Fannie Mae CEO Almodovar in Miami is focused on unique barriers for future homeowners
Fannie Mae Chief Executive Officer Priscilla Almodovar says it is important for people to own homes even if they do not have a credit history. She recalls how her parents moved from Puerto Rico to New York City for better opportunities in the 1950s, making her aware of the steps needed for upward mobility. She said she believes that begins with homeownership and wants young potential homebuyers to know it is possible.
Almodovar, 56, spoke to the Miami Herald on Wednesday while attending the National Association of Hispanic Real Estate Professionals’ L’ATTITUDE conference at the Fontainebleau hotel in Miami Beach. Almodovar discussed the work Fannie Mae is doing to support people of color buying homes and how that reflects her own personal journey. This interview has been edited for clarity.
How does your background as a Latina woman from New York City reflect the work Fannie Mae does to help people buy homes?
I am what Fannie Mae is about. My parents left Puerto Rico because they were poor. They came here for a better life. We were renters. I still remember until I was 4 years old that we lived in a third-floor walk-up apartment and they saved to buy a home. I believe home ownership is still in this country the number one way for wealth generation and that’s becoming harder and harder for people. Growing up, it was a Puerto Rican neighborhood and I thought everybody was Puerto Rican for nine years of my life.
Renters weren’t looked down upon versus home ownership. It was a very diverse neighborhood. Everyone was Puerto Rican and it wasn’t looked down upon. New York is one of those rare cities where there are more renters than homeowners. Most of the country is 65% homeowners and renters are the minority. Nationally, of 124 million households, 65% are homeowners.
We provide liquidity for mortgage credit for mortgages. We don’t deal with the consumer. We buy mortgages from lenders and bankers. So we set the standards right. For the access to the credit, we say we’re willing to buy a 30-year fixed-rate mortgage with a borrower, these are the demographics, and if they deliver that, we buy it. Today, one in four mortgages we own are because of that. It’s critical when you apply for a mortgage to know those standards.
In what way is Fannie Mae helping people of color with little to no credit history buy homes?
I’m looking at who the future homeowners will be ten years from now. According to the demographics, of 90% of those people of color, 70% of those are Latinos. That’s why we’re very much focused on what their unique barriers are. One of them is education. Being ready to own a home means cleaning up your credit file. We’re finding many Latinos don’t have a credit file. They don’t have any credit, just savings. We’re educating people about the whole journey of how to save for a home, all the closing costs, all the stuff you have to do and then, you could rent or buy.
Being a good renter is the same thing as being a good buyer. People own a home and then don’t realize when you own a home that there is a lot of stuff that comes with owning a home. Your roof may leak and other things can happen. It’s a whole journey of maintaining the home as well. Our HomeView educational course which launched in early 2022 is an end-to-end course that someone can take in English or Spanish and it shares just that.
The second thing we’re doing is saying that there are a lot of people, especially for first-time homeowners, that don’t have credit history yet. If you can prove to a lender that you’re a good renter and that you’ve been paying your rent or other bills on time you could be creditworthy.
What things are Fannie Mae working to address in better understanding the homebuyers of tomorrow? High interest rates have dissuaded many people from considering home ownership.
Home prices are super high and mortgage rates are super high just from last year. Right now, in most parts of the country, it’s actually better to rent than to own. That’s a weird dynamic. What’s going on now in the economy is a little bit unusual. It’s never that dramatic. We are working to understand how to make the homebuying experience better for the 25-year-old or 30-year-old homeowner. That’s number one. Number two, the workforce is changing. Before it was mostly W-2 income. Now, there are a lot of jobs in the gig economy. Fannie Mae is finding different ways to underwrite those individuals that aren’t traditional earners.
Our economists think high interest rates are going to be here for longer, just given where inflation and the economy is. We’ll be pretty steady through the first half of 2024. We do see not a soft landing; maybe a mild recession. When that starts happening, maybe rates start coming down. But our economists think they probably won’t come down until maybe 2025.
Something has to give. The labor market is still strong, unemployment is still low. That’s why we think the rates will be higher for longer, because the economy is still doing very well.
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