The Federal Housing Finance Agency (FHFA) this week published a final rule in the Federal Register that outlines housing goals for the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac and seeks to establish yearly standards to meet the goals.
The proposed goals for 2025 through 2027 are designed to ensure that the GSEs purchase mortgages that “responsibly promote equitable access to affordable housing that reaches low- and moderate-income families, minority communities, and other underserved populations,” according to information released this week by the agency.
On the single-family side, the FHFA proposes that 25% of the purchase mortgages acquired by Fannie and Freddie go to borrowers earning less than 80% area median income, a drop from the 28% required in the current housing goals. It also seeks a new goal for very low-income purchases (borrowers earning less than 50% AMI) at 6%, down from 7% in the current plans. The income refinance goal of 26% as proposed is unchanged, as is the purchase sub-goal for low-income census tracts at 4%. The minority census tracts home purchase goal as proposed for 2025-2027 is 12%, up from the current 10%.
Within the realm of single-family housing, the GSEs “must meet the benchmark level established in the final rule or meet the actual market level determined retrospectively for the year based on Home Mortgage Disclosure Act (HMDA) data.”
This rule would establish a new compliance evaluation process that differs from the current framework, which requires either of the GSEs to submit a plan for improving its performance if it fails to reach a particular housing goal.
The new guidance instead states that in such an instance, FHFA “will not require a housing plan if the Enterprise’s performance met the level required by newly-defined enforcement factors. These enforcement factors address, in part, the uncertainty in forecasting the market several years in advance as well as the time lag in determining the actual market level retrospectively.”
On the multifamily housing side, each enterprise must “purchase mortgages on multifamily properties with the target share of units affordable to families in each goal category, as well as meet a subgoal for low-income families in small (5-50 units) multifamily properties,” FHFA explained.
FHFA Director Sandra Thompson said that establishing these kinds of goals will help ensure that constituencies are not lost in a broader shuffle of issues across the housing market.
“Given persistent challenges in the housing market, FHFA is proposing benchmark levels that reflect these dynamics and continue to ensure that the Enterprises remain focused on supporting key affordable housing segments while operating in a safe and sound manner,” Thompson said in a statement. “The goals proposed today offer a meaningful and realistic calibration that takes into account current and forecasted economic factors.”
Comments on the proposed rule’s entry in the Federal Register can be submitted until Oct. 21, 2024.
