🎙️ Val’s Vibe – Episode 18: “SPCP Loans: Why Cutting Them Hurts Us All”

In this episode of Val’s Vibe, Valerie Saunders dives deep into the recent FHFA decision to terminate Special Purpose Credit Programs (SPCPs)—programs that have been pivotal in expanding homeownership opportunities for underserved communities. With the NAMB Legislative & Regulatory Conference just around the corner, Val shares timely insights on what this decision means for first-time buyers and the future of responsible lending. 

If you're in the mortgage industry, a policymaker, or simply someone who believes in access to the American dream, this episode is a must-listen. Let’s keep showing up, speaking out, and fighting for equity in homeownership. 

Transcript

  📍 Hey everybody, this is Valerie Saunders. Welcome to another episode of Val's Vibe being that the National Association of Mortgage Brokers is holding their legislative and regulatory conference next week in Washington, DC. By the way, if you are in the Washington, DC area, please definitely join us to go to namb.org, 
highlight events. And NAMB LRC, you can register for free to attend. The primary speaker day is Tuesday, April 1. So based off of the fact that we will or I will be visiting Washington, DC, I wanted to focus on a recent announcement by FHFA in particular Director Bill Pulte, in relation to types of loans called SPCP loans or Special Purpose Credit Program loans. Director Pulte has been extremely busy this past week. He has been utilizing Twitter primarily to. Announce these various orders and rescissions that he is doing. So if you would like to get up-to-the-minute information, definitely go to Twitter and subscribe to Director Pulte's Twitter feed, which is @pulte so you can be notified of these as they come in.

But on March 25th, he posted the re an order issuing a directive to terminate Special Purpose Credit Programs. On March 26th, NAMB put out a statement basically expressing their concern regarding the termination of these programs, that they do serve a critical need and expanding access to affordable home ownership, particularly for first-time and low- to moderate-income borrowers. In 2023 alone, Fannie Mae acquired 921 loans through its HomeReady first SPCP program. They also purchased an additional 4,747 loans through lender-sponsored PCPs, so that totals 5,668 households served by Fannie Mae in 2023. For Freddie Mac, through its Borrow Smart Access SPCP program, they supported 2,472 home buyers and also acquired 6,828 loans from lender-sponsored SPCPs.

So that's a total with Freddie Mac of 9,300 households. In addition, these types of programs are really a critical pathway. According to NAMB, affordable homeownership for many first-time and underserved home buyers, who annually make up about a quarter to a third of home buyers, is NAMB President Jim Nabors quoted NAMB remains steadfast in its commitment to promoting responsible lending and ensuring all Americans have access to mortgage financing.

In addition to advocating for affordability, NAMB continues to lead on regulatory initiatives that strengthen consumer protection, improve industry compliance, and support a sustainable mortgage ecosystem. I know NAMB welcomes conversations with Director Pulte on this particular topic and other recent developments, but in this particular episode, we're focusing on the special purpose credit programs.

I've seen a lot of comments, some misinformed on exactly what special purpose credit programs are. I do wanna mention the Home Ready and Home Possible. Loans under Fannie Mae and Freddie Mac are not part of these special purpose credit programs. So it's the Home Ready First Loans with Fannie Mae and the Borrow Smart and Borrow Smart Access Loans with Freddie Mac.

That in particular TPO lenders do have access to. So through the broker channel, but these are. Transactions that are critical pieces to the mortgage loan ecosystem. Eliminating these loans, what does that really mean for consumers? Unfortunately, it does lead to reduced access to credit.

These SPCP loans really help to bridge the gap for borrowers. You might have the income but not necessarily the generational wealth or traditional credit history to obtain a loan. It also is a wider racial homeownership gap or contributes to a wider racial homeownership gap. Black home ownership is still below 45% and these SPCP loans were really one of the few tools out there making real moves to shift that.

Anytime we lose. Strategic tools to correct systemic issues. It really is a negative on the industry and a negative for consumers. What do we do now? So no one's saying that we don't need or want responsible lending. Of course we do. But there is also a difference between responsible lending and restrictive lending.

SPCP loans provided or proved that you can expand access to credit without necessarily increasing risk. Let's keep in mind these borrowers were vetted. Qualified and in most cases just really needed a leg up to reach the starting line for home ownership. So what does scrapping these programs do?

It doesn't just change these loan options. It really. Can't potentially change lives because, in some cases, these types of programs were really what we're contributing to be able to have those first-time home buyers. Low- to moderate-income borrowers be able to become homeowners. But what do we do now?

If you're in the industry, we have to remember to keep showing up. Keep pushing for lending programs. Of course, always support your local and national associations like the National Association of Mortgage Brokers, who are speaking out and advocating for our industry in Washington, dc If you're a consumer.

Don't give up hope. There are still plenty of down payment assistance programs out there. And of course, also working with an independent mortgage broker means you've got someone in your corner who knows how to find the best options for you. And if you're a policymaker that's listening, please, let's keep the conversation going.

Let's keep in mind to build policies that expand homeownership responsibly and don't restrict it unfairly. I know that SPCP loans may be paused for now, but of course the mission of those of us who advocate within the industry and especially the National Association Mortgage Brokers, isn't paused.

We're always here to keep fighting for access. Fighting for equity, fighting for everyone's right to a piece of the American dream. So I appreciate you listening to this episode of Val's Vibe. Please share this episode with somebody who you think might need to hear it. Also, don't forget to subscribe to my YouTube channel.

Follow me on Facebook, LinkedIn, TikTok, and Instagram, and until next time. Thank you for tuning into another episode of Val's Vibe. I really appreciate it and I look forward to speaking with you again soon in the future.