November 03, 2016
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Late last week, the Federal Housing Finance Agency (FHFA) released its Annual Housing Report for 2016. The report examines Fannie Mae’s and Freddie Mac’s affordable housing activities for 2015.

The bulk of the report focuses on Fannie Mae’s and Freddie Mac’s performance under their 2015-2017 Affordable Housing Goals. It finds that, while each firm met its affordable multifamily goals in 2015, they did not meet all of their single-family goals. Specifically, they did not meet the goal requiring that at least 24 percent of the single-family loans purchased by Fannie Mae and Freddie Mac each year be made to low-income consumers (those making 80 percent or less of area median income, or AMI). According to FHFA, such loans accounted for 23.5 percent of Fannie Mae’s loan purchases, and 22.3 percent of Freddie Mac’s loan purchases.

Both firms also failed to meet the goal requiring that at least 6 percent of Fannie Mae’s and Freddie Mac’s single-family loan purchases be loans for very low-income consumers (those at 50 percent or less of AMI). The report states that such loans accounted for 5.6 percent of Fannie Mae’s loan purchases and 5.4 percent of Freddie Mac’s loan purchases.

Fannie Mae and Freddie Mac did, however, meet or exceed the single-family affordable housing subgoals for mortgages used to purchase homes in low-income areas (11 percent) and the percentage of purchased refinanced loans that help low-income families (21 percent).

FHFA’s current findings of non-compliance with the affordable housing goals are preliminary. Both Fannie Mae and Freddie Mac may submit to FHFA any additional information they want the agency to consider as it makes its final determination. If, upon its final review, FHFA finds one or both of the firms to be noncompliant, it will consider possible penalties.

The report also notes that FHFA is continuing to review comments it has received on its proposed “Duty to Serve” rule, which would require Fannie Mae and Freddie Mac to support housing for lower income families in certain underserved segments of the housing finance market. FHFA gives no indication as to when the rule will be finalized.