Freddie Mac and Fannie Mae have each moved to offer expanded home ownership opportunities to an underserved minority population.
In December, Fannie Mae announced that it was using a wrinkle in the Federal Deposit Insurance Corporation�s (FDIC) regulations to make a significant deposit investment in Bank2, a state chartered Federal Reserve Member Bank in Oklahoma owned in its entirety by the Chickasaw Nation.
FDIC insures deposits in its member banks up to a maximum of $100,000 per depositor. However, under the Certificate of Deposit Account Registry Service (CDARS), depositors are encouraged to support financial institutions by investing in certificates of deposit in excess of this amount which will be fully FDIC insured.
Fannie Mae made the $1.5 million deposit in Bank2 through its Community Development Financial Institution program. This program is designed to help strengthen the financial capability of institutions, and enhance their capacity to increase affordable housing opportunities within their communities.
A spokesman for the bank said that the bank has expanded its affordable housing lending efforts with education and taken its numerous home mortgage products geared to Native Americans nationwide. Bank2 services 78 tribes nationally.
In the meantime, Freddie Mac has joined with Devon Bank in Chicago to expand opportunities for Muslims living in Illinois and nine other states to become homeowners while still observing traditional Islamic restrictions on paying interest on mortgages and other types of debt.
The bank has worked with the Shariah Supervisory Board of American and other U.S. and overseas Islamic scholars to devise mortgage products that are Shariah compliant.
According to a press release from Freddie Mac, the bank�s �Islamic housing finance model uses carefully tailored real estate financing documents that are in compliance with state and local law and employ the Islamic �murabaha� trade model to avoid objectionable concepts present in traditional loans.�
Freddie Mac has agreed to purchase many of the financing contracts written by Devon, thus expanding Devon�s ability to reach more potential home buyers. There are an estimated 2.5 million Muslim households in the United States.