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Rule2024-30793

2025-2027 Enterprise Housing Goals

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Published

December 30, 2024

Effective

February 28, 2025

Issuing agencies

Federal Housing Finance Agency

Abstract

The Federal Housing Finance Agency (FHFA) is issuing a final rule on the housing goals for Fannie Mae and Freddie Mac (the Enterprises) for 2025 through 2027 as required by the Federal Housing Enterprises Financial Safety and Soundness Act of 1992. The final rule establishes the benchmark levels for the single-family and multifamily housing goals and subgoals for 2025 through 2027. The final rule also includes technical changes and factors FHFA will consider when determining whether an Enterprise would be required to submit a housing plan to FHFA should the Enterprise fail to meet three of the single-family housing goals.

Full Text

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<title>Federal Register, Volume 89 Issue 249 (Monday, December 30, 2024)</title>
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[Federal Register Volume 89, Number 249 (Monday, December 30, 2024)]
[Rules and Regulations]
[Pages 106253-106276]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-30793]

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FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1282

RIN 2590-AB34

2025-2027 Enterprise Housing Goals

AGENCY: Federal Housing Finance Agency.

ACTION: Final rule.

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SUMMARY: The Federal Housing Finance Agency (FHFA) is issuing a final
rule on the housing goals for Fannie Mae and Freddie Mac (the
Enterprises) for 2025 through 2027 as required by the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992. The final

[[Page 106254]]

rule establishes the benchmark levels for the single-family and
multifamily housing goals and subgoals for 2025 through 2027. The final
rule also includes technical changes and factors FHFA will consider
when determining whether an Enterprise would be required to submit a
housing plan to FHFA should the Enterprise fail to meet three of the
single-family housing goals.

DATES: This final rule is effective February 28, 2025.

FOR FURTHER INFORMATION CONTACT: For general questions, please contact
<a href="/cdn-cgi/l/email-protection#2d604849444c64435c58445f44485e6d6b656b6c034a425b">[email&#160;protected]</a>. For technical questions, please contact
Padmasini Raman, Supervisory Policy Analyst, Housing & Community
Investment, Division of Housing Mission and Goals, (202) 649-3633,
<a href="/cdn-cgi/l/email-protection#9acafbfef7fbe9f3f4f3b4c8fbf7fbf4dafcf2fcfbb4fdf5ec">[email&#160;protected]</a>; or Carey Whitehead, Assistant General
Counsel, Office of General Counsel, (202) 649-3630,
<a href="/cdn-cgi/l/email-protection#a2e1c3d0c7db8cf5cacbd6c7cac7c3c6e2c4cac4c38cc5cdd4">[email&#160;protected]</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 Enterprise Housing Goals

The Federal Housing Enterprises Financial Safety and Soundness Act
of 1992 (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 annual housing goals are 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\ 12 U.S.C. 4561(a).
\2\ 12 U.S.C. 4501(7).
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FHFA establishes annual housing goals for Enterprise purchases of
single-family and multifamily mortgages consistent with the
requirements of the Safety and Soundness Act. The structure of the
housing goals and the parameters for determining how mortgage purchases
are counted or not counted towards the goals are defined in FHFA's
Enterprise housing goals regulation.\3\ This final rule amends the
regulation to establish benchmark levels for the single-family and
multifamily housing goals for 2025-2027.
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\3\ 12 CFR part 1282.
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Single-family housing goals. The single-family housing goals
defined under the Safety and Soundness Act include separate categories
for home purchase mortgages for low-income families, very low-income
families, and families that reside in low-income areas.\4\ For purposes
of the single-family housing goals, families that reside in low-income
areas \5\ include: (1) families in low-income census tracts, defined as
census tracts with median income less than or equal to 80 percent of
area median income (AMI); \6\ (2) families with incomes less than or
equal to 100 percent of AMI who reside in minority census tracts
(defined as census tracts with a minority population of at least 30
percent and a tract median income of less than 100 percent of AMI); \7\
and (3) families with incomes less than or equal to 100 percent of AMI
who reside in designated disaster areas.\8\ The Enterprise housing
goals regulation also includes subgoals,\9\ within the low-income areas
housing goal, that focus on single-family housing occupied by families
in low-income census tracts and moderate-income families in minority
census tracts.\10\ Performance on the single-family home purchase goals
and subgoals is measured as the percentage of the total home purchase
mortgages purchased by an Enterprise each year that qualify for each
goal or subgoal. There is also a separate goal for single-family
refinance mortgages for low-income families, and performance on the
refinance goal is determined in a similar way.
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\4\ 12 U.S.C. 4562(a)(1). To distinguish the goals and subgoals
related to home purchase mortgages from the goal related to
refinance mortgages, this preamble refers to the ``low-income home
purchase goal'' and the ``very low-income home purchase goal'' to
refer to the low-income families housing goal and the very low-
income families housing goal, respectively, described in 12 CFR
1282.12(c) and (d). The terms ``low-income census tracts home
purchase subgoal'' and ``minority census tracts home purchase
subgoal'' are used to refer to the low-income census tracts housing
subgoal and the minority census tracts housing subgoal,
respectively, described in 12 CFR 1282.12(f) and (g).
\5\ See 12 U.S.C. 4502(28); 12 CFR 1282.1 (definition of
``families in low-income areas'').
\6\ 12 CFR 1282.1 (par. (i) of definition of ``families in low-
income areas'').
\7\ 12 U.S.C. 4502(29); 12 CFR 1282.1 (par. (ii) of definition
of ``families in low-income areas'' and definition of ``minority
census tract'').
\8\ 12 U.S.C. 4502(28); 12 CFR 1282.1 (definition of
``designated disaster area'' and par. (iii) of definition of
``families in low-income areas'').
\9\ For brevity, sometimes this preamble uses the term ``goals''
to refer to goals and subgoals.
\10\ 12 CFR 1282.12(f).
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Under the Safety and Soundness Act, the single-family housing goals
are limited to mortgages on owner-occupied housing with one to four
units. The single-family goals cover first lien, conventional,
conforming mortgages, meaning mortgages that are not subordinate to
other mortgage liens, that are not insured or guaranteed by the Federal
Housing Administration or another government agency, and that have
principal balances that do not exceed the conforming loan limits for
Enterprise mortgages.
Two-part evaluation approach for single-family housing goals. The
Enterprises' performance on the single-family housing goals is
evaluated using a two-part approach that compares the goal-qualifying
share of each Enterprise's mortgage purchases to two separate measures:
a benchmark level and a market level. To meet a single-family housing
goal, the percentage of mortgage purchases by an Enterprise that
qualifies for credit under each goal must equal or exceed either the
benchmark level or the market level for that year. The benchmark level
is set prospectively by rulemaking based on various factors set forth
in the Safety and Soundness Act, which are further discussed below.\11\
The market level is determined retrospectively for each year, based on
the actual goal-qualifying share of the overall market as measured by
the Home Mortgage Disclosure Act \12\ (HMDA) data for that year. The
overall market that FHFA uses for setting both the prospective
benchmark level and the retrospective market level consists of all
single-family, owner-occupied, conventional, conforming mortgages that
would be eligible for purchase by either Enterprise. It includes loans
purchased by the Enterprises as well as comparable loans held in a
lender's portfolio. It also includes any loans that are part of a
private label security, although few such securities have been issued
for conventional conforming mortgages since 2008. Since 2018, several
new HMDA data fields have become available. FHFA continues to monitor
reporting of these new fields to consider potential adjustments to the
way FHFA measures the overall market. Because FHFA's econometric market
models use past years' data to construct the models, a potential
transition to incorporate any new data variables will require time to
obtain an adequate input data series.
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\11\ See 12 U.S.C. 4562(e).
\12\ 12 U.S.C. 2801 et seq.
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While the retrospective market levels measure mortgage originations
in a particular year, the performance of the

[[Page 106255]]

Enterprises on the housing goals includes all Enterprise purchases in
that year, regardless of the year in which the loan was originated.
This includes any loans that are originated in one year and purchased
by an Enterprise in a later year.
Multifamily housing goals. The multifamily housing goals defined
under the Safety and Soundness Act include separate categories for
mortgages on multifamily properties (properties with five or more
units) with rental units affordable to low-income and very low-income
families. The Safety and Soundness Act also requires reporting on
smaller properties, and the Enterprise housing goals regulation
includes a small multifamily low-income subgoal for properties with 5
to 50 units. The multifamily housing goals include all Enterprise
multifamily mortgage purchases, regardless of the purpose of the loan.
The multifamily housing goals evaluate the performance of the
Enterprises based on the share of affordable units in properties that
serve as collateral for mortgages purchased by an Enterprise. The
Enterprise housing goals regulation does not include a retrospective
market level measure for the multifamily housing goals, due in part to
a lack of comprehensive data about the multifamily market. As a result,
FHFA currently measures Enterprise multifamily housing goals
performance against the benchmark levels only and the final rule
retains this approach.
The Safety and Soundness Act requires that affordability for rental
units under the multifamily housing goals be determined based on rents
that ``[do] not exceed 30 percent of the maximum income level of such
income category, with appropriate adjustments for unit size as measured
by the number of bedrooms.'' \13\ The Enterprise housing goals
regulation considers the net rent paid by the renter, i.e., the rent is
decreased by any subsidy payments that the renter may receive,
including housing assistance payments.\14\
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\13\ See 12 U.S.C. 4563(c). The 30 percent test for measuring
affordability traces back to the ``Brooke Amendment,'' which amended
the United States Housing Act of 1937 to cap public housing rents
(Pub. L. 91-152). For purposes of the multifamily housing goals, to
be affordable at the 80 percent of AMI level, the rents must not
exceed 30 percent of the renter's income, which must not exceed 80
percent of AMI. See <a href="https://www.huduser.gov/portal/pdredge/pdr_edge_featd_article_092214.html">https://www.huduser.gov/portal/pdredge/pdr_edge_featd_article_092214.html</a> for a description of the Brooke
Amendment and background on the notion of affordability embedded in
the housing goals.
\14\ See 12 CFR 1282.1 (par. (i)(B) of definition of ``rent'').
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B. Considerations After Publication of the Final Rule

If, after publication of this final rule, new information indicates
that any of the single-family or multifamily housing goals or subgoals
should be adjusted in light of market conditions or the safety and
soundness of the Enterprises, or for any other reason, FHFA may take
any steps that are necessary and appropriate to respond, consistent
with the Safety and Soundness Act and the Enterprise housing goals
regulation.
For example, under the Safety and Soundness Act and the Enterprise
housing goals regulation, FHFA is permitted to reduce a benchmark level
in response to an Enterprise petition for reduction for any of the
single-family or multifamily housing goals or subgoals in a particular
year. Any adjustment in response to such a petition must be 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.\15\
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\15\ See 12 U.S.C. 4564(b); 12 CFR 1282.14(d).
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The Safety and Soundness Act and the Enterprise housing goals
regulation also consider the possibility that achievement of a
particular housing goal or subgoal may or may not have been feasible
for an Enterprise. If FHFA determines that a housing goal or subgoal
was not feasible for an Enterprise to achieve, then the statute and
regulation do not require any further action related to that housing
goal or subgoal for that year.\16\
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\16\ See 12 U.S.C. 4566(b); 12 CFR 1282.21(a) (current
regulation); 12 CFR 1282.22(a) (final rule).
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If FHFA determines that an Enterprise did not 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 performance.\17\
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\17\ See 12 U.S.C. 4566(c); 12 CFR 1282.21(a) (current
regulation); 12 CFR 1282.22(a) (final rule).
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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,
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 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 29, 2024, that proposed
benchmark levels for the single-family and multifamily housing goals
for 2025-2027.\18\ The public comment period on the proposed rule ended
on October 28, 2024. The NPRM proposed decreasing the benchmark levels
for the single-family low-income home purchase and very low-income home
purchase goals from the current benchmark levels in response to recent
market conditions and forecast updates. The NPRM also proposed
increasing the minority census tracts home purchase subgoal benchmark
level, while maintaining the existing low-income census tracts home
purchase subgoal and the low-income refinance goal benchmark levels.
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\18\ 89 FR 70127 (Aug. 29, 2024).
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With respect to the multifamily benchmark levels, the NPRM proposed
maintaining the existing low-income multifamily goal benchmark level,
increasing the very low-income multifamily goal benchmark level, and
decreasing the small (5-50 units) multifamily subgoal benchmark level.
In response to potential future uncertainty regarding the size and
composition of the single-family mortgage market, the NPRM proposed
including ``Enforcement Factors'' that FHFA would consider in
determining when a housing plan would be required if an Enterprise
failed to meet certain single-family housing goals during the 2025-2027
period.
The NPRM also proposed referring to the multifamily very low-income
housing subgoal as a goal instead of a subgoal. In addition, the NRPM
proposed technical changes intended to better conform the regulation to
statutory text and existing FHFA practices and procedures and indicated
that it may include additional technical changes or corrections in the
final rule based on comments received.
Overview of comments received.
FHFA received 31 comment letters from 61 organizations and
individuals in response to the proposed rule. Comments were submitted
by both Enterprises, as well as by a community development financial
institution, two mortgage companies, and four trade

[[Page 106256]]

associations (one trade association submitted two letters). FHFA also
received one comment letter signed by 20 Members of Congress, and seven
comment letters from policy advocacy organizations, with one letter
representing the views of eleven organizations and another representing
the views of five organizations. Eleven individuals submitted the
remaining thirteen comment letters (one individual submitted three
letters). FHFA also held several meetings with stakeholders to describe
the content of the proposed rule and to discuss issues raised by the
proposed rule.\19\
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\19\ Summaries of each of these meetings are available at
<a href="https://www.fhfa.gov/regulation/federal-register/proposed-rulemaking/2025-2027-enterprise-housing-goals">https://www.fhfa.gov/regulation/federal-register/proposed-rulemaking/2025-2027-enterprise-housing-goals</a>.
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FHFA has reviewed and considered all the comments. Several of the
letters raised issues unrelated to the housing goals or beyond the
scope of the proposed rule, and those comments are not addressed in
this final rule. Specific provisions of the proposed rule, and the
comments received on those provisions, are discussed below and
throughout this final rule.
Proposed single-family housing goals benchmark levels.
Most of the commenters who addressed the proposed single-family
goals, including the Enterprises, three individuals, three trade
associations, and three nonprofit advocacy organizations, expressed
overall support for the proposed benchmark levels. Many of these
commenters also acknowledged the challenges associated with developing
updated benchmark levels for the single-family housing goals using
forecast models, particularly given recent and future mortgage market
conditions. One nonprofit advocacy organization stated that while their
organization has traditionally opposed reductions in the affordable
housing goals, they recognize that higher interest rates and a
historically low supply of affordable homes have combined to severely
limit home purchase options for low-income households. The commenter
also expressed support for FHFA's efforts to balance market dynamics
and the desire to set single-family goals at relatively high levels.
Another comment letter submitted on behalf of several nonprofit
advocacy groups acknowledged the challenges posed by rising interest
rates in the housing market in recent years and FHFA's ongoing
commitment to navigate the complexities of a high-interest rate
environment while supporting racial equity initiatives. The comment
letter also noted that while the previous housing goals were
established as reasonable stretch targets based on market conditions at
that time, it is vital that FHFA adopt new strategies to better address
the current economic landscape. One trade association stated that the
proposed goals strike the right balance between continuing to push the
Enterprises to fulfill their mission to serve low- and moderate-income
homebuyers and homeowners, while doing so in a financially responsible
and achievable manner.
Although both Enterprises conveyed support for the proposed single-
family home purchase benchmark levels, both also expressed concerns
over uncertainty in the housing and loan origination market. Fannie Mae
welcomed the proposed reductions in the low-income and very low-income
benchmark levels but noted that uncertainty and constraints in housing
supply and affordability could challenge its ability to meet the
proposed benchmark levels.
Three nonprofit advocacy organizations, one trade association, and
a community development financial institution disagreed with all or
many of the proposed single-family goal benchmark levels, and their
comments supported maintaining or increasing the benchmark levels
relative to the levels established for 2022 through 2024. Some of these
commenters specifically opposed the proposed reductions in the
benchmark levels for the low-income home purchase and very low-income
home purchase goals. A few of these commenters also recommended that
the benchmark levels for the low-income refinance goal and the low-
income census tracts home purchase subgoal be increased. These
commenters urged FHFA to remain aggressive and ambitious when setting
the housing goal benchmark levels as a means to motivate the
Enterprises to lead the market. Several of these commenters stressed
the critical role the goals and subgoals play in providing access to
mortgage credit for low-income and very low-income borrowers by
ensuring that the Enterprises properly focus on this important aspect
of their mission.
Proposed benchmark levels for single-family low-income and very
low-income home purchase goals.
Three nonprofit advocacy organizations and one community
development financial institution recommended that the proposed
benchmark levels for the single-family low-income home purchase goal,
which FHFA proposed to lower from 28 percent to 25 percent, and the
single-family very low-income home purchase goal, which FHFA proposed
to lower from 7 percent to 6 percent, be increased in the final rule.
These commenters maintained that the proposed benchmark levels were not
aggressive enough given that interest rates had declined since the
proposed rule was published. A few of these commenters pointed out that
the proposed benchmark levels for the low-income and very low-income
home purchase goals were set at levels lower than the midpoints of the
forecasts. As noted above, several of these commenters stated that the
Enterprises should be given more ambitious low-income and very low-
income home purchase goals to motivate them to lead the market.
Proposed single-family low-income census tracts home purchase
subgoal.
One individual commented that the proposed rule, which would
maintain the current benchmark level for the single-family low-income
census tracts home purchase subgoal at 4 percent, is lower than past
performance as well as projected forecast performance. The commenter
further noted that a higher benchmark level for this subgoal would be
more consistent with past Enterprise performance and projected market
performance (i.e., two of the statutory factors that must be considered
when establishing a goal or subgoal). Two policy advocacy groups urged
FHFA to set a higher benchmark level for this subgoal and pointed out
that FHFA's model forecast and Enterprise performance in recent years
have been higher than the proposed benchmark level of 4 percent.
Proposed single-family minority census tracts subgoal.
Many commenters supported the proposed increase in the benchmark
level for the single-family minority census tracts home purchase
subgoal from 10 percent to 12 percent. A comment letter submitted on
behalf of several nonprofit advocacy organizations expressed support
for this proposed increase and noted that the previous benchmark level
did not present a significant challenge for the Enterprises to meet. A
community development financial institution also supported the proposed
increase, and encouraged FHFA to further increase it over time given
the critical need to close the persistent racial and ethnic
homeownership gaps that perpetuate inequality. A nonprofit advocacy
organization recommended that FHFA set the benchmark level at 13
percent rather than 12 percent to push the Enterprises to pursue
innovations that drive the market in light of population trends that
may lead to a greater share of census tracts where at least 30

