As required by the Housing and Economic Recovery Act of 2008, the Federal Housing Finance Agency (FHFA) has embarked its annual task of developing a set of affordable housing goals for government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac for the next three years.
The suite of goals, which has been put out for public comment, includes a set of goals for single-family financing for both GSEs and separate goals for multifamily financing.
This time around, the FHFA is 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 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.
Under ‘Alternative 1,’ the goal for single-family purchase mortgages to low-income families is proposed to remain at the current 23% of overall purchases through 2017. In addition, the current goal of 7% for purchases by very-low income families will remain unchanged as well.
If the FHFA were to adopt ‘Alternative 2,’ the agency would consider adopting single-family benchmark levels in the final rule that are lower than the proposed levels.Â ‘Alternative 3’ would not involve setting a prospective benchmark level, the agency says in its request for comment.
In addition to the alternatives presented, the FHFA proposes a ‘sub goal’ of increasing the goal for purchases within low-income areas from the current 11% to 14% for the next three years.
The FHFA gets more aggressive with its goals for serving low-income families when it comes to refinancing. It is proposing to increase the percentage of all refinancing targeted for low-income families from the current 20% to 27% for the next three years. Meanwhile, the FHFA has been looking for ways to boost participation in the Home Affordable Refinance Program.
The FHFA is also proposing a ‘sub goal’ for small multifamily properties (5-50 units) under which Fannie Mae would provide financing for 20,000 affordable units in 2015, 25,000 in 2016 and 30,000 in 2017. Freddie Mac would provide refinancing for 5,000, 10,000 and 15,000 units, 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 the each of the next three years. For Freddie Mac, the low-income goal would rise in stepped fashion from the current 200,000 units to 210,000 in 2015, 220,000 in 2016 and 230,000 in 2017. For very-low-income families the current 40,000 units goal would increase to 43,000 in 2015, 46,000 in 2016 and 50,000 in 2017.
FHFA is also requesting comment on whether multifamily housing goals credit should be allowed for blanket loans on manufactured housing communities.
Comments are due by Oct. 28. For more, click here.