MBA Seeks ‘Balance’ for GSE Single-Family, Multifamily Affordable Housing Goals

The Mortgage Bankers Association, in a letter to the Federal Housing Finance Agency, said affordable housing goals for Fannie Mae and Freddie Mac should ensure sustainable housing for low- and very low-income households, they should be balanced with and accompany other tools and objectives.

“As MBA noted in our recent proposal to reform and strengthen the secondary mortgage market, the most effective goals will be those that include both specific, quantitative outcomes based on loans made to distinct borrower/market segments and qualitative efforts, such as outreach, research and targeted initiatives,” wrote MBA President and CEO David Stevens, CMB. “These differing types of goals should be pursued in tandem and should complement each other.”

The Housing and Economic Recovery Act of 2008 established a duty for Fannie Mae and Freddie Mac to serve three specified underserved markets–manufactured housing, affordable housing preservation and rural housing–by increasing the liquidity of mortgage investments and improving the distribution of investment capital available for mortgage financing for very low-, low-, and moderate-income families in those markets. Under the Duty to Serve regulation, Fannie Mae and Freddie Mac required to prepare an Underserved Markets Plan describing specific activities and objectives it will undertake to fulfill its Duty to Serve obligations in each underserved market over a three-year period.

In its white paper on reforming Fannie Mae, Freddie Mac and the secondary mortgage market, GSE Reform: Creating a Sustainable, More Vibrant, Secondary Mortgage Market (, MBA calls the GSEs’ affordable housing obligations were a critical element of creating stability. MBA’s proposal includes a guarantor model that advances an affordable housing strategy.

“Importantly, while access to affordable mortgage credit is essential for addressing the needs of underserved borrowers and communities, it is worth noting that many housing markets face a critical shortage of affordable housing stock,” MBA said in its letter this week. “This supply imbalance can create a pernicious cycle where, for instance, more affordable credit can lead to more bids on fewer homes, actually driving prices higher. While policy solutions to this issue are complex, this demand/supply dynamic should be considered when evaluating affordable housing goals and Duty to Serve obligations.”

MBA expressed hope that the combination of the Enterprise housing goals, the soon-to-be implemented Duty to Serve requirements and the multifamily-specific volume cap regime can work in concert to move the Enterprises towards such a quantitative-qualitative balance. “As FHFA evaluates the Enterprises on multiple fronts, we would urge that any assessments focus on market impact,” MBA said. “Success is ultimately based on firm evidence regarding performance in various markets rather than the level of resources committed or activities conducted.”

MBA encouraged FHFA to provide each Enterprise with a clear and transparent process by which it is expected to carry out the housing plan, including a feasible timeline by which to take any necessary actions. For the multifamily rental market, FHFA should continue to monitor its size and the market share of various multifamily finance capital sources in developing the Enterprise housing goals. In doing so, FHFA should remain aware of the availability of, and the need for, equity investments for multifamily housing.

MBA also called on FHFA to continue to monitor the impact that congressional tax and budget negotiations could have on the financing of affordable housing stock if, for example, the value of the Low-Income Housing Tax Credit is impacted. MBA recommended maintaining the requirement that qualified small balance multifamily loans be on properties that serve households at 80 percent of area median income or less.

“As single-family rental properties have become a focus of prominent policy discussions, MBA encourages FHFA, in its market analysis and development of low-income and very low-income benchmark levels, to provide clarity in advance on how this asset class will be categorized and measured within the Enterprise housing goals, the Duty to Serve requirements, and, if applicable, the impact on multifamily regimes,” the letter said.