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Mortgage Partnership Initiates New Efforts

Thursday, January 1, 1998

For the past couple of years, the Community Affairs staffs of six Federal Reserve Banks—St. Louis, Boston, Chicago, Cleveland, New York and San Francisco—have engaged in Mortgage Credit Partnership (MCP) projects in their respective Districts. The goal of these MCP projects was to bring together leaders from financial institutions, real estate agencies, appraisal agencies, insurers and others to eliminate disparate treatment in the home-buying process and help ensure equal access to all financially qualified home seekers.

Several organizations are initiating local programs or policies that address barriers to minority homeownership identified through the MCP projects. Some of the MCP recommendations (listed at right) for eliminating those barriers are deemed to have national implications. During 1998 and into 1999, Community Affairs officers of the participating Federal Reserve Banks are presenting these recommendations to national trade associations and other appropriate groups to request their help with implementing the recommended changes. For more information on MCP efforts, call Glenda Wilson at (314) 444-8317.

Real Estate

  • Address stated preferences for conventional financing: Multiple Listing Service policies should be amended to indicate that properties shall not be marketed in a manner that indicates a preference for conventional financing only.
  • Promote consumer awareness and education: A brochure is being designed that highlights web sites consumers can access to educate themselves about home buying.

Credit Scoring

  • Develop a "Best Practices Guide" for users of credit scores: This would further educate mortgage lenders about the role of credit scoring in the underwriting process and in determining the price of a loan. The Fed currently is discussing this idea with representatives of Fair Isaac, Fannie Mae, Freddie Mac and other experienced lenders.


  • Review formal and informal underwriting guidelines for homeowners insurance and consider adopting formal criteria.
  • Consider implementing an industry-wide practice of providing adverse action notices when coverage is declined, canceled or not renewed, specifying the reason for declination: Providing such a notice would help a homebuyer understand the reason for the denial or cancellation.
  • Encourage major insurance companies to develop and implement a plan to assure office and agent accessibility in all communities: The lack of access to insurance agents in inner-city communities creates a barrier to equal access and affordability of homeowner insurance to many minority and low-income residents.


  • Develop an "Urban Appraiser" certification program: Recognizing the challenges and complexity inherent in conducting appraisals in urban neighborhoods, appraisers should have a standardized level of education and experience for qualification as an urban appraiser.