According to the Federal Housing Finance Agency (FHFA) Annual Housing Report for 2018, released today, Fannie Mae met all its affordable housing goals in 2017, while Freddie Mac met its multifamily goals but had a mixed record on its single-family goals. The report covers all Fannie Mae’s and Freddie Mac’s (collectively, the Government-Sponsored Enterprises, or GSEs) affordable housing activities in 2017.
The bulk of the report focuses on Fannie Mae’s and Freddie Mac’s 2017 performance under their 2015-2017 Affordable Housing Goals that establish minimum expected levels of annual support for affordable single-family and multifamily housing lending.
FHFA uses a dual approach to measure the GSEs’ compliance with their single-family goals and subgoals. Under this approach, FHFA establishes a benchmark goal that requires a certain percentage (24 percent for 2017) of the loans purchased by a GSE each year be made to low-income consumers (those making 80 percent or less of area median income, or AMI). The GSEs are expected to meet this benchmark goal unless the share of home loans in the overall lending market made to low-income consumers falls below the benchmark. In that case, the GSEs’ level of support for low-income lending will simply have to match that of the overall market in order for them to be considered compliant. FHFA uses an identical approach toward measuring compliance with its single-family subgoals for loans to very-low-income consumers (those at 50 percent of AMI or below), loans used to purchase homes in low-income areas, and refinance loans for low-income homeowners.
In the report released today, FHFA finds that Fannie Mae achieved all of its single-family goals and subgoals for 2017. Slightly more than 25 percent (25.5) of Fannie Mae’s loan purchases were loans to low-income consumers, above the 24 percent benchmark goal and the 24.3 percent level for the market as a whole. Fannie Mae just missed the six percent benchmark goal for loans to very-low-income individuals but matched the overall market at 5.9 percent.
Almost 23 percent (22.9) of Fannie Mae’s loan purchases were for homes in low-income areas, exceeding the 18 percent benchmark and the overall market share of 21.5 percent. At 24.8 percent, Fannie Mae also exceeded its benchmark goal of 21 percent of refinanced loan purchases being made for low-income homeowners and was slightly below the market level.
Freddie Mac, which met all its single-family housing goals in 2016, had a mixed record for 2017. Its purchases of loans for low-income consumers represented 23.2 percent of its total 2016 purchases, slightly below the benchmark and market levels. Freddie Mac also fell just short of its goal for very-low-income consumers. Such loans accounted for 5.7 percent of Freddie Mac’s 2017 loan purchases, compared to its 6 percent benchmark and 5.9 percent market levels. Freddie Mac did meet its purchase goals for loans made to borrowers in low-income areas and purchase of refinanced loans for low-income borrowers. In both cases, the firm exceeded its benchmark goal and fell short of the market as a whole.
FHFA’s current findings of non-compliance with the affordable housing goals are preliminary. Freddie Mac may submit to FHFA any additional information it wants the agency to consider as it makes its final determination. If, upon its final review, FHFA finds one or both of the firms to be non-compliant, it will consider possible penalties.
Multifamily Goals Met
As they did in each of the last two years, both GSEs exceeded their multifamily goals for 2017. The goals required them to finance the development of at least 300,000 units affordable to low-income renters earning 80 percent of AMI or below; at least 60,000 units affordable to very-low-income renters earning 50 percent of AMI or below; and at least 8,000 units located in small multifamily properties that have between 5 and 50 units.
Freddie Mac’s support for affordable multifamily housing was strong in 2016, improving its support for each subgoal over 2016. Specifically, it financed more than 408,000 units affordable to low-income renters; more than 92,000 units affordable to very-low-income renters; and just under 40,000 affordable units in small properties.
Fannie Mae also financed more loans in each multifamily goal category in 2017. It financed 401,000 units affordable to low-income renters; more than 82,000 units affordable to very-low-income renters; and about 12,000 affordable units in small properties.