- The Washington Times - Sunday, July 7, 2002

"A home provides shelter and a safe place where families can prosper and children can thrive," said President Bush as he signed the June 4 proclamation declaring June National Homeownership Month.
"For many Americans, their home is an important financial investment, and it can be a source of great personal pride and an important part of community stability. Homeownership encourages personal responsibility and the values necessary for strong families. Where homeownership flourishes, neighborhoods are more stable, residents are more civic-minded, schools are better, and crime rates decline. Thanks to the resources available in our nation, more Americans own homes today than at any time in our history."
With these words, the president elegantly describes the year-in and year-out importance of homeownership and, more significantly, home. He also touches on the multilayered and mutually reinforcing mortgage finance delivery system that is the envy of the world and instrumental in producing a homeownership rate of 68 percent. But the American dream of homeownership has not been realized by significant segments of our society. There exists today a real opportunity to reach these groups and significantly increase minority homeownership.
Under Mr. Bush's leadership, concrete steps are being taken to open the doors of new homes for millions of Americans. On June 17, nine top housing-directed organizations signed on the dotted line to help provide the keys to new homes. They have agreed to work with Mr. Bush and Housing and Urban Development Secretary Mel Martinez to increase minority homeownership by no less than 5.5 million by the close of this decade.
More specifically, the Enterprise Foundation, Fannie Mae, Federal Home Loan Banks, Freddie Mac, Local Initiatives Support Corp., National Association of Homebuilders, National Association of Realtors, Neighborhood Housing Services of America, and Neighborhood Reinvestment Corp. have agreed to, among other actions, focus on:
Supplying adequate capital to fuel continued homeownership growth.
Producing and rehabilitating affordable homes.
Developing innovative mortgage products.
Marketing effectively to minority communities to ensure the availability of a full range of mortgage products and housing opportunities.
Initiating outreach, financial, and homeownership education.
Fostering community-based communications and cooperation among members of the housing industry, community organizations and local government.
The 12 Federal Home Loan Banks look forward to filling a vital role in this effort. The Federal Home Loan Bank (FHLB) System is a privately capitalized, cooperative government-sponsored enterprise or GSE. The regional banks help to ensure a reliable and steady supply of capital for housing and community development through member lenders. The FHLBs support the commitment to increase minority homeownership and will work with the 7,900 member lenders, affordable-housing advocates and economic development proponents to further homeownership opportunities.
The Federal Home Loan Bank System will work to support homeownership and housing through 2009 with four value-adding programs. The banks will allocate $1.3 billion private-sector housing grant dollars to support low- to moderate-income housing, of which 30 percent or $390 million is expected to finance 100,000 homeownership units of low-income housing through the Affordable Housing Program (AHP); provide $16.8 billion in loans to finance 325,000 low- to moderate-income homes through the Community Investment Cash Advance Program (CICA); provide $5.8 billion in CICA economic development initiatives to expand and retain jobs that provide not only the income for home purchases, but also the ability to maintain the mortgage obligation; and provide $250 million as a homeownership set-aside from AHP for individual family down payment and closing-costs grants for low-income homebuyers.
AHP works effectively because it enables local member housing lenders to directly support the housing needs of income-qualified households. This is accomplished through local housing organizations that combine AHP financing with other funding sources to create housing for moderate-, low-, and very low-income families. Because the AHP dollars are private sector funds, they have a great range of applicability and work for people who need housing. In the process, the AHP has created a high degree of community participation. Moreover, our members have used AHP as a catalyst to bring together lenders and nonprofit housing and community development organizations.
Since its authorization 13 years ago by the federal government, AHP has provided the nation with $1.36 billion in hard grant dollars to help finance 313,000 housing units in 8,170 local housing initiatives. These AHP dollars were also used to leverage a total of $22 billion in the all-in investment for the creation 313,000 affordable housing units. And of these units, 212,894 units benefited very-low income individuals. By providing 10 percent of our annual income in the form of housing grants, the Home Loan Banks are by far and away the single largest resource for private sector dollars that the local housing groups can tap. For example, in 2000, the Home Loan Bank System allocated nearly twice as much ($246 million vs. $112 million) as the total amount provided by the top 25 U.S. foundations that made grants for housing. Congress and the Executive Branch deserve praise for designing wise public policy and establishing an innovative mechanism that has helped provide new home for hundreds of thousands of families.
It should also be remembered that, in this Home Loan Bank private/public partnership, the local member lenders of the Home Loan Bank System have deep roots in their communities. They serve as mainstays of their local home mortgage markets and regional economies. This overriding community focus results in a Federal Home Loan Bank membership that simultaneously complements and competes with each other.
These community-oriented lenders reflect and serve the many different kinds of communities large cities, small cities, towns, and rural areas that make up the fabric of our nation. Each lender has in-depth knowledge of the businesses and people in its community, and therefore each can make considered decisions quickly. They see not just the numbers, but also the people, places, ideas and potential underlying an application for a loan. In short, the Federal Home Loan Bank System is a quiet but effective credit delivery mechanism that helps member lenders do the business of community lending and permits communities to grow.
For 70 years, the Federal Home Loan Banks and member community banks, and more recently with other enterprises, have assured the flow of and access to competitively priced housing funds to the consumer.
The Federal Home Loan Banks have accepted President Bush's challenge to cooperatively create at least 5.5 million minority homeowners before the end of the decade. Promoting and funding successful community partnerships is what the Home Loan Banks are all about, and helping all families achieve the American Dream is the sine qua non of these partnerships.

Richard S. Mroz is a member of the board of director of the Federal Home Loan Bank of New York and is an attorney with the law firm of Stradley, Ronon Stevens & Young, LLP, Cherry Hill, N.J. Mr. Mroz also was chief counsel to former New Jersey Gov. Christine Todd Whitman.

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