[[Page 106257]]

percent of the population identifies as non-white. Another nonprofit
advocacy group stated that because the statutory definition of
``minority census tract'' is broad, FHFA should greatly increase the
benchmark level for this subgoal to incentivize the Enterprises to
close the racial homeownership gaps for specific minority groups.
Proposed single-family low-income refinance goal.
Most of the commenters who addressed the proposed low-income
refinance goal supported the proposal, which would maintain the current
benchmark level at 26 percent. Several of the commenters recognized the
challenges associated with forecasting the refinance market. For
example, one trade association noted that the refinance market is more
sensitive to interest rates, making it more difficult to forecast
compared to the home purchase market. A policy advocacy group
acknowledged that the refinance market is more unpredictable and
volatile than the home purchase market due to increased sensitivity to
interest rates, but nevertheless encouraged FHFA to increase the
benchmark level for this goal in response to the forecasted market. To
address the challenges associated with establishing this goal, the
trade association also suggested that FHFA consider establishing a
secondary assessment factor based on the number of loans purchased when
unique market factors drive large or unanticipated increases in the
denominator \20\ to better assess the number of low-income refinances
purchased year over year.
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\20\ For refinance mortgages, the denominator is the total
number of refinancing mortgage purchases of an Enterprise in a
particular year that finance owner-occupied single-family
properties.
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Measurement buffers (called ``Enforcement Factors'' in the proposed
rule).
In the proposed rule preamble, FHFA specifically requested comments
on the proposed factors (referred to as ``Enforcement Factors'' in the
NPRM) that FHFA would consider when determining if a housing plan would
be required if an Enterprise failed to meet certain single-family
housing goals during the 2025-2027 housing goals period. Specifically,
FHFA proposed language in section 1282.22 to indicate that it would not
require a housing plan if the benchmark level for a single-family
housing goal is higher than the market level for the goal and the
Enterprise's performance meets or exceeds the market level minus a
specified percentage point. The applicable percentage point is
different for the low-income home purchase goal, the very low-income
home purchase goal, and the low-income refinance goal. FHFA did not
propose similar factors for single-family subgoals. FHFA also proposed
limitations so that the factors would not apply in 2027 if the
Enterprise did not meet the market and the benchmark levels in 2025 and
2026.
Several commenters, including a nonprofit advocacy organization,
both Enterprises, three trade associations, and a mortgage company
expressed support for the proposed factors. The nonprofit advocacy
organization commented that the proposed factors would offer
flexibilities that will allow the Enterprises to better adapt their
business activities to market changes without having to focus on
meeting one static metric. One trade association noted that the
proposed factors would allow the Enterprises to address unexpected
market outcomes to prevent unintended consequences, including unwanted
market behaviors that would not benefit the intended borrowers. A
mortgage company welcomed the additional flexibility based on current
market conditions that the proposed factors would provide.
Fannie Mae expressed general support for the proposed enforcement
factors, indicating that the proposed factors considered the
difficulties an Enterprise may experience when managing to the
anticipated market share rather than the fixed benchmark levels. Fannie
Mae noted that while the use of the proposed factors would not change
the requirement that an Enterprise meet or surpass each of the single-
family housing goals benchmark levels or market share levels,
implementation of the factors would provide the Enterprises some
assurance considering the uncertainty inherent in predicting market
share, especially in the absence of fulsome data.
Freddie Mac expressed support for the proposed enforcement factors,
noting that they would appropriately account for market fluctuations
and uncertainties that cannot be adequately predicted months or years
in advance due to the lack of inclusive and timely market data. Freddie
Mac described the proposed factors as a ``necessary safeguard'' for
offsetting any potential gap between the actual and forecasted market
levels during the 2025-2027 housing goal period. Freddie Mac also
supported the proposed limitations on the use of the proposed factors.
Specifically, if an Enterprise fails to meet one of the single-family
low-income housing goals in both 2025 and 2026, it would not be allowed
to apply the proposed factor to the applicable housing goal in 2027.
Freddie Mac noted that the proposed limitation on the use of the
proposed factors would appropriately account for the uncertainty of
market conditions and forecasting while maintaining the Enterprises'
responsibility to develop strategies for achieving the housing goals.
Comment letters submitted on behalf of several policy advocacy
organizations expressed opposition to the proposed enforcement factors,
based on the view that they would reduce the accountability of the
Enterprises and allow them to meet a share lower than the market level.
As noted in the NPRM, the use of the enforcement factors would be
limited and designed to balance the importance of meeting the housing
goals with support for liquidity in all market segments. To balance
these needs, FHFA narrowly targeted the proposed enforcement factors to
apply only to certain single-family housing goals and only for 2025-
2027. FHFA noted that it would consider a proposed factor only if the
benchmark levels for certain single-family goals were a stretch goal
(i.e., above the HMDA market measure) for the year.
Two comments submitted on behalf of nonprofit advocacy
organizations expressed concern that the proposed factors would relax
performance requirements for the Enterprises. FHFA notes that these
comments do not reflect the intent behind the proposed factors. As
proposed, the factors do not modify the standards for meeting the
housing goals. The Enterprises are still required to meet the lower of
the benchmark level or the market level for each goal. FHFA will
continue to make a final determination of each Enterprise's performance
under each single-family housing goal and subgoal and each multifamily
housing goal and subgoal and will continue to notify Congress if an
Enterprise fails to meet any of the goals or subgoals.
Proposed multifamily housing goals benchmark levels.
Several of the commenters that commented on the proposed
multifamily housing goals benchmark levels supported the proposal to
maintain the current multifamily low-income goal benchmark level at 61
percent, to increase the multifamily very low-income goal benchmark
level from 12 percent to 14 percent, and to reduce the small
multifamily low-income subgoal benchmark level from 2.5 to 2.0 percent.
One trade association supported all the proposed multifamily goal
benchmark levels, stating that they would effectively balance the role
of the Enterprises in supporting affordable housing and providing
liquidity to the

[[Page 106258]]

entire multifamily market. Another trade association stated that the
proposed benchmark levels strike the right balance between continuing
to push the Enterprises to fulfill their mission while doing so in a
financially responsible and achievable manner. Another trade
association referred to the proposed benchmark levels as a
``reasonable'' mandate for the Enterprises that would provide a
critical framework for mortgage funding. A nonprofit advocacy
organization supported the proposal to keep the multifamily housing
goals at elevated levels. The organization particularly supported the
proposed increase in the very low-income goal benchmark level from 12
percent to 14 percent, noting that very low-income renters have been
disproportionately impacted by the affordable housing crisis and face a
severe shortage of affordable options.
Of the remaining commenters on the multifamily housing goals, three
nonprofit advocacy organizations, 20 Members of Congress, and three
individuals supported one or more of the proposed multifamily goals or
the subgoal benchmark levels, while two nonprofit advocacy
organizations opposed all the proposed multifamily goals benchmark
levels. Two letters submitted by nonprofit advocacy organizations (one
submitted on behalf of 11 nonprofit advocacy organizations) encouraged
FHFA to adopt a higher benchmark level for the multifamily low-income
housing goal but expressed support for the proposed multifamily very
low-income benchmark level. Conversely, another policy advocacy
organization supported maintaining the multifamily low-income housing
goal benchmark level at 61 percent but urged FHFA to adopt a benchmark
level for the multifamily very low-income housing goal higher than 12
percent, not realizing that FHFA proposed increasing this goal to 14
percent. A letter submitted on behalf of 20 Members of Congress called
on FHFA to increase the proposed multifamily low-income housing goal
benchmark level. With respect to the proposed multifamily low-income
housing goal, the letters submitted by and on behalf of policy advocacy
organizations, as well as the 20 Members of Congress, stressed that the
Enterprises' previous performance highlighted their ability to lead in
providing credit for multifamily mortgages that serve low-income
households. For example, one of the commenters noted that because both
Enterprises' multifamily lending activity easily exceeded the 61
percent benchmark level each year from 2020 to 2023, the multifamily
low-income housing goal benchmark level should be increased to 65
percent. The letter submitted of behalf of the Members of Congress also
noted that recent decreases in the target range for the federal funds
rate, as well as the potential for additional decreases, coupled with
individual state actions to increase housing supply pointed towards new
opportunities for the Enterprises to meet higher benchmark levels.
Regarding the proposed multifamily very low-income goal, a
nonprofit advocacy organization expressed support for the proposed
increase in the benchmark level by highlighting the important role the
Enterprises play in helping to address the affordable housing needs of
very low-income renters. The commenter pointed out that both
Enterprises have easily exceeded the 12 percent benchmark level in
recent years. The commenter also noted that developers of very low-
income rental units often struggle to access affordable capital and
that the Enterprises are well-suited to address these developers'
funding needs. Another policy advocacy organization viewed a benchmark
level of 12 percent to be proportionally low in comparison to the
proposed multifamily low-income housing goal benchmark level as well as
the past performance of the Enterprises. The commenter noted that
Fannie Mae's multifamily very low-income housing goal performance was
18.7 percent for 2023, while Freddie Mac's was 20.6 percent. As a
result, the commenter recommended that FHFA increase the multifamily
very low-income housing goal benchmark level in the final rule to
reflect the greater need for affordable housing as well as to make it
more proportional to the relationship between performance and
benchmarking.
One of the nonprofit advocacy organizations stated that FHFA is too
conservative with its setting of the multifamily goal benchmark levels.
The commenter noted that the recent historical performance of the
Enterprises indicates that the proposed multifamily goals and subgoal
benchmark levels should be more ambitious. The commenter expressed
concern that the large difference between goal benchmark level setting
and historical performance will encourage the Enterprises to ``back
slide,'' which will hurt the housing supply for low-income rental units
during a time when rents have been increasing significantly. Another
nonprofit advocacy organization strongly urged FHFA to set higher
multifamily goal benchmark levels in response to the ``fair and
affordable housing crisis'' to incentivize the Enterprises to lead and
move the market to give renters more opportunities for fair and
affordable multifamily housing.
Proposed small multifamily housing subgoal benchmark level.
There were mixed reactions among those commenters that addressed
the proposal to lower the benchmark level for the small multifamily
low-income subgoal (which is for properties with 5 to 50 units) from
2.5 percent to 2 percent. One trade association supported the proposed
reduction in the benchmark level, stating that this sector is well-
supported by private capital sources. Freddie Mac stated that the
proposal was appropriate given how sensitive this segment of the market
is to market conditions and noted that this market sensitivity has
resulted in fewer owners of such properties seeking financing relative
to the market overall. Freddie Mac also stated that while it is
important for the Enterprises to play a role in this market by
advancing beneficial standards and providing countercyclical liquidity,
the Enterprises should not crowd out private capital providers
including regional banks and small financial institutions. Fannie Mae
also supported the proposed benchmark level, stating that a reduction
from 2.5 percent to 2 percent is consistent with the ongoing
competition for these loans in the market.
One nonprofit advocacy organization and three individuals urged
FHFA to maintain the benchmark level for this subgoal at the current
2.5 percent. A nonprofit advocacy organization and a letter on behalf
of 20 Members of Congress recommended that the benchmark level be
raised to above 2.5 percent. The commenters argued that because the
Enterprises have exceeded the 2.5 percent subgoal for the last four
years, there is no need to decrease the benchmark level. The commenters
emphasized that Enterprise support is crucial for these properties,
noting that small multifamily properties serve as a critical source of
affordable housing in rural areas and other underserved communities and
owners of these properties struggle to access capital as readily as
owners of larger developments.

[[Page 106259]]

Technical changes.
Fannie Mae commented that the proposed technical changes related to
enforcement of the housing goals omit certain language in the Safety
and Soundness Act at 12 U.S.C. 4566(c)(7), 4581(a)(3), and 4585(a)(3)
that refers to goals established under specific sections of the
statute. Fannie Mae suggested that FHFA modify the proposed rule
language to avoid confusion about the enforcement options available for
the housing goals. As stated in the proposed rule preamble, FHFA
proposed technical changes ``to better conform the regulation to
statutory text'' and to improve transparency by providing a more
complete description of FHFA's enforcement authority.\21\ FHFA did not
intend the proposed technical changes to expand or to limit FHFA's
authority to enforce housing plans under the Safety and Soundness Act
or any other applicable law.
---------------------------------------------------------------------------

\21\ 89 FR 70127, 70130.
---------------------------------------------------------------------------

Other issues not included in the proposed rule, but raised by
commenters:
Duration of goals and opportunity for comment. One nonprofit
advocacy organization urged FHFA to set two-year, rather than three-
year, benchmark levels for the single-family and multifamily goals. The
commenter reasoned that because forecasts are more accurate in shorter
time frames, two-year goals could allow for more aggressive benchmark
levels. The commenter also stated that a two-year cycle would increase
the frequency of public comments and suggested that FHFA request public
comments on the Enterprises' performance under the goals, specifically
with respect to housing plans.
Under the Safety and Soundness Act, FHFA is required to establish
the annual housing goals benchmark levels in a regulation, which FHFA
adopts through notice and comment rulemaking.\22\ FHFA has chosen a
three-year housing goals period, as it enables the Enterprises to plan
their business activities more effectively and make progress towards
meeting the goals. FHFA continues to believe that the establishment of
three-year housing goals better enables the Enterprises to develop and
implement high-level strategies for guiding their respective
organizations towards achieving all the single-family and multifamily
housing goals. The establishment and implementation of three-year
housing goals also allows the Enterprises to map out, develop, and
invest in longer-term strategies designed to achieve the housing goals.
---------------------------------------------------------------------------

\22\ 12 U.S.C. 4561(a).
---------------------------------------------------------------------------

