FHFA finalizes new housing goals for Fannie Mae, Freddie Mac

The Federal Housing Finance Agency (FHFA) this week announced a new final rule establishing affordable housing goals for the loan purchases of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac from 2025 through 2027.

The goals, originally proposed in August, are largely unchanged from the initial draft. They are designed to “support equitable housing access for low-income families and families in low-income areas,” according to an announcement.

On the single-family side, 25% of the purchase mortgages acquired by Fannie and Freddie must go to borrowers earning less than 80% of the area median income (AMI), a decline from the 28% required in the previously outlined goals.

In line with the August proposal, there is also a new goal for very low-income purchases (for borrowers earning less than 50% AMI). The GSEs must allocate 6% of their purchases in this area, down from 7% in the previous plan. The low-income refinance goal of 26% as proposed is unchanged, as is the purchase subgoal for low-income census tracts at 4%. A purchase subgoal for minority census tracts is now 12%, up from the current 10%.

“The affordable housing goals better enable the Enterprises to effectively advance their missions and support housing finance markets in a safe and sound manner,” FHFA Director Sandra Thompson said in a statement. “It is critical that the Enterprises meet these goals, as required by law and regulation.”

For the single-family goals, “the Enterprises must meet the benchmark level or the actual market level of loans for each category,” the agency explained. “The actual market level is determined retrospectively for the year based on Home Mortgage Disclosure Act (HMDA) data.”

The goals also establish what FHFA calls “measurement buffers,” which help to determine what to do if either GSE fails to meet a goal. In these instances, the enterprise “must develop a housing plan (which is an action plan to demonstrate how it will improve its performance),” the FHFA explained.

A housing plan may be required if Fannie or Freddie “fails to meet a goal and the gap between the Enterprise’s performance and the market level is greater than the buffer defined in the final rule,” the agency stated.

The final rule is scheduled to go into effect on Feb. 27, 2025, or 60 days following its publication in the Federal Register.