Overview of the Final

Enterprise Housing Goals for 2015-17

Paul Manchester
Principal Economist
Office of Housing & Community Investment
Division of Housing Mission and Goals
Presentation to National Association of Realtors, January 28, 2016
The views expressed do not necessarily represent those of the FHFA.
Final Rule published September 3, 2015, at
http://www.gpo.gov/fdsys/pkg/FR-2015-09-03/pdf/2015-20880.pdf

Historical Background

1938: Fannie Mae created as a subsidiary of the Reconstruction Finance Corporation (RFC); transferred to the
Housing & Home Finance Agency (HHFA) in 1950, which became part of HUD in 1965.
1968: Fannie Mae was privatized (i.e., became a GSE); HUD became regulator; Ginnie Mae spun off and
continued to be part of HUD; Congress wanted to make sure that Fannie Maes mortgage purchases included
loans to lower-income families, but HUD delayed issuing housing goals until 1978.
1970: Freddie Mac created as part of the Federal Home Loan Bank System (Emergency Home Finance Act of
1970.)
1978: HUD (Secretary Harris) issued first housing goals for Fannie Mae, for mortgages to low- and moderateincome families and properties in central cities.
1989: HUD became regulator for Freddie Mac under FIRREA (Financial Institutions Reform, Recovery, &
Enforcement Act).
1992: OFHEO (Office of Federal Housing Enterprise Oversight) created as safety & soundness Enterprise
regulator, HUD retained mission regulation authority under the Federal Housing Enterprises Financial Safety &
Soundness Act (FHEFSSA).
1993-2004: HUD issued 4 sets of housing goals, for 1993-95, 1996-2000, 2001-04, and 2005-08: shifted focus
central cities to underserved areas; added bonus points for units in small multifamily mortgages for 2001-03;
added home purchase subgoals for 2005-08. Goals were subject to review by OMB and OFHEO.
2008: All Enterprise regulation, except fair housing, transferred to FHFA under the Housing & Economic
Recovery Act of 2008 (HERA); Congress established new structure for housing goals; requirement for goals not
impacted by Enterprise conservatorships.
2009: FHFA revised levels of 2009 goals established by HUD prior to HERA.
2010: FHFA issued first housing goals under new structure for 2010-11.
2012: FHFA revised housing goals for 2012-14.
September 3, 2015: Final rule on housing goals for 2015-17 published in Federal Register.

Single-Family Goals: Dual Comparison Approach

Since 2010, performance on the single-family housing goals has been measured against
two standards:
1.

A pre-set prospective benchmark, established by FHFA based on the 6 factors

specified in HERA: (1) national housing needs; (2) economic, housing, &
demographic conditions; (3) past goal performance and effort; (4) ability of
Enterprises to lead the industry in making mortgage credit available; (5) projected
size of relevant primary conventional, conforming market; and (6) the need to
maintain the sound financial condition of the Enterprises.

2. A retrospective measure, the share of conventional, conforming home purchase

or refinance mortgages originated in the primary mortgage market that would have
qualified for each goal. This is based on FHFA analysis of Home Mortgage
Disclosure Act (HMDA) data.
Meeting/missing a goal: An enterprise meets a single-family goal if its performance
equals or exceeds either #1 or #2. Retrospective measure #2 not available until release of
HMDA data, in September of the following year.
Enterprise misses a goal if performance falls short of both #1 and #2. In this case, FHFA
may require a housing plan, in accordance with 12 CFR 1282.21 and 12 U.S.C. 4566(b).

Single-Family Goals: Econometric Modelling

With regard to Factor (5) in establishing the pre-set benchmark, FHFA has
developed an econometric model to project the goal-qualifying shares of
conventional, conforming mortgages originated in the primary market for
2015-17, the years covered by the latest rule. This model is posted on FHFAs
Web site at
https://www.fhfa.gov/SupervisionRegulation/Rules/RuleDocuments/2015-201
7_Enterp_Housing_Goals_Final_Rule_Market_Estimation.pdf

Single-Family Low-Income Home Purchase Goal

(Low-income borrowers: those with incomes <= 80% of Area
Median Income)

Goals & Performance, 2010-14

2010
Goal
HMDA
Actual &
Projected
Market

Fannie
Mae
Performan
ce

27%

201
1

201
2

201
3

Goals for 2015-17

201
4

27% 23% 23% 23%

27.2%

26.5
%

26.6
%

24.0
%

22.8
%

25.1%

25.8
%

25.6
%

23.8
%

23.5
%

2015
24%
22.4
%
+/- 3.2%

2016 2017
24%

24%

22.9
%

22.0
%

+/4.2%

+/5.0%

Notes
Freddie
Enterprise performance figures23.3
are calculated
FHFA based
on analysis of Enterprise loanMac
24.4 by21.8
21.0
26.8%are calculated by FHFA based on analysis of Home Mortgage
level data; market figures
%
%
%
%
Performan
Disclosure Act (HMDA) data. Enterprises to report 2015 performance in mid-March 2016.
ce

Single-Family Low-Income Home Purchase Goal

Public Comments: Some public commenters supported the proposed goal of 23 percent
benchmark, while others said it should be higher--some said as high as 27 percent.
Final Rule: The final rule set the benchmark level for this goal at 24 percent for
2015-17, well within the forecast range shown on the previous slide. (For example,
the 95% confidence interval for 2015 was 22.4% +/- 3.2% = 19.2% - 25.6%.)

