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Fannie Sees Flaws in Group’s Black Mortgage-Denial Claims

Fannie Mae said it sees “serious flaws” with a figure for the denial rate of black mortgage applicants cited by the president of the home-loan industry’s largest trade group.

Mortgage Bankers Association President David Stevens said this week that 2012 Home Mortgage Disclosure Act data showed a 56 percent denial rate for blacks seeking home-purchase loans eligible to be sold to taxpayer-backed Fannie Mae and Freddie Mac, which are known as government-sponsored enterprises.

“Some advocates in Washington fear changing the GSEs because they want to protect the underserved and minorities from being crowded out of the housing market,” Stevens said in remarks prepared for a May 19 speech. “However, data clearly shows that they are being left out now.”

Fannie Mae spokesman Andrew Wilson said that “we believe there are serious flaws with how this HMDA data was analyzed and characterized.”

The Washington-based company is “committed to working with all stakeholders to ensure access to safe, affordable mortgage credit in every community,” he wrote today in an e-mail.

A Federal Reserve report in November showed a 32 percent denial rate for blacks on “conventional” purchase loans in 2012 based on HMDA data.

Pre-approval Denials

Stevens said today in a statement that the group “stands by its analysis” and is “disappointed at the direction of the debate which obscures the alarming trend for African American borrowers.” He said it’s appropriate to include pre-approval denials and manufactured housing loans in the calculations, which others exclude.

Graham Fisher & Co. analyst Josh Rosner, co-author of a book on Fannie Mae and Freddie Mac’s role in the housing crisis and a critic of legislation that would wind down and replace them, also questioned the figure cited by the MBA.

“MBA is a trade association and its efforts to influence GSE reform legislation have been clear,” Rosner said today in an e-mail. “When their methodology strongly contradicts mainstream analysis,” it “should be scrutinized thoroughly. This is especially true when, in furtherance of their political interests, it is employed to suggest racial bias.”

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