Rule2022-27467
2023-2024 Multifamily Enterprise Housing Goals
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 23, 2022
Effective
February 21, 2023
Issuing agencies
Federal Housing Finance Agency
Abstract
The Federal Housing Finance Agency (FHFA or the Agency) is issuing a final rule on the multifamily housing goals for Fannie Mae and Freddie Mac (the Enterprises) for 2023 and 2024. The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (the Safety and Soundness Act) requires FHFA to establish annual housing goals for mortgages purchased by the Enterprises. Under FHFA's existing housing goals regulation, the multifamily housing goals for the Enterprises include benchmark levels through the end of 2022 based on the total number of affordable units in multifamily properties financed by mortgage loans purchased by the Enterprise each year. This final rule amends the regulation to establish benchmark levels for the multifamily housing goals for 2023 and 2024 based on a new methodology--the percentage of affordable units in multifamily properties financed by mortgages purchased by the Enterprise each year.
Full Text
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[Federal Register Volume 87, Number 246 (Friday, December 23, 2022)]
[Rules and Regulations]
[Pages 78837-78846]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-27467]
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FEDERAL HOUSING FINANCE AGENCY
12 CFR Part 1282
RIN 2590-AB21
2023-2024 Multifamily Enterprise Housing Goals
AGENCY: Federal Housing Finance Agency.
ACTION: Final rule.
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SUMMARY: The Federal Housing Finance Agency (FHFA or the Agency) is
issuing a final rule on the multifamily housing goals for Fannie Mae
and Freddie Mac (the Enterprises) for 2023 and 2024. The Federal
Housing Enterprises Financial Safety and Soundness Act of 1992 (the
Safety and Soundness Act) requires FHFA to establish annual housing
goals for mortgages purchased by the Enterprises. Under FHFA's existing
housing goals regulation, the multifamily housing goals for the
Enterprises include benchmark levels through the end of 2022 based on
the total number of affordable units in multifamily properties financed
by mortgage loans purchased by the Enterprise each year. This final
rule amends the regulation to establish benchmark levels for the
multifamily housing goals for 2023 and 2024 based on a new
methodology--the percentage of affordable units in multifamily
properties financed by mortgages purchased by the Enterprise each year.
DATES: The final rule is effective on February 21, 2023.
FOR FURTHER INFORMATION CONTACT: Ted Wartell, Associate Director,
Housing & Community Investment, Division of Housing Mission and Goals,
(202) 649-3157, <a href="/cdn-cgi/l/email-protection#1d497879334a7c6f697871715d7b757b7c337a726b"><span class="__cf_email__" data-cfemail="134776773d44726167767f7f53757b75723d747c65">[email protected]</span></a>; Padmasini Raman, Supervisory
Policy Analyst, Housing & Community Investment, Division of Housing
Mission and Goals, (202) 649-3633, <a href="/cdn-cgi/l/email-protection#bdeddcd9d0dcced4d3d493efdcd0dcd3fddbd5dbdc93dad2cb"><span class="__cf_email__" data-cfemail="2e7e4f4a434f5d474047007c4f434f406e4846484f00494158">[email protected]</span></a>; Kevin
Sheehan, Associate General Counsel, Office of General Counsel, (202)
649-3086, <a href="/cdn-cgi/l/email-protection#82c9e7f4ebecacd1eae7e7eae3ecc2e4eae4e3ace5edf4"><span class="__cf_email__" data-cfemail="256e40534c4b0b764d40404d444b65434d43440b424a53">[email protected]</span></a>. These are not toll-free numbers. The
mailing address is: Federal Housing Finance Agency, 400 Seventh Street
SW, Washington, DC 20219. For TTY/TRS users with hearing and speech
disabilities, dial 711 and ask to be connected to any of the contact
numbers above.
SUPPLEMENTARY INFORMATION:
I. Background
A. Statutory and Regulatory Background for the Housing Goals
The Safety and Soundness Act requires FHFA to establish several
annual housing goals for both single-family and multifamily mortgages
purchased by the Enterprises.\1\ The achievement of the annual housing
goals is one measure of the extent to which the Enterprises are meeting
their public purposes, which include ``an affirmative obligation to
facilitate the financing of affordable housing for low- and moderate-
income families in a manner consistent with their overall public
purposes, while maintaining a strong financial condition and a
reasonable economic return.'' \2\
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\1\ See 12 U.S.C. 4561(a).
\2\ See 12 U.S.C. 4501(7).
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Since 2010, FHFA has established annual housing goals for
Enterprise purchases of both single-family and multifamily mortgages by
rulemaking, consistent with the requirements of the Safety and
Soundness Act. FHFA's most recent final rule amending the housing goals
regulation was issued in December 2021 and established benchmark levels
for the single-family housing goals for 2022 through 2024 and benchmark
levels for the multifamily housing goals for 2022 only.\3\ On August
18, 2022, FHFA issued a proposed rule that proposed a new methodology
and benchmark levels for the multifamily housing goals for 2023 and
2024.\4\
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\3\ See 86 FR 73641 (December 28, 2021).
\4\ See 87 FR 50794 (August 18, 2022).
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B. Adjusting the Housing Goals
If, after publication of the final rule establishing the
multifamily housing goals for 2023 and 2024, FHFA determines that any
of the multifamily housing goals or subgoals should be adjusted in
light of market conditions to ensure the safety and soundness of the
Enterprises, or for any other reason,
[[Page 78838]]
FHFA will take any steps that are necessary and appropriate to adjust
the goal(s) such as reducing the benchmark level(s) through the
processes in the existing regulation.
FHFA may also take other actions consistent with the Safety and
Soundness Act and the Enterprise housing goals regulation based on new
information or developments that occur after publication of the final
rule. For example, under the Safety and Soundness Act and the
Enterprise housing goals regulation, FHFA may reduce the benchmark
levels in response to an Enterprise petition for any of the single-
family or multifamily housing goals or subgoals in a particular year
based on a determination by FHFA that: (1) market and economic
conditions or the financial condition of the Enterprise require a
reduction; or (2) efforts to meet the goal or subgoal would result in
the constraint of liquidity, over-investment in certain market
segments, or other consequences contrary to the intent of the Safety
and Soundness Act or the purposes of the Enterprises' charter acts.\5\
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\5\ See 12 CFR 1282.14(d).
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The Safety and Soundness Act and the Enterprise housing goals
regulation also take into consideration the possibility that
achievement of a particular housing goal or subgoal may or may not have
been feasible for an Enterprise to achieve. If FHFA determines that a
housing goal or subgoal was not feasible for an Enterprise to achieve,
then the statute and regulation provide for no further enforcement of
that housing goal or subgoal for that year.\6\ If FHFA determines that
an Enterprise failed to meet a housing goal or subgoal and that
achievement of the housing goal or subgoal was feasible, then the
statute and regulation provide FHFA with discretionary authority to
require the Enterprise to submit a housing plan describing the specific
actions the Enterprise will take to improve its housing goals or
subgoals performance.
