“Our business is the American dream.”

This is the slogan of Fannie Mae, the company created during the Great Depression to expand homeownership opportunities to low-and moderate-income, and minority families. Fannie Mae’s website claims to “hold diversity and inclusion...as one of our highest values.”

But is this value reflected in Fannie Mae’s track record? In a state so diverse as Texas, why is this diversity not reflected in homeownership rates? Why in Texas are just 46 percent of African-Americans and 56 percent of Hispanics homeowners, while 71 percent of Whites are homeowners? Does Fannie Mae play a role in this phenomenon?

In 2002, the Texas Low Income Housing Information Service (TxLIHIS) embarked on a long-term research project to answer these questions. Our research was prompted by Fannie Mae’s announcement of a $23 billion investment plan that promised to provide affordable homeownership and rental opportunities to more than 230,000 families in Dallas/ Fort Worth.

Fannie Mae’s multi-billion dollar plan was created to comply with a congressional mandate that it, and other Government Sponsored Enterprises (GSEs), facilitate the financing of affordable housing for low- and moderate-income families.

Fannie Mae’s new investment plan garnered enormous publicity. When a reporter from the Dallas Morning News asked TxLIHIS if Fannie Mae’s past commitments had produced the promised results, we had to confess that we were not sure. We decided to look into it.

To our amazement, we discovered that there was no independent evaluation of Fannie Mae’s record of purchasing loans to minorities in Texas. So we decided to conduct the research ourselves. Over the next years, we studied Fannie Mae’s impact on the single-family home loan market for minorities in Dallas and Fort Worth.

Our research results, summarized in this newsletter, are troubling. Far from being a leader in serving minorities and low- and moderate-income borrowers, the majority of single family mortgage loans Fannie Mae purchases are directed at White and upper income families.

Our conclusion is not — as some would propose — to abolish Fannie Mae. However, the GSE must be reformed so that the minority and low-income families Congress has mandated it to assist truly do have a shot at the American dream.

TxLIHIS’ complete report, containing the full text, 45 detailed maps and charts and video summary is available for download and also on a CD-ROM by emailing news@texashousing.org.