The Federal Housing Finance Agency (FHFA) today proposed new affordable housing goals for Fannie Mae and Freddie Mac for 2022-24 in support of the Biden Administration’s efforts to improve homeownership among minority and lower income families.
The proposed new goals are designed to ensure Fannie Mae & Freddie Mac (the Enterprises) promote equitable access to affordable housing that reaches low- and moderate-income families, minority communities, rural areas, and other underserved populations, the FHFA said.
FHFA is proposing two new single-family home purchase sub-goals to replace the existing low-income areas sub-goal. One new sub-goal targets minority communities; the other continues to target low-income neighborhoods.
The new minority census tract sub-goal is designed to improve access to fair and sustainable mortgage financing in communities of color. A mortgage qualifies under the new sub-goal 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 minorities make up at least 30 percent of the population.
“The new subgoal for minority census tracts was designed to help preserve and support affordable housing in communities of color. The sub-goal benefits families at or below area median income, allowing them to stay in the communities they helped build," said FHFA Acting Director Sandra L. Thompson. “The Enterprises' housing goals over the next three years should support equitable access to sustainable affordable housing opportunities in a safe and sound manner that bolsters the health of communities."
Under the proposal, the FHFA would raise the low-income buyer goal for single-family homes to 28% over overall qualified single-family purchases, from the current 24%, and the “very low-income” goal to 7% from 6%.
The proposed sub-goal for minority census tracts home purchases would be 10%, while the proposed low-income census tracts home purchases sub-goal would be 4%. Neither of these sub-goals currently exist.
The FHFA’s proposal also includes increasing the low-income refinance goal to 26% from 21%.
To meet a single-family housing goal or sub-goal, the percentage of mortgage purchases by Fannie Mae or Freddie Mac in that category must exceed either the benchmark level set in advance by FHFA 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.
The FHFA is seeking comment from interested parties on this proposed rule within 60 days of publication in the Federal Register. Comments should be submitted to the Federal Housing Finance Agency, Division of Housing Mission and Goals, 400 7th Street, S.W., Washington, DC 20219 or via FHFA.gov.
For more on the proposed new goals and subgoals, click here.
