By Eugene T. Lowe
July 12, 2004

Richard F. Syron, Chairman and Chief Executive Officer of Freddie Mac, in remarks in the opening plenary session of the 72nd Conference of Mayors Meeting in Boston, said that his company's goal is "to lead the market in expanding housing opportunities for underserved groups within five years. This is a benchmark by which we and others should assess our success as a company."

During his remarks, Syron presented data, which centered on the challenges of homeownership for families and minority groups. He said that the homeownership rate for families with children has actually declined since the 1970s. Citing a report by the National Housing Conference, Syron said that homeownership for families has fallen — from 62 percent in 1978 to 56 percent in 2001. He added that there was also more than a 25-point homeownership gap between black and Hispanic families and the white homeownership rate. Syron also cited data from the Joint Center for Housing Studies at Harvard University, which found that nearly one third of all households spend 30 percent or more of their incomes on housing, and 13 percent spend 50 percent of more. Syron conclude, "Affordable housing isn't so affordable any more. Many middle-income families are struggling to get into a home — and stay there."

Syron said, however, that Freddie is "concerned ... about proposed regulations that would hamper our ability to serve all families." The regulations that Syron talked about were recently issued by the Department of Housing and Urban Development (HUD) which set new affordable housing goals for the government sponsored enterprises — Freddie Mac and Fannie Mae. According to Syron, the affordable goals "rise so far and so rapidly above current levels that our ability to help middle-class families may be harmed." Freddie Mac could be "forced to reduce our other mortgage investments, particularly refinancing, to boost affordable lending percentages... This could raise interest rates and costs for everyone." In addition, Syron said that Freddie Mac could be forced to eliminate "certain instruments like the 15-year loan, hurting working-class mortgagees looking forward to retirement."

The Freddie Mac Chairman offered what he called "a better alternative" to HUD's goals. He proposed "that HUD look at our affordable lending as a percentage of our new home loans, removing refinances from the calculations of our performance. Doing this will make us more accountable, and focus Freddie Mac on bringing more potential first-time homebuyers into the market, particularly minority and other underserved borrowers."