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\6\ See 12 CFR 1282.21(a); 12 U.S.C. 4566(b).
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The actions described in this section provide FHFA some flexibility
to respond to new information or developments that occur after
publication of the final rule. As proposed, the new methodology for
establishing the benchmarks in the final rule sets the levels as a
percentage of goal-eligible units backing mortgages acquired by each
Enterprise,\7\ which could reduce the likelihood that FHFA will be
required to modify the benchmark levels in response to unexpected
market developments after publication of the final rule.
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\7\ In this final rule, ``goal-eligible units'' is used as a
synonym for ``denominator,'' to refer to all dwelling units that are
financed by mortgage purchases that could be counted for purposes of
the multifamily housing goals and subgoals. The counting rules in 12
CFR 1282.16(b) exclude certain types of mortgages from eligibility
for housing goals credit, such as multifamily mortgages with Federal
guarantees and subordinate lien multifamily mortgages. Such loans
are not included in the denominator. ``Goal-qualifying units'' is
used as a synonym for ``numerator,'' to refer to the goal-eligible
units that meet the respective affordability requirements of each
multifamily goal. For example, low-income units are affordable to
families with incomes less than or equal to 80 percent of area
median income (AMI) and very low-income units are affordable to
families with incomes less than or equal to 50 percent of AMI.
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C. Housing Goals Under Conservatorship
On September 6, 2008, FHFA placed each Enterprise into
conservatorship. Although the Enterprises remain in conservatorship at
this time, they continue to have the mission of supporting a stable and
liquid national market for residential mortgage financing. FHFA has
continued to establish annual housing goals for the Enterprises and to
assess their performance under the housing goals each year during
conservatorship.
II. Discussion of Proposed Rule and Public Comments
FHFA published a Notice of Proposed Rulemaking (NPRM or proposed
rule) in the Federal Register on August 18, 2022, that proposed a new
methodology for measuring the Enterprise multifamily housing goals.
Rather than measuring the multifamily housing goals based on an
absolute number of affordable units in multifamily properties financed
by mortgages purchased by the Enterprises, FHFA proposed using
percentages of affordable units in multifamily properties financed by
mortgages purchased by the Enterprises. The NPRM also proposed specific
benchmark levels for each of the multifamily housing goals. The public
comment period for the proposed rule ended on October 17, 2022.
Overview. FHFA received 77 comment letters from organizations and
members of the public in response to the proposed rule. Comment letters
were submitted by both Fannie Mae and Freddie Mac, as well as nonprofit
organizations, policy advocacy organizations, and trade associations
representing lenders, homebuilders, and other mortgage market
participants. FHFA received one joint letter from two policy
organizations focused on renters and one letter signed by 35 housing
and community development organizations. FHFA also received 64 comment
letters from members of the public and organizations which were part of
a letter-writing campaign concerned about the high cost of rent and the
lack of tenant protections.
FHFA has reviewed and considered all of the comment letters
received in response to the NPRM. A number of those letters raised
issues that are unrelated to the housing goals or are beyond the scope
of the proposed rule. As a result, those issues are not addressed in
this final rule. Specific provisions of the proposal and comments
received in response to those provisions are discussed below.
Change in methodology for measuring the multifamily goals. Although
not all of the comment letters received in response to the NPRM
addressed the proposed change in methodology, those that did supported
the proposed change. The Enterprises, trade organizations, policy
advocacy organizations, and one member of the supported the proposed
methodology change, stating that it would be more responsive to market
conditions, offer flexibility for the Enterprises, and enable the
Enterprises to maintain a focus on affordability while facilitating
their ability to provide necessary liquidity.
Although not opposed to the proposed change, a trade association
representing homebuilders stressed the importance of preserving the
Enterprises' countercyclical role and expressed concern that the
proposed methodology could potentially result in a decline in the
absolute number of affordable units acquired by each Enterprise.
The Safety and Soundness Act provides that the Director shall, by
regulation, establish a single annual goal, by either unit or dollar
volume, of purchases by each Enterprise of mortgages on multifamily
housing that finance dwelling units affordable to low-income
families.\8\ FHFA has established the multifamily housing goals based
on a specific number of units each year since 2010. However, the volume
of Enterprise multifamily purchases has varied considerably from year
to year due to a variety of market and economic conditions. Changing to
a percentage-based methodology will better reflect the market and
economic conditions the Enterprises encounter in acquiring mortgages.
Percentage-based multifamily goals will require that the Enterprises
continue to support the affordable segment of the market in years where
their multifamily mortgage acquisitions increase, while ensuring
[[Page 78839]]
that the goals remain feasible in years where the Enterprise
multifamily mortgage acquisitions are lower.
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\8\ See 12 U.S.C. 4563(a).
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FHFA notes that setting the multifamily goal benchmark levels as
the percentage share of all goal-eligible units backing mortgages
acquired by the Enterprise that are affordable units is consistent with
the statutory requirement that the multifamily housing goal be based on
unit or dollar volume. While the Safety and Soundness Act defines the
single-family housing goals and multifamily housing goals using
different terms, the difference is focused on the single-family housing
goals being based on mortgages and the multifamily housing goals being
based on units or dollar volume. FHFA does not interpret the difference
between the single-family and multifamily housing goals to prohibit
using percentages for the multifamily housing goals. Setting the
multifamily housing goals as a minimum percentage also aligns the
multifamily goals more closely with the statutory factors that FHFA is
required to consider in setting the multifamily housing goals. Those
factors include consideration of national multifamily mortgage credit
needs and the size of the multifamily mortgage market for housing
affordable to low-income and very low-income families. Because market
conditions can change significantly each year, it is difficult to
identify in advance a specific number of units for the multifamily
housing goals that would be ambitious yet feasible for the Enterprises.
Percentage-based multifamily housing goals address this difficulty and
are intended to ensure the Enterprises appropriately support the
housing finance market while fulfilling their affordable housing
mission requirements each year.
Therefore, FHFA is adopting as final the percentage-based
methodology for measuring the multifamily goals as set forth in the
proposed rule. The new methodology will not affect FHFA's ability to
track, report, and verify data on multifamily units backing mortgages
purchased by the Enterprises, including data on affordable units by
income level. FHFA will continue to closely monitor Enterprise
performance on the multifamily housing goals and trends in the
multifamily market in general.
Multifamily benchmark levels. Both Enterprises and groups
representing bankers, mortgage bankers, and lenders expressed support
for the proposed benchmark levels for all three of the multifamily
housing goals. However, a trade association representing homebuilders,
a policy advocacy organization representing housing finance agencies,
and 35 housing and community development nonprofits urged FHFA to raise
the proposed benchmark levels to be in line with, or higher than, the
Enterprises' recent performance. A policy advocacy organization
maintained that the proposed benchmark levels should be higher given
the tremendous demand for affordable housing and the need to ensure
that the Enterprises fulfill their countercyclical role during economic
downturns. This commenter further argued that higher benchmark levels
would better align with FHFA's recent focus on increasing Enterprise
support for affordable housing. One comment letter, endorsed by 35
housing and community development organizations, supported the change
in methodology but recommended setting the benchmark levels above
recent Enterprise performance. Section IV below provides additional
detail on the benchmark levels set in this final rule.
