|
HUD Pulls Plug
on Fair Housing Study of GSEs' AU Systems
National Mortgage News
Nov. 10, 2003
The
Department of Housing and Urban Development is burying a study that was supposed
to determine if the automated underwriting systems developed by Fannie Mae and
Freddie Mac discriminate against minority homebuyers.
But a Democratic congresswoman is taking HUD to task for refusing to release the
report, while making copies available to Fannie and Freddie.
Housing secretary Mel Martinez told Dow Jones Newswires that he has problems
with the methodology HUD researchers used in conducting the study.
The AU study was started in 2000 when Andrew Cuomo was secretary of HUD.
In addition, secretary Martinez told the wire service he has concerns about the
release of proprietary information the two government-sponsored enterprises
provided HUD, which is now outdated.
A HUD spokesman confirmed that the secretary has problems with the study and it
will not be released. "It is a closed matter as far as we are concerned," he
said.
In response to the wire story, Rep. Jan Schakowsky, D-Ill., sent a letter
to the HUD secretary, reminding him that she asked for a copy of the study two
years ago.
"I have deep concerns about your decision to allow the companies you regulate to
view the report before providing it to Congress or the public," she says in a
letter to secretary
Martinez.
"This action is both surprising and questionable. Certainly, it makes no sense
to deny Congress and the public access to this report now," Rep. Schakowsky
says in the Oct. 30 letter.
HUD officials declined to comment on the letter last week.
"Releasing the report would serve to inform Congress and the public as to
whether these systems work in a nondiscriminatory fashion," the congresswoman
said.
Release of the HUD study was expected this spring and it was expected to have an
impact on a class-action lawsuit that alleges Fannie Mae's AU system - Desktop
Underwriter- discriminates against minority applicants.
Fannie disputes the allegations and claims Desktop Underwriter complies with
fair lending laws.
The case, Safiyyah Rahmaan v. Fannie Mae, is in discovery right now. But the
plaintiff's attorney, Barry Weprin, said his case does not hinge on the HUD
report.
"We are fairly confident that an objective look will show that their impact is
discriminatory," he said. Mr. Weprin is a partner at Milberg, Weiss in
New York.
A separate class-action lawsuit filed against Freddie Mac claims that its AU
system - Loan Prospector - actually generates credit reports. And Freddie is in
violation of the Fair Credit Reporting Act by prohibiting lenders from sharing
those credit reports with borrowers.
|
|