On The Market

211: The New Reform That Could Unlock $1B+ for Affordable Housing w/Sharon Cornelissen

Apr 25, 2024

Sharon Cornelissen, Director of Housing at the Consumer Federation of America, reveals how $7.3 billion in housing subsidies isn't benefiting homebuyers. She discusses the need for reform in the Federal Home Loan Bank system to redirect funds to affordable housing, potentially unlocking over $1 billion for housing investments. Sharon highlights the challenges in the mortgage market and emphasizes the importance of regulations for balancing profit motives with public benefits.

31:42

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Episode guests

Sharon Cornelissen

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Quick takeaways

Majority of housing subsidies are diverted to banks instead of homebuyers, prompting the need for reforms.

The Federal Home Loan Bank system requires reform to ensure effective allocation of $7.3 billion subsidies.

Proposed reforms aim to increase affordable housing funding by 30%, potentially unlocking an additional $1.5 billion annually.

Deep dives

Overview of Federal Home Loan Banking System Subsidies

The Federal Home Loan Banking System receives $7.3 billion in subsidies annually, aimed at providing liquidity for housing and community development. Despite the substantial budget, it's questioned whether these subsidies effectively impact affordability and the housing market.

Introduction

2min

Navigating Housing Challenges in Detroit

9min

Banking, Real Estate, and Investments

6min

Evolution of the Mortgage Market and the Challenges with Government-sponsored Enterprises

7min

Reforming Federal Home Loan Banks for Affordable Housing

6min

Proposed Reform to Increase Funding for Affordable Housing Programs

2min

Exploring the Challenges of Affordable Housing and Partnerships

3min

America is in need of affordable housing; we’re all aware. Buying your first home has become increasingly challenging for everyday people. This is where housing subsidies come in. Federal housing subsidies were created over ninety years ago to help Americans get into the housing market and strengthen the economy, but in 2024, much of that money may not be headed to homebuyers—it could be going to banks instead.

On today’s show, we talk to Sharon Cornelissen, Ph.D., Director of Housing at the Consumer Federation of America. Sharon’s mission is to advocate for safe, affordable housing with equitable mortgage lending for American consumers. In this episode, Sharon illuminates the shocking fact that most Americans are completely unaware of—billions in housing subsidies AREN’T being used for housing. So, if they’re not going to homebuyers, where are all the subsidies headed?

Sharon discusses the banks that could be receiving a significant amount of these subsidies without providing any benefits for homebuyers, how the Coalition for Federal Home Loan Bank Reform is trying to change this, and how, if they succeed, affordable housing could see a MASSIVE influx in subsidies, that could help the housing market tremendously.

In This Episode We Cover:

Where the $7.3 billion in housing subsidies is actually going

The Federal Home Loan Bank system and why it’s in dire need of reform

How the mortgage market changed over the past century and why we’re seeing these problems

How over $1 billion could be directed straight towards affordable housing

How Sharon picked up a $7,000 house in one of the most devastated real estate markets

And So Much More!

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