Conservatorship Scorecard Cap. Comment letters from Fannie Mae, a
trade organization representing mortgage bankers, and two policy
advocacy organizations representing renters discussed the interaction
between the multifamily benchmark levels and the Conservatorship
Scorecard Cap. Although some comments were beyond the scope of the
proposed rule, FHFA took the comments into consideration in finalizing
the Conservatorship Scorecard Cap for 2023.\9\ FHFA notes that the
methodology adopted in the final rule for measuring the multifamily
housing goals sets the goals as percentages rather than number of units
and was designed to better harmonize the requirements of the housing
goals and the Conservatorship Scorecard Cap, which is one of the
objectives discussed by these organizations.
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\9\ See <a href="https://www.fhfa.gov/Media/PublicAffairs/Pages/2023-Multifamily-Caps-for-Fannie-Mae-and-Freddie-Mac.aspx">https://www.fhfa.gov/Media/PublicAffairs/Pages/2023-Multifamily-Caps-for-Fannie-Mae-and-Freddie-Mac.aspx</a>.
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Multifamily data. Two policy advocacy organizations representing
renters requested that FHFA study and publish findings on various
issues related to the multifamily market. FHFA notes that both the
Enterprises and the Agency regularly publish performance data on the
Enterprises' multifamily acquisitions, including in the Annual Housing
Activities Reports and Annual Mortgage Reports produced by the
Enterprises in March each year, the Annual Housing Report published by
FHFA in October each year, and in FHFA's preliminary and final
determination letters on the Enterprises' annual housing goals
performance, all of which are posted to the FHFA website. However, FHFA
plans to continue to identify ways to improve and enhance its ability
to share multifamily research and analysis with the public.
Other issues. A number of commenters raised concerns that went
beyond the scope of the proposed rule. For example, FHFA received
numerous comments focused on a variety of renter issues and concerns.
One comment letter signed by 35 housing and community development
organizations urged FHFA to consider ways to address issues such as
displacement and substandard living conditions for low-income tenants
and tenants of color. The comment letter provided recommendations for
underwriting, tracking, and evaluating the affordability of rental
units, as well as holding landlords accountable for the needs of their
tenants. FHFA notes in regard to this comment that the Safety and
Soundness Act requires FHFA to determine affordability for purposes of
the housing goals based on whether the rent level is at or below 30
percent of the maximum income level for the relevant category, adjusted
for unit size.\10\ FHFA also received 64 comment letters from members
of the public and organizations concerned about the high cost of rent
and the lack of tenant protections for renters. The comment letters
were submitted as part of a letter-writing campaign organized by an
advocacy group. The commenters cited the tenant protections that were
offered during the COVID-19 pandemic as part of the Enterprise
forbearance programs as positive actions taken by FHFA. These letters
specifically urged FHFA to regulate rents for all federally-backed
mortgages in order to support sustainable, affordable housing. FHFA
recognizes the significant issues that families face in finding
affordable rental housing and in remaining secure in the face of
economic uncertainty. Section IV below includes additional discussion
of these affordability challenges. FHFA also has met with stakeholders
to discuss these issues and will continue working to identify ways that
FHFA and the Enterprises can support renters across the country.
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\10\ See 12 U.S.C. 4563(c).
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III. Summary of the Final Rule
The Safety and Soundness Act requires FHFA to establish annual
multifamily housing goals for purchases by each Enterprise of mortgages
on multifamily housing that finance dwelling units affordable to low-
income and very low-income families. In accordance with the Safety and
[[Page 78840]]
Soundness Act, the final rule establishes the multifamily housing goals
for 2023 and 2024 based on the percentage of affordable units in
multifamily properties financed by mortgages purchased by the
Enterprise.
The final rule establishes the benchmark levels for the multifamily
goal and subgoals for 2023 and 2024 as follows:
------------------------------------------------------------------------
Final
benchmark
Goal Criteria level for 2023
and 2024 (%)
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Low-Income Goal................ Percent of all goal- 61
eligible units in
multifamily properties
financed by mortgages
purchased by the
Enterprises in that
year that are
affordable to low-
income families,
defined as families
with incomes less than
or equal to 80 percent
of area median income
(AMI).
Very Low-Income Subgoal........ Percent of all goal- 12
eligible units in
multifamily properties
financed by mortgages
purchased by the
Enterprises in that
year that are
affordable to very low-
income families,
defined as families
with incomes less than
or equal to 50 percent
of AMI.
Small Multifamily Low-Income Percent of all goal- 2.5
Subgoal. eligible units in all
multifamily properties
financed by mortgages
purchased by the
Enterprises in that
year that are units in
small multifamily
properties affordable
to low-income
families, defined as
families with incomes
less than or equal to
80 percent of AMI.
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The final rule does not make any changes to the requirements for
determining which multifamily mortgage purchases are counted, or not
counted, as those requirements continue to be defined in the existing
housing goals regulation. The Enterprises will continue to report on
the number of multifamily units acquired each year, including data on
units that are affordable to low-income households, very low-income
households, and low-income households in small multifamily properties.
The Enterprise housing goals regulation defines a small multifamily
property as a property with 5 to 50 units. In order to meet each of the
multifamily goals, each Enterprise will be required to ensure that the
percentage of units that are affordable meets or exceeds the applicable
benchmark level.
While the final rule does not change the requirements for
determining which multifamily mortgages are eligible to be counted
towards the goals, the final rule makes technical revisions to Sec.
1282.15 to reflect the new methodology. As in the proposed rule, the
final rule revises Sec. 1282.15(c) to express the percentage of
affordable units in multifamily properties financed by mortgages
purchased by the Enterprises in terms of a defined numerator and
denominator. As revised, Sec. 1282.15(c) mirrors the description of
the single-family housing goals that currently exists in Sec.
1282.15(a), which already measures the single-family housing goals as
percentages. FHFA did not receive comments on these specific revisions
in the proposed rule.
In addition, as in the proposed rule, the final rule amends Sec.
1282.15(e)(3) to clarify the treatment of rental units with missing
affordability information. Under the existing regulation, an Enterprise
is permitted to estimate the affordability of such units, up to a
maximum of 5 percent of the total number of rental units in properties
securing multifamily mortgages purchased by the Enterprise in the
current year. Rental units with missing affordability information are
not counted for purposes of the multifamily housing goals to the extent
that the number of such units exceeds the nationwide maximum of 5
percent. Rental units also are excluded if it is not possible to
estimate the affordability of such units. The final rule clarifies that
under the new methodology, any units with missing affordability
information in excess of the 5 percent nationwide maximum will be
excluded from the numerator of the multifamily goals but will be
included in the denominator. This treatment is consistent with the
objective to encourage the Enterprises to obtain affordability
information whenever possible. The final rule excludes rental units
with missing affordability information from both the numerator and the
denominator if it is not possible to estimate the affordability of such
units. This treatment reflects the fact that the availability of
information needed to estimate affordability is outside the
Enterprises' control.