In response to the commenter's recommendation that FHFA request
public comments on the Enterprises' performance under the goals,
specifically on housing plans, FHFA notes that FHFA issues an Annual
Housing Report (Report) pursuant to 12 U.S.C. 4566. The Report
describes the affordable and other housing activities of Fannie Mae and
Freddie Mac during the preceding year and FHFA's final review of the
Enterprises' housing goals performance, including copies of the final
determination letters FHFA sends each Enterprise. The Report also
indicates whether FHFA has required an Enterprise to submit a housing
plan if the Enterprise fails to meet one or more of the goals and such
goals were feasible. Because an Enterprise's housing plan may contain
proprietary information, FHFA does not believe it is appropriate to
request public input on the strategies and initiatives the Enterprise
intends to pursue to correct and improve its housing goal performance.
Enterprises' ability to lead the market. Three nonprofit advocacy
organizations argued that the Enterprises be given higher, more
ambitious goals to ensure they lead and ``drive up'' the market to
serve the needs of neglected populations and address the nation's
affordable housing crisis. As further discussed below, the Safety and
Soundness Act requires FHFA to balance seven statutory factors in
setting the benchmark levels for the single-family housing goals, and
six statutory factors in setting the benchmark levels for the
multifamily housing goals. Under the statute, FHFA must consider the
ability of the Enterprises to lead the single-family and multifamily
markets, as well as other factors such as recent Enterprise and market
performance, current and expected market conditions, and the safety and
soundness of the Enterprises. In setting benchmark levels, FHFA takes
all the statutory factors into account to enable the Enterprises to
continue to provide critical support to the different goal market
segments while also supporting the rest of the market.
Publishing local data on Enterprise performance. One nonprofit
advocacy organization stated that FHFA should publish local data on
Enterprise performance to enable stakeholders to better identify
underserved areas with many goal-qualified loans due to relatively high
levels of housing affordability but are perhaps overlooked by the
primary and secondary markets. The commenter suggested that FHFA create
a database that would include income to housing ratios and other
indicia of affordability that could help identify the underserved areas
with a high share of goal-qualified loans.
FHFA publishes state-level data from HMDA and on Enterprise
performance on each single-family housing goal. Because the housing
goals are set across all localities and for all Enterprise acquisitions
in any given year, and because loan origination volume fluctuates
depending on macroeconomic conditions, primary market activities, and
Enterprise participation in the secondary market in each locality,
comparisons of locality data across years may be misleading without
adequate context about the extent of primary mortgage activity in the
area as well as secondary market activities. FHFA will continue to
conduct research and provide data that FHFA believes would be
beneficial to the public.
Additional tract ``criteria'' for the single-family low-income
census tracts home purchase subgoal. A nonprofit advocacy organization
commented that FHFA could use additional census tract ``criteria'' to
ensure mortgage credit is made available to underserved, disinvested
markets (where gentrification is not happening or is less of a concern)
and limit borrower income in some low-income census tracts. The
commenter noted the additional criteria are necessary because mortgage
credit remains scarce in rural areas, smaller post-industrial legacy
cities, and poor urban neighborhoods. The commenter urged FHFA to
examine tailoring the single-family low-income census tracts home
purchase subgoal to better scale its impact on underserved, low-income
markets.
FHFA notes that gentrification and disinvestment are measured on
multiple dimensions and data series on these measures are not readily
available. FHFA first established the minority census tracts subgoal
and the low-income census tracts subgoal for the 2022-2024 period, and
there have only been two complete performance years for these subgoals.
FHFA will continue to analyze the subgoal performance as related to
these issues and will publish information on FHFA's website as
appropriate.
Setting housing goals consistently. One nonprofit advocacy
organization stated that the housing goals are not set consistently
because some goals are set below the market forecast, while other goals
are set at the market forecast. When proposing the benchmark levels,
FHFA considers the most up-to-date expected market conditions as
indicated by a forecast produced by Moody's and the latest HMDA market
levels for

[[Page 106260]]

which the loan level data series are available to include in the model
when developing the proposed rule. FHFA also considers Enterprise
performance for the partial year, to appropriately adjust the model-
generated benchmark levels. The proposed rule's benchmark level for the
low-income census tracts home purchase subgoal was set below the market
forecast at that time to address displacement concerns. The proposed
rule's benchmark level for the low-income refinance goal was set below
the market forecast as this segment is highly sensitive to interest
rate changes. In addition, there is limited economic data regarding how
many borrowers are ``locked in'' by their current low mortgage rates,
meaning that they are less likely to refinance or sell their home while
prevailing mortgage rates are higher than their current rate. FHFA also
notes that along with the market forecast, FHFA must consider the
statutory factors in the Safety and Soundness Act that are not included
in the market model when setting each benchmark level, as discussed in
more detail below.
Support for market-rate units. One trade association recommended
that FHFA help the Enterprises balance their housing goals with
providing liquidity support for market-rate units. FHFA considered
market-rate units when setting the cap on multifamily purchase volume
(the Multifamily Cap) and the percent of loans purchased that must be
``mission-driven,'' in the Conservatorship Scorecard.\23\ The proposed
Enterprise housing goals, however, are focused on families at or below
specific AMI levels and FHFA sought to balance these objectives.
---------------------------------------------------------------------------

\23\ In an annual Conservatorship Scorecard, FHFA establishes a
cap on the multifamily purchase volume of each Enterprise. The
Scorecard also establishes a percentage of multifamily purchases
within the cap that must be ``mission driven,'' a defined term that
generally encompasses affordable and underserved market segments.
The 2024 Scorecard sets a cap of $70 billion on each Enterprise and
requires that at least half of Enterprise multifamily loan purchases
be ``mission-driven.'' Details are available in the fact sheet
``2025 Multifamily Loan Purchase Caps for Fannie Mae and Freddie
Mac,'' available at <a href="https://www.fhfa.gov/news/fact-sheet/2025-multifamily-loan-purchase-caps-for-fannie-mae-and-freddie-mac">https://www.fhfa.gov/news/fact-sheet/2025-multifamily-loan-purchase-caps-for-fannie-mae-and-freddie-mac</a>.
---------------------------------------------------------------------------

Simplify Enterprise goals and targets. One trade association
encouraged FHFA to work towards simplifying the various multifamily
affordable and mission-related goals of the Enterprises (including the
housing goals that are the subject of this final rule, the
Conservatorship Scorecard, and the Duty to Serve requirements in 12 CFR
part 1282, subpart C). Each of these requirements helps ensure that the
Enterprises fulfill a different aspect of their statutory mission and
charters, as well as that they serve low- and moderate-income families
and underserved markets in different ways. FHFA has already taken
measures to assist the Enterprises in coordinating their efforts with
respect to these requirements. For example, FHFA's 2023-2024
Multifamily Enterprise Housing Goals final rule established the
benchmark levels for the multifamily goals based on a new methodology--
the percentage of affordable units in multifamily properties financed
by mortgages purchased by the Enterprise each year. FHFA believes that
this change has simplified the multifamily housing goals in a way that
complements the Multifamily Cap and enables the Enterprises to meet
both targets more seamlessly. FHFA will continue to explore ways to
coordinate and streamline the requirements of the various multifamily
affordable and mission-related goals of the Enterprises while ensuring
these goals are achieved.

III. Summary of Final Rule

A. Benchmark Levels for the Single-Family Housing Goals and Subgoals--
Sec. 1282.12

This final rule establishes the benchmark levels for the single-
family housing goals and subgoals for 2025-2027 as follows:

----------------------------------------------------------------------------------------------------------------
Final
benchmark
Goal or subgoal Criteria level for
2025-2027
(percent)
----------------------------------------------------------------------------------------------------------------
Low-Income Home Purchase Goal................... Home purchase mortgages on single-family, owner- 25
occupied properties, to borrowers with incomes
no greater than 80 percent of area median income
(AMI).
Very Low-Income Home Purchase Goal.............. Home purchase mortgages on single-family, owner- 6
occupied properties, to borrowers with incomes
no greater than 50 percent of AMI.
Low-Income Refinance Goal....................... Refinance mortgages on single-family, owner- 26
occupied properties, to borrowers with incomes
no greater than 80 percent of AMI.
Minority Census Tracts Home Purchase Subgoal.... Home purchase mortgages on single-family, owner- 12
occupied properties to borrowers with incomes no
greater than 100 percent of AMI in minority
census tracts.\1\.
Low-Income Census Tracts Home Purchase Subgoal.. (i) Home purchase mortgages on single-family, 4
owner-occupied properties to borrowers
(regardless of income) in low-income census
tracts \2\ that are not minority census tracts,
and (ii) home purchase mortgages on single-
family, owner-occupied properties to borrowers
with incomes greater than 100 percent of AMI in
low-income census tracts that are also minority
census tracts..
----------------------------------------------------------------------------------------------------------------
\1\ Census tracts that have a minority population of at least 30 percent and a median income of less than 100
percent of AMI.
\2\ Census tracts where the median income is no greater than 80 percent of AMI.

As in previous rulemakings, the low-income areas housing goal
benchmark level is not included in this final rule. Under the existing
regulation, the benchmark level will be the sum of the benchmark levels
for the minority census tracts home purchase subgoal and the low-income
census tracts home purchase subgoal established in this final rule,
plus an additional amount that will be determined separately by FHFA by
notice that considers families in disaster areas with incomes no
greater than 100 percent of AMI.\24\
---------------------------------------------------------------------------

\24\ See 12 CFR 1282.12(e). The benchmark level for 2024 is 19
percent. The notices setting this benchmark level can be found on
FHFA's website at <a href="https://www.fhfa.gov/sites/default/files/2024-06/2024-Low-Income-Areas-Goal-Fannie-Mae.pdf">https://www.fhfa.gov/sites/default/files/2024-06/2024-Low-Income-Areas-Goal-Fannie-Mae.pdf</a> and <a href="https://www.fhfa.gov/sites/default/files/2024-06/2024-Low-Income-Areas-Goal-Freddie-Mac.pdf">https://www.fhfa.gov/sites/default/files/2024-06/2024-Low-Income-Areas-Goal-Freddie-Mac.pdf</a>.
---------------------------------------------------------------------------

B. Benchmark Levels for the Multifamily Housing Goals and Subgoal--
Sec. 1282.13

The final rule establishes the benchmark levels for the multifamily
housing goals and subgoal for 2025-2027 as follows:

[[Page 106261]]

----------------------------------------------------------------------------------------------------------------
Final
benchmark
Goals and subgoal Criteria level for
2025-2027
(percent)
----------------------------------------------------------------------------------------------------------------
Low-Income Goal................................. Percentage share of all goal-eligible units in 61
multifamily properties financed by mortgages
purchased by the Enterprise in the 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 Goal............................ Percentage share of all goal-eligible units in 14
multifamily properties financed by mortgages
purchased by the Enterprise in the 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............ Percentage share of all goal-eligible units in 2
all multifamily properties financed by mortgages
purchased by the Enterprise in the 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.
----------------------------------------------------------------------------------------------------------------

C. Measurement Buffers (Referred to as ``Enforcement Factors'' in the
Proposed Rule)--Sec. 1282.22(b)

Consistent with the proposed rule, the final rule establishes new
factors for the 2025-2027 housing goals period that FHFA will apply in
determining whether to require a housing plan if an Enterprise fails to
meet certain single-family housing goals in 2025-2027. The final rule
establishes the numerical factors as proposed but changes the name to
``measurement buffers.'' Specifically, for 2025-2027, if the benchmark
level for the single-family low-income home purchase, very low-income
home purchase, or low-income refinance housing goal is higher than the
market level for the goal, an Enterprise that fails to meet the goal
will not be required to submit a housing plan if the Enterprise's
performance meets or exceeds: (i) the market level minus 1.3 percentage
points for the low-income home purchase goal; (ii) the market level
minus 0.5 percentage points for the very low-income home purchase goal;
or (iii) the market level minus 1.3 percentage points for the low-
income refinance goal. To ensure that an Enterprise does not rely
entirely on these measurement buffers, if an Enterprise fails to meet
one of the applicable goals in both 2025 and 2026, the measurement
buffer will not apply to that goal in 2027.

D. Multifamily Very Low-Income Housing Goal--Sec. Sec. 1282.11(a)(1);
1282.13(a) and (c); 1282.15(c) and (e)

The final rule revises the housing goals regulation to refer to the
multifamily very low-income housing subgoal as a goal instead of a
subgoal. This change is consistent with the Safety and Soundness Act,
the reference to the single-family very low-income home purchase goal
in 12 CFR 1282.12(d) as a goal and not a subgoal, and FHFA's practice
of referring to ``multifamily housing goals.'' \25\ FHFA received one
comment (NDI) supporting this proposed change.
---------------------------------------------------------------------------

\25\ 12 U.S.C. 4563(a)(2) requires FHFA to establish
``additional requirements'' for units affordable to very low-income
families when it establishes the goal for mortgages on multifamily
properties that finance dwelling units affordable to very low-income
families.
---------------------------------------------------------------------------

E. Technical Changes--Sec. Sec. 1282.1; 1282.11(a)(1); 1282.13
(Header); 1282.20; 1282.21; 1282.22

Consistent with the proposed rule, the final rule makes minor
technical changes to the housing goals regulation that are intended to
better conform the regulation to statutory text and existing FHFA
practices and procedures. Except as discussed in this preamble
regarding proposed changes to Sec. 1282.22(g), FHFA received no
comments on the proposed technical changes.
The final rule modifies the definition of ``designated disaster
area'' in Sec. 1282.1 as proposed, to reflect that major disasters are
designated (declared) by the President under the Robert T. Stafford
Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.).
FHFA modified the definition to add the reference to the designation by
the President and deleted the reference to ``declared by the Federal
Government.'' This change eliminates potential confusion about which
disasters are associated with designated disaster areas.
Consistent with the proposed rule, the final rule modifies Sec.
1282.11(a)(1) to correctly reference the various housing goals. That
paragraph previously referred to one single-family housing subgoal and
is modified in the final rule to reference the two single-family,
owner-occupied, purchase money mortgage housing subgoals. The final
rule also removes the words ``special affordable'' that until now
described the multifamily goals and subgoals in Sec. 1282.11(a)(1) and
the header in Sec. 1282.13 for simplicity and to consistently
reference single-family and multifamily goals and subgoals.
Affordability remains a criterion for units to count towards meeting
the goals and subgoal, however.
In addition, consistent with the proposed rule, the final rule
makes non-substantive changes to the enforcement provisions in Sec.
1282.20 and redesignates housing plan provisions in Sec. 1282.21 as a
new Sec. 1282.22. Specifically, the final rule modifies Sec. 1282.20
to separate and more fully describe the preliminary and final
determinations of housing goals compliance. As modified, Sec. 1282.20
addresses preliminary determinations of housing goals compliance; Sec.
1282.21 addresses final determinations of housing goals compliance.
These sections also include revised wording that conforms to FHFA's
established practices.
The final rule revises and republishes newly redesignated Sec.
1282.22 to include the measurement buffers for the 2025-2027 single-
family housing goals in paragraph (b). The final rule relocates
provisions in Sec. 1282.21(b) through (e) to Sec. 1282.22(c) through
(f). Paragraph (c)(3) includes an additional technical change
inadvertently omitted in the proposed rule to add ``or subgoal'' for
consistency with the changes to Sec. 1282.22(a) in the proposed and
final rules. Paragraph (f) includes technical changes to clarify that
if a proposed amended housing plan is not acceptable to the Director,
the Director may afford the Enterprise 15 days to submit additional
amendments to its proposed plan for approval or disapproval, rather
than requiring a ``new'' proposed plan. Except as noted, these changes
are included in the final rule as proposed in the NPRM.
The final also rule includes the new proposed provision at Sec.
1282.22(g) that incorporates the housing plan enforcement provisions
contained in the

[[Page 106262]]

Safety and Soundness Act.\26\ That paragraph provides that if the
Director requires an Enterprise to submit a housing plan and the
Enterprise refuses to submit such a plan, submits an unacceptable plan,
or fails to comply with the plan, the Director may issue a cease and
desist order in accordance with 12 U.S.C. 4581, impose civil money
penalties in accordance with 12 U.S.C. 4585, or take any other action
that the Director determines to be appropriate. The Safety and
Soundness Act provides authority to enforce the housing plans, but this
authority was not previously described in the Enterprise housing goals
regulation. Including these provisions in the final rule supports
transparency by providing a more complete description of FHFA's
enforcement authority. This change makes it easier for anyone
unfamiliar with the Safety and Soundness Act to understand the
potential consequences if an Enterprise fails to submit an acceptable
housing plan or fails to comply with the plan as required. This is the
only technical change addressed by a comment on the proposed rule. In
response to a comment from Fannie Mae suggesting that FHFA modify the
proposed rule language to provide clarity about the enforcement options
available for the housing goals, FHFA is including language in Sec.
1282.22(g) to indicate that enforcement of housing plans will be
consistent with 12 U.S.C. 4566 and any other applicable requirements of
the Safety and Soundness Act.
---------------------------------------------------------------------------

\26\ 12 U.S.C. 4566.
---------------------------------------------------------------------------

IV. Single-Family Housing Goals and Subgoals

A. Factors Considered in Setting the Single-Family Housing Goal
Benchmark Levels

The Safety and Soundness Act requires FHFA to consider the
following seven factors in setting the single-family housing goals:
1. National housing needs;
2. Economic, housing, and demographic conditions, including
expected market developments;
3. The performance and effort of the Enterprises toward achieving
the housing goals in previous years;
4. The ability of the Enterprises to lead the industry in making
mortgage credit available;
5. Such other reliable mortgage data as may be available;
6. The size of the purchase money conventional mortgage market, or
refinance conventional mortgage market, as applicable, serving each of
the types of families described, relative to the size of the overall
purchase money mortgage market or the overall refinance mortgage
market, respectively; and
7. The need to maintain the sound financial condition of the
Enterprises.\27\
---------------------------------------------------------------------------

\27\ See 12 U.S.C. 4562(e)(2)(B).
---------------------------------------------------------------------------

