By Franklin D. Raines
If you are planning to buy your first home, and wonder if the day will ever come when a mortgage lender hands you the keys and says, “Congratulations,” Fannie Mae and our lending and housing partners have just announced a nationwide plan to make it more possible for more families.
The plan is called, “Expanding the American Dream Commitment.” The goal, which we will pursue through a range of creative initiatives to break down the barriers to homeownership, is to help six million families — including 1.8 million minority families — to become first-time homeowners over the next 10 years.
Our goal for minority families is crucial to housing in America. Right now, over 68 percent of Americans — and 75 percent of non-minority families — own their homes, yet only 49 percent of minority families do. Fannie Mae and our partners want to boost that rate to 55 percent.
Numerous studies all reach the same conclusion: homeownership benefits not just the home-owning families, but also their communities, the economy and the nation as a whole.
Neighborhoods of predominantly homeowners tend to thrive and be safer and healthier for families and children.
The expansion of homeownership fuels the economy, not just by creating jobs and commerce in the housing sector, but also because owning a home is the single most powerful way most families in America can build equity wealth for the future.
For example, if you bought a $100,000 home in 1990, and it grew in value at the four to five percent annual national rate, it would be worth $172,000 today. That $72,000 gain represents real wealth.
Indeed, over the past four years, as home values rose and interest rates fell, millions of families refinanced their mortgages, lowered their monthly payments, and tapped some of their equity wealth to expand their homes, reorganize their finances, and make needed expenditures. That consumer spending, we believe, helped to ease the recession and speed the recovery.
Fannie Mae and our partners want to make sure every family that wants to own a home and can handle the mortgage payments has the opportunity — and that no family is overlooked, underserved or overcharged.
Our Expanding the American Dream Commitment plan will undertake a number of steps to help mortgage lenders reach out and serve more first-time home buyers.
These steps include:
• Making three-to-five percent down payment mortgages more available nationwide, and making down payments even lower;
• Helping mortgage lenders to reach and serve families and communities that are often overlooked by mainstream finance, or relegated to higher-cost subprime lending;
• Cutting $500 from the cost of processing a mortgage application, while driving toward a totally paperless mortgage process. This will make the home-buying process even faster, cheaper and easier;
• Making homeownership a success for families which might be at risk of losing their homes; and
• Expanding the construction and redevelopment of affordable work-force housing where it is needed most, including for teachers, police, firefighters and other public servants so they can afford to own a home in communities they serve.
Owning a home is called the American Dream, and we believe all Americans deserve a chance to see it come true.
Franklin D. Raines is the Chairman and CEO of Fannie Mae.
To learn more, visit the Web site at www.fanniemae.org.