Today, the Federal Housing Finance Agency (FHFA) issued a final rule for Fannie Mae and Freddie Mac (the Enterprises) that establishes the benchmark levels for each of the single-family housing goals and subgoals for 2022 through 2024 and establishes the benchmark levels for the multifamily housing goals for 2022.
The housing goals ensure that the Enterprises, through their mortgage purchases, responsibly promote equitable access to affordable housing that reaches low- and moderate-income families, minority communities, and other underserved populations. FHFA issued a proposed rule in August 2021 that requested public comment on proposed housing goals for the Enterprises for 2022-2024, which FHFA considered in adopting the final rule.
The single-family home purchase goals include two new single-family home purchase subgoals – one targeting minority communities and the other targeting low-income neighborhoods. The new minority census tract subgoal is designed to improve access to fair and sustainable mortgage financing in communities of color. An Enterprise mortgage purchase 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 at or below AMI and where minorities make up at least 30 percent of the population.
“The Enterprises’ housing goals will support equitable access to sustainable, affordable housing opportunities in a safe and sound manner that bolsters the health of communities,” said FHFA Acting Director Sandra L. Thompson. “The new subgoals for minority and low-income census tracts will help preserve and support affordable housing opportunities as well as allow those communities to retain ownership of the neighborhoods they helped build.”
To meet a single-family housing goal or subgoal, the percentage of mortgage purchases by an Enterprise in that category must exceed either the benchmark level above or the market level for that year. The market level is determined retrospectively each year, based on Home Mortgage Disclosure Act (HMDA) data showing the actual goal-qualifying share of the overall market, as measured by FHFA.
In response to the public comments on the proposed rule and the differential impact of COVID-19 on various multifamily origination segments, the multifamily home purchase goals apply to 2022 only. FHFA expects to engage in further rulemaking in 2022 to establish the multifamily benchmarks for 2023. The final rule also establishes different benchmark levels for Fannie Mae and Freddie Mac for the small multifamily low-income subgoal, due in part to each Enterprise’s different business models that complement one another and ensure continued liquidity in the multifamily market. These benchmarks should continue to encourage the Enterprises’ participation in this market and ensure the Enterprises have the expertise necessary to serve this market should private sources of financing become unable or unwilling to lend on small multifamily properties.
To meet a multifamily housing goal or subgoal, an Enterprise must purchase mortgages on multifamily properties (properties with five or more units) with rental units affordable to families in each category. FHFA will measure Enterprise multifamily goals performance against benchmark levels above.
By law, the Enterprises must support a stable and liquid national market for residential mortgage financing. FHFA establishes annual housing goals for the Enterprises and assesses their performance under the housing goals annually.