FHFA has considered each of these seven statutory factors in
setting the benchmark levels for each of the single-family housing
goals and subgoals in the final rule.
In setting the benchmark levels for the single-family housing goals
and subgoals, FHFA relied on statistical market models developed by
FHFA to evaluate four of the seven factors (national housing needs;
economic, housing, and demographic conditions; other reliable mortgage
data; and the size of the conventional purchase money or refinance
mortgage segment). These market models generate a point forecast for
each goal as well as a confidence interval for the point forecast. FHFA
also monitors information on market developments that are not reflected
in the model. FHFA then considers the other statutory factors
(performance and effort of the Enterprises to lead the industry in
making mortgage credit available; the ability of the Enterprises to do
so; and the need to maintain sound financial condition of the
Enterprises). These factors are not explicitly modeled in the
statistical forecast models. Therefore, FHFA considered these factors
when setting the benchmark levels within the model generated confidence
intervals for the 2025-2027 single-family housing goals.
Market forecast models. The purpose of FHFA's market forecast
models is to forecast the market share of the goal-qualifying mortgage
originations for the 2025-2027 period. The models are intended to
generate reliable forecasts rather than to test various economic
hypotheses about the housing market or to explain the relationship
between variables. Therefore, following standard practice among
forecasters and economists at other federal agencies, FHFA estimates a
reduced-form equation for each of the housing goals and fits an
Autoregressive Integrated Moving Average (or ARIMA) model to each goal
share. The models look at the statistical relationship between (a) the
historical market share for each single-family housing goal or subgoal,
as calculated from monthly HMDA data, and (b) the historical values for
various factors that may influence the market shares, such as interest
rates, inflation, home prices, home sales, the unemployment rate, and
other factors. The models then project the future value of the
affordable market share using forecast values of the model inputs.
Separate models are developed for each of the single-family housing
goals and subgoals.
FHFA has employed similar models in past Enterprise housing goals
rulemaking cycles to generate market forecasts. The models are
developed using monthly series generated from HMDA and other data
sources, and the resulting monthly forecasts are then averaged into an
annual forecast for each of the three years in the goal period. The
models rely on 20 years of HMDA data, from 2004 to 2023, the latest
year for which public HMDA data was available at the time of model
construction. Additional discussion of the market forecast models can
be found in a technical report on FHFA's official website.\28\
---------------------------------------------------------------------------

\28\ Details on FHFA's single-family market models are available
in the technical report ``The Size of the Affordable Mortgage
Market: 2025-2027 Enterprise Single-Family Housing Goals,''
available at <a href="https://www.fhfa.gov/research/papers/2025-2027-enterprise-single-family-housing-goals-12-2024">https://www.fhfa.gov/research/papers/2025-2027-enterprise-single-family-housing-goals-12-2024</a>.
---------------------------------------------------------------------------

Current market outlook. There are many factors that impact the
affordable housing market, and changes to any of them could
significantly impact the ability of the Enterprises to meet the goals.
In developing the market models, FHFA used Moody's forecasts as the
source for macroeconomic variables where available.\29\ In cases where
Moody's forecasts were not available (for example, the share of
government-insured/guaranteed home purchases and the share of
government-insured/guaranteed refinances), FHFA generated and tested
its own forecasts as in past rulemakings.\30\ Variables that impact the
models and the determinations of benchmark levels, including interest
rates, home prices, and the supply of affordable housing, are discussed
below.
---------------------------------------------------------------------------

\29\ Ibid.
\30\ This refers to the mortgages insured or guaranteed by
government agencies such as the Federal Housing Administration,
Department of Veterans Affairs, and Rural Housing Service.
---------------------------------------------------------------------------

The Federal Open Market Committee (FOMC) of the Federal Reserve, at
its September 2024 meeting, reiterated its commitment to seeking
maximum employment and inflation at the rate of 2 percent in the long
run, by lowering its target range for the federal funds rate by 0.5
percentage points to 4.75 percent to 5.0 percent.\31\ In its November
2024 meeting, the FOMC lowered the target range by an additional 0.25
percentage

[[Page 106263]]

points to 4.5 percent to 4.75 percent.\32\ Moody's August 2024 Baseline
forecast does not include these cuts but assumes that the FOMC will cut
rates by 0.25 percentage points in September 2024 and December 2024,
with further cuts to the federal funds rate to 4 percent by the fourth
quarter of 2025.
---------------------------------------------------------------------------

\31\ <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20240918a.htm">https://www.federalreserve.gov/newsevents/pressreleases/monetary20240918a.htm</a>.
\32\ <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20241107a.htm">https://www.federalreserve.gov/newsevents/pressreleases/monetary20241107a.htm</a>.
---------------------------------------------------------------------------

The forecast projects that the 30-year fixed mortgage rate will
remain elevated, and only decline 0.3 percentage points from 6.4
percent in 2025 to 6.1 percent in 2026, and then decline to 6.0 percent
in 2027. Home prices increased rapidly in 2021 and 2022 as indicated by
FHFA's purchase-only House Price Index (HPI), due to a combination of
high demand for housing resulting from demographic trends and limited
supply of homes for sale.\33\ The rapid rise in mortgage rates through
2022 and their stabilization at new elevated levels in 2023 slowed down
the pace of house price growth. Although slower, house price growth was
still significant, rising 4.2 percent from August 2023 to August
2024.\34\ FHFA noted in its monthly HPI report that it was the sixth
consecutive month of modest house price growth.\35\ Moody's predicts
that home price appreciation will slow down even more in 2025. Moody's
August 2024 forecast of the same HPI index expects the annual rates of
house price growth to be 1.0, 1.5, and 2.1 percent in 2025, 2026, and
2027, respectively.
---------------------------------------------------------------------------

\33\ FHFA, ``House Price Index Datasets,'' available at <a href="https://www.fhfa.gov/data/hpi/datasets?tab=hpi-datasets">https://www.fhfa.gov/data/hpi/datasets?tab=hpi-datasets</a>.
\34\ FHFA, ``FHFA House Price Index Report--Monthly Report,''
October 2024, available at <a href="https://www.fhfa.gov/sites/default/files/2024-11/FHFA-HPI-Monthly_10292024.pdf">https://www.fhfa.gov/sites/default/files/2024-11/FHFA-HPI-Monthly_10292024.pdf</a>.
\35\ Ibid.
---------------------------------------------------------------------------

Even though mortgage interest rates are forecast to decline
modestly, many households maintain low mortgage rates that are likely
to remain below the prevailing mortgage rates, and therefore they are
less likely to refinance. The refinance share of overall mortgage
originations declined from 62.4 percent in 2020 to 19.2 percent in
2023. Moody's forecasts this share to decline further to 18.0 percent
in 2024, but rise to 19.2, 25.7, and 33.8 percent in 2025, 2026, and
2027, respectively.
Taken together, the elevated mortgage interest rates and high home
price levels will likely continue to impact the ability of low- and
very low-income households to purchase homes. The median sales price
for existing single-family homes to median household income ratio,
which is often used to measure affordability, rose to 5.1 in 2022, up
from 4.1 in 2019.\36\ As a result, between 2019 and 2022, the number of
cost-burdened homeowners increased by 3 million households.\37\ Housing
affordability in 2023, as measured by Moody's forecast of the Housing
Affordability Index (HAI) provided by the National Association of
Realtors (NAR), was at its lowest level since 1989. This factor is
projected to rise even more modestly in the August 2024 forecast used
to support the final rule than was projected in the February 2024
forecast (used to support the proposed rule).38 39
---------------------------------------------------------------------------

\36\ ``The State of the Nation's Housing 2024,'' Joint Center
for Housing Studies of Harvard University, 2024, p. 10, available at
<a href="https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2024.pdf">https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2024.pdf</a>.
\37\ Ibid. p. 2.
\38\ Moody's Analytics, ``Economic Data and Forecasts,'' August
2024.
\39\ NAR's HAI is a national index. It measures, nationally,
whether an average family could qualify for a mortgage on a typical
home. A typical home is defined as the national median-priced,
existing single-family home as reported by NAR. An average family is
defined as one earning the median family income. The calculation
assumes a down payment of 20 percent of the home price and a monthly
payment that does not exceed 25 percent of the median family income.
An index value of 100 means that a family earning the median family
income has exactly enough income to qualify for a mortgage on a
median-priced home. An index value above 100 signifies that a family
earning the median family income has more than enough income to
qualify for a mortgage on a median-priced home. A decrease in the
index value over time indicates that housing is becoming less
affordable.
---------------------------------------------------------------------------

The supply of affordable housing has not kept pace with the growth
of demand. This has led to a shortage of homes, which became more acute
during the COVID-19 pandemic. Although, for example, the October 2024
active listing count is 29.2 percent higher that it was in October
2023, it is still 21.1 percent lower than it was at the same time in
2019.\40\ Single-family housing starts, or the measure of new one-to-
four-unit residential construction, dropped 10.8 percent from 2021 to
2022, and continued to decline in 2023.\41\ For example, the Mortgage
Bankers Association (MBA) estimates housing starts to have decreased
about 8.8 percent from 1.55 million in 2022 to 1.42 million in 2023.
MBA forecasts housing starts to decline about 4.6 percent in 2024,
before rising about 3.4 percent in 2025.\42\
---------------------------------------------------------------------------

\40\ ``Housing Inventory: Active Listing Count in the United
States,'' accessed on November 18, 2024, at <a href="https://fred.stlouisfed.org/series/ACTLISCOUUS">https://fred.stlouisfed.org/series/ACTLISCOUUS</a>.
\41\ Exploring 2023's Housing Trends and Challenges [verbar]
Housing Matters,'' Urban Institute, January 31, 2024, available at
<a href="https://housingmatters.urban.org/research-summary/exploring-2023s-housing-trends-and-challenges">https://housingmatters.urban.org/research-summary/exploring-2023s-housing-trends-and-challenges</a>.
\42\ ``Housing Finance: At a Glance Monthly Chartbook, October
2024,'' [verbar] Urban Institute Housing Finance Policy Center,
Urban Institute,'' Urban Institute, October 30, 2024, p. 22,
available at <a href="https://www.urban.org/sites/default/files/2024-10/Housing-Finance-At-A-Glance-Monthly-Chartbook-October-2024.pdf">https://www.urban.org/sites/default/files/2024-10/Housing-Finance-At-A-Glance-Monthly-Chartbook-October-2024.pdf</a>.
---------------------------------------------------------------------------

The combination of high home prices and elevated mortgage rates
along with continued limited housing supply has also contributed to a
sharp decline in purchase loan origination volumes, as new homes are
less affordable and existing homeowners are less likely to move and
relinquish their low interest rate mortgages. For example, in 2022,
lenders reported a 51 percent decrease in originated closed-end home
loans from 2021 volumes.\43\ In 2023, there were further declines, with
lenders reporting a 34.5 percent decrease in originated closed-end home
loans from 2022 volumes.\44\ Moody's Baseline scenario for August 2024
shows single-family purchase mortgage originations similarly down in
2023, when originations totaled $1.33 trillion, compared to 2021, when
originations totaled $1.86 trillion.\45\
---------------------------------------------------------------------------

\43\ ``Summary of 2022 Data on Mortgage Lending,'' Consumer
Financial Protection Bureau, June 29, 2023, available at <a href="https://www.consumerfinance.gov/data-research/hmda/summary-of-2022-data-on-mortgage-lending/">https://www.consumerfinance.gov/data-research/hmda/summary-of-2022-data-on-mortgage-lending/</a>.
\44\ ``Summary of 2023 Data on Mortgage Lending,'' Consumer
Financial Protection Bureau, July 11, 2024, available at <a href="https://www.consumerfinance.gov/data-research/hmda/summary-of-2023-data-on-mortgage-lending/">https://www.consumerfinance.gov/data-research/hmda/summary-of-2023-data-on-mortgage-lending/</a>.
\45\ Moody's Analytics, ``Economic Data and Forecasts,'' August
2024.
---------------------------------------------------------------------------

Furthermore, this observation from Moody's February 2024 forecast
is still applicable: ``Life events such as divorces, deaths, and the
birth of children along with moderating interest rates will prompt more
homeowners to list their homes in 2024 than in 2023, but the rise in
existing home sales is expected to be limited.'' \46\
---------------------------------------------------------------------------

\46\ Edward Friedman, ``U.S. Macroeconomic Outlook Baseline and
Alternative Scenarios,'' Moody's Analytics, 2024.
---------------------------------------------------------------------------

FHFA continues to monitor how these changes in the housing market,
as well as other market conditions, may impact various segments of the
market, including those targeted by the housing goals.
Post-model adjustments. While FHFA's models can address and
forecast many of the factors referenced in the statute, including
increasing interest rates and rising property values, some factors are
not captured in the models. FHFA, therefore, considers additional
factors when selecting the benchmark level within the model-generated
confidence interval for each of the single-family housing goals.
Demographic trends. Although the model considers some demographic
factors, specific demographic changes,

[[Page 106264]]

such as the housing demand patterns of Millennials or the growth of
minority households, are not included explicitly in the market forecast
models. FHFA considers those demographic changes that are not captured
by the model, along with the other factors listed in this section, as
post-model adjustments when setting the housing goals benchmark levels.
According to NAR, Millennials had represented the largest share of
homebuyers for almost a decade until 2022.\47\ Although they lost that
spot to Baby Boomers in 2022, Millennials once again represented the
largest share of homebuyers in 2023, increasing from 28 percent to 38
percent.48 49 Furthermore, the number of minority households
is projected to grow by 22 percent, or 9.3 million, from 2018 to
2028.\50\
---------------------------------------------------------------------------

\47\ NAR, ``2023 Home Buyers and Sellers Generational Trends
Report,'' 2023, p. 8, available at <a href="https://www.nar.realtor/sites/default/files/documents/2023-home-buyers-and-sellers-generational-trends-report-03-28-2023.pdf">https://www.nar.realtor/sites/default/files/documents/2023-home-buyers-and-sellers-generational-trends-report-03-28-2023.pdf</a>.
\48\ Ibid.
\49\ NAR, ``2024 Home Buyers and Sellers Generational Trends
Report,'' 2024, p. 8, available at <a href="https://www.nar.realtor/sites/default/files/documents/2024-home-buyers-and-sellers-generational-trends-04-03-2024.pdf">https://www.nar.realtor/sites/default/files/documents/2024-home-buyers-and-sellers-generational-trends-04-03-2024.pdf</a>.
\50\ Daniel McCue, ``Number of U.S. Households Projected to
Increase by 12.2 Million in the Next Decade,'' Joint Center for
Housing Studies of Harvard University, December 20, 2018, available
at <a href="https://www.jchs.harvard.edu/blog/number-of-u-s-households-projected-to-increase-by-12-2-million-in-the-next-decade">https://www.jchs.harvard.edu/blog/number-of-u-s-households-projected-to-increase-by-12-2-million-in-the-next-decade</a>.
---------------------------------------------------------------------------

Ability of the Enterprises to lead the mortgage market. The
Enterprises' overall share of the mortgage market is subject to
fluctuation, as well. In the years preceding the 2008 financial crisis,
the Enterprises' share of the market dropped to about 44 percent. As
shown in Graph 1, that share rose to about 65 percent in 2012, but
declined to about 55 percent in 2015. The Enterprises' share remained
relatively stable until 2019, then jumped to 67 percent in 2020 as the
Enterprises continued to acquire mortgages even as others in the market
stepped back during the COVID-19 pandemic. Since then, the Enterprises'
share has declined as the shares of government-guaranteed and
government-insured loans, as well as the shares of other market
participants, have grown. Government-guaranteed and government-insured
loans are not eligible for housing goals credit.
[GRAPHIC] [TIFF OMITTED] TR30DE24.005

Graph 1 also shows that the Enterprises' share of the conforming
mortgage market returned to pre-pandemic levels in 2022 but declined
significantly in 2023. Preliminary data shows further declines in 2024.
Over the same period, the total Government share of the mortgage market
(including the Federal Housing Administration, Department of Veterans
Affairs, and Rural Housing Service) and the Other share (such as
retained bank portfolios) expanded.
Need to maintain the sound financial condition of the Enterprises.
During a period of affordability challenges and increased uncertainty
around market conditions, setting the single-family housing goals
benchmark levels too high could compromise safe and sound lending
standards. FHFA carefully considered benchmark levels that would
support access to mortgage lending for low-income families, families
that reside in low-income areas, and very low-income families, while
still allowing the Enterprises to adequately support all other segments
of the market.
Past performance and effort of the Enterprises to achieve the
housing goals. Table 1 provides the annual performance of both
Enterprises on the single-family housing goals between 2010 and 2023.

