November 13, 2012

On November 13, the Federal Housing Finance Agency (FHFA) released a final rule setting the annual affordable housing goals for mortgages purchased by Fannie Mae and Freddie Mac for years 2012 through 2014.

Lower Single-Family Benchmarks

The new rule establishes lower single-family housing goals from those that were in effect for 2010-2011.  The benchmark level for mortgages to low-income families, defined as those families who earn no greater than 80 percent of area median income (AMI), would be set at 23 percent.  This means that at least 23 percent of the loans Fannie and Freddie serve each year would have to serve this population.  This is down from 27 percent, but is an increase from the 20 percent benchmark FHFA originally called for in its proposed rule.  After the proposed rule was issued, NCSHA sent a letter to FHFA asking that they increase their single-family goals. 

For mortgages issued to very low-income consumers (those whose incomes are below 50 percent AMI), the benchmark would decrease from 8 percent in 2010-2011 percent to 7 percent in 2012-2014.  The benchmark goal for loans purchasing homes in low-income areas will also be lowered, from 24 percent in 2010-2011 to 20 percent in 2012-2014.  This benchmark is set annually, so it could be adjusted further in 2013 and 2014.  Finally, at least 20 percent of the refinance loans purchased by the GSEs would have to help low-income families, down from 21 percent.   The chart below lays out how the goals were changed.

In justifying the reduced benchmarks, FHFA points out that Fannie and Freddie were both unable to meet the higher benchmarks set for 2010-2011.  The agency also contends that an improving housing market should make it easier for low-income families to find affordable home-financing in the private market.

Higher Multifamily Goals

The final rule establishes higher multifamily goals for both GSEs than they faced in 2010-2011.  The goals will also be gradually reduced in 2013 and 2014, due to what FHFA cites as an uncertain market, but will remain above the previous levels.  NCSHA’s letter to FHFA expressed strong support for the higher multifamily goals. 

For Fannie Mae, the low-income multifamily goal will increase from 177,500 units in 2011 to 285,000 units for 2012.  The goals for 2013 and 2014 will be 265,000 and 250,000 respectively.  With regard to mortgage purchases that support multifamily housing for those below 50 percent AMI, Fannie’s goal will increase from 42,750 units to 80,000 units in 2012, then go down to 70,000 in 2013 and 60,000 in 2014.

Multifamily Low-Income Goals for Fannie Mae

  2010/2011 2012 2013 2014
Proposed Rule N/A 251,000 243,000 223,000
Final Rule 177,500 285,000 265,000 250,000


Multifamily Very Low-Income Goals for Fannie Mae

  2010/2011 2012 2013 2014
Proposed Rule N/A 60,000 59,000 53,000
Final Rule 42,750 80,000 70,000 60,000


Freddie Mac received a larger increase, percentage wise, in its multifamily goals.  The annual goal for the firm’s purchase of low-income multifamily mortgages in 2012 is set at 225,000 units in 2012, up from 161,500 in 2011.  Freddie’s goal for 2013 will be 215,000 units, which will fall to 200,000 units in 2014.  Freddie’s goal regarding the purchase of mortgages on multifamily housing affordable to very low-income families is set at at least 59,000 units in 2012, 50,000 in 2013, and 40,000 in 2014.  Below is a chart that outlines all of the changes.

Multifamily Low-Income Goals for Freddie Mac

  2010/2011 2012 2013 2014
Proposed Rule  N/A 251,000 243,000 223,000
Final Rule 161,500 225,000 215,000 200,000


Multifamily Very Low-Income Goals for Freddie Mac   

  2010/2011 2012 2013 2014
Proposed Rule N/A 32,000 31,000 27,000
Final Rule 21,000 59,000 50,000 40,000