Single-Family Very Low-Income Home Purchase Goal

(Very low-income borrowers: those with incomes <= 50% of Area
Median Income)

Goals & Performance, 2010-14

2010
Goal

8%

HMDA
Actual &
Projected
Market

8.1%

Fannie
Mae
Performa
nce

7.2%

Goals for 2015-17

2011 2012 2013 201

4
8%

7%

7%

7%

8.0%

7.7
%

6.3
%

5.7
%

7.6%

7.3
%

6.0
%

5.7
%

2015

201
6

2017

6%

6%

6%

5.9%

6.0
%

5.7%

+/2.5%

+/3.2%

+/- 3.8%

Freddie
Mac
7.1 Notes
5.5 4.9
7.9% 6.6%
Performa
% by FHFA
% based
% on analysis of Enterprise loanEnterprise performance figures are calculated
nce
level data; market figures are calculated by FHFA based on analysis of HMDA data. Goal in
single digits because most families at this income level are renters, not homeowners.

Single-Family Low-Income Areas Home Purchase Subgoal

(For all borrowers in low income areas [tract income <= 80% of AMI] and moderate income
borrowers [<= 100% of AMI] in high minority [>= 30%] areas)

Goals & Performance, 2010-14

Goal
HMDA
Actual &
Projected
Market

2010

2011

13%

13%

12.1%

11.4%

Fannie
Mae
12.4% 11.6%
Performan
ce

Goals for 2015-17

2012 2013 201

4

2015

2016 2017

11%

11% 11%

14%

14%

14%

13.6
%

14.2
%

15.0
%

13.2
%

13.6
%

14.2%

13.1
%

14.0
%

15.5
%

+/-1.5%

+/-2.8%

+/-3.6%

Freddie
Notes
Mac
11.4 12.3 13.6
Enterprise performance
are calculated by FHFA based on analysis of Enterprise loan10.4%figures
9.2%
%
%
%
Performan
level data; market figures are calculated based on analysis of HMDA data. There is also an
ceannual low-income areas home purchase goal, including loans on properties in disaster
areas to families with incomes <= 100% of AMI; this was 18% for 2014 & 19% for 2015.

Single-Family Low-Income Refinance Goal

(For borrowers with incomes <= 80% of Area Median Income)
Note: HAMP modifications for low-income borrowers also count towards this goal.

Goals & Performance, 2010-14

Goal
HMDA
Actual &
Projected
Market

2010

2011

21%
20.2%

Goals for 2015-17

2012 2013 201

4

2015

2016 2017

21%

20%

20% 20%

21%

21%

21%

21.5%

22.3
%

24.3
%

25.1
%

21.8
% +/-

22.4
%

22.8%

2.7%

+/-4.7%

21.8
%

24.0
%

26.5
%

Fannie
Mae
20.9% 23.1%
Performan
ce

+/-6.2%

Freddie
Mac
22.4Notes
23.4 26.4
22.0% 23.4%
Enterprise performance figures are calculated
% by FHFA
% based
% on analysis of Enterprise loanPerforman
celevel data; market figures are calculated by FHFA based on analysis of HMDA data. HAMP
= Treasurys Home Affordable Modification Program.

Multifamily Low-Income Goal

(Units affordable to families with incomes <= 80% of AMI, based on rental proxy;
factors specified in HERA; for the first time, goals are the same for both Enterprises)

10

Multifamily Very Low-Income Subgoal

(Units affordable to families with incomes <= 50% of AMI, based on rental proxy; for

the first time, goals are the same for both Enterprises.)

11

NEW: Small Multifamily Low-Income Subgoal

(Units affordable to low-income families in 5-50 unit properties)

12

Mortgages on Single-Family (1-4 Unit) Rental Properties

Includes units in 1- 4 unit investor-owned properties and

rental units in 2 - 4 unit properties with 1 owner-occupied
unit and 1- 3 rental units.

Important source of affordable housing.

Included with other mortgages in the housing goals prior

to HERA, but not included in the post-2008 goals.

Enterprises must report on their funding of rental units in

these properties.

13

Summary

Housing

goals for Enterprises still in effect.

Housing

goals an important, statutory aspect of Enterprises

mission.
Final

rule establishing goals for 2015-17 changed levels of

some goals, created new low-income small multifamily goal.
For

more information, see FHFAs Annual Housing Report,

published annually in October.
Also,

detailed information on the Enterprises mortgage

purchases is available in their Annual Housing Activity
Reports, sent to FHFA and Congress in mid-March.

14