IV. Multifamily Housing Goals
A. Factors Considered for the Final Multifamily Housing Goals Benchmark
Levels
In establishing benchmark levels for the multifamily housing goals
for 2023 and 2024, FHFA has considered the statutory factors set forth
in section 1333(a)(4) of the Safety and Soundness Act. The statutory
factors are:
1. National multifamily mortgage credit needs and the ability of
the Enterprises to provide additional liquidity and stability for the
multifamily mortgage market;
2. The performance and effort of the Enterprises in making mortgage
credit available for multifamily housing in previous years;
3. The size of the multifamily mortgage market for housing
affordable to low-income and very low-income families, including the
size of the multifamily markets for housing of a smaller or limited
size;
4. The ability of the Enterprises to lead the market in making
multifamily mortgage credit available, especially for multifamily
housing affordable to low-income and very low-income families;
5. The availability of public subsidies; and
6. The need to maintain the sound financial condition of the
Enterprises.\11\
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\11\ See 12 U.S.C. 4563(a)(4).
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FHFA considered each of these required statutory factors in setting
the benchmark levels for the multifamily housing goals. The analysis
below describes trends in the overall multifamily mortgage market as
they apply to setting the final benchmark levels. Additional analyses
of the trends in the overall multifamily mortgage market can be found
in the proposed rule.\12\
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\12\ See 87 FR 50794 (August 18, 2022).
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Overall economic outlook. Many factors impact the affordable
housing market as a whole, and changes to any one of them could
significantly affect the ability of the Enterprises to meet the housing
goals. FHFA will continue to monitor the affordable housing market and
take these factors into account when considering the feasibility of the
goals.
On November 2, 2022, the Federal Reserve noted that despite recent
strong job gains and a low unemployment rate,
[[Page 78841]]
inflation remains elevated.\13\ The Federal Reserve noted that the
invasion of Ukraine by Russia and related events are causing additional
upward pressure on inflation and affecting global economic activity. In
an effort to achieve maximum employment and inflation of 2 percent in
the long run, the Federal Open Market Committee (FOMC) raised its
target range for the federal funds rate to 3.75 percent to 4 percent,
with plans to increase the target range further as appropriate until
its goals are achieved.\14\
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\13\ See <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20221102a.htm">https://www.federalreserve.gov/newsevents/pressreleases/monetary20221102a.htm</a>.
\14\ Ibid.
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Interest rates are very important determinants of mortgage market
trajectory. Moody's November 2022 consensus forecast projects that 30-
year fixed-rate mortgage interest rates will rise from an annual
average rate of 3.0 percent in 2021 to 5.4 percent in 2022, then rise
even further to 6.4 percent in 2023, before declining to 5.4 percent in
2024.\15\ As of December 1, 2022, the weekly average rate for a 30-year
fixed-rate mortgage was 6.49 percent.\16\ Moody's forecast also
projects that the unemployment rate will rise from 3.7 percent in 2022
to 4.3 percent in 2023, and to 4.5 percent in 2024. In addition,
Moody's projects a slight decline in per capita disposable nominal
income from $56,100 in 2021 to $55,800 in 2022, before rising to
$61,300 by 2024. Furthermore, Moody's forecast estimates that the
annual average inflation rate will decline from a projected 40-year
high of 8.1 percent in 2022 to 2.5 percent in 2024. The year-over-year
inflation rate for October 2022 was 7.7 percent.\17\
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\15\ The macroeconomic outlook described herein is based on
Moody's consensus forecast as of November 2022.
\16\ See <a href="https://www.freddiemac.com/pmms/docs/historicalweeklydata.xls">https://www.freddiemac.com/pmms/docs/historicalweeklydata.xls</a>.
\17\ See <a href="https://data.bls.gov/timeseries/CUUR0000SA0&output_view=pct_12mths">https://data.bls.gov/timeseries/CUUR0000SA0&output_view=pct_12mths</a>.
Table 1--Historical and Projected Trends of Key Macroeconomic Variables
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Household trends Projected trends
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2016 2017 2018 2019 2020 2021 2022 2023 2024
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Real GDP Growth Rate............... 1.7 2.2 2.9 2.3 -2.8 5.9 1.8 0.4 1.4
Unemployment Rate.................. 4.9 4.4 3.9 3.7 8.1 5.4 3.7 4.3 4.5
Labor Force Participation Rate..... 62.8 62.8 62.9 63.1 61.8 61.7 62.3 62.6 62.7
Inflation Rate (Change in CPI)..... 1.3 2.1 2.4 1.8 1.2 4.7 8.1 3.9 2.5
Consumer Confidence Index.......... 99.8 120.3 130.2 128.3 101.0 112.7 104.2 107.7 112.9
30-Year Mortgage Fixed Rate........ 3.6 4.0 4.5 3.9 3.1 3.0 5.4 6.4 5.4
Per Capital Disposable Income $43.6 $45.3 $47.5 $49.6 $53.0 $56.1 $55.8 $58.9 $61.3
(1,000s $)........................
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Note: Historical values and projected trends are provided by Moody's Analytics.
Multifamily mortgage market. FHFA's consideration of the
multifamily mortgage market addresses the size of and competition
within the market, as well as the subset of the market that is
affordable to low-income and very low-income renters. In October 2022,
the Mortgage Bankers Association (MBA) forecast that multifamily
mortgage originations would decline by 7 percent from the 2021 record
of $487 billion to $455 billion in 2022, then to $451 billion in
2023.\18\ However, the MBA also noted that while this forecast is based
on their baseline economic forecast, the outlook is currently uncertain
and further declines in multifamily mortgage originations could not be
ruled out.\19\
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\18\ See <a href="https://www.mba.org/news-and-research/newsroom/news/2022/10/03/commercial-multifamily-lending-expected-to-fall-in-2022-due-to-ongoing-economic-uncertainty">https://www.mba.org/news-and-research/newsroom/news/2022/10/03/commercial-multifamily-lending-expected-to-fall-in-2022-due-to-ongoing-economic-uncertainty</a>.
\19\ Ibid.
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Affordability in the multifamily mortgage market. In October 2022,
the Urban Institute stated that the affordable housing market had
changed dramatically in the past year, with both rents and home prices
rising more than 13 percent and interest rates more than doubling
relative to a year earlier.\20\ The Joint Center for Housing Studies of
Harvard University's (JCHS) State of the Nation's Housing Report 2022
found that year-over-year rent growth in the professionally managed
segment of the apartment market surged to a record 11.6 percent at the
end of 2021, and stayed high at the beginning of 2022.\21\ In
comparison, the average annual rent increase in the pre-pandemic years
of 2015-2019 was 3.2 percent.\22\
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\20\ See ``Mom-and-Pop Landlords Are Raising Rents, Albeit Less
Than Market Rates, Leaving Renters with Few Places to Turn,'' Urban
Institute, October 2022, p.1, available at <a href="https://www.urban.org/urban-wire/mom-and-pop-landlords-are-raising-rents-albeit-less-market-rates-leaving-renters-few">https://www.urban.org/urban-wire/mom-and-pop-landlords-are-raising-rents-albeit-less-market-rates-leaving-renters-few</a>.