[[Page 106265]]

Table 1--Enterprise Single-Family Housing Goals Performance
[2010-2023]
--------------------------------------------------------------------------------------------------------------------------------------------------------
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
Low-Income Home Purchase Goal
--------------------------------------------------------------------------------------------------------------------------------------------------------
Actual Market........................... 27.2 26.5 26.6 24.0 22.8 23.6 22.9 24.3 25.5 26.6 27.6 26.7 26.8 26.3
Benchmark............................... 27.0 27.0 23.0 23.0 23.0 24.0 24.0 24.0 24.0 24.0 24.0 24.0 28.0 28.0
Fannie Mae Performance.................. * 25.1 * 25.8 25.6 23.8 23.5 * 23.5 22.9 25.5 28.2 27.8 29.0 28.7 27.4 + 26.1
Freddie Mac Performance................. 27.8 * 23.3 24.4 * 21.8 * 21.0 * 22.3 23.8 * 23.2 25.8 27.4 28.5 27.4 29.0 28.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Very Low-Income Home Purchase Goal
--------------------------------------------------------------------------------------------------------------------------------------------------------
Actual Market........................... 8.1 8.0 7.7 6.3 5.7 5.8 5.4 5.9 6.5 6.6 7.0 6.8 6.8 6.5
Benchmark............................... 8.0 8.0 7.0 7.0 7.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 7.0 7.0
Fannie Mae Performance.................. * 7.2 * 7.6 7.3 * 6.0 5.7 * 5.6 * 5.2 5.9 6.7 6.5 7.3 7.4 6.9 + 6.0
Freddie Mac Performance................. 8.4 * 6.6 7.1 * 5.5 * 4.9 * 5.4 5.7 * 5.7 6.3 6.8 6.9 6.3 7.1 6.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Low-Income Areas Home Purchase Goal
--------------------------------------------------------------------------------------------------------------------------------------------------------
Actual Market........................... 24.0 22.0 23.2 22.1 22.1 19.8 19.7 21.5 22.6 22.9 22.4 19.1 28.0 28.1
Benchmark............................... 24.0 24.0 20.0 21.0 18.0 19.0 17.0 18.0 18.0 19.0 18.0 14.0 20.0 20.0
Fannie Mae Performance.................. 24.1 22.4 22.3 21.6 22.7 20.4 20.2 22.9 25.1 24.5 23.6 20.3 29.6 28.1
Freddie Mac Performance................. * 23.8 * 19.2 20.6 * 20 20.1 19.0 19.9 20.9 22.6 22.9 21.8 18.0 28.7 29.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Low-Income Census Tracts Home Purchase Subgoal
--------------------------------------------------------------------------------------------------------------------------------------------------------
Actual Market........................... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... 9.7 9.8
Benchmark............................... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... 4.0 4.0
Fannie Mae Performance.................. ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... 9.3 9.3
Freddie Mac Performance................. ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... 9.1 9.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Minority Census Tracts Home Purchase Subgoal
--------------------------------------------------------------------------------------------------------------------------------------------------------
Actual Market........................... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... 12.1 12.5
Benchmark............................... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... 10.0 10.0
Fannie Mae Performance.................. ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... 13.5 12.6
Freddie Mac Performance................. ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... 12.8 13.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Low-Income Refinance Goal
--------------------------------------------------------------------------------------------------------------------------------------------------------
Actual Market........................... 20.2 21.5 22.3 24.3 25.0 22.5 19.8 25.4 30.7 24.0 21.0 26.1 37.3 40.3
Benchmark............................... 21.0 21.0 20.0 20.0 20.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 26.0 26.0
Fannie Mae Performance.................. 20.9 23.1 21.8 24.3 26.5 22.1 * 19.5 24.8 31.2 23.8 21.2 26.2 34.7 38.4
Freddie Mac Performance................. 22.0 23.4 22.4 24.1 26.4 22.8 21.0 24.8 27.3 22.4 * 19.7 24.8 37.1 43.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers marked with an asterisk indicate that the Enterprise failed to meet the goal.
+ Numbers marked with a plus sign indicate that FHFA determined the goal to be infeasible.

B. Benchmark Levels for the Single-Family Housing Goals for 2025-2027
in the Final Rule

The final rule establishes the following benchmark levels for the
single-family housing goals and subgoals for 2025-2027:
1. Low-Income Home Purchase Goal
The low-income home purchase goal is based on the percentage share
of all conventional, conforming, single-family, owner-occupied home
purchase mortgages purchased by an Enterprise that are made to low-
income families, defined as families with incomes less than or equal to
80 percent of AMI. Consistent with the proposed rule and FHFA's market
model, the final rule sets the annual low-income home purchase housing
goal benchmark level for 2025-2027 at 25 percent. While this benchmark
level is below the current benchmark level of 28 percent for 2022-2024,
it is above the 24 percent benchmark level that was in place from 2015
through 2021 and is consistent with the updated forecast using Moody's
August 2024 baseline forecast and 2023 HMDA data. As explained further
below, FHFA believes that this benchmark level is appropriate to enable
the Enterprises to fulfill their statutory duty to facilitate the
financing of affordable housing for all low-income families without
compromising safe and sound lending standards during a period of
affordability challenges and increased uncertainty around market
conditions.

Table 2--Single-Family Low-Income Home Purchase Goal
----------------------------------------------------------------------------------------------------------------
Historical performance Projected forecast
Year -------------------------------------------------------------------------------
2020 2021 2022 2023 2024 2025 2026 2027
----------------------------------------------------------------------------------------------------------------
Actual Market Level............. 27.6% 26.7% 26.8% 26.3% ....... ....... ....... .......
Benchmark Level................. 24.0% 24.0% 28.0% 28.0% 28.0% 25.0% 25.0% 25.0%
Current Market Forecast......... ......... ......... ......... ......... 26.3% 26.2% 25.9% 25.7%
+/- +/- +/- +/-
2.6% 4.4% 5.7% 6.7%
----------------------------------------------------------------------------------------------------------------
Fannie Mae Performance
----------------------------------------------------------------------------------------------------------------
Low-Income Home Purchase 374,376 375,569 278,799 189,439 ....... ....... ....... .......
Mortgages......................
Total Home Purchase Mortgages... 1,288,806 1,306,459 1,016,371 726,139 ....... ....... ....... .......

[[Page 106266]]

Low-Income % of Home Purchase 29.0% 28.7% 27.4% 26.1% ....... ....... ....... .......
Mortgages......................
----------------------------------------------------------------------------------------------------------------
Freddie Mac Performance
----------------------------------------------------------------------------------------------------------------
Low-Income Home Purchase 280,561 329,426 264,118 209,432 ....... ....... ....... .......
Mortgages......................
Total Home Purchase Mortgages... 982,888 1,201,540 911,037 735,932 ....... ....... ....... .......
Low-Income % of Home Purchase 28.5% 27.4% 29.0% 28.5% ....... ....... ....... .......
Mortgages......................
----------------------------------------------------------------------------------------------------------------

Recent performance and forecasts. As shown in Table 2, between 2020
and 2023, the low-income purchase market level, as measured by HMDA
data, declined from 27.6 percent to 26.3 percent. FHFA's current model
forecasts that market level to continue declining and end below 26
percent in 2027 with an average forecast midpoint value of 25.9
percent. Freddie Mac's performance on this goal was 29.0 percent in
2022 and 28.5 percent in 2023, which was above both the benchmark and
the market levels in those two years. Fannie Mae's performance in 2022
was 27.4 percent, which was below the benchmark level but above the
market level. However, in 2023, Fannie Mae's performance was 26.1
percent, which was below both the benchmark and the market levels. FHFA
determined that while Fannie Mae had missed the goal, the goal itself
was not feasible for the Enterprise in 2023.\51\
---------------------------------------------------------------------------

\51\ FHFA's final determination of Fannie Mae's performance for
2023, available at <a href="https://www.fhfa.gov/sites/default/files/2024-11/2023-Final-Determination-Letter-Fannie-Mae.pdf">https://www.fhfa.gov/sites/default/files/2024-11/2023-Final-Determination-Letter-Fannie-Mae.pdf</a>.
---------------------------------------------------------------------------

FHFA rationale. As FHFA noted in the proposed rule preamble,
``[t]he combination of high home prices and elevated mortgage rates
along with continued limited housing supply has also contributed to a
sharp decline in purchase loan origination volumes, as new homes are
less affordable and existing homeowners are less likely to give up
their low interest rate mortgage. For example, in 2022, lenders
reported a 51 percent decrease in closed-end, site-built, single-family
mortgage originations from 2021 volumes. Home prices grew by 43 percent
between 2019 and 2022, while incomes grew by just 7 percent over the
same time.'' \52\ These trends are reflected in the declining market
share for the low-income home purchase goal segment as measured by HMDA
data. Table 2 shows the decline from 26.8 percent in 2022 to 26.3
percent in 2023 amidst a sharp contraction in mortgage origination
volume. Taking the market forecast average and current and forecast
market conditions into consideration, the benchmark level in the final
rule is set at 25 percent to encourage the Enterprises to continue to
find ways to support low-income borrowers under current and forecast
market conditions while not compromising safe and sound lending
standards. Some commenters on the proposed rule supported the proposal
to lower the benchmark level for this goal from the current 28 percent
to 25 percent, recognizing the impact of a variety of market challenges
and describing the proposed benchmark level as appropriate. Other
commenters disagreed with the proposed lowered benchmark level, arguing
that the Enterprises should be leading the market. Both Enterprises
were supportive of the proposed benchmark level of 25 percent,
describing it as meaningful, prudent, and consistent with the Safety
and Soundness Act. After considering the comments and updated economic
data that became available after FHFA issued the proposed rule, FHFA is
adopting the proposed benchmark level of 25 percent in the final rule.
---------------------------------------------------------------------------

\52\ 89 FR 70127, 70133 (citing ``Data Point: 2022 Mortgage
Market Activity and Trends,'' Consumer Financial Protection Bureau,
2023, p.8, available at <a href="https://files.consumerfinance.gov/f/documents/cfpb_data-point-mortgage-market-activity-trends_report_2023-09.pdf">https://files.consumerfinance.gov/f/documents/cfpb_data-point-mortgage-market-activity-trends_report_2023-09.pdf</a>; Alexander Hermann and Peyton Whitney,
``Home Price-To-Income Ratio Reaches Record High,'' Joint Center for
Housing Studies of Harvard University, January 22, 2024, available
at <a href="https://www.jchs.harvard.edu/blog/home-price-income-ratio-reaches-record-high-0">https://www.jchs.harvard.edu/blog/home-price-income-ratio-reaches-record-high-0</a>; and Moody's Analytics, ``Economic Data and
Forecasts,'' February 2024).
---------------------------------------------------------------------------

2. Very Low-Income Home Purchase Goal
The very low-income home purchase goal is based on the percentage
share of all conventional, conforming, single-family, owner-occupied
home purchase mortgages purchased by an Enterprise that are for very
low-income families, defined as families with incomes less than or
equal to 50 percent of AMI. Consistent with the proposed rule and
FHFA's market model, the final rule sets the annual very low-income
home purchase housing goal benchmark level for 2025-2027 at 6 percent.
While this benchmark level is below the current benchmark level of 7
percent, it is in line with the benchmark level in place from 2015-2021
and the most recent market forecast midpoint average of 6.0 percent.
FHFA has determined that a 6 percent benchmark level will serve as an
appropriate target that will promote Enterprise efforts in this market
segment.

Table 3--Single-Family Very Low-Income Home Purchase Goal
----------------------------------------------------------------------------------------------------------------
Historical performance Projected forecast
Year -------------------------------------------------------------------------------
2020 2021 2022 2023 2024 2025 2026 2027
----------------------------------------------------------------------------------------------------------------
Actual Market Level............. 7.0% 6.8% 6.8% 6.5% ....... ....... ....... .......
Benchmark Level................. 6.0% 6.0% 7.0% 7.0% 7.0% 6.0% 6.0% 6.0%
Current Market Forecast......... ......... ......... ......... ......... 6.2% 6.1% 6.0% 5.9%
+/- +/- +/- +/-
1.1% 2.0% 2.5% 3.0%
----------------------------------------------------------------------------------------------------------------
Fannie Mae Performance
----------------------------------------------------------------------------------------------------------------
Very Low-Income Home Purchase 93,909 97,154 69,919 43,792 ....... ....... ....... .......
Mortgages......................
Total Home Purchase Mortgages... 1,288,806 1,306,459 1,016,371 726,139 ....... ....... ....... .......

[[Page 106267]]

Very Low-Income % of Home 7.3% 7.4% 6.9% 6.0% ....... ....... ....... .......
Purchase Mortgages.............
----------------------------------------------------------------------------------------------------------------
Freddie Mac Performance
----------------------------------------------------------------------------------------------------------------
Very Low-Income Home Purchase 68,216 75,945 64,850 50,244 ....... ....... ....... .......
Mortgages......................
Total Home Purchase Mortgages... 982,888 1,201,540 911,037 735,932 ....... ....... ....... .......
Very Low-Income % of Home 6.9% 6.3% 7.1% 6.8% ....... ....... ....... .......
Purchase Mortgages.............
----------------------------------------------------------------------------------------------------------------

Recent performance and forecasts. As shown in Table 3, between 2020
and 2023, the very low-income purchase market level, as measured using
HMDA data, declined from 7.0 percent to 6.5 percent. FHFA's current
model forecasts that the market for this goal will fall from 6.1
percent to 5.9 percent for the 2025-2027 period. While Freddie Mac's
performance in 2022 and 2023 was above both the benchmark and market
levels, Fannie Mae's performance in 2022 was above the market level but
below the benchmark level. In 2023, Fannie Mae's performance was below
both the market and the benchmark levels. FHFA determined that the goal
was not feasible for the Enterprise in 2023.
FHFA rationale. The 6 percent benchmark level in the final rule
should encourage the Enterprises to continue their efforts to promote
safe and sustainable lending to very low-income families. FHFA believes
that setting the benchmark level at 6 percent is appropriate,
reasonable, and supported by the current market forecast. As noted in
section II, some commenters on the proposed rule supported the proposal
to lower the benchmark level for this goal from the current 7 percent
to 6 percent, recognizing the market challenges, and describing it as
appropriate. Other commenters disagreed with the proposed lowered
benchmark level, arguing that the Enterprises should be leading the
market. Both Enterprises supported the proposed benchmark level of 6
percent, describing it as meaningful, prudent, and consistent with the
Safety and Soundness Act, while also noting that it will be challenging
to meet. After considering the comments and updated economic data that
became available after FHFA issued the proposed rule, FHFA is adopting
the proposed benchmark level of 6 percent in the final rule.
3. Minority Census Tracts Home Purchase Subgoal
The minority census tracts home purchase subgoal is based on the
percentage share of home purchase mortgages on conventional,
conforming, single-family, owner-occupied properties to borrowers with
incomes no greater than 100 percent of AMI in minority census tracts.
The Safety and Soundness Act defines minority census tracts as those
with a minority population of 30 percent or more and median census
tract income of less than 100 percent of AMI. Consistent with the
proposed rule and FHFA's market model, the final rule increases the
annual benchmark level for this subgoal for 2025-2027 from the current
10 percent to 12 percent. This benchmark level is slightly below the
average market forecast of 12.7 percent. FHFA has determined that this
benchmark level will serve as an appropriate target that will promote
Enterprise efforts in this market segment.

Table 4--Single-Family Minority Census Tracts Home Purchase Subgoal
----------------------------------------------------------------------------------------------------------------
Historical performance Projected forecast
Year -------------------------------------------------------------------------------
2020 2021 2022 2023 2024 2025 2026 2027
----------------------------------------------------------------------------------------------------------------
Actual Market Level............. 9.2% 9.5% 12.1% 12.2% ....... ....... ....... .......
Benchmark Level................. N/A N/A 10.0% 10.0% 10.0% 12.0% 12.0% 12.0%
Current Market Forecast......... ......... ......... ......... ......... 12.3% 12.5% 12.7% 13.0%
+/- +/- +/- +/-
1.4% 2.3% 3.0% 3.5%
----------------------------------------------------------------------------------------------------------------
Fannie Mae Performance
----------------------------------------------------------------------------------------------------------------
Minority Census Tracts Home 129,996 143,340 137,474 91,202 ....... ....... ....... .......
Purchase Mortgages.............
Total Home Purchase Mortgages... 1,288,806 1,306,459 1,016,371 726,139 ....... ....... ....... .......
Minority Census Tracts % of Home 10.1% 11.0% 13.5% 12.6% ....... ....... ....... .......
Purchase Mortgages.............
----------------------------------------------------------------------------------------------------------------
Freddie Mac Performance
----------------------------------------------------------------------------------------------------------------
Minority Census Tracts Home 89,998 111,691 116,223 97,378 ....... ....... ....... .......
Purchase Mortgages.............
Total Home Purchase Mortgages... 982,888 1,201,540 911,037 735,932 ....... ....... ....... .......
Minority Census Tracts % of Home 9.2% 9.3% 12.8% 13.2% ....... ....... ....... .......
Purchase Mortgages.............
----------------------------------------------------------------------------------------------------------------
The numbers in italics refer to FHFA's tabulations of the market and Enterprise performance had this goal been
in place before 2022.

