fha goals for the mortgage market in 2009 current report changes for 2010

C. 2009 Housing Goals

The Safety and Soundness Act, as amended, includes a transitional provision for the 2009

affordable housing goals. Specifically, section 1331(c) provides that the 2008 housing goals

shall remain in effect for 2009 and directs FHFA to review the goal levels for 2009 to determine

their feasibility given current market conditions, and after seeking public comment, make

appropriate adjustments consistent with the market conditions.9

After evaluating market conditions and seeking public comment, and in light of continued

deterioration in market conditions and an unexpectedly high volume of refinance mortgages

obtained by higher-income borrowers, FHFA determined that all of the goal and home purchase

subgoal levels and the housing goal and subgoal levels should be reduced for 2009. On May 1,

2009, FHFA published a proposed rule revising the overall 2009 housing goals and the 2009

home purchase subgoals.10 Following review of the comments on the proposed rule and an

updated analysis of mortgage market conditions, on August 10, 2009, FHFA published a final

rule establishing the 2009 housing goal levels as follows: 11

 Lowered the existing low- and moderate-income goal from 56 percent to 43 percent

 Lowered the existing underserved areas goal from 39 percent to 32 percent

 Lowered the existing special affordable goal from 27 percent to 18 percent

 Lowered the existing low- and moderate-income home purchase subgoal from 47

percent to 40 percent

 Lowered the existing underserved areas home purchase subgoal from 34 percent to 30

percent

 Lowered the existing special affordable home purchase subgoal from 18 percent to 14

percent

However, because of the severe curtailment of secondary market financing for multifamily

properties from other sources, FHFA modestly increased the existing special affordable

multifamily subgoals for the Enterprises-for Fannie Mae, from $5.49 billion to $6.56 billion,

and for Freddie Mac, from $3.92 billion to $4.60 billion. The 2009 special affordable

multifamily subgoals are well below the Enterprises' actual performance on these subgoals in

recent years. However, due to conditions in the multifamily market, the subgoals will be

challenging for the Enterprises to meet.

D. 2010 Housing Goals

Sections 1331 to 1333 of the Safety and Soundness Act, as amended, require the Director to

establish for 2010 and each year thereafter, four annual single-family housing goals and one

annual multifamily special affordable housing goal, as identified in those sections.12 This

represents a significant change in the structure of the housing goals in effect from 2004 to 2009.

FHFA is currently developing a regulation through the rulemaking process to implement these

statutory requirements.

Specifically, there are no longer any overall goals covering mortgages financed for all property

types (single-family and multifamily combined), property uses (owner- and renter-occupied

combined), and purposes (purchase and refinance combined). Rather, there are separate goals

for multifamily and single-family properties, and within the single-family category, separate

goals for home purchase and refinance mortgages. Further, Enterprise purchases of mortgages

on investor-owned single-family (1-4 unit) properties are excluded from all goals, although

FHFA intends to continue to monitor Enterprise purchases of such mortgages because these units

constitute an important source of affordable rental housing.

Single-Family Goals

. Under section 1332, there are three goal categories for Enterprise

acquisitions of single-family purchase money mortgages financing units for owner-occupied

housing. These are:

 Low-income families-defined as families with incomes no greater than 80 percent of

Area Median Income (AMI).

 Families in low-income areas-defined as families residing in census tracts or block

numbering areas in which the median income does not exceed 80 percent of AMI for the

area in which such census tract or block numbering area is located, and shall include

families with incomes not greater than 100 percent of AMI who reside in minority census

tracts (defined as tracts with a minority population of at least 30 percent in the 2000

Census and a median family income of less than 100 percent of the area family median

income), and shall include families with incomes not greater than 100 percent of AMI

who reside in designated disaster areas.

 Very low-income families-defined as families with incomes no greater than 50 percent

of AMI.

In addition, section 1332 requires the establishment of a refinance goal for low-income families.

Each purchase-money and refinance goal is required to be established as a percentage of total

acquisitions of purchase money or refinance mortgages for each Enterprise. There is a further

requirement for each Enterprise to report annually on its financing of low-income rental units in

2-4 unit properties containing at least one owner-occupied unit.

Multifamily Goal

. Section 1333 requires the establishment of a multifamily goal for Enterprise

purchases of mortgages on multifamily housing that finance dwelling units affordable to lowincome

families. The goal may be established in terms of minimum dollar volume (as was the

case for the special affordable multifamily subgoals set by HUD) or in terms of minimum

number of such units financed.

Section 1333 further requires FHFA to establish "additional requirements" for the purchase by

each Enterprise of mortgages on multifamily housing that finance units affordable to very lowincome

families.

In addition, section 1333 requires each Enterprise to report on its financing of low-income units

in small multifamily properties, which may be defined as properties with 5 to 50 units or with

loan amounts of up to $5 million.

FHFA expects to issue a proposed rule on the 2010 affordable housing goals by the end of the

fourth quarter of 2009.