Skip to Content
Streetsblog USA home
Streetsblog USA home
Log In

The Urbanist Case Against Fannie Mae and Freddie Mac

The Congress for the New Urbanism (CNU), an advocacy group working to reform local development practices, is seizing on House Financial Services Committee Chairman Barney Frank's (D-MA) recent call for a new system of housing finance to replace government-controlled Fannie Mae and Freddie Mac.

liveworkplay_0726_B_227477l.jpgMixed-use developments, such as Atlanta's Atlantic Station (above), are often incompatible with Fannie and Freddie's rules. (Photo: AJC)

The CNU's concerns about Fannie and Freddie, which the government has used for more than 40 years to promote home ownership by backstopping trillions of dollars in mortgage loans, predate the government's takeover of the two entities in 2008.

Urbanists' frustrations with Fannie and Freddie stem from a key fact: both mortgage guarantors will not deal in home loans for properties with more than 20 percent of space set aside for non-residential use. Plans for walkable, mixed-use complexes that combine housing, retail, and office space, therefore, are often out of luck.

"Every Main Street in America violates Fannie Mae's and Freddie Mac's
rigid standards," CNU President John Norquist said in a statement yesterday reiterating his group's support for housing finance reform.

Citing "plenty of mixed-use streets" in major cities where Fannie and Freddie have played no role in development, Norquist added: "These neighborhoods often have
impressive purchasing power, transit-service and the potential to be
sites of new opportunity and green redevelopment, but this flawed
government-subsidized lending approach works to keep them locked in a
pattern of disinvestment."

Norquist and fellow urbanists have reason to hold out hope for government housing support to take on a more pro-urban cast in the coming years. The Obama administration's new inter-agency sustainable communities task force plans to spend some of its initial $150 million allocation on encouraging the issuance of "location-efficient" mortgages that take lower transportation costs into account, rewarding borrowers who move to more walkable or transit-rich areas.

But where Fannie and Freddie is concerned, Congress has shown little appetite to make the difficult choices necessary to phase in a new framework for what's known as the "secondary mortgage market."
Treasury Secretary Tim Geithner followed Frank's comments by admitting to PBS that restructuring the mortgage giants probably would not occur this year, calling it "a complicated thing to get right."

And even as Frank predicted that lawmakers would work this year on a new face to replace Fannie and Freddie, he did not address the charges of anti-urban bias long leveled by Norquist's CNU. Less than one year ago, however, Frank publicly questioned Fannie and Freddie's decision to tighten their rules on lending for all-residential condo developments.

Stay in touch

Sign up for our free newsletter

More from Streetsblog USA

Tuesday’s Headlines Fix It First

How voters incentivize politicians to ignore infrastructure upkeep. Plus, are hydrogen trains the future of rail or a shiny distraction?

April 23, 2024

Why We Can’t End Violence on Transit With More Police

Are more cops the answer to violence against transit workers, or is it only driving societal tensions that make attacks more frequent?

April 23, 2024

Justice Dept., Citing Streetsblog Reporting, Threatens to Sue NYPD Over Cops’ Sidewalk Parking

The city is now facing a major civil rights suit from the Biden Administration if it doesn't eliminate illegal parking by cops and other city workers.

April 22, 2024

Five Car Culture Euphemisms We Need To Stop Using

How does everyday language hide the real impact of building a world that functionally requires everyone to drive?

April 22, 2024
See all posts