`[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 [www.gpo.gov]
[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 
[email protected]. For technical questions, please contact 
Padmasini Raman, Supervisory Policy Analyst, Housing & Community 
Investment, Division of Housing Mission and Goals, (202) 649-3633, 
[email protected]; or Carey Whitehead, Assistant General 
Counsel, Office of General Counsel, (202) 649-3630, 
[email protected]. 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 https://www.huduser.gov/portal/pdredge/pdr_edge_featd_article_092214.html 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 
https://www.fhfa.gov/regulation/federal-register/proposed-rulemaking/2025-2027-enterprise-housing-goals.
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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 https://www.fhfa.gov/news/fact-sheet/2025-multifamily-loan-purchase-caps-for-fannie-mae-and-freddie-mac.
---------------------------------------------------------------------------

    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 https://www.fhfa.gov/sites/default/files/2024-06/2024-Low-Income-Areas-Goal-Fannie-Mae.pdf and https://www.fhfa.gov/sites/default/files/2024-06/2024-Low-Income-Areas-Goal-Freddie-Mac.pdf.
---------------------------------------------------------------------------

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 https://www.fhfa.gov/research/papers/2025-2027-enterprise-single-family-housing-goals-12-2024.
---------------------------------------------------------------------------

    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\ https://www.federalreserve.gov/newsevents/pressreleases/monetary20240918a.htm.
    \32\ https://www.federalreserve.gov/newsevents/pressreleases/monetary20241107a.htm.
---------------------------------------------------------------------------

    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 https://www.fhfa.gov/data/hpi/datasets?tab=hpi-datasets.
    \34\ FHFA, ``FHFA House Price Index Report--Monthly Report,'' 
October 2024, available at https://www.fhfa.gov/sites/default/files/2024-11/FHFA-HPI-Monthly_10292024.pdf.
    \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 
https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2024.pdf.
    \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 https://fred.stlouisfed.org/series/ACTLISCOUUS.
    \41\ Exploring 2023's Housing Trends and Challenges [verbar] 
Housing Matters,'' Urban Institute, January 31, 2024, available at 
https://housingmatters.urban.org/research-summary/exploring-2023s-housing-trends-and-challenges.
    \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 https://www.urban.org/sites/default/files/2024-10/Housing-Finance-At-A-Glance-Monthly-Chartbook-October-2024.pdf.
---------------------------------------------------------------------------

    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 https://www.consumerfinance.gov/data-research/hmda/summary-of-2022-data-on-mortgage-lending/.
    \44\ ``Summary of 2023 Data on Mortgage Lending,'' Consumer 
Financial Protection Bureau, July 11, 2024, available at https://www.consumerfinance.gov/data-research/hmda/summary-of-2023-data-on-mortgage-lending/.
    \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 https://www.nar.realtor/sites/default/files/documents/2023-home-buyers-and-sellers-generational-trends-report-03-28-2023.pdf.
    \48\ Ibid.
    \49\ NAR, ``2024 Home Buyers and Sellers Generational Trends 
Report,'' 2024, p. 8, available at https://www.nar.realtor/sites/default/files/documents/2024-home-buyers-and-sellers-generational-trends-04-03-2024.pdf.
    \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 https://www.jchs.harvard.edu/blog/number-of-u-s-households-projected-to-increase-by-12-2-million-in-the-next-decade.
---------------------------------------------------------------------------

    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 https://www.fhfa.gov/sites/default/files/2024-11/2023-Final-Determination-Letter-Fannie-Mae.pdf.
---------------------------------------------------------------------------

    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 https://files.consumerfinance.gov/f/documents/cfpb_data-point-mortgage-market-activity-trends_report_2023-09.pdf; 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 https://www.jchs.harvard.edu/blog/home-price-income-ratio-reaches-record-high-0; 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 https://www.novoco.com/notes-from-novogradac/hud-publishes-fy-2022-income-limits-99-counties-will-see-increase.
    \54\ See https://transition.fcc.gov/form477/Geo/more_about_2020_census_tracts.pdf.
    \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 https://www.fema.gov/disasters.
---------------------------------------------------------------------------

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 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.
    \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 https://www.nmhc.org/research-insight/quick-facts-figures/quick-facts-resident-demographics/household-characteristics.
---------------------------------------------------------------------------

    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 https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_Americas_Rental_Housing_2024.pdf.
    \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 https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_Americas_Rental_Housing_2024.pdf.
    \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 
https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2024.pdf.
    \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 https://www.urban.org/sites/default/files/publication/48986/2000174-The-GSEs-Shrinking-Role-in-the-Multifamily-Market.pdf.
    \79\ ``Multifamily Business Information Presentation,'' Fannie 
Mae, November 2024, p. 3, available at https://multifamily.fanniemae.com/media/37196/display.
    \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 https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_Americas_Rental_Housing_2024.pdf.
    \83\ Sonya Acosta, ``Final 2023 Funding Bill Should Support, 
Expand Housing Vouchers. Center on Budget and Policy Priorities'', 
December 2022, available at https://www.cbpp.org/blog/final-2023-funding-bill-should-support-expand-housing-vouchers.
---------------------------------------------------------------------------

    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 https://www.jchs.harvard.edu/state-nations-housing-2024.
---------------------------------------------------------------------------

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`