Perspectives

Meeting the Housing Challenges of the Next Generation

Jonathan LawlessEach generation faces its own set of challenges to finding an affordable home. The obstacles facing millennials reaching for homeownership or an affordable home to rent are uniquely complex.

Whether they choose to rent or buy, millennials face the hard reality that affordable options are few, and in many rural and urban communities, the supply of affordable homes has dwindled. Many younger households have an added burden of college debt, a phenomenon not widely shared by their parents. Student debt saddles many young Americans and makes it more difficult to set aside a down payment or manage the monthly expenses that come with owning a home.

To help address these challenges, Fannie Mae is collaborating with its lender partners and industry innovators to develop new solutions for a new generation of homeowners by testing and learning from innovative ideas. A number of efforts are in different stages of development or testing.

The pilots being tested by Fannie Mae reflect the changing demographics and evolving financial needs of America's families now and in the years to come. Today's households and those of tomorrow will be very different from previous generations – demographically and financially. Our pilot programs recognize that, beyond their bank accounts and hurdles such as student debt, the lifestyles, tastes, and preferences of today’s new households reflect the on-demand, consumer-centered world in which they came of age.

The pilots can be likened to a Silicon Valley R&D lab. Our research will focus on new and innovative ways to address challenges to affordable homeownership that a business-as-usual approach can’t tackle. We'll develop these ideas with lenders willing to test them with us; then we'll apply what we learn from the tests to improve the solutions. The pilots do not reflect a change in credit standards. Rather, they aim to test new technologies and methods to help us learn non-traditional, yet safe, ways of looking at traditional problems.

Our aim is to work with lenders and partners who share our goal of finding innovative, safe, and sensible housing solutions.

Pilots typically start with one or more lenders or other participants who sign on for our "test-and-learn" approach. This approach allows us to carefully measure and monitor the results, scale ideas that work, and discontinue ones that do not. Each pilot will be limited in duration and will involve a limited number of loans. We will manage the risk for each pilot prudently before we decide to expand any pilot further. 

Once a new piloted mechanism, process, or system is proven, evaluated, and vetted by our partners and regulators, we intend to make the concept available to our customers generally.

We will learn from our failures, and build on our successes. Our hope: A new generation of families looking for their version of the American dream will have new ways of achieving it.

Jonathan Lawless
Vice President, Product Development and Affordable Housing

February 9, 2018