National CRE News In Your Inbox.
Sign up for Connect emails to stay informed with CRE stories that are 150 words or less.
FHFA Steers GSEs Toward Affordable Product
The Federal Housing Finance Agency is putting more of an emphasis on affordability in setting its proposed housing goals, covering single-family and multifamily mortgages, for Fannie Mae and Freddie Mac for 2022 to 2024. The proposed housing goals are designed to ensure the GSEs “responsibly promote equitable access to affordable housing that reaches low- and moderate-income families, minority communities, rural areas, and other underserved populations,” says FHFA. It’s accepting public comment on the proposed goals through Oct. 17.
This year, FHFA is proposing two new single-family home purchase subgoals to replace the existing low-income areas subgoal. One new subgoal targets minority communities, while the other continues to target low-income neighborhoods.
The new minority census tract subgoal is designed to improve access to fair and sustainable mortgage financing in communities of color. A mortgage qualifies under the new subgoal if the borrower has an income at or below area median income (AMI); and the property is in a census tract where the median income is below AMI and minorities make up at least 30% of the population.
“The new subgoal for minority census tracts was designed to help preserve and support affordable housing in communities of color,” said FHFA acting director Sandra L. Thompson. “The subgoal benefits families at or below area median income, allowing them to stay in the communities they helped build. The [GSEs’] housing goals over the next three years should support equitable access to sustainable affordable housing opportunities in a safe and sound manner that bolsters the health of communities.”
To meet a multifamily housing goal or subgoal, a GSE must purchase mortgages on multifamily properties (properties with five or more units) with rental units affordable to families in each category. FHFA measures Enterprise multifamily goals performance against benchmark levels set in advance.
Current multifamily goals, in effect through the end of 2021, target 300,000 units of low-income housing. The 2022-2024 goal increases that target to 415,000 units, including 88,000 very low-income units. Within the low-income goal are 23,000 units in small (five- to 50-unit) multifamily properties, up from the current level of 10,000.
Fannie and Freddie were placed into conservatorship following the 2008 financial crisis, and it’s not clear when they’ll reach an exit. “While the Enterprises remain in conservatorship, they continue to have the mission of supporting a stable and liquid national market for residential mortgage financing,” FHFA says.
FHFA has continued to establish annual housing goals for Fannie and Freddie and to assess their performance under the housing goals each year during conservatorship.
- ◦Financing
