On August 19, the Federal Housing Finance Agency (FHFA) released its final rule establishing affordable housing goals for Fannie Mae and Freddie Mac for 2015 through 2017. The goals set benchmarks for affordable single-family and multifamily housing financed by Fannie Mae and Freddie Mac, the government sponsored enterprises (GSEs).
Compared to the proposed rule and the goals for 2014, the final rule increases the targets for multifamily housing affordable to both low and very low income families. The rule does not include any targets for multifamily housing units affordable to extremely low income families, those with income less than 30% of the area median income (AMI). Through 2017, Fannie Mae and Freddie Mac will each be expected to finance at least 300,000 rental units per year that are affordable to low income families, those with income less than 80% of AMI. These goals are higher than the 2014 benchmark levels (250,000 units for Fannie Mae and 200,000 units for Freddie Mac) and the proposed rule benchmark levels (250,000 units for Fannie Mae and 210,000 to 230,000 units for Freddie Mac). FHFA stated that this increase was “to account for the overall size of the multifamily finance market, which has expanded substantially since the proposed rule was issued.”
In addition, FHFA boosted the subgoal for financing multifamily properties with units affordable to very low income families, those with income less than 50% of AMI. Each year, Fannie Mae and Freddie Mac are expected to finance 60,000 rental units, an increase for Freddie Mac, which had a benchmark in 2014 of 40,000 units. The subgoal for Fannie Mae was unchanged from its 2014 target.
The final rule also creates a new subgoal for the GSEs’ purchases of mortgages on small multifamily properties, defined as buildings with between 5 and 50 rental units that are affordable to low income families. These subgoals are 6,000 units in 2015, 8,000 units in 2016, and 10,000 units in 2017.
At the bill’s release, FHFA Director Mel Watt stated, “The multifamily goals will create rental opportunities for those who need affordable housing. Together, these goals establish a solid foundation for affordable and sustainable homeownership and rental opportunities in this country.”
The Center for American Progress (CAP) issued a statement on the final rule saying, “[T]he multifamily goals should help push Fannie and Freddie to better support affordable rental housing at a time when rent burdens are at all-time highs. Broad availability and affordability of rental and homeownership options are crucial to increasing household opportunity, reducing economic inequality, and furthering racial justice. Going forward, FHFA should require Fannie and Freddie to implement policies, programs, and strategies to promote appropriate and sustainable housing options for the populations that need it most.”
FHFA first issued a proposed rule on the GSEs’ housing goals in August 2014 and sought public comments.
The final rule is at http://1.usa.gov/1EvFmPO
The FHFA press release is at http://1.usa.gov/1E5JTrH
The CAP statement is at http://ampr.gs/1JrROwA