The Federal Housing Finance Agency (FHFA) is seeking public comment on a set of preliminary affordable housing goals for the two government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac for the next three years. There is a single set of single family financing goals for both GSEs and separate goals for each covering multifamily units. FHFA is required by the Housing and Economic Recovery Act of 2008 to establish these annual housing goals for the GSEs.
The agency is also proposing three alternative approaches for establishing single family housing goals. Alternative 1, would use the current two-step process which involves setting both a prospective benchmark level and a retrospective market level measure based on Home Mortgage Disclosure Act data. Alternative 2 would set only prospective benchmark levels and Alternative 3 would use only the retrospective market level measure.
Using Alternative 1, the goal for both Freddie Mac and Fannie for single family purchase mortgages to low income families is proposed to remain at the 2014 level of 23 percent of overall purchases over the 2015 through 2017 period. The 2014 goal of 7 percent for purchases by very-low income families will be unchanged for the next three years as well. FHFA is leaving these goals at present levels to encourage Fannie Mae and Freddie Mac to promote safe and sound lending to lower-income borrowers.
A sub goal for purchases within low income areas will increase from the current 11 percent to 14 percent for 2015, 2016, and 2017. The most significant proposed change is for the percentage of all refinancing targeted for low income families. This may rise from the current goal of 20 percent to 27 percent for the next three years.
If FHFA were to adopt Alternative 2 the agency would consider using single-family benchmark levels in the final rule that are lower than the proposed levels. Alternative 3 would not involve setting a prospective benchmark level.
FHFA is proposing for the first time to establish a sub goal for small multifamily properties (5-50 units) affordable to low-income families. Under this sub goal Fannie Mae would provide financing for 20,000 affordable units in 2015, 25,000 in 2016, and 30,000 in 2017. The goals for the three years for Freddie Mac would be 5,000, 10,000 and 15,000 respectively.
FHFA's proposed multifamily benchmark levels for Fannie Mae would remain at the current 250,000 units for low income families and 60,000 for very low-income families. For Freddie Mac the low-income goal would rise from the current 200,000 units to 210,000 in 2015 and by 10,000 units in each of the subsequent two years. For very-low-income families the current 40,000 units goal would increase to 43,000 in 2015, 46,000 units in 2016, and finally 50,000 units in 2017.
The proposed levels would require the GSEs to continue to support affordable multifamily housing despite the expectation that their overall multifamily market share will continue to decline in the coming years as the private sector becomes more involved in the multifamily market.
FHFA is requesting comment on all aspects of the proposed rule including the alternative approaches and is also requesting comment on whether multifamily housing goals credit should be allowed for blanket loans on manufactured housing communities. Comments should be made to FHFA (www.fhfa.gov) no later than October 28, 2014.