Recent performance and forecasts. Table 4 shows the implied market
levels and Enterprise performance in 2020 and 2021 (before FHFA
established this subgoal), as well as market levels and Enterprise
performance since this subgoal was established. Both Enterprises
exceeded the benchmark and market levels for this subgoal in 2022 and
2023. The table also shows a pronounced increase in the market levels
and in both Enterprises' performance on this subgoal beginning in 2022,
which was the first year of the new subgoal as well as the first year
of new census tract boundaries based on the 2020 census. The average
AMI increase in 2022 was unusually high, which led to more borrowers
qualifying

[[Page 106268]]

for this subgoal.\53\ The number of census tracts rose from about
74,000 to 85,000 in the 2020 census, and the share of minority census
tracts rose from 32.9 percent to 35.2 percent with this census update,
leading to more loans qualifying for this subgoal.54 55 The
imposition of the new subgoal also meant additional attention and
effort at the Enterprises to meet the new subgoal's benchmark level.
With changes in the census tract boundaries, unusually high AMI
increases, and the imposition of the new subgoal all occurring in 2022,
it is difficult to isolate and conclusively determine the specific
effect of each of these factors on the higher performance of the market
and the Enterprises. FHFA will continue to analyze this trend.
---------------------------------------------------------------------------

\53\ ``HUD Publishes FY 2022 Income Limits; 99% of Counties Will
See Increase,'' Novogradac, April 19, 2022, available at <a href="https://www.novoco.com/notes-from-novogradac/hud-publishes-fy-2022-income-limits-99-counties-will-see-increase">https://www.novoco.com/notes-from-novogradac/hud-publishes-fy-2022-income-limits-99-counties-will-see-increase</a>.
\54\ See <a href="https://transition.fcc.gov/form477/Geo/more_about_2020_census_tracts.pdf">https://transition.fcc.gov/form477/Geo/more_about_2020_census_tracts.pdf</a>.
\55\ FHFA's tabulations of census tracts data.
---------------------------------------------------------------------------

FHFA rationale. One commenter suggested that FHFA greatly increase
the benchmark level for this subgoal given that the statutory
definition of ``minority census tract'' is broad. As noted, the
definition of ``minority census tract'' is statutory, and FHFA first
established this subgoal in the 2022-2024 housing goals final rule.\56\
For the 2022-2024 housing goals, FHFA set the benchmark level for this
subgoal at 10 percent.\57\ Given that the subgoal is still relatively
new, an incremental increase over the benchmark level in the previous
housing goals period will further the same purposes without being
disruptive to the market. The 12 percent benchmark level is an
appropriate level given the recent market and Enterprise performance,
and the updated model forecast. FHFA believes that this benchmark level
emphasizes the importance of providing access to mortgage credit for
borrowers with incomes at or below 100 percent of AMI who reside or
seek to reside in minority census tracts while taking current market
conditions into consideration. Commenters strongly supported the
proposed increase in the benchmark level to 12 percent. Several
commenters highlighted the positive impact the proposed benchmark level
would have on ensuring the Enterprises fulfill their statutory duty to
facilitate the financing of affordable housing for low- and moderate-
income families, including families of color. After considering the
comments and updated economic data that became available after FHFA
issued the proposed rule, FHFA is adopting the proposed benchmark level
of 12 percent in the final rule.
---------------------------------------------------------------------------

\56\ 12 U.S.C. 4502(29).
\57\ 86 FR 73641, 73651 (Dec. 28, 2021).
---------------------------------------------------------------------------

4. Low-Income Census Tracts Home Purchase Subgoal
The low-income census tracts home purchase subgoal is based on the
percentage share of conventional, conforming, single-family, owner-
occupied home purchase mortgages that are: (1) to borrowers (regardless
of income) in low-income census tracts that are not minority census
tracts; and (2) to borrowers with incomes greater than 100 percent of
AMI in low-income census tracts that are also minority census tracts.
Consistent with the proposed rule, the final rule sets the annual
benchmark level for this subgoal for 2025-2027 at 4 percent, which is
the same as the benchmark level for the 2022-2024 housing goals period.
FHFA recognizes that this benchmark level is significantly lower than
both the midpoint of the confidence intervals of the market forecast
and the recent performance of the Enterprises. However, FHFA has
determined that a relatively low benchmark level for this subgoal is
appropriate because the subgoal includes housing goals credit for
higher-income borrowers (higher than 100 percent of AMI) that may have
ready access to mortgage credit even when purchasing homes in low-
income census tracts. FHFA's tabulation of 2023 HMDA data shows that 70
percent of the loans that qualified for credit under this subgoal were
made to borrowers at or above 100 percent of AMI.

Table 5--Single-Family Low-Income Census Tracts Home Purchase Subgoal
----------------------------------------------------------------------------------------------------------------
Historical performance Projected forecast
Year -------------------------------------------------------------------------------
2020 2021 2022 2023 2024 2025 2026 2027
----------------------------------------------------------------------------------------------------------------
Actual Market Level............. 8.5% 9.6% 9.7% 9.8% ....... ....... ....... .......
Benchmark Level................. N/A N/A 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%
Current Market Forecast......... ......... ......... ......... ......... 10.1% 10.1% 10.1% 10.1%
+/- +/- +/- +/-
0.7% 1.1% 1.5% 1.7%
----------------------------------------------------------------------------------------------------------------
Fannie Mae Performance
----------------------------------------------------------------------------------------------------------------
Low-Income Census Tracts Home 106,362 122,177 94,864 67,844 ....... ....... ....... .......
Purchase Mortgages.............
Total Home Purchase Mortgages... 1,288,806 1,306,459 1,016,371 726,139 ....... ....... ....... .......
Low-Income Census Tracts % of 8.3% 9.4% 9.3% 9.3% ....... ....... ....... .......
Home Purchase Mortgages........
----------------------------------------------------------------------------------------------------------------
Freddie Mac Performance
----------------------------------------------------------------------------------------------------------------
Low-Income Census Tracts Home 78,436 104,401 82,883 69,459 ....... ....... ....... .......
Purchase Mortgages.............
Total Home Purchase Mortgages... 982,888 1,201,540 911,037 735,932 ....... ....... ....... .......
Low-Income Census Tracts % of 8.0% 8.7% 9.1% 9.4% ....... ....... ....... .......
Home Purchase Mortgages........
----------------------------------------------------------------------------------------------------------------
The numbers in italics refer to FHFA's tabulations of the market and Enterprise performance had this goal been
in place before 2022.

Recent performance and forecasts. Table 5 shows that both
Enterprises exceeded the benchmark level for this subgoal in 2022 and
2023. FHFA's current model forecasts that the market for this subgoal
will remain around 10.1 percent for 2025-2027.
FHFA rationale. The comments on this subgoal summarized in section
II indicate that some commenters were unclear about the structure of
this subgoal as well as FHFA's intent in setting a benchmark level well
below its forecasted share. The benchmark is set at a level that
balances the need for access to credit in low-income census tracts with
the concern that a higher benchmark level could result in an incentive
for the Enterprises to purchase loans made to higher-income borrowers
in low-income census tracts, leading to displacement of low-income
families in both low-income and minority census

[[Page 106269]]

tracts. As FHFA explained when it first proposed implementing the
minority census tracts home purchase subgoal in 2021, ``[u]nder the
proposed rule, for loans purchased from areas that meet the criteria
for both minority and low-income census tracts, the borrower's AMI
would determine under which subgoal the loan would be eligible. If the
borrower's income is less than or equal to 100 percent of AMI, the loan
would be counted towards the minority census tracts [home purchase]
subgoal, and if the borrower's income is above 100 percent of AMI, the
loan would be counted towards the low-income census tracts [home
purchase] subgoal.'' \58\ FHFA notes that the single-family low-income
census tracts home purchase subgoal is not defined to cap the
borrower's income relative to AMI. For instance, as displayed in Table
6, FHFA's analysis of HMDA data shows that approximately 68.7 percent
of the loans that were made in 2023 that met the criteria for the
subgoal were made to borrowers at or above 100 percent of AMI.
---------------------------------------------------------------------------

\58\ 86 FR 47398, 47408 (Aug. 25, 2021).

Table 6--Low-Income Census Tracts Subgoal: Borrower Income Distribution
----------------------------------------------------------------------------------------------------------------
Borrower incomes relative to AMI
(HMDA) 2019 (%) 2020 (%) 2021 (%) 2022 (%) 2023 (%)
----------------------------------------------------------------------------------------------------------------
Borrower Income <=50% AMI....... 9.1 10.1 9.2 7.3 7.4
Borrower Income >50% and <=80% 16.8 17.6 16.7 14.0 15.1
AMI............................
Borrower Income >80% and <=100% 7.6 7.6 7.7 6.8 7.2
AMI............................
Borrower Income >100% and <=120% 17.5 16.9 17.4 19.2 19.1
AMI............................
Borrower Income >120% AMI....... 47.2 45.8 47.3 50.7 49.6
Income Missing.................. 1.9 1.9 1.8 2.1 1.6
-------------------------------------------------------------------------------
Total....................... 100 100 100 100 100
----------------------------------------------------------------------------------------------------------------
Source: FHFA tabulation of HMDA data.

As noted in the proposed rule preamble, FHFA is selecting a
benchmark level lower than its model forecast midpoint and lower than
recent Enterprise performance to avoid exacerbating the displacement of
low-income residents in these low-income, non-minority census tracts as
well as in low-income, minority census tracts. Setting this lower
benchmark level addresses concerns about incentivizing purchases of
loans to higher-income borrowers in low-income census tracts. However,
this benchmark level is also intended to encourage the Enterprises to
continue providing critically needed access to mortgage credit in low-
income census tracts. After considering the comments and updated
economic data that became available after FHFA issued the proposed
rule, FHFA is adopting the proposed benchmark level of 4 percent in the
final rule.
5. Low-Income Areas Home Purchase Goal
The benchmark level for the overall low-income areas housing goal
is set annually by FHFA notice based on the sum of the benchmark levels
for the low-income census tracts housing subgoal and the minority
census tracts housing subgoal, plus an adjustment factor reflecting the
additional incremental share of mortgages for low- and moderate-income
families in designated disaster areas. FHFA will continue to set a
benchmark level for the overall low-income areas housing goal that will
reflect the adjustment factor for mortgages to families with incomes
less than or equal to 100 percent of AMI who are located in federally
declared disaster areas.\59\ Accordingly, the low-income areas home
purchase goal benchmark level is not included in the final rule. During
the 2025-2027 housing goals period, FHFA will continue its annual
practice to notify the Enterprises by letter of the benchmark level for
the overall low-income areas housing goal for each year.
---------------------------------------------------------------------------

\59\ Disaster declarations are listed on the Federal Emergency
Management Agency (FEMA) website at <a href="https://www.fema.gov/disasters">https://www.fema.gov/disasters</a>.
---------------------------------------------------------------------------

6. Low-Income Refinance Goal
The low-income refinance goal is based on the percentage share of
all conventional, conforming, single-family, owner-occupied refinance
mortgages purchased by an Enterprise that are for low-income families,
defined as families with incomes less than or equal to 80 percent of
AMI. Consistent with the proposed rule and the updated FHFA market
model, the final rule sets the annual benchmark level for this goal for
2025-2027 at 26 percent, which is the same as the benchmark level for
the 2022-2024 housing goals period. FHFA has determined that given the
market challenges and the uncertainty of future mortgage rates, a 26
percent benchmark level will serve as an appropriate target that will
promote Enterprise efforts in this segment.

Table 7--Single-Family Low-Income Refinance Goal
----------------------------------------------------------------------------------------------------------------
Historical performance Projected forecast
Year -------------------------------------------------------------------------------
2020 2021 2022 2023 2024 2025 2026 2027
----------------------------------------------------------------------------------------------------------------
Actual Market Level............. 21.0% 26.1% 37.3% 40.3% ....... ....... ....... .......
Benchmark Level................. 21.0% 21.0% 26.0% 26.0% 26.0% 26.0% 26.0% 26.0%
Current Market Forecast......... ......... ......... ......... ......... 38.5% 38.1% 36.4% 34.3%
+/- +/- +/- +/-
3.1% 5.5% 7.0% 8.3%
----------------------------------------------------------------------------------------------------------------
Fannie Mae Performance
----------------------------------------------------------------------------------------------------------------
Low-Income Refinance Mortgages.. 663,667 809,452 279,020 60,682 ....... ....... ....... .......
Total Refinance Mortgages....... 3,133,931 3,089,529 803,634 157,984 ....... ....... ....... .......

[[Page 106270]]

Low-Income % of Refinance 21.2% 26.2% 34.7% 38.4% ....... ....... ....... .......
Mortgages......................
----------------------------------------------------------------------------------------------------------------
Freddie Mac Performance
----------------------------------------------------------------------------------------------------------------
Low-Income Refinance Mortgages.. 490,176 658,845 254,332 54,906 ....... ....... ....... .......
Total Refinance Mortgages....... 2,485,748 2,651,858 686,394 127,043 ....... ....... ....... .......
Low-Income % of Refinance 19.7% 24.8% 37.1% 43.2% ....... ....... ....... .......
Mortgages......................
----------------------------------------------------------------------------------------------------------------

When measured in percentage terms, annual performance in the
overall market and by the Enterprises on low-income refinance mortgages
tends to be inversely proportional to the volume of low-income
refinance loans the market produces and the Enterprises purchase during
a given year. For example, during the refinance boom of 2020, when
mortgage rates were low, low-income refinance volume in the overall
market soared to over 1.3 million loans, but the volume of all
refinances in the market reached over 6.3 million.\60\ This equated to
a low-income refinance market performance of 21.0 percent. In contrast,
in 2023, with higher mortgage rates, low-income refinance volume in the
overall market contracted to roughly 160,000 loans and refinance volume
overall fell to about 397,000 loans.\61\ This equated to a low-income
refinance market performance of 40.3 percent. The Enterprises'
performance on the low-income refinance goal followed the same pattern.
Low-income refinance performance for both Enterprises increased
significantly during this later period, even as the volume of their
purchases of low-income refinance mortgages fell.
---------------------------------------------------------------------------

\60\ FHFA's tabulation of HMDA data.
\61\ Ibid.
---------------------------------------------------------------------------

Recent performance and forecasts. As shown in Table 7, the market
for low-income refinance loans rose sharply from 2020 to 2023, as
reflected in the HMDA data. For example, the market level for low-
income refinance loans was 21.0 percent in 2020 with low mortgage rates
and was 40.3 percent in 2023 with elevated mortgage rates. At 19.7
percent, Freddie Mac was below the 21 percent benchmark level in 2020,
but has met the goal since then, with performance rising to 43.2
percent in 2023. Fannie Mae has met the goal since 2020, with
performance rising from 21.2 percent to 38.4 percent during that
period.
FHFA rationale. Some commenters supported the proposed benchmark
level of 26 percent, noting that the refinance market is highly
sensitive to fluctuations in interest rates. One commenter asked FHFA
to raise the benchmark level given the recent strong performance of the
market and the Enterprises. As noted above, the Enterprises' annual
performance on the low-income refinance goal tends to be inversely
proportional to the volume of low-income refinance loans the market
produces and the Enterprises purchase during a given year. Although
mortgage rates are expected to decline during the 2025-2027 housing
goals period, FHFA's model cannot forecast the low-income refinance
market with a high degree of confidence due to the unpredictability of
future interest rates and the strong sensitivity of refinance
originations to interest rates. FHFA believes that the 26 percent
benchmark level in the final rule is reasonable given these forecasting
challenges. Many current mortgage holders are unlikely to refinance
without a substantial reduction in mortgage rates. FHFA is not aware of
any long-term data series that captures this impact that can be used in
the forecast model. FHFA also recognizes that if interest rates were to
decline significantly, the benchmark level of 26 percent could be
difficult for the Enterprises to achieve based on market conditions. It
is for this reason that the final rule establishes the benchmark level
of 26 percent for this goal, as proposed, and establishes measurement
buffers for this goal, which are further discussed below.

V. Measurement Buffers

For the three single-family housing goals subject to the
measurement buffers, FHFA proposed numerical factors to encourage each
Enterprise to focus on achieving the housing goal by meeting the market
level if the benchmark level is higher than the market level, despite
the uncertainty regarding the final market level throughout the course
of the year.\62\ Specifically, for 2025-2027, as proposed, the final
rule provides that if the benchmark level for the single-family low-
income home purchase, very low-income home purchase, or low-income
refinance housing goal is higher than the market level for the goal, an
Enterprise that fails to meet the goal will not be required to submit a
housing plan if the Enterprise's performance meets or exceeds: (i) the
market level minus 1.3 percentage points for the low-income home
purchase goal; (ii) the market level minus 0.5 percentage points for
the very low-income home purchase goal; or (iii) the market level minus
1.3 percentage points for the low-income refinance goal. To ensure that
an Enterprise does not rely entirely on these measurement buffers, if
an Enterprise fails to meet one of the applicable goals in both 2025
and 2026, the measurement buffer will not apply to that goal in 2027.
---------------------------------------------------------------------------

\62\ As previously noted, the proposed rule referred to the
measurement buffers as ``Enforcement Factors''.
---------------------------------------------------------------------------

Fannie Mae commented that FHFA should establish similar factors for
the single-family housing subgoals. The final rule does not include a
measurement buffer for the single-family minority census tracts home
purchase subgoal or the single-family low-income census tracts home
purchase subgoal. FHFA is not adopting a measurement buffer for the
minority census tracts home purchase subgoal due to the Enterprises'
recent performance on this subgoal. A measurement buffer is unnecessary
for the low-income census tracts home purchase subgoal because the
benchmark level for the subgoal is being established below historic
Enterprise performance to address potentially unintended consequences
of Enterprise purchases in those areas.
FHFA considers the measurement buffers to be a transparent and fair
means to encourage each Enterprise to achieve these three single-family
housing goals by meeting the market level despite uncertainty about the
market level during the measurement period. FHFA also notes, as it did
in the NPRM, that these measurement buffers will be in place for the
2025-2027 housing goals period due to the heightened uncertainty in
macroeconomic conditions and the difficult mortgage market that is

[[Page 106271]]

currently forecast for 2025-2027. Additionally, if an Enterprise fails
to meet one of the applicable single-family housing goals in both 2025
and 2026, the measurement buffer for that goal will not apply in 2027.

