According to the Federal Housing Finance Agency (FHFA) Annual Housing Report for 2017 released today, Freddie Mac met its 2016 affordable housing goals and Fannie Mae met its multifamily goals but had a mixed record on its single-family goals. The report covers all Fannie Mae’s and Freddie Mac’s (collectively, the Government-Sponsored Enterprises, or GSEs) affordable housing activities in 2016.
The bulk of the report focuses on Fannie Mae’s and Freddie Mac’s 2016 performance under their 2015-2017 Affordable Housing Goals that establish minimum levels of support for affordable single-family and multifamily housing lending that both GSEs are expected to meet each year.
FHFA uses a dual approach to measure the GSEs’ compliance with their single-family goals and subgoals. Under this approach, FHFA establishes a benchmark goal that requires a certain percentage (24 percent for 2016) of the loans purchased by a GSE each year be made to low-income consumers (those making 80 percent or less of area median income, or AMI). The GSEs are expected to meet this benchmark goal unless the share of home loans in the overall lending market made to low-income consumers falls below the benchmark. In that case, the GSEs’ level of support for low-income lending will simply have to match that of the overall market in order for them to be considered compliant. FHFA uses an identical approach toward measuring compliance with its single-family subgoals for loans to very low-income consumers (those at 50 percent of AMI or below), loans used to purchase homes in low-income areas, and refinance loans for low-income homeowners.
In the report released today, FHFA finds that Freddie Mac achieved all of its single-family goals and subgoals for 2016. While 23.8 percent of Freddie Mac’s loan purchases in 2016 were made to low-income consumers, just below the 24 percent benchmark, Freddie’s support for such loans exceeded the market as a whole by .9 percent. Similarly, while Freddie did not meet the 6 percent benchmark goal for home purchase loans for very-low income consumers, such loans accounted for 5.7 percent of its loan purchases compared to 5.4 percent for the market as whole.
19.9 percent of Freddie Mac’s loan purchases were used to purchase homes in low-income areas, exceeding the 14 percent benchmark goal but lower than the overall market share of 15.9 percent. Freddie Mac also matched its benchmark goal of 21 percent of refinanced loan purchases being made for low-income homeowners.
The report finds that Fannie Mae’s purchases of loans for low-income consumers represented 22.9 percent of its total 2016 purchases, slightly exceeding market level. Fannie Mae’s support for homes purchased in low-income areas was 20.2 percent, exceeding the benchmark and market levels.
However, loans to very low-income consumers accounted for 5.2 percent of Fannie Mae’s total loan purchases, falling below the 6 percent benchmark and 5.4 percent market level. Fannie Mae’s low-income refinance purchases accounted for 19.5 of its total refinance purchases, just below the market level of 19.8 percent.
FHFA’s current findings of non-compliance with the affordable housing goals are preliminary. Fannie Mae may submit to FHFA any additional information it wants 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.
Each of the GSEs exceeded their multifamily goals for 2016. The goals required them to finance the development of at least 300,000 units affordable to low-income renters earning 80 percent of AMI or below, at least 60,000 units affordable to very low-income renters earning 50 percent of AMI or below, and at least 8,000 units located in small multifamily properties that have between 5-50 units.
Freddie Mac’s support for affordable multifamily housing was particularly strong in 2016. It financed over 406,000 units affordable to low-income renters, 73,030 units affordable to very low-income renters, and over 22,000 affordable units in small properties.
Fannie Mae financed over 352,000 units affordable to low-income renters, almost 69,000 units affordable to very low-income renters, and 9,312 affordable units in small properties.