The election of Zohran Mamdani as New York City’s new mayor has pushed the housing affordability debate back to the forefront. Too often, proposed “solutions” reveal a misunderstanding of proper functioning markets. Radically overhauling existing and interconnected frameworks are difficult to implement and rarely succeed.
However, it’s seemingly insignificant conditions that many times have the most impact on housing. One of these is the tri-merge credit reporting model. This niche subject has a profound impact on consumer access to the mortgage market which most consumers are not aware of.
The Federal Housing Finance Agency (FHFA) is the conservator of Fannie Mae and Freddie Mac, which hold a majorityof the mortgages in the United States. Mortgage lenders want to sell their mortgages to Fannie and Freddie because it provides liquidity for the mortgage lender. But for Fannie and Freddie to consider purchasing these mortgages, they have requirements set by the FHFA that the lender must meet. This ensures mortgage viability as the government takes on the risk.
Leah Locke is a policy analyst at the American Consumer Institute, focusing on finance and insurance policy. The American Consumer Institute is a nonprofit education and research organization. For more information about the Institute, follow us on X @ConsumerPal.