VI. Multifamily Housing Goals and Subgoal

A. Factors Considered in Setting the Multifamily Housing Goal Benchmark
Levels

The Safety and Soundness Act requires FHFA to consider the
following six factors in setting the multifamily housing goals:
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.\63\
---------------------------------------------------------------------------

\63\ 12 U.S.C. 4563(a)(4).
---------------------------------------------------------------------------

Unlike the single-family housing goals, performance on the
multifamily housing goals is measured solely against benchmark levels
set by FHFA in the regulation, without any retrospective market
measure. The absence of a retrospective market measure for the
multifamily housing goals results, in part, from the lack of
comprehensive data about the multifamily mortgage market. Unlike the
single-family mortgage market, where HMDA provides a reasonably
comprehensive dataset about single-family mortgage originations each
year, the multifamily mortgage market (and the affordable multifamily
mortgage market segment) has no comparable single, unified source with
coverage extending across many years. As a result, it is difficult to
correlate different datasets that rely on different reporting metrics.
The lack of comprehensive data for the multifamily mortgage market
is even more acute with respect to the segments of the market that are
targeted to low-income families, defined as families with incomes at or
below 80 percent of AMI, and very low-income families, defined as
families with incomes at or below 50 percent of AMI.
Unlike the single-family housing goals, which set separate
benchmark levels for home purchase and refinance mortgages, the
multifamily housing goals include all Enterprise multifamily mortgage
purchases, regardless of the purpose of the loan.
In consideration of public comments and to improve the
responsiveness of the multifamily housing goals to market conditions,
in 2023, FHFA revised the housing goals regulation to change the
multifamily housing goals benchmark levels from a numeric benchmark
level for units to a percentage of affordable units in multifamily
properties financed by mortgages purchased by the Enterprise each year.
This ensures that the multifamily housing goals remain meaningful in
different market conditions and enables the Enterprises to respond to
those conditions while continuing to serve affordable segments.\64\
---------------------------------------------------------------------------

\64\ 12 CFR 1282.13.
---------------------------------------------------------------------------

FHFA has considered each of the six statutory factors in setting
the benchmark levels for each of the multifamily housing goals in the
final rule. Five of the factors relate to the multifamily mortgage
market and the Enterprises' role in that market. Those factors
generally have similar impacts on each of the multifamily housing goals
and are discussed below. The past performance of the Enterprises is
discussed separately for each of the multifamily housing goals.
Multifamily mortgage market. FHFA's consideration of the
multifamily mortgage market credit needs addresses the size and
competitiveness of the overall multifamily mortgage market as well as
the subset that is affordable to low-income and very low-income
families. In August 2024, MBA forecasted that multifamily mortgage
originations would increase from the $246 billion estimated in 2023 to
$297 billion in 2024, then to $390 billion in 2025.\65\ MBA noted that
the moderation in interest rates along with the large volume of loans
maturing should result in an increase in borrowing relative to 2023 and
2024, but the timing of this borrowing is uncertain.\66\
---------------------------------------------------------------------------

\65\ ``MBA Forecast: Commercial/Multifamily Borrowing and
Lending to Increase 26 Percent to $539 Billion in 2024,'' Mortgage
Bankers Association, August 29, 2024, available at <a href="https://www.mba.org/news-and-research/newsroom/news/2024/08/29/mba-forecast-commercial-multifamily-borrowing-and-lending-to-increase-26-percent-to-539-billion-in-2024">https://www.mba.org/news-and-research/newsroom/news/2024/08/29/mba-forecast-commercial-multifamily-borrowing-and-lending-to-increase-26-percent-to-539-billion-in-2024</a>.
\66\ Ibid.
---------------------------------------------------------------------------

According to the National Multifamily Housing Council's tabulation
of American Community Survey microdata, in 2023, about 47 percent of
renter households (22 million households) lived in multifamily
properties.67 68
---------------------------------------------------------------------------

\67\ Single-family properties are defined as structures with one
to four units. Multifamily properties are defined as structures with
five or more units.
\68\ ``Review of Household Characteristics, (n.d.),'' National
Multifamily Housing Council, available at <a href="https://www.nmhc.org/research-insight/quick-facts-figures/quick-facts-resident-demographics/household-characteristics">https://www.nmhc.org/research-insight/quick-facts-figures/quick-facts-resident-demographics/household-characteristics</a>.
---------------------------------------------------------------------------

Affordability in the multifamily mortgage market. In its America's
Rental Housing 2024 report, Harvard University's Joint Center for
Housing Studies (JCHS) found that rent growth had moderated following
historically high rent growth in 2021 and 2022.\69\ For instance, in
the third quarter of 2023, rent growth for professionally managed
apartments was 0.4 percent, compared to 15.3 percent in early 2022.\70\
Despite the recent slowdown in rent growth, the extended period of
rising rents corresponds to the continued stress on renters, with the
share of cost-burdened renters continuing to remain elevated.
---------------------------------------------------------------------------

\69\ ``America's Rental Housing 2024,'' Joint Center for Housing
Studies of Harvard University, 2024, p. 1, available at <a href="https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_Americas_Rental_Housing_2024.pdf">https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_Americas_Rental_Housing_2024.pdf</a>.
\70\ Ibid.
---------------------------------------------------------------------------

For purposes of the Enterprise housing goals, the Safety and
Soundness Act requires FHFA to determine affordability based on whether
rent levels are affordable. The Safety and Soundness Act defines a rent
level as affordable if a family's rent and utility expenses do not
exceed 30 percent of the maximum income level for each income category,
with appropriate adjustments for unit size as measured by the number of
bedrooms.\71\ The JCHS report found that the share of cost-burdened
renters, particularly among low-income and very low-income households,
continues to grow.\72\ A household is considered cost-burdened if it
spends more than 30 percent of its income on housing, and severely
cost-burdened if it spends more than 50 percent of its income on
housing. The JCHS report shows that the share of cost-burdened renters
across all income segments rose by 3.2 percentage points to 50 percent
from 2019 to 2022.\73\ The

[[Page 106272]]

share of cost-burdened renters earning between $45,000 and $74,999
increased the most, rising by 5.4 percentage points.\74\
---------------------------------------------------------------------------

\71\ 12 U.S.C. 4563(c).
\72\ ``America's Rental Housing 2024,'' Joint Center for Housing
Studies of Harvard University, 2024, p. 2, available at <a href="https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_Americas_Rental_Housing_2024.pdf">https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_Americas_Rental_Housing_2024.pdf</a>.
\73\ Ibid.
\74\ Ibid.
---------------------------------------------------------------------------

In The State of the Nation's Housing 2024 report, JCHS noted the
significant rise in new rental supply as 449,900 units were added in
2023, a 22 percent rise from 2022 and the highest number of completions
in more than 30 years.\75\ However, the growth in new rental supply is
expected to slow down as multifamily starts fell by 14 percent in 2023,
and this decline has accelerated.\76\ While the addition of rental
units may limit rent growth, the JCHS report found that new rental
units are primarily targeted towards the upper end of the market, with
a median asking rent of $1,710 in the third quarter of 2023, compared
to $1,440 in 2014.\77\
---------------------------------------------------------------------------

\75\ ``The State of the Nation's Housing 2024,'' Joint Center
for Housing Studies of Harvard University, 2024, p. 13, available at
<a href="https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2024.pdf">https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2024.pdf</a>.
\76\ Ibid.
\77\ Ibid.
---------------------------------------------------------------------------

Role of the Enterprises. In adopting the multifamily housing goal
benchmark levels for 2025-2027 in the final rule, FHFA has considered
the ability of the Enterprises to lead the market in making multifamily
mortgage credit available. The Enterprises' share of the overall
multifamily mortgage market increased in the years immediately
following the 2008 financial crisis but has declined more recently in
response to growing private sector participation. The Enterprises'
share of the multifamily market was over 70 percent in 2008 and 2009,
compared to 36 percent in 2015.78 79 The total share was 40
percent or higher from 2016 to 2020. However, in 2021 and 2022, when
multifamily origination volume was relatively robust, the combined
Enterprise share was estimated to be below 30 percent before increasing
to 41 percent in 2023.\80\ Through the second quarter of 2024, the
combined Enterprise share is estimated to be 35 percent.\81\
---------------------------------------------------------------------------

\78\ ``The GSE's Shrinking Role in the Multifamily Market,''
Urban Institute, April 2015, p. 4, available at <a href="https://www.urban.org/sites/default/files/publication/48986/2000174-The-GSEs-Shrinking-Role-in-the-Multifamily-Market.pdf">https://www.urban.org/sites/default/files/publication/48986/2000174-The-GSEs-Shrinking-Role-in-the-Multifamily-Market.pdf</a>.
\79\ ``Multifamily Business Information Presentation,'' Fannie
Mae, November 2024, p. 3, available at <a href="https://multifamily.fanniemae.com/media/37196/display">https://multifamily.fanniemae.com/media/37196/display</a>.
\80\ Ibid.
\81\ Ibid.
---------------------------------------------------------------------------

FHFA recognizes that the multifamily housing goals are just one
measure of how the Enterprises contribute to and participate in the
multifamily market. Other Enterprise multifamily activities include
those under their Duty to Serve Underserved Markets Plans, Low-Income
Housing Tax Credit (LIHTC) equity financing, and the mission-driven
elements of FHFA's Conservatorship Scorecard. Together with the housing
goals, these programmatic activities provide support to renter
households, including low-income families spending more than 30 percent
of their income on housing. FHFA will continue to monitor these
initiatives and priorities to maintain appropriate focus by the
Enterprises, including compliance with the Enterprises' charter acts
and safety and soundness considerations.
FHFA expects the Enterprises to continue to demonstrate leadership
in supporting affordable housing in the multifamily market by providing
liquidity for housing for tenants at different income levels in various
geographies and market segments. This support should continue
throughout the economic cycle, even as the overall size of the
multifamily mortgage market fluctuates.
Availability of public subsidies. Multifamily housing assistance is
primarily available in two forms--demand-side public subsidies that
either directly assist low-income tenants (e.g., Section 8 vouchers) or
provide project-based rental assistance (e.g., Section 8 contracts),
and supply-side public subsidies that support the creation and
preservation of affordable housing (e.g., public housing and LIHTCs).
The availability of public subsidies impacts the overall affordable
multifamily housing market, and significant changes to long-standing
public subsidy programs could impact the ability of the Enterprises to
meet the housing goals. The Enterprises also provide liquidity to
facilitate the preservation of public subsidies through their purchases
of mortgages that finance the preservation of existing affordable
housing units (especially for restructurings of older properties that
reach the end of their initial 15-year LIHTC compliance periods) and
for refinancing properties with expiring Section 8 Housing Assistance
Payment contracts.
The need for public subsidies persists as the number of cost-
burdened renters remains high, at over 22.4 million renter households
in 2022.\82\ The Center on Budget and Policy Priorities estimates that
only one in four eligible households currently receive Federal housing
assistance.\83\
---------------------------------------------------------------------------

\82\ ``America's Rental Housing 2024,'' Joint Center for Housing
Studies of Harvard University, 2024, p. 2, available at <a href="https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_Americas_Rental_Housing_2024.pdf">https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_Americas_Rental_Housing_2024.pdf</a>.
\83\ Sonya Acosta, ``Final 2023 Funding Bill Should Support,
Expand Housing Vouchers. Center on Budget and Policy Priorities'',
December 2022, available at <a href="https://www.cbpp.org/blog/final-2023-funding-bill-should-support-expand-housing-vouchers">https://www.cbpp.org/blog/final-2023-funding-bill-should-support-expand-housing-vouchers</a>.
---------------------------------------------------------------------------

In 2025 and beyond, there should continue to be opportunities in
the multifamily mortgage market to provide permanent financing for
properties with LIHTCs and to preserve existing affordable units, as
described above.
Maintaining the sound financial condition of the Enterprises. In
establishing multifamily housing goals benchmark levels for 2025-2027
in the final rule, FHFA must balance the role of the Enterprises 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 across economic cycles, and their
loans on affordable multifamily properties have experienced low levels
of delinquency and default that are similar to those of market rate
properties.
FHFA continues to monitor the activities of the Enterprises in this
market. As discussed above and consistent with the authorities
described in the Enterprise housing goals regulation, FHFA may take any
steps it determines necessary and appropriate after adoption of this
final rule to address the multifamily housing goals benchmark levels to
ensure the Enterprises' continued safety and soundness.
Past performance of the Enterprises. Before finalizing the
benchmark levels for the multifamily housing goals in this final rule,
FHFA reviewed any additional data (including Enterprise performance
after the proposed rule was published) that became available about the
performance of the Enterprises with regard to the multifamily housing
goals. For each multifamily housing goals benchmark level, FHFA
summarized the relevant performance of the Enterprises in the context
of that goal or subgoal discussed in section B. Multifamily Housing
Goals Benchmark Levels in the Final Rule--Sec. 1282.13.
Based on FHFA's consideration of the statutory factors described
above, any developments in the multifamily mortgage market, and
comments received on the proposed multifamily housing goals benchmark
levels, the final rule establishes the benchmark levels for the
multifamily housing goals, as further discussed below.

[[Page 106273]]

1. Multifamily Low-Income Housing Goal
The multifamily low-income housing goal is the percentage share of
all goal-eligible units in multifamily properties financed by mortgages
purchased by the Enterprises that are affordable to low-income families
in any given year. Low-income families are defined as those with
incomes less than or equal to 80 percent of AMI. The final rule sets
the annual benchmark level for this goal for 2025-2027 at 61 percent of
goal-eligible units acquired. This is the same benchmark level as in
the proposed rule and that was in place for the 2023-2024 housing goals
period. It is consistent with FHFA's analysis of the current and
expected multifamily market, which indicates fewer affordable units to
support, rising price per unit, and uncertain market conditions.

Table 8--Multifamily Low-Income Housing Goal
----------------------------------------------------------------------------------------------------------------
Historical performance
Year -------------------------------------------------------------------------------
2020 2021 2022 2023 2024 2025 2026 2027
----------------------------------------------------------------------------------------------------------------
Low-Income Multifamily Benchmark 315,000 315,000 415,000 61% 61% 61% 61% 61%
Level..........................
----------------------------------------------------------------------------------------------------------------
Fannie Mae Performance
----------------------------------------------------------------------------------------------------------------
Low-Income Multifamily Units.... 441,773 384,488 419,361 317,032 ........ ........ ........ ........
Total Multifamily Units......... 637,696 557,152 542,347 415,513 ........ ........ ........ ........
Low-Income % Total Units........ 69.3% 69.0% 77.3% 76.3% ........ ........ ........ ........
----------------------------------------------------------------------------------------------------------------
Freddie Mac Performance
----------------------------------------------------------------------------------------------------------------
Low-Income Multifamily Units.... 473,338 373,225 420,107 231,968 ........ ........ ........ ........
Total Multifamily Units......... 664,638 540,541 567,249 345,702 ........ ........ ........ ........
Low-Income % of Total Units..... 71.2% 69.0% 74.1% 67.1% ........ ........ ........ ........
----------------------------------------------------------------------------------------------------------------

Recent performance. Table 8 shows the annual share of goal-
qualifying low-income multifamily units in properties backing mortgages
acquired by each Enterprise from 2020 through 2023.\84\ In addition,
the historical performance share average for the pre-pandemic years of
2017-2019 would have been 65.1 percent for Fannie Mae and 67.3 percent
for Freddie Mac.\85\
---------------------------------------------------------------------------

\84\ 12 CFR 1282.16 (Special Counting Requirements).
\85\ See 87 FR 50800 (Aug. 18, 2022).
---------------------------------------------------------------------------

FHFA rationale. FHFA has considered the statutory factors for the
multifamily housing goals, including current market conditions, the
Enterprises' performance, and the Enterprises' role in the market, as
well as the public comments received (summarized in section II).
Several commenters supported the proposed benchmark level of 61 percent
for this goal, while other commenters recommended that FHFA establish a
higher benchmark level. FHFA remains concerned that elevated interest
rates are continuing to contribute to the increasing costs of owning
low-income multifamily units. FHFA also remains concerned that expected
declines in affordable originations and increases in rents are likely
to cause fewer units to qualify as affordable for low-income families.
These challenges are expected to persist in 2025-2027, as rent
increases and insufficient supply of affordable housing are likely to
result in more low-income families paying more than 30 percent of their
incomes for rent.\86\ In light of FHFA's consideration of the statutory
factors and the comments on the proposed goal, FHFA is adopting the
proposed benchmark level of 61 percent for this goal for 2025-2027 in
the final rule.
---------------------------------------------------------------------------

\86\ See ``The State of the Nation's Housing 2024,'' Joint
Center for Housing Studies of Harvard University, June 2024,
available at <a href="https://www.jchs.harvard.edu/state-nations-housing-2024">https://www.jchs.harvard.edu/state-nations-housing-2024</a>.
---------------------------------------------------------------------------

2. Multifamily Very Low-Income Housing Goal
The multifamily very low-income housing goal is the percentage
share of all goal-eligible units in multifamily properties financed by
mortgages purchased by the Enterprises that are affordable to very low-
income families in any given year. Very low-income families are defined
as those with incomes less than or equal to 50 percent of AMI. The
final rule sets the annual benchmark level for this goal for 2025-2027
at 14 percent of goal-eligible units acquired, which is the same as the
proposed benchmark level but higher than the current 12 percent
benchmark level applicable for the 2023-2024 housing goals period.

