Following the Housing and Economic Recovery Act of 2008 (HERA), the Federal Housing Finance Agency (FHFA) has sent a final rule to the Federal Register establishing new housing goals for Fannie Mae and Freddie Mac, according to rismedia.com.
In the past the Department of Housing and Urban Development set overall goals that measured the combined performance of single-family and multifamily mortgages. Now, the new goals required by HERA will target more specific segments of those markets. The new goals will have two separate focuses 1. Focus on core business activities to support the mortgage market, and 2. Minimize losses on their existing mortgages.
The final rule established three single-family, owner-occupied home purchase mortgage goals for low-income families, very low-income families, and families living in geographical areas with lower-income populations, such as areas hit by disasters or with high concentrations of minority residents. In addition, the rule also ensures that both Fannie Mae and Freddie Mac address housing needs in lower-income areas.
Home purchase and refinance goals are expressed as minimum goal-qualifying mortgage shares of home purchase or refinance mortgages acquired by Fannie Mae and Freddie Mac.
A few of these goals are:
-27% for the low-income home purchase goal
-8% for the very low-income home purchase goal
The FHFA does not intend for Fannie Mae and Freddie Mac to undertake economically adverse or high-risk activities in support of the goals, nor does it intend for Fannie Mae’s or Freddie Mac’s state of conservatorship to be a justification for withdrawing support from these important market segments.
The FHFA expects to take future regulatory action to address housing goals treatment of purchases of multifamily loans that aid the conversion of properties that have affordable rents to properties that have less affordable, market rate rents.