The Federal Housing Finance Agency (FHFA) issued a proposed rule to repeal its Fair Lending, Fair Housing, and Equitable Housing Finance Plan requirements — regulations it finalized barely a year ago — and is inviting the public to comment on this proposal until Sept. 26.
It is one of the agency’s swiftest reversals of a major rule, and a signal that partisan winds may be influencing an independent regulator whose statutory duty is to ensure that the housing finance system maintains access to safe, sound liquidity in service of America’s affordability and supply goals.
Congress established the FHFA in 2008 with the Housing and Economic Recovery Act during President George W. Bush’s administration at the onset of the Great Financial Crisis. HERA consolidated the Office of Federal Housing Enterprise Oversight, the Federal Housing Finance Board, and the government-sponsored enterprise oversight functions of HUD into a single independent regulator. Its mandate was clear: oversee Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System, the secondary mortgage market infrastructure that backs two out of every three American mortgages.
The stakes could not be higher. Millions lost their homes due to foreclosure in the last housing crash, and postmortems made clear that deceptive lending and redlining both disenfranchised minority and low-income borrowers and destabilized the entire financial system. Congress created FHFA to prevent such mistakes from recurring. Repealing a rule designed to shine light on fair lending practices and GSE performance is not a minor adjustment — it could reintroduce precisely the kind of opacity that once fueled a crisis.
Importantly, earlier FHFA leaders never intended for Equitable Housing Finance and Fair Lending Plans to be symbolic nods to diversity, equity, and inclusion. They are operational tools, requiring the GSEs to set measurable goals, report data, and ensure safety and soundness through proactive monitoring. They help governance leaders identify systemic risks before they metastasize — much as regulators failed to do ahead of regional bank failures in 2023. Ending these plans removes an essential safeguard.
It is also worth recalling the bipartisan roots of the housing finance system. Republican President Herbert Hoover created the Federal Home Loan Banks in 1932 to extend liquidity during the Depression, helping to capitalize local thrifts and local savings and loan banks. Democratic President Franklin Roosevelt established Fannie Mae in 1938 alongside other New Deal institutions like the FDIC and SEC. Both parties understood that safe, affordable housing finance is not ideological—it is foundational to economic stability.
That bipartisan tradition also underpins the rule-making process itself. Once an agency proposes a rule, it must undergo public review and scrutiny through the Office of Information and Regulatory Affairs. OIRA review ensures costs, benefits, and stakeholder comments are meaningfully considered before a rule is finalized — a process that often takes many months or years. When FHFA finalized its Fair Lending rules in 2023, it did so after several phases of public engagement and agency review. Now, in moving to repeal them almost immediately, the question is whether the agency has gathered new market data or stakeholder input that would justify such a dramatic reversal. Or is it moving at political speed, not regulatory rigor?
Stakeholders who previously commented deserve clarity on what, if anything, has changed.
The timing could not be worse. America’s housing market is in a deep crisis. Homeownership is increasingly out of reach, with the median age of first-time homebuyers now 38 — the oldest ever recorded. Rents are consuming disproportionate shares of household income, squeezing families who cannot save for a downpayment. At the same time, tariffs and inflation have pushed up material costs for builders, constraining new supply. Small-scale real estate investors—who often buy and rehabilitate properties in the very neighborhoods where they grew up — face higher barriers to entry and fewer lending opportunities with interest rates remaining high, leaving more space for large, institutional buyers to dominate.
FHFA should focus its efforts on strengthening affordability, expanding supply, and creating opportunity for ordinary Americans. Repealing safeguards informed by a robust agency outreach and review process — designed to ensure the GSEs meet their mission — risks doing the opposite: making the housing economy more vulnerable to speculative investment. That would be a serious backtrack from the GSEs’ purpose. Fannie, Freddie, and the FHLBs exist to serve the public mission of safe, sound, and affordable housing finance. That mission is not partisan. It is not racial. It is patriotic.
The public has until this Friday to make their voices heard on FHFA’s proposal. People should ensure the agency conducts the full stakeholder and data analysis required before moving forward. A reversal of this magnitude must be justified by evidence — not political presumptions.
