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Want to Buy a Home But Think You Can’t? There May Be An Answer

March 20, 1994

WASHINGTON (AP) _ Taryn Goldsmith and Michael Jacobs plan to be married soon and want to buy a house. They have two incomes, credit and savings toward a down payment.

But they’re afraid they’ll be hassled because they are black.

″We just anticipate so many problems that we’re afraid to go ahead and try anyway,″ said Goldsmith, 29, an advertising sales representative. ″If we were white, we would.″

That’s the kind of hurdle that the nation’s largest home mortgage investor - the Federal National Mortgage Association - is trying to eliminate.

Fannie Mae has pledged to facilitate home loans for 10 million families, mainly by taking steps to curb discrimination and gear the process more toward minorities, new immigrants and others who may not meet traditional credit standards.

The first step will be a massive public relations campaign to get information on home buying into the hands of the curious but renting.

″We have heard over and over that people have not been well-served in the past, not only because of discrimination, but also because of lack of information,″ said Fannie Mae spokesman David Jeffers. ″Where we hope to be is a place where there isn’t fear and loathing of the process.″

Fannie Mae’s program coincides with the Clinton administration’s attempts to curb discrimination in lending and to break down barriers that keep low- and middle-income families from obtaining mortgages.

A recent Gallup poll found that more than half of the Americans who have never bought a home believe there is discrimination in mortgage lending, don’t feel they have enough income to buy a home and assume they need large sums of money to make a down payment.

That is Jacobs’ belief. ″They operate from a profile that doesn’t fit our population,″ he said. ″If you’ve been in your apartment for years and you’ve been paying your rent, what’s the difference? But they think that ... once you’re in a house, you’re going to act a fool, lose your mind, and not pay. That’s stupid.″

Fannie Mae’s decision definitely struck a nerve among consumers. Two days after its announcement, Fannie Mae had received 20,000 inquiries, Jeffers said.

Among the interested were Dana and Cynthia Langlois of Amesbury, Mass. Langlois, 29, works as a night auditor at a hotel. His wife, 26, works at a local delicatessen. They have two children and want eventually to buy a home, but they don’t know exactly where to begin.

″I’ve inquired with people I know, at banks. I’ve told them my situation, and they’ve said, ’I wouldn’t even try because this is what they’ll say,‴ Langlois said. ″And these are friends. So it’s very discouraging.″

Langlois’ advice to lenders: When considering minority applicants, look at factors such as timely rent payments and work history, rather than just credit and income.

Lenders eventually will have to consider such nontraditional indicators, mainly because they have to overcome vast mistrust among minorities, said Laurence Pearl, director of program standards and evaluation in the Department of Housing and Urban Development’s office of fair housing.

″You can understand why a lender wants to make sure the loan will be repaid, but if you haven’t gone through it and you’re sensitive to discrimination, you’d be discouraged up front,″ Pearl said.

Beyond the public relations campaign, Fannie Mae plans to change the rules and procedures for loan underwriting. And it will simplify and shorten the application process, and trim the fees charged to borrowers by $1,000.

Fannie Mae tested its information campaign in five cities last year, and will expand to 12 this year. The five were Baltimore, Cleveland, Oakland, San Antonio and Washington. Fannie Mae would not reveal all the others, but did say New York and Los Angeles are among them.

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Fannie Mae’s toll-free number is 1-800-7FANNIE.

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