WASHINGTON A Senate proposal to overhaul the U.S. housing finance system would make mortgages more expensive and less available, especially in minority communities, a coalition of consumer advocates and civil rights groups warned on Friday.
A draft bill to wind down government-run mortgage financiers Fannie Mae and Freddie Mac, released earlier this month by the leaders of Senate Banking Committee, would replace the companies with a new industry-financed agency. The agency would provide a government backstop for mortgages, but only after private creditors shouldered 10 percent of any losses.
The main concern expressed by the coalition was that the bill would fail to provide adequate access to credit and make housing affordable for all creditworthy borrowers, including non-whites and families with modest incomes and lower wealth.
"The legislation would widen the existing wealth gap and lock out the very borrowers the market needs to operate in a healthy manner," the groups said in a joint statement.
Seven groups signed on to the statement: The Leadership Conference on Civil and Human Rights, National Council of La Raza, National Fair Housing Alliance, National Urban League, Center for Responsible Lending, National Coalition for Asian Pacific American Community Development, and the NAACP.
"The bill lacks provisions to ensure that the housing finance system is fair and non-discriminatory," the groups said.
Some leaders of the coalition joined top White House officials on Wednesday to discuss the draft legislation put together by the committee's Democratic chairman, Tim Johnson, and its top Republican, Michael Crapo.
The Obama administration worked heavily over the last couple of months with both Johnson and Crapo on their bill.
(Reporting by Margaret Chadbourn; Editing by David Gregorio)