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From Banking and Finance Law Daily, September 2, 2014

FHFA proposes to maintain housing goals for low-income families

By Lisa M. Goolik, J.D.

The Federal Housing Finance Agency has proposed a rule that would establish single-family and multifamily housing goals for Fannie Mae and Freddie Mac (GSEs) for 2015 through 2017. FHFA is requesting comment on all aspects of the proposed rule no later than Oct. 28, 2014.

Background. The Housing and Economic Recovery Act of 2008 requires FHFA to establish annual housing goals for mortgages purchased by the GSEs. The housing goals include separate categories for single-family and multifamily mortgages on housing that is affordable to low-income and very low-income families, among other categories. FHFA’s current housing goals rule is effective through the end of 2014.

FHFA also released a paper, The Size of the Affordable Mortgage Market: 2015-2017 Enterprise Single-Family Housing Goals, that outlines the methodology used to estimate the market size.

Single-family housing goals. FHFA is requesting comment on three alternative approaches for establishing the single-family housing goals for 2015 through 2017:

  • Alternative 1—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—set only prospective benchmark levels; and

  • Alternative 3—use only the retrospective market level measure.

Under Alternative 1, FHFA has proposed single-family benchmark levels for 2015 through 2017, which are defined in terms of percentages of mortgages on owner-occupied properties, either home purchase or refinance, acquired during a calendar year. As proposed, the current and prospective goals for low-income families home purchases (23 percent) and very low-income families home purchases (7 percent) would remain the same, while the low-income areas home purchases subgoal would increase from 11 percent to 14 percent. The low-income families refinance goal would also increase from 20 percent to 27 percent.

Under Alternative 2, the agency would consider adopting 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.

Multifamily housing goals. The proposed rule also includes benchmark levels for multifamily housing goals and would also establish a benchmark for small multifamily properties (5-50 units) that are affordable to low-income families.

FHFA's proposed multifamily benchmark levels would remain the same for Fannie Mae (250,000) and would gradually increase for Freddie Mac (210,000 in 2015; 220,000 in 2016; and 230,000 in 2017). For small multifamily properties affordable to low income families, the benchmark for each GSE will gradually increase from 20,000 units for Fannie Mae and 5,000 units for Freddie Mac in 2015 to 30,000 and 15,000, respectively, in 2017.

The proposed levels would require the GSEs to continue to support affordable multifamily housing despite the expectation that the GSEs' overall multifamily market share will continue to decline due to increased participation by the private sector in the multifamily market.

FHFA is also requesting comment on whether multifamily housing goals credit should be allowed for blanket loans on manufactured housing communities.

Increased clarity and transparency. The proposed rule would also revise a number of other provisions in order to provide greater clarity on the mortgages eligible for goal or subgoal categories, including guidelines for counting shared living spaces, such as student housing, and rules for skilled nursing and seniors housing units. In addition, the proposed rule would make a number of clarifying and conforming changes, including revisions to the definitions of “rent” and “utilities” and to the rules for determining affordability of both single-family and multifamily units.

To increase transparency, FHFA also plans to require more detailed reporting from the GSEs on their purchases of mortgages on single-family rental housing. The proposed rule also would establish more transparent agency procedures if FHFA issues guidance on the housing goals in the future.

Comments. Comments should be submitted to the Federal Housing Finance Agency, Division of Housing Mission and Goals, 400 7th Street, S.W., Washington, D.C. 20024 or through FHFA’s website,

Companies: Fannie Mae; Freddie Mac

MainStory: TopStory GovernmentSponsoredEnterprises Mortgages

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