John E. Sununu is right (“The Fannie and Freddie gravy train,” Op-ed, July 8). We do need a “bipartisan, substantive, and bold” solution to the current stalemate in Washington about the future of Fannie Mae and Freddie Mac. On this issue, more than most, such an outcome is possible.
A proposal floated recently in the Senate by Virginia Democrat Mark Warner and Tennessee Republican Bob Corker starts the conversation, but it is lacking in some important aspects. Corker-Warner offers an explicit federal government guarantee for mortgage lending without a parallel affirmative obligation to serve all communities equitably and responsibly.
We have seen over the years, absent such an affirmative obligation, that one of two problems arises. Wall Street financiers either ignore low- and moderate-income communities or prey on those same neighborhoods, extracting profits and leaving a wake of devastation behind.
Corker-Warner further harms efforts to reach low-wealth borrowers by establishing a 5 percent down payment requirement. There is plenty of evidence here in Massachusetts and nationwide that solidly underwritten mortgage programs with down payments as low as 3 percent perform well and enable lenders to reach underserved populations in a responsible manner. Those programs remain our best hope for closing the racial wealth gap that exists, driven by huge disparities in homeownership rates for white households compared with those for households of color.