On April 18, 2023, President Biden quietly signed an executive order on advancing racial equity and support for underserved communities across the federal government. The order directs federal agencies to take a number of steps to address racial disparities in housing, including:
- Increasing access to affordable housing
- Promoting fair housing practices
- Addressing racial segregation in housing
- Supporting underserved communities
The order also directs the Department of Housing and Urban Development (HUD) to develop a new “Affirmatively Furthering Fair Housing” rule to help overcome patterns of segregation and to hold state, localities, and public housing agencies that receive federal funds accountable for ensuring that underserved communities have equitable access to affordable housing opportunities.
The order is part of President Biden’s commitment to addressing racial equity across the federal government. It is also a response to the growing housing crisis in the United States, which has disproportionately impacted communities of color.
Here are some of the key provisions of the order:
- Increase access to affordable housing: The order directs federal agencies to take a number of steps to increase access to affordable housing, including:
- Expanding the availability of rental assistance
- Investing in affordable housing development
- Promoting homeownership
- Promote fair housing practices: The order directs federal agencies to take a number of steps to promote fair housing practices, including:
- Cracking down on housing discrimination
- Educating the public about their fair housing rights
- Address racial segregation in housing: The order directs federal agencies to take a number of steps to address racial segregation in housing, including:
- Investing in affordable housing in underserved communities
- Promoting mixed-income housing
- Supporting community development initiatives
- Support underserved communities: The order directs federal agencies to take a number of steps to support underserved communities, including:
- Providing technical assistance to community development organizations
- Investing in community-based programs
- Promoting community engagement
So, what does this mean? What is the negative of this executive order?
It is possible that Biden’s executive order on advancing racial equity and support for underserved communities could make it harder for borrowers with good credit to buy a house. The order directs the Federal Housing Finance Agency (FHFA) to revise the Loan-Level Price Adjustment (LLPA) matrix, which is used to calculate mortgage fees. The new LLPA matrix could result in higher mortgage fees for borrowers with good credit, while borrowers with lower credit scores could see their fees reduced. This could make it more difficult for borrowers with good credit to qualify for a mortgage or to afford the monthly payments.
However, it is important to note that the new LLPA matrix is not yet finalized, and it is possible that the FHFA will make changes to it that mitigate the impact on borrowers with good credit. Additionally, the order also directs the FHFA to consider other factors, such as the borrower’s debt-to-income ratio, when setting mortgage fees. This could help to offset the impact of the new LLPA matrix on borrowers with good credit.
Overall, it is too early to say definitively whether Biden’s executive order will make it harder for borrowers with good credit to buy a house. However, it is something that borrowers with good credit should be aware of as they consider buying a home.
Stay tuned on what’s to follow…