\21\ See ``The State of the Nation's Housing 2022,'' Joint
Center for Housing Studies of Harvard University, June 2022, p.30,
available at <a href="https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2022.pdf">https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2022.pdf</a>.
\22\ Ibid.
---------------------------------------------------------------------------
The Safety and Soundness Act requires FHFA to determine
affordability for purposes of the Enterprise housing goals based on a
family's rent and utility expenses not exceeding 30 percent of AMI.\23\
The JCHS Report describes the growing presence of cost-burdened
renters, particularly among low-income and very low-income
households.\24\ A household is considered cost-burdened if they are
spending more than 30 percent of their income on housing, or severely
cost-burdened if they are spending more than 50 percent of their income
on housing. The Report shows that the share of cost-burdened renters
across all income segments rose from 43.6 percent in 2019 to 46.2
percent in 2020.\25\ The Report also shows that 82.6 percent of renters
earning less than $15,000 and 77.9 percent of renters earning between
$15,000 and $29,999 were cost-burdened in 2020. The share of cost-
burdened renters earning between $30,000 and $44,999 increased the
most, rising approximately 9.0 percent--from 49.2 percent in 2019 to
58.3 percent in 2020.\26\
---------------------------------------------------------------------------
\23\ See 12 U.S.C. 4563(c).
\24\ See ``The State of the Nation's Housing 2022,'' Joint
Center for Housing Studies of Harvard University, June 2022, p.8,
available at <a href="https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2022.pdf">https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2022.pdf</a>.
\25\ See ``The State of the Nation's Housing 2022: Appendix and
Web Tables,'' Joint Center for Housing Studies of Harvard
University, June 2022, Table W-2, available at <a href="https://www.jchs.harvard.edu/sites/default/files/interactive-item/files/Harvard_JCHS_State_Nations_Housing_2022_Appendix_Tables_0.xlsx">https://www.jchs.harvard.edu/sites/default/files/interactive-item/files/Harvard_JCHS_State_Nations_Housing_2022_Appendix_Tables_0.xlsx</a>.
\26\ Ibid.
---------------------------------------------------------------------------
The JCHS Report also notes the significant rise in new rental
supply. The Report notes that in 2021, multifamily starts reached
474,000 units, the highest since the mid-1980s,
[[Page 78842]]
94 percent of which were intended for the rental market.\27\ The first
quarter of 2022 saw starts totaling 124,000 units, the highest first
quarter since 1986, with 91 percent of those units intended for the
rental market.\28\
---------------------------------------------------------------------------
\27\ See ``The State of the Nation's Housing 2022,'' Joint
Center for Housing Studies of Harvard University, June 2022, p.33,
available at <a href="https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2022.pdf">https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2022.pdf</a>.
\28\ Ibid.
---------------------------------------------------------------------------
While the addition of these units is expected to temper rent
growth, the JCHS Report notes that these units are primarily targeted
at the upper end of the market, with rents unaffordable to low-income
households.\29\ The Report states that the median asking rent for newly
completed units in 2021 was $1,740, a 24 percent increase from
2015.\30\ In addition, the share of newly completed units renting for
less than $1,250 declined from 39 percent in 2015 to 15 percent in
2021, and for units renting for less than $850, from 9 percent to 2
percent for the same time period.\31\
---------------------------------------------------------------------------
\29\ Ibid, p.34.
\30\ Ibid.
\31\ Ibid.
---------------------------------------------------------------------------
Role of the Enterprises. In establishing the multifamily housing
goal benchmark levels for 2023 and 2024, FHFA has considered the
ability of the Enterprises to lead the market in making multifamily
mortgage credit available. The share of the overall multifamily
mortgage origination market that is purchased by the Enterprises
increased in the years immediately following the financial crisis, but
their share has declined more recently in response to growing private
sector participation. The Enterprises' share of the multifamily
mortgage origination market was over 70 percent in 2008 and 2009,
compared to 36 percent in 2015.\32\ The total share was at 40 percent
or higher from 2016 to 2020. However, in 2021, a record multifamily
volume year, the combined Enterprise share was estimated to have been
around 28 percent.\33\ Fannie Mae estimates that through the second
quarter of 2022, Enterprise share was around 26 percent.\34\ With
interest rates expected to continue to rise in 2023 and 2024 and fewer
multifamily originations expected (consistent with the MBA's forecast
for 2023 and 2024), much uncertainty remains around the number and
types of multifamily loans that may be originated in the next two
years.
---------------------------------------------------------------------------
\32\ See Fannie Mae, ``Multifamily Business Information
Presentation,'' November 2022, p.3: <a href="https://multifamily.fanniemae.com/media/9131/display">https://multifamily.fanniemae.com/media/9131/display</a>.
\33\ Ibid.
\34\ Ibid.
---------------------------------------------------------------------------
FHFA recognizes there are numerous Enterprise activities that
impact how the Enterprises contribute to and participate in the
multifamily market, including through their Duty to Serve Underserved
Markets Plans, their Equitable Housing Finance Plans, and the mission-
driven elements of the Conservatorship Scorecard. Together with the
housing goals, these programmatic activities provide support to renter
households, including lower-income families spending more than 30
percent of their income on housing. FHFA will continue to monitor the
aforementioned initiatives and priorities to ensure appropriate focus
by the Enterprises and compliance with the Enterprises' charter acts
and safety and soundness considerations.
FHFA expects the Enterprises to continue demonstrating leadership
in multifamily affordable housing lending by providing liquidity and
supporting housing for tenants at different income levels in various
geographic markets and in various market segments. This support should
continue throughout the economic cycle, with the Enterprises providing
support even as the overall volume of the multifamily mortgage market
fluctuates.
Maintaining the sound financial condition of the Enterprises. In
establishing multifamily housing goals benchmark levels for 2023 and
2024, FHFA must balance the role that the Enterprises play in providing
liquidity and supporting various multifamily mortgage market segments
with the need to maintain the Enterprises' sound and solvent financial
condition. The Enterprises have served as a stabilizing force in the
multifamily mortgage market. The Enterprises' portfolios of loans on
multifamily affordable housing properties have experienced low levels
of delinquency and default, similar to the performance of multifamily
loans on market-rate properties.
FHFA continues to monitor the activities of the Enterprises in its
capacity as safety and soundness regulator and as conservator. As
discussed above, FHFA may take any steps it determines necessary and
appropriate to address the multifamily housing goals benchmark levels
to ensure the Enterprises' continued safety and soundness.
B. Final Multifamily Housing Goals Benchmark Levels
This section describes FHFA's analysis for establishing the final
benchmark levels based on its consideration of the statutory factors
described above and the performance of the Enterprises.
