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FHFA 2014 Report to Congress Sets Forth GSEs’ and FHLBanks’ Housing Goals

Two-Story-HouseIn an effort to inform Congress of the their regulated entities goals, activities, and missions, the Federal Housing Finance Agency's (FHFA) recently released their 2014 Report to Congress, which examines and reports the activities of Freddie Mac, Fannie Mae, 12 Federal Home Loan Banks (FHLBanks), and the FHLBanks’ Office of Finance. The agency also reported the goals set forth for the GSEs and FHLBank’s mission and affordable housing programs they offer.

The report highlights that the FHFA aimed to reduce taxpayer risk through increasing the role of private capital in the mortgage market, and also build a new single-family securitization infrastructure for use by the GSEs and adaptable for use by other participants in the secondary market in the future. These goals were outlined in the 2014 Conservatorship Strategic Plan and the 2014 Conservatorship Scorecard.

“The 2014 Conservatorship Scorecard expressed the expectation that the Enterprises would, expand the volume and types of transactions that transfer single-family mortgage credit risk from the Enterprises to the private sector, continue the ongoing reduction of the Enterprises’ retained portfolios, with a focus on the sale of their less liquid assets, and take steps to ensure the stability of mortgage insurance companies that are important Enterprise counterparties, the FHFA report said. “FHFA’s 2014 Conservatorship Strategic Plan and Conservatorship Scorecard continued to make building a new infrastructure for the securitization functions of the Enterprises an important priority”

The FHFA’s annual 2014 housing goals for mortgages purchased by the GSEs include single-family mortgages on housing that is affordable to low-income and very low-income families. The agency is required to set these goals under the Safety and Soundness Act.

The report noted that the low-income purchase goal for home purchase mortgages should go to families with incomes of no more than 80 percent of area median income. The very low-income home purchase goal is intended for families with income of no more than 50 percent of area median income.

The low-income areas home purchase sub-goal accepts median incomes no greater than 80 percent of area median income, or families with incomes no greater than 100 percent of area median income who live in census tracts with a minority population of 30 percent or more and a tract median income less than 100 percent of area median income, the report says. Low-income areas home purchase goal, which includes mortgages that meet the criteria under the low-income areas home purchase sub-goal as well as home purchase mortgages to families with incomes no greater than 100 percent of area median income who live in federally declared disaster areas.

The low-income refinance goal for refinance mortgages will go to families with incomes no greater than 80 percent of area median income, the FHFA reported.

“Since 2010, the single-family housing goals have included both preset benchmark levels and a retrospective comparison of goal performance with the corresponding figures on the goal-qualifying shares of conventional conforming mortgages in the primary mortgage market in each year,” the report said. “FHFA bases the retrospective comparison part of this process on analysis of data on mortgage originations, as reported by lenders in accordance with the Home Mortgage Disclosure Act (HMDA).”

Also in 2014, the report noted that the FHFA continued to monitor FHLBanks to place their focus on their housing finance and community development mission. The agency’s efforts included ongoing discussions about core mission activities, proposed revisions to the FHLBank membership regulations, and proposals to improve the Affordable Housing Program (AHP).

“The Bank Act requires each of the 12 FHLBanks to establish an AHP to provide financing for the construction, purchase, or rehabilitation of affordable housing for very low-and low-or moderate-income households, the FHFA said. “AHP applicants are FHLBank member financial institutions that pass the subsidy through to an eligible beneficiary in the form of subsidized advances or grants.”

According to the FHFA, FHLBanks are also required to set forth housing goals based on single-family loans purchased by these banks from their members through their AMA programs. The housing goals are expected to measure the extent of how the banks’ AMA programs are assisting low income families.

Click here to view the FHFA's complete 2014 Report to Congress.

 

About Author: Xhevrije West

Xhevrije West is a writer and editor based in Dallas, Texas. She has worked for a number of publications including The Syracuse New Times, Dallas Flow Magazine, and Bellwethr Magazine. She completed her Bachelors at Alcorn State University and went on to complete her Masters at Syracuse University.
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