Fannie Mae and Freddie Mac Mortgage Purchases in Low-Income and High-Minority Neighborhoods: 1994–96AbstractThis article¹ consists of parallel case studies of intrametropolitan lending and government-sponsored enterprise (GSE) purchases in 10 metropolitan statistical areas (MSAs) across the Nation. All 10 MSAs were large, with 5 representing high-cost areas (as measured by median value of owner-occupied housing) and 5 representing low-cost areas. The studies of lending volumes provide a preliminary indication of whether and to what extent service by the primary market is relatively low in the census tracts designated as underserved by HUD. The studies of GSE purchases indicate whether and to what extent loan purchases by Freddie Mac and Fannie Mae are concentrated outside these census tracts. HUD classifies low-income census tracts and middle-income census tracts with high minority representation as underserved, so the studies contrast activities in these tracts with activity in middle-income tracts with low minority representation. The studies showed that to the extent that there are shortfalls in lending activity and GSE purchases in underserved areas, they are concentrated in low-income census tracts rather than middle-income, high-minority tracts. The shortfalls in GSE purchases are generally larger for Freddie Mac than for Fannie Mae. The shortfalls in primary market activity are found primarily in low-cost MSAs, whereas the shortfalls in GSE purchases are less sharply divided according to the level of housing cost.¹Preliminary versions of this article were presented in seminars at Texas A&M University and at HUD. Fannie Mae and Freddie Mac Mortgage Purchases in Low-Income and High-Minority Neighborhoods: 1994–96 (*.pdf)
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