Table 9--Multifamily Very Low-Income Housing Goal
----------------------------------------------------------------------------------------------------------------
Historical performance
Year -------------------------------------------------------------------------------
2020 2021 2022 2023 2024 2025 2026 2027
----------------------------------------------------------------------------------------------------------------
Very Low-Income Multifamily 60,000 60,000 88,000 12% 12% 14% 14% 14%
Benchmark Level................
----------------------------------------------------------------------------------------------------------------
Fannie Mae Performance
----------------------------------------------------------------------------------------------------------------
Very Low-Income Multifamily 95,416 83,459 127,905 77,509 ........ ........ ........ ........
Units..........................
Total Multifamily Units......... 637,696 557,152 542,347 415,513 ........ ........ ........ ........
Very Low-Income % of Total Units 15.0% 15.0% 23.6% 18.7% ........ ........ ........ ........
----------------------------------------------------------------------------------------------------------------
Freddie Mac Performance
----------------------------------------------------------------------------------------------------------------
Very Low-Income Multifamily 107,105 87,854 127,733 71,217 ........ ........ ........ ........
Units..........................
Total Multifamily Units......... 664,638 540,541 567,249 345,702 ........ ........ ........ ........
Very Low-Income % of Total Units 16.1% 16.3% 22.5% 20.6% ........ ........ ........ ........
----------------------------------------------------------------------------------------------------------------

[[Page 106274]]

Recent performance. Table 9 shows the number and share of goal-
qualifying very low-income multifamily units as a percentage of the
total goal-eligible units in properties backing mortgages acquired by
each Enterprise. In addition, the historical performance share average
for the pre-pandemic years of 2017-2019 would have been 13.1 percent
for Fannie Mae and 15.6 percent for Freddie Mac.\87\
---------------------------------------------------------------------------

\87\ See 87 FR 50801 (Aug. 18, 2022).
---------------------------------------------------------------------------

FHFA rationale. 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 benchmark level for this goal that
are summarized in section II. As with the multifamily low-income
housing goal, several commenters thought that FHFA could slightly
increase the benchmark level for the multifamily very low-income
housing goal. As discussed above, FHFA remains concerned that elevated
interest rates and the severe disparity between demand and supply of
units affordable to very low-income renters are continuing to
contribute to the increasing costs of owning very low-income
multifamily units. These factors are expected to result in fewer units
that qualify as affordable for very low-income families. As a result,
FHFA believes that a benchmark level of 14 percent for this goal will
encourage the Enterprises to continue to adequately serve very low-
income families, while accounting for the challenges associated with
elevated interest rates, lower volume of loan transactions, and the
lack of affordable units in the multifamily market, as well as
continued uncertain economic conditions.
FHFA believes that raising the benchmark level for this goal from
the current 12 percent to 14 percent is appropriate and achievable
considering the past performance of the Enterprises on this goal.
Accordingly, FHFA is adopting the proposed benchmark level of 14
percent for this goal for 2025-2027 in the final rule.
3. Small Multifamily Low-Income Housing Subgoal
The current Enterprise housing goals regulation defines a small
multifamily property as having 5 to 50 units. The small multifamily
low-income housing subgoal is based on the share of units in small
multifamily properties affordable to low-income families as a
percentage of all goal-eligible units in all multifamily properties
financed by mortgages purchased by the Enterprises in a given year.
Low-income families are defined as those with incomes less than or
equal to 80 percent of AMI. The final rule sets the annual benchmark
level for this subgoal for 2025-2027 at 2 percent of goal-eligible
units acquired, as proposed, which is slightly lower than the current
2.5 percent benchmark level for the 2023-2024 housing goals period.
FHFA believes that with a 2 percent benchmark level, the Enterprises
will remain positioned to support this market when needed without
crowding out other sources of financing for small multifamily
properties.

Table 10--Small (5-50 Units) Multifamily Low-Income Subgoal
----------------------------------------------------------------------------------------------------------------
Historical performance
Year -------------------------------------------------------------------------------
2020 2021 2022 2023 2024 2025 2026 2027
----------------------------------------------------------------------------------------------------------------
Fannie Mae Small Low-Income 10,000 10,000 17,000 2.5% 2.5% 2.0% 2.0% 2.0%
Multifamily Benchmark Level....
Freddie Mac Small Low-Income 10,000 10,000 23,000 2.5% 2.5% 2.0% 2.0% 2.0%
Multifamily Benchmark Level....
----------------------------------------------------------------------------------------------------------------
Fannie Mae Performance
----------------------------------------------------------------------------------------------------------------
Small Low-Income Multifamily 21,797 14,409 21,436 13,241 ........ ........ ........ ........
Units..........................
Total Multifamily Units......... 637,696 557,152 542,347 415,513 ........ ........ ........ ........
Small Low-Income % of Total 3.4% 2.6% 4.0% 3.2% ........ ........ ........ ........
Units..........................
----------------------------------------------------------------------------------------------------------------
Freddie Mac Performance
----------------------------------------------------------------------------------------------------------------
Small Low-Income Multifamily 28,142 31,913 27,103 14,006 ........ ........ ........ ........
Units..........................
Total Multifamily Units......... 664,638 540,541 567,249 345,702 ........ ........ ........ ........
Small Low-Income % of Total 4.2% 5.9% 4.8% 4.1% ........ ........ ........ ........
Units..........................
----------------------------------------------------------------------------------------------------------------

Recent performance. Table 10 shows Enterprise performance on this
subgoal, including the previous numeric benchmark levels applicable
through 2022 and the percentage-based metric that began in 2023. FHFA
recognizes that the Enterprises have different business approaches to
the small multifamily market segment, and that each Enterprise sets its
own credit risk tolerance for these products. As a result, each
Enterprise has performed very differently on this subgoal. Since 2020,
Freddie Mac has exceeded Fannie Mae in terms of percentage share of
total units and volume of low-income units in small (5-50) multifamily
properties.
FHFA rationale. FHFA has considered the statutory factors for the
multifamily housing goals, the purpose of this subgoal, and the
comments received on the proposed benchmark level for this subgoal. As
noted in section II, several commenters supported the proposed
benchmark level of 2 percent, with one commenter noting that this
market segment is well-supported by private capital sources. Other
commenters disagreed with the proposed benchmark level, recommending
that FHFA raise or maintain the existing benchmark level. Both
Enterprises supported the proposed benchmark level, recognizing that
their role is to provide liquidity without crowding out the private
capital sources that have historically served this market segment.
FHFA has observed increased private sector financing for small
multifamily properties in recent years, and as a result, less activity
among secondary mortgage market participants. Therefore, FHFA believes
that a benchmark level of 2 percent should be adequate for the
Enterprises to support this market segment when needed without crowding
out other sources of financing for small multifamily properties.
Accordingly, FHFA is adopting the proposed benchmark level of 2 percent
for this goal for 2025-2027 in the final rule.

VII. Paperwork Reduction Act

The final rule does not contain any information collection
requirement that requires the approval of the Office of Management and
Budget (OMB) under the Paperwork Reduction Act (44 U.S.C. 3501 et
seq.). Therefore, FHFA has not

[[Page 106275]]

submitted the final rule to OMB for review.

VIII. 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. Such an analysis need not be
undertaken 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 final rule applies to Fannie Mae
and Freddie Mac, which are 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 the Office of Information and
Regulatory Affairs of OMB.

List of Subjects in 12 CFR Part 1282

Mortgages, Reporting and recordkeeping requirements.

Accordingly, for the reasons stated in the Preamble, FHFA amends
part 1282 of title 12 of the Code of Federal Regulations as follows:

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. 1282.1 by revising the definition of ``Designated
disaster area'' to read as follows:

Sec. 1282.1 Definitions.

* * * * *
Designated disaster area means any census tract that is located in
a county designated by the President as adversely affected by a
declared major disaster administered by FEMA under the Robert T.
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121
et seq.), where housing assistance payments were authorized by FEMA. A
census tract shall be treated as a ``designated disaster area'' for
purposes of this part beginning on the January 1 after the major
disaster declaration of the county, or such earlier date as determined
by FHFA, and continuing through December 31 of the third full calendar
year following the major disaster declaration. This time period may be
adjusted for a particular disaster area by notice from FHFA to the
Enterprises.
* * * * *

0
3. Amend Sec. 1282.11 by revising paragraph (a)(1) to read as follows:

Sec. 1282.11 General.

(a) * * *
(1) Three single-family owner-occupied purchase money mortgage
housing goals, two single-family owner-occupied purchase money mortgage
housing subgoals, a single-family refinancing mortgage housing goal,
two multifamily housing goals, and a multifamily housing subgoal;
* * * * *

0
4. Amend Sec. 1282.12 by revising paragraphs (c)(2), (d)(2),
(f)(2)(ii), (g)(2), and (h)(2) to read as follows:

Sec. 1282.12 Single-family housing goals and subgoals.

* * * * *
(c) * * *
(2) The benchmark level, which for 2025, 2026, and 2027 shall be 25
percent of the total number of purchase money mortgages purchased by
that Enterprise in each year that finance owner-occupied single-family
properties.
(d) * * *
(2) The benchmark level, which for 2025, 2026, and 2027 shall be 6
percent of the total number of purchase money mortgages purchased by
that Enterprise in each year that finance owner-occupied single-family
properties.
* * * * *
(f) * * *
(2) * * *
(ii) The benchmark level, which for 2025, 2026, and 2027 shall be 4
percent of the total number of purchase money mortgages purchased by
that Enterprise in each year that finance owner-occupied single-family
properties.
(g) * * *
(2) The benchmark level, which for 2025, 2026, and 2027 shall be 12
percent of the total number of purchase money mortgages purchased by
that Enterprise in each year that finance owner-occupied single-family
properties.
(h) * * *
(2) The benchmark level, which for 2025, 2026, and 2027 shall be 26
percent of the total number of refinancing mortgages purchased by that
Enterprise in each year that finance owner-occupied single-family
properties.

0
5. Revise Sec. 1282.13 to read as follows:

Sec. 1282.13 Multifamily housing goals and subgoal.

(a) Multifamily housing goals and subgoal. An Enterprise shall be
in compliance with a multifamily housing goal or subgoal if its
performance under the housing goal or subgoal meets or exceeds the
benchmark level for the goal or subgoal, respectively.
(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 2025, 2026, and
2027.
(c) Multifamily very 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 very low-income families shall meet or exceed 14 percent
of the total number of dwelling units in multifamily residential
housing financed by mortgages purchased by the Enterprise in each year
for 2025, 2026, and 2027.
(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 percent of the
total number of dwelling units in all multifamily residential housing
financed by mortgages purchased by the Enterprise in each year for
2025, 2026, and 2027.

0
6. Amend Sec. 1282.15 by:
0
a. In paragraph (b)(2), remove the first instance of ``subgoal'' and
add, in its place, ``subgoals'';
0
b. Revise the heading and the first sentence of paragraph (c);
0
c. In paragraphs (d)(1), (3), and (4) and (e)(3), remove the phrase
``housing goal and subgoals'' wherever it appears and add in its place
the phrase ``housing goals and subgoal'';
0
d. Revise the heading to paragraph (e); and
0
e. In paragraph (e)(2), remove the phrase ``housing goal or subgoals''
and add in its place the phrase ``housing goals or subgoal''.

[[Page 106276]]

The revisions read as follows:

Sec. 1282.15 General counting requirements.

* * * * *
(c) Calculating the numerator and denominator for multifamily
housing goals and subgoal. Performance under the multifamily housing
goals and subgoal shall be measured using a fraction that is converted
into a percentage. * * *
* * * * *
(e) Missing data or information for multifamily housing goals and
subgoal. * * *
* * * * *

0
7. Revise Sec. 1282.20 to read as follows:

Sec. 1282.20 Preliminary determination of compliance with housing
goals; notice of preliminary determination.

(a) Preliminary determination. On an annual basis, the Director
will evaluate each Enterprise's performance under each single-family
housing goal and subgoal and each multifamily housing goal and subgoal.
The Director will make a preliminary determination of whether an
Enterprise has failed, or there is a substantial probability that an
Enterprise will fail, to meet each housing goal or subgoal established
by this subpart.
(b) Notice of preliminary determination. The Director will provide
written notice to each Enterprise of the preliminary determination of
its performance under each housing goal and subgoal established by this
subpart, the reasons for such determination, and the information on
which the Director based the determination.
(c) Response by Enterprise. Any notification to an Enterprise of a
preliminary determination under this section will provide the
Enterprise with an opportunity to respond in writing in accordance with
the procedures at 12 U.S.C. 4566(b). Relevant information in a timely
written response from an Enterprise will be included in the information
the Director considers when making a final determination of housing
goals compliance under Sec. 1282.21.

Sec. 1282.21 [Redesignated as Sec. 1282.22]

0
8. Redesignate Sec. 1282.21 as Sec. 1282.22.

0
9. Add new Sec. 1282.21 to read as follows:

Sec. 1282.21 Final determination of compliance with housing goals;
notice of final determination.

(a) Final determination. On an annual basis, the Director will make
a final determination of each Enterprise's performance under each
single-family housing goal and subgoal and each multifamily housing
goal and subgoal. The final determination will address whether an
Enterprise has failed, or there is a substantial probability that an
Enterprise will fail, to meet any housing goal or subgoal and whether
the achievement of that housing goal or subgoal was or is feasible.
(b) Notice of final determination. The Director will provide each
Enterprise with written notification of the final determination. If the
Enterprise fails to meet any housing goal or subgoal, the notification
will specify whether the Enterprise is required to submit a housing
plan for approval under Sec. 1282.22.

0
10. Revise newly redesignated Sec. 1282.22 to read as follows:

Sec. 1282.22 Housing plans.

(a) General. If the Director determines that an Enterprise has
failed, or that there is a substantial probability that an Enterprise
will fail, to meet any housing goal or subgoal, and that the
achievement of the housing goal or subgoal was or is feasible, the
Director may require the Enterprise to submit a housing plan for
approval by the Director.
(b) Measurement buffers for 2025-2027. (1) Except as provided in
paragraph (b)(3) of this section, the Director will not require an
Enterprise to submit a housing plan based on the Enterprise's failure
to meet the single-family low-income families housing goal, the single-
family very low-income families housing goal, or the single-family
refinancing housing goal for the years 2025, 2026, or 2027, if:
(i) The share of the market as defined in Sec. 1282.12(b) for the
applicable goal is lower than the benchmark level for the goal; and
(ii) The Enterprise's performance meets or exceeds the share of the
market minus the measurement buffer for the applicable goal as defined
in paragraph (b)(2) of this section.
(2) The following measurement buffers apply for the years 2025,
2026, and 2027:
(i) For the single-family low-income families housing goal, 1.3
percentage points;
(ii) For the single-family very low-income families housing goal,
0.5 percentage points; and
(iii) For the single-family refinancing housing goal, 1.3
percentage points.
(3) The measurement buffers in this paragraph (b) will not apply to
a goal in 2027 if the Enterprise failed to meet that goal for each of
the previous two years.
(c) Nature of plan. If the Director requires a housing plan, the
housing plan must:
(1) Be feasible;
(2) Be sufficiently specific to enable the Director to monitor
compliance periodically;
(3) Describe the specific actions that the Enterprise will take in
a time period determined by the Director to improve the Enterprise's
performance under the housing goal or subgoal; and
(4) Address any additional matters relevant to the plan as
required, in writing, by the Director.
(d) Deadline for submission. The Enterprise shall submit the
housing plan to the Director within 45 days after issuance of a notice
requiring the Enterprise to submit a housing plan. The Director may
extend the deadline for submission of a plan, in writing and for a time
certain, to the extent the Director determines an extension is
necessary.
(e) Review of housing plans. The Director shall review and approve
or disapprove housing plans in accordance with 12 U.S.C. 4566(c)(4) and
(c)(5).
(f) Resubmission. If the Director disapproves an initial housing
plan submitted by an Enterprise, the Enterprise shall submit an amended
plan for approval or disapproval not later than 15 days after the
Director's disapproval of the initial plan; the Director may extend the
deadline if the Director determines an extension is in the public
interest. If an amended plan is not acceptable to the Director, the
Director may afford the Enterprise 15 days to submit additional
amendments to its plan for approval or disapproval.
(g) Enforcement of housing plans. If the Director requires an
Enterprise to submit a housing plan and the Enterprise refuses to
submit such a plan, submits an unacceptable plan, or fails to comply
with the plan, the Director may issue a cease and desist order in
accordance with 12 U.S.C. 4581, impose civil money penalties in
accordance with 12 U.S.C. 4585, or take any other action that the
Director determines to be appropriate, consistent with the Safety and
Soundness Act.

Sandra L. Thompson,
Director, Federal Housing Finance Agency.
[FR Doc. 2024-30793 Filed 12-27-24; 8:45 am]
BILLING CODE 8070-01-P

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Indexed from Federal Register on December 30, 2024.

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