The Trump administration has moved to kill off lending programs that help first-time home buyers and minority-owned small businesses who have been disqualified under discriminatory credit-scoring or real estate appraisal practices. For 50 years, banks and other lenders have created “special purpose credit programs” to redress past racial harms and economic disadvantages.
The head of the US Federal Housing Finance Agency, Bill Pulte, ordered Fannie Mae and Freddie Mac, the quasi-public mortgage guarantors, to end the programs, which have enabled banks, credit unions and other lenders to offer discounted interest and lower fees for specific demographic groups. In a screenshot of the directive posted on X, Pulte ordered the two entities to “terminate” their SPCP programs.
Safe harbor
The 1974 Equal Credit Opportunity Act outlawed discrimination, but allowed banks “to counter pre-existing discrimination that’s been baked-in to the economy,” as Next City’s Oscar Abello wrote in 2022. Courts have upheld the provisions many times.
As recently as February 2022, federal officials were actively encouraging more banks to create special purpose credit programs to expand access to wealth-building opportunities in home and business ownership.
