The Federal Housing Finance Agency (FHFA) has submitted a proposed rule to establish a framework for affordable housing goals for the 12 Federal Home Loan Banks (FHLBanks) it oversees for publication in the Federal Register. FHFA is mandated to establish such goals both for FHLBanks and for the two government sponsored enterprises, Fannie Mae and Freddie Mac, under provisions of the Housing and Economic Recovery Act (HERA) of 2008. Publication of the rules will signal the beginning of a 45 day period during which the public is invited to review the rules and submit comments.
The purposed rule would define four housing goals for the Banks purchase of mortgages under the system's Acquired Member Assets (AMA) Programs on a basis similar to that used for the GSEs. The rule would require three separate goals for purchase money mortgages that would separately measure performance on loans to low-income families, for families in low income areas, and for very low-income families. A separate goal for refinancing mortgages would measure performance on refinancing for low-income families.
FHFA is proposing to establish a volume threshold that would need to be met by a Bank before it would be subject to the proposed housing goals. This threshold is intended to ensure that Banks with significant AMA volume in any year would be subject to the housing goals while banks with a relatively low annual volume of AMA-approved mortgages can continue to serve all PFIs without being subject to these goals. FHFA said it believes that the housing goal mission objective of expanding access to mortgage finance to low-income families and families in low-income areas be balanced against the Banks' need to provide liquidity to small members and the communities they serve. FHFA is proposing that this volume threshold be set at $2.5 billion.
The rule would establish single-family housing goals that include an assessment of a Bank's performance as compared to the actual share of the market that fits the criteria for each goal. FHFA is proposing to calculate the goals-qualifying shares of the district-level primary mortgage market using all mortgages originated within the geographic boundaries of each district for properties located in that district. All mortgages purchased by a Bank that meet the requirements of the proposed regulation would count toward the Banks goals regardless of where the mortgages are located, but the market share against which the Bank's performance would be evaluated would be the market share of mortgages located in the district. A Bank would meet its housing goal if its annual performance meets or exceeds the actual share of the market in that district that fits the criteria for one of the four goals for the year. The housing goals would not apply until an individual Bank reaches the dollar volume threshold of $2.5 billion.
The proposed housing goals are to be market based in a manner largely consistent with the goals for the GSEs, measuring the Banks' single-family housing goals performance relative to the actual goals-qualifying shares of the primary mortgage market during the year in their districts. The public information on the goals-qualifying shares will not be available until the release of Home Mortgage Disclosure Act (HMDA) data in late summer of the following year so FHFA will conduct a monthly survey of single-family mortgage originations and make that data available to the public. FHFA said that this is likely to provide detailed information more frequently and in a timelier manner than does the public release of HMDA data.
HERA requires FHFA to set interim goals for 2009 and 2010 that facilitate an orderly transition to out years. FHFA said it has decided to establish goals for 2010 and beyond in order to reduce the administrative and monitoring challenges of establishing and then changing policies and procedures.
Plain and Simple: the FHFA is telling us that the FHLBs are going to play a bigger role in the housing industry in the future!
