On Feb. 17, the Federal Housing Finance Agency (FHFA) issued proposed 2010 and 2011 affordable housing goals for Fannie Mae and Freddie Mac. Even though the two mortgage firms are still under federal conservatorship, the FHFA is required by statute to issue goals. For the first time, instead of having combined corporate affordable housing goals, the rule creates separate goals for multifamily housing and for single-family housing.
The annual multifamily low-income housing goal (units affordable to households at or below 80 percent of area median income [AMI]) is 237,000 units for Fannie Mae and 215,000 units for Freddie Mac.
The annual very-low-income housing goal (units affordable to families at or below 50 percent of AMI) is 57,000 units for Fannie Mae and 28,000 units for Freddie Mac.
Additionally, in accordance with the Housing and Economic Recovery Act of 2008 (HERA), which created the FHFA, the enterprises will be reporting their funding of low-income units in small (five to 50 units) multifamily housing communities. The proposed rule prohibits the enterprises from getting credit for mortgages in commercial mortgage-backed securities (CMBS) or other private-label securities.
As has traditionally been the case, the goals are expected to incentivize the enterprises to maintain or increase their multifamily loan activity, because multifamily properties are inherently affordable. Although the proposed goals are more targeted than in past years, the firms should not have any challenge meeting the low-income (80 percent of AMI) goal. The 50 percent of AMI goal could, however, require them to purchase more mortgages for properties with rent subsidies or significant affordable set-asides than they have historically.
The FHFA says it does not intend for the enterprises to undertake uneconomic or high-risk activities to achieve the goals. Visit http://bit.ly/b1jD5B for information.