in more capital to free up credit. At the same time, strict regulatory oversight and a premium-based insurance fund would foster confidence and protect taxpayers, much as the Federal Deposit Insurance Corporation (FDIC) has done for savings and checking accounts for more than 80 years.

All the pieces are finally coming together. The Trump Administration and Treasury Secretary Steve Mnuchin are in favor of a transition based on the principles outlined above. And Democrat and Republican members of the Senate Banking Committee have been working together on a solution since the summer.

We cannot allow this refreshing and gridlock-breaking bipartisanship pass us by. Congress should take advantage of this new willingness to reach across the aisle in order to reform the mortgage financing system the right way, and right away, for LGBT—and all—Americans.