Addressing the Homeownership Gap by Serving the Underserved

When Freddie Mac released its Equitable Housing Finance Plan in June 2022, we made a commitment to work to address the homeownership gap for Black and Latino borrowers through responsible and impactful initiatives that expand access to credit.

In that same Plan, we identified Special Purpose Credit Programs (SPCPs) as a valuable tool for addressing the homeownership gap for underserved borrowers and communities. Under federal law, lenders may offer special underwriting or pricing for traditionally disadvantaged groups as part of an SPCP. These programs have the potential to advance equity in housing in a way that is both safe and sustainable, by expanding access to homeownership to creditworthy applicants.

At Freddie Mac, we have a two-pronged approach to using SPCPs to make home possible for those living in or purchasing homes in underserved communities. First, we are partnering with lenders to purchase loans originated through their SPCPs. By providing liquidity to the market for these programs, lenders are able to expand their impact. I’m pleased to announce that we have purchased nearly 1,800 loans through lender SPCPs.

In addition to lenders’ SPCPs, Freddie Mac has developed an SPCP of its own: BorrowSmart Access^SM. BorrowSmart Access is available for first-time homebuyers across 10 major cities: Atlanta; Chicago; Detroit; Memphis, Tenn.; Miami; Philadelphia; St. Louis; Houston; El Paso, Texas; and McAllen, Texas.

BorrowSmart Access will assist traditionally underserved borrowers and communities by providing down payment assistance, which helps overcome one of the largest obstacles to homeownership. This mortgage product allows first-time homebuyers in these select metro areas to obtain funds for their down payment through combined contributions from Freddie Mac and their approved lender. In exchange for these funds, the borrower must complete financial counseling through Freddie Mac’s BorrowSmart^SM Program, which has been available to lenders since 2020. We’re leveraging our BorrowSmart lender network to help scale our BorrowSmart Access SPCP quickly and responsibly.

BorrowSmart Access is an important component of Freddie Mac’s mission-driven work to create a more affordable, sustainable, and equitable housing finance system. As our first SPCP, we intend to use this offering to serve traditionally underserved communities, while also learning valuable lessons that will inform potential future SPCP offerings.

Addressing the homeownership gap and expanding housing opportunities to all communities requires long-term planning and prudent execution. But it also requires partnerships. This initiative is part of Freddie Mac’s commitment to work across the industry to create opportunities for Black and Latino families who have historically lacked equitable access to sustainable and affordable housing.

While this is just the beginning, and there is much more to do, we are excited about the possibility of giving more families an opportunity to take part in the American Dream.

To learn more about Freddie Mac’s efforts to advance equity, read our Equitable Housing Finance Plan.