----------------------------------------------------------------------------------------------------------------
Proposed Final
benchmark benchmark
Goal Criteria level for level for
2023 and 2023 and
2024 (%) 2024 (%)
----------------------------------------------------------------------------------------------------------------
Low-Income Goal............................... Percent of all goal-eligible units in 61 61
multifamily properties financed by
mortgages purchased by the
Enterprises in that year that are
affordable to low-income families,
defined as families with incomes less
than or equal to 80 percent of AMI.
Very Low-Income Subgoal....................... Percent of all goal-eligible units in 12 12
multifamily properties financed by
mortgages purchased by the
Enterprises in that year that are
affordable to very low-income
families, defined as families with
incomes less than or equal to 50
percent of AMI.
Small Multifamily Low-Income Subgoal.......... Percent of all goal-eligible units in 2.0 2.5
all multifamily properties financed
by mortgages purchased by the
Enterprises in that year that are
units in small multifamily properties
affordable to low-income families,
defined as families with incomes less
than or equal to 80 percent of AMI.
----------------------------------------------------------------------------------------------------------------
[[Page 78843]]
1. Multifamily Low-Income Housing Goal
The multifamily low-income housing goal is based on the percentage
of rental units in multifamily properties financed by mortgages
purchased by the Enterprises in that year that are affordable to low-
income families, defined as families with incomes less than or equal to
80 percent of AMI. The final rule sets the annual benchmark level for
this goal for both 2023 and 2024 at 61 percent of goal-eligible units
acquired. This is consistent with FHFA's analysis of the current and
expected multifamily market, with fewer affordable units to support,
rising price per unit, and uncertain market conditions.
Recent performance. Table 2 below shows the number of goal-
qualifying low-income multifamily units in properties backing mortgages
acquired by each Enterprise, as well as the goal-qualifying multifamily
low-income units as a percentage of the total goal-eligible units in
properties backing mortgages that were acquired in each year. Although
there were numeric benchmarks historically in place for low-income
multifamily units, the Enterprise performance reflected below has been
well above the numeric benchmarks. FHFA notes that the Enterprises'
performance in 2021 is at or below the 2020 performance, which
corresponded to the onset of the COVID-19 pandemic.
Table 2--Multifamily Low-Income Housing Goal
--------------------------------------------------------------------------------------------------------------------------------------------------------
Performance
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 (%) 2024 (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Low-Income Multifamily Benchmark 300,000 300,000 300,000 315,000 315,000 315,000 315,000 415,000 61 61
Fannie Mae Performance
Low-Income Multifamily Units 307,510 352,368 401,145 421,813 385,763 441,773 384,488
Total Multifamily Units *... 468,798 552,785 630,868 628,230 596,137 637,696 557,152
Low-Income % Total.......... 65.6% 63.7% 63.6% 67.1% 64.7% 69.3% 69.0%
Freddie Mac Performance
Low-Income Multifamily Units 379,042 406,958 408,096 474,062 455,451 473,338 373,225
Total Multifamily Units *... 514,275 597,399 630,037 695,587 661,417 667,451 543,077
Low-Income % of Total Units. 73.7% 68.1% 64.8% 68.2% 68.9% 70.9% 68.7%
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Refers to the total multifamily units that are eligible for housing goals.
Proposed rule and comments. FHFA proposed setting the benchmark
level for the multifamily low-income goal at 61 percent. The
Enterprises and three trade associations representing bankers, mortgage
bankers, and mortgage lenders expressed support for this proposed
benchmark level, describing it as appropriate, realistic, attainable,
and representing a strong commitment to affordability. A trade
association representing home builders, two policy advocacy
organizations, and a comment letter signed by 35 housing and community
development organizations urged FHFA to set the benchmark level at a
level closer to or higher than recent Enterprise performance. No
commenters recommended lowering the proposed benchmark level.
FHFA determination. FHFA has considered the statutory factors for
the multifamily housing goals, including current market conditions, the
Enterprises' performance, and their role in the market. FHFA has also
considered the comments received in response to the proposed
multifamily low-income benchmark level. Rising interest rates are
contributing to the increasing costs of acquiring low-income
multifamily units, and expected continued declines in affordable
originations and higher rents are also causing fewer units to qualify
as affordable for low-income families, with affordability defined based
on rents being less than or equal to 30 percent of the maximum income
level that would qualify as low-income for the area, adjusted for unit
size.\35\ These challenges are expected to continue in 2023 and 2024 as
more low-income families are having to pay greater than 30 percent of
their incomes for rent.\36\ In light of all these factors, FHFA has
determined that the benchmark level for this goal should be set at 61
percent for both Enterprises for 2023 and 2024, consistent with the
proposed rule.
---------------------------------------------------------------------------
\35\ See 12 U.S.C. 4563(c).
\36\ See ``The State of the Nation's Housing 2022,'' Joint
Center for Housing Studies of Harvard University, June 2022, p.6,
available at <a href="https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2022.pdf">https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2022.pdf</a>.
---------------------------------------------------------------------------
2. Multifamily Very Low-Income Housing Subgoal
The multifamily very low-income housing subgoal is based on the
percentage of rental units in multifamily properties financed by
mortgages purchased by the Enterprises that are affordable to very low-
income families, defined as families with incomes less than or equal to
50 percent of AMI. The final rule sets the annual benchmark level for
this subgoal for 2023 and 2024 at 12 percent of goal-eligible units
acquired. FHFA believes that this benchmark level is appropriate to
ensure that the Enterprises continue to adequately serve very low-
income families while accounting for the challenges associated with
increasing interest rates, decreasing affordability in the multifamily
market, and uncertain economic conditions.
Recent performance. Table 3 below shows the number of goal-
qualifying very low-income multifamily units in properties backing
mortgages acquired by each Enterprise, as well as goal-qualifying very
low-income multifamily units as a percentage of the total goal-eligible
units in properties backing mortgages that were acquired in each year.
As noted in the NPRM, the recent performance of the Enterprises on the
multifamily very low-income subgoal indicates that the number of goal-
qualifying units in properties backing mortgages purchased by the
Enterprises varies more widely from year-to-year than the percentage of
goal-qualifying units. Since 2015, one Enterprise has performed at
levels close to the benchmark level of 12 percent that will apply for
2023 and 2024, especially in the years prior to the pandemic. Both
Enterprises have exceeded the numeric benchmark levels that were in
place. However, the number of very low-income units in properties
backing
[[Page 78844]]
mortgages acquired by both Enterprises was lower in 2021 compared to
2020, reflecting changing market conditions.
Table 3--Multifamily Very Low-Income Subgoal
--------------------------------------------------------------------------------------------------------------------------------------------------------
Performance
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 (%) 2024 (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Very Low-Income Multifamily 60,000 60,000 60,000 60,000 60,000 60,000 60,000 88,000 12 12
Benchmark......................
