Booster Shots for Affordable Housing : Two huge programs will be offered in the public and private sectors

The American dream of owning a home often turns out to be no more than a dream in pricey California, where too many people are unable to get a home loan. But now, as interest rates remain low, millions of dollars of new financing are being made available for affordable housing.

Of course the two new programs that were announced last week are no cure-all, but they are welcome and long overdue. Traditional lenders historically have catered to the middle and upper housing market at the expense of the low end, where the goal of owning a home has been the most elusive.

This tendency to favor the more affluent borrower has become an institutional problem. Barriers to borrowing have been particularly severe for minorities and low-income workers, according to studies that have identified racial discrimination and biases in lending practices. In any community, homeownership is a key to building economic stability.

Last week the Federal National Mortgage Assn., the nation’s largest home mortgage investor, said it will commit $1 trillion between now and the end of the decade to help finance homes for 10 million families and the communities most in need. The Fannie Mae program is designed to reach families with incomes at or below the median for the communities. Minorities, new immigrants, central city residents and people who have special housing needs are expected to be among the beneficiaries.

In a separate development California’s mega-rich state pension funds disclosed that they will invest millions in a remarkably affordable housing deal that should yield 5,000 apartments, townhouses and homes for renters and first-time buyers. This unprecedented infusion of private pension funds into what had been a public effort is laudable. It is also very necessary because federal budget deficits and other fiscal constraints preclude greater government involvement.

The ambitious project--$340 million in construction loans--involves Oakland’s World Savings & Loan Assn., the Ford Foundation, the California Public Employees Retirement System (CalPers), the California State Teachers Retirement System (CalSters), Wells Fargo, Bank of America and Bridge Housing Corp., a nonprofit developer.

Is funneling such huge amounts of money into affordable housing altruism or charity? Neither. These institutions look at these investments as good business. But with their investment, they demonstrate an admirable social conscience.