[Congressional Record Volume 140, Number 144 (Thursday, October 6, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: October 6, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                     JIM JOHNSON--CEO OF FANNIE MAE

                                 ______


                         HON. MARTIN OLAV SABO

                              of minnesota

                    in the house of representatives

                       Wednesday, October 5, 1994

  Mr. SABO. Mr. Speaker, I rise to recognize the efforts and 
achievements of Jim Johnson, Chairman and CEO of the Federal National 
Mortgage Association, also known as Fannie Mae. Under Jim's leadership, 
Fannie Mae will open a partnership office in the Twin Cities that will 
create new opportunities to those who have been locked out of the 
mortgage finance system.
  I applaud Fannie Mae's actions in Minnesota and across the Nation. We 
all are fortunate that Jim Johnson has chosen to focus his talent and 
energy on our Nation's housing finance system. Through Fannie Mae, he 
is revolutionizing mortgage finance and opening new opportunities to 
thousands of Americans. With Jim Johnson leading the way, there are few 
limits to what Fannie Mae can achieve in affordable housing.
  I would like to share with you an editorial and article from the 
Minneapolis Star Tribune regarding Jim Johnson's accomplishments as CEO 
of Fannie Mae.

         Fannie Mae--A $1 Trillion Promise to House 10 Million

       By now, periodic reports tracking bias in mortgage lending 
     seem as common as a change in the seasons, suggesting that 
     however unacceptable that bias is, rooting it out is a very 
     difficult task. That's why a new, high-profile effort to end 
     discrimination as an obstacle to homeownership is especially 
     welcome.
       Last Saturday, top brass from the Federal National Mortgage 
     Association (Fannie Mae) joined some of Minnesota's 
     congressional delegation and the two Twin Cities mayors to 
     initiate a local chapter to a very ambitious plan aimed at 
     helping Americans with homeownership. The Twin Cities will be 
     among 26 U.S. metropolitan areas to host an office linking 
     renters, minorities, recent immigrants and people with low to 
     moderate incomes with $1 trillion in mortgage lending that 
     targets these groups.
       Make no mistake about the size of this effort; it's huge. 
     If the six-year program is successful, about 10 million more 
     Americans will become homeowners.
       Apparently such a massive effort is needed to excise from 
     the lending process the demons of racial discrimination, lack 
     of information, inadequate homebuyer counseling and arbitrary 
     barriers in the housing finance system. Those barriers remain 
     formidable despite honorable attempts by some lenders in 
     recent years to ensure approval of more loan applications 
     from minorities and low-income people. Federal Reserve Board 
     studies released each fall still describe persistent mortgage 
     bias and make a case that even more needs to be done. For 
     instance, a study last year showed that lenders rejected 
     applications from blacks at more than twice the rate of those 
     from whites in 1992.
       Fannie Mae is a privately managed, shareholder-owned and 
     profit-oriented corporation, not a government institution. It 
     has become the nation's largest source of home mortgage funds 
     by investing in mortgages originated by banks, thrifts and 
     mortgage companies. Lenders are able to continually issue new 
     loans by grouping old ones together and selling them to 
     secondary market corporations like Fannie Mae, which buys 
     only those loans that meet its underwriting criteria.
       For years, lenders have asserted that they weren't 
     responsible for mortgage lending biases. The problem, they 
     said, was underwriting guidelines set by Fannie Mae and other 
     secondary market agencies. Such excuses soon will become 
     untenable as corporations such as Fannie Mae move to rewrite 
     underwriting guidelines with an emphasis on mortgage access 
     for home-aspiring members of minority groups, low-income 
     people, renters and others who have suffered lending bias. 
     Not only is that new emphasis on equity good mortgage 
     business, it is good policy for building strong families and 
     stable American communities.
       Fannie Mae is providing a fresh opportunity for many whose 
     dreams of homeownership had grown dim. They should take up 
     Fannie Mae's offer by dialing 1-800-7FANNIE (732-6643). Call 
     the number and find your way home.
                                  ____


  Fannie Mae to Open Twin Cities Office as Part of Plan to Boost Home-
                                 Buying

                           (By Neal Gendler)

       The Nation's largest source of home mortgage money will 
     open a Twin Cities office as part of a national commitment to 
     provide $1 trillion over seven years to help people of low 
     and moderate incomes buy 10 million homes.
       James Johnson, chairman of the Federal National Mortgage 
     Association--known as Fannie Mae--is to announce plans for 
     the ``Partnership Office'' today at a news conference after a 
     bus tour of Twin Cities neighborhoods with public officials.
       ``Fannie Mae and the Twin Cities will work together to 
     develop a five-year strategic plan to address the cities' 
     major housing needs.'' Johnson said in a statement. ``Our 
     commitment . . . to the entire state is to make home 
     ownership more accessible than ever before.''
       Johnson, who is from Benson, Minn., was Walter Mondale's 
     executive assistant when Mondale was vice president. Fannie 
     Mae is a congressionally chartered, shareholder-owned company 
     that provides money for mortgages by purchasing them from 
     lenders with funds raised by selling bonds or securities 
     backed by the mortgages.
       The Twin Cities office, the first to serve an entire state, 
     will be the sixth of 10 to be announced this year and one of 
     25 to be opened by the end of 1996. It is to open in December 
     in one of the two central cities, said Jack Hayes, Fannie Mae 
     senior vice president and director of the Mid-west office, 
     which serves 10 states from Chicago.
       It will deal with members of the lending community, 
     nonprofit organizations and state and local government 
     people, but not directly with consumers.
       But Fannie Mae hopes consumers will notice a difference, 
     because the offices are intended ``to expand the 
     corporation's capacity to serve more people, especially 
     minorities and new immigrants.''
       Hayes said the office is needed because ``we have somebody 
     from this office in the Twin Cities literally every week.'' 
     Fannie Mae buys mortgages from more than 20 lenders in 
     Minnesota, and through July of this year it bought about 
     32,000 home mortgages worth nearly $3 billion in the state. 
     That includes 12.126 ``affordable-housing'' loans worth 
     $848.1 million, he said.
       He said that Minnesota is a leader in the development of 
     affordable housing and that cooperation among city 
     government, lenders and nonprofit agencies is uncommonly 
     high.
       Seventy-two percent of Minnesota households own their 
     homes, ahead of the national figure of 64 percent, according 
     to 1990 census data, but in St. Paul, the number is only 54 
     percent and Minneapolis is at 50 percent, Fannie Mae said. 
     Hayes said economic data show good prospects for ownership 
     here because the area has a strong and diverse economy, the 
     state has per-capita income 16 percent above the national 
     average and housing is considered affordable.
       The Partnership Offices and the $1 trillion commitment are 
     part of an 11-point program that is intended to help break 
     down barriers for potential borrowers. Key goals include 
     reducing origination costs for loans of $50,000 or less and 
     using technology to reduce paperwork, speed loan origination 
     and cut loan costs $1,000.
       Among the other key points of the plan are national 
     consumer outreach using multilingual television, radio and 
     print advertising, direct mail and other techniques; working 
     to ``make elimination of discrimination the No. 1 priority of 
     every participant in the mortgage finance system,'' and a 
     multilingual ``New Americans'' campaign to reach the 8 
     million immigrants expected in the 1990s.
       The $1 trillion is targeted at people at or below the 
     median income in their communities; minority families; new 
     immigrants; people living in central cities; and other 
     underserved communities, perhaps rural areas that need more 
     affordable housing, and people with special housing needs 
     like the elderly, Fannie Mae spokesman Gene Eisman said.
       Fannie Mae plans to begin advertising availability of such 
     loans next year and will offer a toll-free number.

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