Fannie Mae Performance
Very Low-Income Multifamily 69,078 65,910 82,674 80,891 79,649 95,416 83,459
Units......................
Total Multifamily Units *... 468,798 552,785 630,868 628,230 596,137 637,696 557,152
Very Low-Income % of Total 14.7% 11.9% 13.1% 12.9% 13.4% 15.0% 15.0%
Units......................
Freddie Mac Performance
Very Low-Income Multifamily 76,935 73,030 92,274 105,612 112,773 107,105 87,854
Units......................
Total Multifamily Units *... 514,275 597,399 630,037 695,587 661,417 667,451 543,077
Very Low-Income % of Total 15.0% 12.2% 14.6% 15.2% 17.1% 16.0% 16.2%
Units......................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Refers to the total multifamily units that are eligible for housing goals.
Proposed rule and comments. FHFA proposed setting the benchmark
level for the multifamily very low-income subgoal at 12 percent.
Similar to the comments received in response to the proposed low-income
goal, the Enterprises and three trade associations representing
mortgage bankers, bankers, and mortgage lenders expressed support for
setting the multifamily very low-income subgoal benchmark level at 12
percent, describing it as appropriate, realistic, attainable, and
representing a strong commitment to affordability. A comment letter
signed by 35 housing and community development organizations, a trade
association representing home builders, and another policy advocacy
organization urged FHFA to set the benchmark level at a level closer to
or higher than recent Enterprise performance. No commenters recommended
lowering the proposed benchmark level.
FHFA determination. FHFA has considered the statutory factors for
the multifamily housing goals, including current market conditions and
the Enterprises' role in the market. FHFA has also considered the
comments received in response to the proposed multifamily very low-
income benchmark level. Very low-income renters face similar challenges
as low-income renters. Rising interest rates are contributing to the
increasing costs of acquiring very low-income multifamily units, and
expected continued declines in affordable originations and higher rents
are causing fewer units to qualify as affordable for very low-income
families, with affordability defined based on rents being less than or
equal to 30 percent of the maximum income level that would qualify as
low-income for the area, adjusted for unit size.\37\ These challenges
are expected to continue into 2023 as more very low-income families are
having to pay greater than 30 percent of their incomes for rent.\38\ In
light of all these factors, FHFA has determined that the multifamily
very low-income benchmark level should be set at 12 percent for both
Enterprises for 2023 and 2024, consistent with the proposed rule.
---------------------------------------------------------------------------
\37\ See 12 U.S.C. 4563(c).
\38\ See ``The State of the Nation's Housing 2022,'' Joint
Center for Housing Studies of Harvard University, June 2022, p.6,
available at <a href="https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2022.pdf">https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2022.pdf</a>.
---------------------------------------------------------------------------
3. Small Multifamily Low-Income Housing Subgoal
The small multifamily low-income housing subgoal is based on the
percentage of rental units in all multifamily properties financed by
mortgages purchased by the Enterprises that are units in small
multifamily properties affordable to low-income families, defined as
families with incomes less than or equal to 80 percent of AMI. The
Enterprise housing goals regulation defines a small multifamily
property as a property with 5 to 50 units. This subgoal was created in
conjunction with the 2015-2017 housing goals rulemaking to position the
Enterprises to be able to respond quickly to potential need in this
segment. In light of the current small multifamily market conditions
discussed below, FHFA is interested in ensuring that the Enterprises
remain positioned to support this market when needed without crowding
out other sources of financing for small multifamily properties.
The final rule sets the annual benchmark level for affordable units
in small multifamily properties for 2023 and 2024 at 2.5 percent of the
goal-eligible units in all multifamily properties securing mortgages
acquired by an Enterprise each year, rather than as the affordable
percentage of small multifamily properties only, consistent with the
objectives FHFA has previously expressed for this subgoal. The final
benchmark level is slightly higher than the proposed 2 percent
benchmark level, as FHFA has determined that the 2.5 percent benchmark
level would better ensure that the Enterprises maintain an appropriate
level of support for this market, given expected uncertainty in market
and economic conditions, the comments received in response to the
proposed benchmark level, and other factors described in this final
rule.
As discussed in the preamble to the proposed rule, the small low-
income multifamily housing market historically has been challenging to
size and monitor. FHFA is aware that following the pandemic-related
slowdown in 2020, private sector financing returned to this sector more
robustly.\39\ However, this private sector participation is expected to
be highly sensitive to interest rates and other market conditions. FHFA
believes that the final benchmark level for the small
[[Page 78845]]
multifamily low-income housing subgoal will ensure that the Enterprises
maintain a limited but appropriate level of engagement in the small
multifamily segment of the market that could be scaled up in the future
should the need arise.
---------------------------------------------------------------------------
\39\ See <a href="https://www.walkerdunlop.com/insights/2021/07/19/small-balance-multifamily-sizable-and-resilient/">https://www.walkerdunlop.com/insights/2021/07/19/small-balance-multifamily-sizable-and-resilient/</a>. FHFA defines small
multifamily properties as properties with 5 to 50 units, while this
article defines small multifamily properties to include properties
with 5 to 99 units and multifamily properties with a principal loan
balance at origination between $1 and $10 million.
---------------------------------------------------------------------------
Recent performance. Table 4 below shows Enterprise performance on
this subgoal both in terms of the actual numeric benchmark levels
applicable through 2022, as well as the proposed subgoal metric that
would be based on percentages. As noted in the NPRM and as reflected by
the different numeric benchmark levels set for each Enterprise in the
2021 final rule, FHFA recognizes that the Enterprises have different
multifamily business approaches to this segment and that each
Enterprise sets its own credit risk tolerance for multifamily products.
As a result, each Enterprise has performed very differently on this
subgoal. For example, Fannie Mae's performance was below the new
benchmark level of 2.5 percent from 2015 through 2018, while Freddie
Mac's performance has generally exceeded this level.
Table 4--Small Multifamily Low-Income Subgoal
--------------------------------------------------------------------------------------------------------------------------------------------------------
Performance
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 (%) 2024 (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fannie Mae Benchmark............ 6,000 8,000 10,000 10,000 10,000 10,000 10,000 17,000 2.5 2.5
Freddie Mac Benchmark........... 6,000 8,000 10,000 10,000 10,000 10,000 10,000 23,000 2.5 2.5
Fannie Mae Performance:
Small Low-Income Multifamily 6,731 9,312 12,043 11,890 17,832 21,797 14,409
Units......................
Total Small Multifamily 11,198 15,211 20,375 17,894 25,565 36,880 25,416
Units......................
Total Multifamily Units *... 468,798 552,785 630,868 628,230 596,137 637,696 557,152
Small Low-Income % of Total 60.1% 61.2% 59.1% 66.4% 69.8% 59.1% 56.7%
Small Multifamily Units....
Small Low-Income % of Total 1.4% 1.7% 1.9% 1.9% 3.0% 3.4% 2.6%
Units......................
Freddie Mac Performance:
Small Low-Income Multifamily 12,801 22,101 39,473 39,353 34,847 28,142 31,913
Units......................
