The Federal Housing Finance Agency (FHFA) February 6 published a final rule establishing the affordable housing goals for the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac for years 2018 through 2020. The rule maintains most of the affordable single-family and multifamily housing goals and subgoals at the same levels from years 2015-2017.
As shown in the table from FHFA above, the rule makes no changes to the single-family goals and subgoals. Specifically, 24 percent of the single-family loans the GSEs purchase each year must be made to low-income consumers (those making 80 percent of area median income, or AMI, or below). In addition, at least 6 percent of GSE loans purchases must be made to very low-income consumers (those earning 50 percent of AMI or below) and 21 percent of the GSEs’ purchases of refinanced loans must be for loans to low-income borrowers.
In the original proposed rule, FHFA proposed increasing the subgoal for loans used to purchase homes in low-income areas from 14 percent to 15 percent. However, the final rule maintains the subgoal at 14 percent. FHFA explains that it decided against increasing this subgoal because it was concerned that many of the GSEs’ loan purchases for homes in low-income areas were mortgages made to high-income borrowers in rapidly developing communities, which were actually increasing borrowing costs for low-income families.
FHFA will continue to measure the GSEs’ compliance with the single-family goals through a dual approach that takes into account not just the benchmark goals but also the overall housing market’s support for affordable lending.
The rule requires Fannie Mae and Freddie Mac to support the development of at least 315,000 rental homes annually that are affordable to renters with incomes at or below 80 percent of AMI, an increase over the previous goal of 300,000. The subgoals for units affordable to very low-income renters (those earning 50 percent of AMI or below) and for affordable units in small multifamily properties (those properties with 5-50 units) will remain at their current levels of 60,000 and 10,000, respectively.
According to FHFA’s 2017 Annual Report to Congress, Freddie Mac met all of its 2016 affordable housing goals and Fannie Mae met its multifamily goals but had a mixed record on its single-family goals. NCSHA summarized the report’s findings in more detail here.