Could it be Possible that Racial Bias is Baked in the GSE Underwriting Policies?
R
ecently, the Government-sponsored enterprise (GSE) has been constantly accused of racial discrimination in its underwriting policies. Despite being intended to enhance the flow of financial credit to different targeted areas of the economy, the GSE’s underwriting policies have a significantly secluded majority of people who would have fully benefitted from its provisions. However, different people have had varying opinions towards this issue. The pushback from the MBA and ABA on the racial allegations indicate contrasting opinions on the issue. To unpack the heated debate, I believe that the GSE guidelines are discriminatory and that the allegations are true. The pricing strategies used by the organization favors those individuals in the society who are rich, in most cases the white community. The people of color who are mostly associated with the middle and working classes are disadvantaged. Low down payment borrowers have constantly complained about the GSE’s pricing methods which combine the loan-level pricing adjustments with the g-fees, making these people pay an excessive premium. The exorbitant premiums charged on top of the coverage directed to most low earners who are majorly the black community highlight a fraction of the discriminatory allegations raised. Fannie Mae’s inability to be effective with its credit scores underwriting is another reason I strongly believe that the GSE system is discriminatory. The GSE’s refusal to pilot alternative types of models like the vantage score, a framework claiming to score thousands of borrowers, raises eyebrows. The non-updated models used in the underwriting process indicates the organization’s willingness to offer its services to all citizens of the USA indiscriminately. Despite the GSE’s 2/3 rule and some of the impacts it has created, the ownership provisions mandated for people of color is absurd. Besides, several types of research have concluded that black borrowers are charged higher rates 126 l
across all income levels. The different system used to calculate interest rates for these people is completely discriminatory, as people of color are forced to pay more. With the gap between black homeowners and other white people increasing, it is evident that the GSE’s underwriting policies and guidelines favors a specific group. High interest rates charged on the people of color by the GSE are very high compared to those levied for white homeowners. Such discriminatory acts highlight the levels of racism in the GSE’s underwriting procedures. In conclusion, such events embolden my belief in a racial and discriminatory GSE underwriting system. With all the uncertain debates concerning GSE, you maybe unsure of whether to apply for that mortgage loan or not. You don’t have to ponder around because The Power Is Now Media Inc. is here to for you. This is where discrimination is just a vocabulary that doesn’t exist and equality rules. Get a mortgage loan and purchase your dream home by contacting Eric Lawrence Frazier MBA, a licensed Mortgage Advisor, NMLS 461807, with First Bank. ABOUT THE POWER IS NOW MEDIA INC. The Power Is Now Media Inc. is an advocate for the empowerment of the minority communities all around the United States. We engage in various thoughts of leaders to make sure that you are equipped with knowledge about our economy. We have partnered with First Bank to provide you with products and services that will help you prepare better for the future. We are also advocating for first-time home buyers. The Power Is Now Media Inc can help make your home ownership dream a reality. Go to www.neverrentagain.com and get started today! Eric Lawrence Frazier MBA DRE, Vice President and Mortgage Advisor of First Bank, NMLS 461807. President and CEO of The Power Is Now Media Inc. www.thepowerisnow.com References https://abcnews.go.com/Business/wireStory/secret-bias-hiddenmortgage-approval-algorithms-79633917 https://app.hedgeye.com/insights/104238-is-there-racial-bias-ingse-lending-ask-president-barack-obama https://www-housingwire-com.cdn.ampproject.org/v/s/www. housingwire.com/articles/is-there-racial-bias-baked-into-gseunderwriting/ THE POWER IS NOW MAGAZINE | OCTOBER 2021