Total Small Multifamily 21,246 33,984 55,116 53,893 46,879 41,275 41,874
Units......................
Total Multifamily Units *... 514,375 597,339 630,037 695,587 661,417 667,451 543,077
Small Low-Income % of Total 60.3% 65.0% 71.6% 73.0% 74.3% 68.2% 76.2%
Small Multifamily Units....
Small Low-Income % of Total 2.5% 3.7% 6.3% 5.7% 5.3% 4.2% 5.9%
Units......................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Refers to the total multifamily units that are eligible for housing goals.
Proposed rule and comments. Three comment letters, including those
from Fannie Mae, a group of mortgage lenders, and a trade organization
representing mortgage bankers, expressed support for the proposed
benchmark level of 2 percent, noting that this market is already well-
served by other sources of private capital. However, a trade
organization representing home builders questioned the proposed
benchmark level given the possibility of a recession in 2023, pointing
out that many lenders in this market retreat from less lucrative
business lines during economic downturns. A comment letter signed by 35
housing and community development organizations and a policy advocacy
organization representing housing finance agencies urged FHFA to set
the benchmark level at a level closer to or higher than recent
Enterprise performance. No commenters recommended lowering the proposed
benchmark level.
FHFA determination. The final rule sets the benchmark level for the
small multifamily low-income subgoal at 2.5 percent, which is slightly
higher than the proposed benchmark level of 2 percent.\40\ While this
market is currently being served by other sources of private capital
such as small and/or regional banks, the final benchmark level will
ensure that the Enterprises maintain a presence in this specialized
market. FHFA's determination is based on its consideration of the
statutory factors for the multifamily housing goals, the purpose of
this goal, and the comments received on the proposed benchmark level.
---------------------------------------------------------------------------
\40\ FHFA notes that all previous percentage-based housing goals
were established using whole numbers for the benchmark levels.
However, the relatively low percentage for the small multifamily
low-income subgoal necessitates using a small increment to ensure
the benchmark level is appropriate. FHFA has an established practice
of rounding Enterprise performance to the first decimal when
evaluating Enterprise performance on previous percentage-based
housing goals; that same practice will be followed for the
percentage-based multifamily housing goals.
---------------------------------------------------------------------------
V. Paperwork Reduction Act
The Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq.) requires
that regulations involving the collection of information receive
clearance from the Office of Management and Budget (OMB). The final
rule contains no such collection of information requiring OMB approval
under the PRA. Therefore, no information has been submitted to OMB for
review.
VI. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that
a regulation that has a significant economic impact on a substantial
number of small entities, small businesses, or small organizations must
include an initial regulatory flexibility analysis describing the
regulation's impact on small entities. FHFA need not undertake such an
analysis if the agency has certified that the regulation will not have
a significant economic impact on a substantial number of small
entities. 5 U.S.C. 605(b). FHFA has considered the impact of the final
rule under the Regulatory Flexibility Act. FHFA certifies that the
final rule will not have a significant economic impact on a substantial
number of small entities because the regulation only applies to Fannie
Mae and Freddie Mac, which are
[[Page 78846]]
not small entities for purposes of the Regulatory Flexibility Act.
IX. Congressional Review Act
In accordance with the Congressional Review Act (5 U.S.C. 801 et
seq.), FHFA has determined that this final rule is a major rule and has
verified this determination with OMB.
List of Subjects in 12 CFR Part 1282
Mortgages, Reporting and recordkeeping requirements.
Authority and Issuance
For the reasons stated in the Preamble, under the authority of 12
U.S.C. 4511, 4513, and 4526, FHFA amends part 1282 of Title 12 of the
Code of Federal Regulations as follows:
CHAPTER XII--FEDERAL HOUSING FINANCE AGENCY
SUBCHAPTER E--HOUSING GOALS AND MISSION
PART 1282--ENTERPRISE HOUSING GOALS AND MISSION
0
1. The authority citation for part 1282 continues to read as follows:
Authority: 12 U.S.C. 4501, 4502, 4511, 4513, 4526, 4561-4566.
0
2. Amend Sec. 1282.13 by revising paragraphs (b) through (d) to read
as follows:
Sec. 1282.13 Multifamily special affordable housing goal and
subgoals.
* * * * *
(b) Multifamily low-income housing goal. The percentage share of
dwelling units in multifamily residential housing financed by mortgages
purchased by each Enterprise that consists of dwelling units affordable
to low-income families shall meet or exceed 61 percent of the total
number of dwelling units in multifamily residential housing financed by
mortgages purchased by the Enterprise in each year for 2023 and 2024.
(c) Multifamily very low-income housing subgoal. The percentage
share of dwelling units in multifamily residential housing financed by
mortgages purchased by each Enterprise that consists of dwelling units
affordable to very low-income families shall meet or exceed 12 percent
of the total number of dwelling units in multifamily residential
housing financed by mortgages purchased by the Enterprise in each year
for 2023 and 2024.
(d) Small multifamily low-income housing subgoal. The percentage
share of dwelling units in small multifamily properties financed by
mortgages purchased by each Enterprise that consists of dwelling units
affordable to low-income families shall meet or exceed 2.5 percent of
the total number of dwelling units in all multifamily residential
housing financed by mortgages purchased by the Enterprise in each year
for 2023 and 2024.
0
3. Amend Sec. 1282.15 by revising paragraphs (c) and (e)(3) to read as
follows:
Sec. 1282.15 General counting requirements.
* * * * *
(c) Calculating the numerator and denominator for multifamily
housing goals. Performance under the multifamily housing goal and
subgoals shall be measured using a fraction that is converted into a
percentage. Neither the numerator nor the denominator shall include
Enterprise transactions or activities that are not mortgage purchases
as defined by FHFA or that are specifically excluded as ineligible
under Sec. 1282.16(b).
(1) The numerator. The numerator of each fraction is the number of
dwelling units that count toward achievement of a particular
multifamily housing goal or subgoal in properties financed by mortgages
purchased by an Enterprise in a particular year.
(2) The denominator. The denominator of each fraction is the total
number of dwelling units in properties financed by mortgages purchased
by an Enterprise in a particular year.
* * * * *
(e) * * *
(3) The estimation methodology in paragraph (e)(2) of this section
may be used up to a nationwide maximum of 5 percent of the total number
of rental units in properties securing multifamily mortgages purchased
by the Enterprise in the current year. Multifamily rental units with
missing affordability information in excess of this maximum shall be
included in the denominator for the multifamily housing goal and
subgoals, but such rental units shall not be counted in the numerator
of any multifamily housing goal or subgoal. Multifamily rental units
with missing affordability information for which estimation information
is not available shall be excluded from both the numerator and the
denominator for purposes of the multifamily housing goal and subgoals.
* * * * *
Sandra L. Thompson,
Director, Federal Housing Finance Agency.
[FR Doc. 2022-27467 Filed 12-22-22; 8:45 am]
BILLING CODE 8070-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on December 23, 2022.
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