MBA Commends FHFA’s New Enterprise Housing Goals Methodology Proposal

The Mortgage Bankers Association commended the Federal Housing Finance Agency for its proposed rule establishing 2023-2024 Multifamily Enterprise Housing Goals for Fannie Mae and Freddie Mac.

The government-sponsored enterprises are required to promote access to mortgage credit and provide assistance to the secondary market to support housing for low- and moderate-income families. FHFA uses the housing goals to measure their progress.

FHFA has proposed a new methodology for measuring the enterprise multifamily housing goals that will use the percentage of each enterprise’s annual multifamily loan acquisitions (in units) that are affordable to each income category rather than establishing the multifamily housing goals based on a fixed number of units. The proposed benchmark levels for 2023-2024 are 61% of annual loan acquisition (in units) for the low-income goal (80% of area median income), 12% for the very low-income subgoal (50% of area median income) and 2% for the small multifamily low-income subgoal (80% of area median income).

“Using the percentage of each enterprise’s annual multifamily loan acquisitions (in units) for measurement simplifies the affordable targets and will ease the management of these goals for the enterprises,” wrote MBA Senior Vice President Mike Flood in the letter to FHFA Director Sandra L. Thompson. He said MBA especially appreciates the 2% subgoal for small multifamily low-income properties, noting this market is well served by other sources of private capital.

MBA also encouraged FHFA to work toward more simplification of various affordable- and mission-related goals of Fannie Mae and Freddie Mac. “The enterprises currently manage several different affordable targets (housing goals, scorecard and PSPA (though currently suspended)), as well as Duty to Serve requirements and Equitable Housing Plan objectives,” the letter said. “The enterprises have a limited number of resources, and we urge FHFA to carefully balance the needs of the market while prioritizing the safety and soundness of the Enterprises.”

In an effort to move closer to a simplified framework for affordable targets, MBA encouraged FHFA to strongly consider eliminating the mission-driven targets in the 2023 Scorecard. “The Scorecard should simply set forth the lending caps and reiterate the housing goals as outlined in the proposed rule,” the letter said. “The housing goals will help the enterprises serve the needs of low-income and very low-income individuals and families and there is substantial overlap between the housing goals and mission driven targets.”

MBA also encouraged FHFA to support legislative action to update the Federal Housing Enterprises Financial Safety and Soundness Act to expand the definitions of low-income, very low-income and the affordability measure to better serve individuals and families living in high-cost areas.

“There have been very few updates to the Act since its enactment in 1992 and the rise in housing costs has increased significantly over the last 30 years,” the letter said. “In the 2022 Scorecard for the Enterprises, FHFA has recognized the need for higher income thresholds for affordability in high costs areas.”