Homebuyers, Owners, & Renters
      
      Homebuyers, Owners, and Renters

          
                        Business Partners
                  Single-Family Business

Helping lenders serve homebuyers and homeowners with affordable mortgages
    
          Multifamily Business

Financing for quality, affordable rental housing in every market, every day
    
          Capital Markets

Reducing risk and enhancing housing finance liquidity
          About Us
                toggle
                Who We Are
                                              toggle
                        Awards and Recognition
                                                      Diversity and Inclusion
                                                              toggle
                                Employee Resource Groups
                                                                      Progress With Purpose
                                                      Employee Code of Conduct
                                                      Community Engagement
                                                      History
                                      What We Do
                                              toggle
                        Duty to Serve
                                                              toggle
                                Manufactured Housing
                                                                      Affordable Housing Preservation
                                                                      Rural Housing
                                                                      Research Initiatives
                                                                      Colonias Investment Areas
                                                      Homeownership
                                                              toggle
                                Access to Mortgage Credit
                                                                      Restrictive Covenants
                                                      Innovation
                                                      Mortgage Finance in America
                                                      Financial Performance
                                                      Disaster Resiliency and Relief
                                                      Pilot Transparency
                                      Leadership Team
                                      Corporate Governance
                                              toggle
                        Corporate Governance Guidelines
                                                      Fannie Mae Charter
                                                      Board of Directors
                                                      Committees
                                                      Committee Charters
                                                      Code of Conduct
                                                      Bylaws
                                                      Contacting the Board of Directors
                                                      Housing Reports
                                      Investor Relations
                                              toggle
                        Quarterly and Annual Results
                                                      Annual Reports
                                                      SEC Filings
                                                              toggle
                                All SEC Filings
                                                                      Annual Filings
                                                                      Quarterly Filings
                                                                      Current Reports
                                                                      Section 16 Filings
                                                                      Proxy Filings
                                                      Additional Disclosures
                                                              toggle
                                Monthly Summary
                                                                      Capital Disclosures
                                                      Stock Information
                                                      Current Stock Information
                                                      Contact Information
                                      ESG
                                              toggle
                        Learn about our business
                                                      Environmental
                                                      Social
                                                              toggle
                                Equitable Housing Finance Plan
                                                      Governance
                                                      Sustainable Bonds
                                                              toggle
                                Green Bonds
                                                                      Social Bonds
                                                      Reports & Disclosures
                                                              toggle
                                2021 ESG Report
                                      Research & Insights
                                              toggle
                        Forecast
                                                              toggle
                                Monthly Archive
                                                                      Weekly Archive
                                                      Surveys & Indices
                                                              toggle
                                National Housing Survey
                                                                      Mortgage Lender Sentiment Survey
                                                                      Fannie Mae Home Price Index
                                                                      Refinance Application-Level Index
                                                                      Special Topics
                                                      Publications
                                                              toggle
                                Fannie Mae Working Papers
                                                                      Housing Insights
                                                                      Partner Research
                                                                      Publications Archive
                                                      Perspectives
                                                              toggle
                                Archive - 2020
                                                                      Archive - 2021
                                                                      Archive - 2022
                                                                      Archive - 2023
                                      Newsroom
                                              toggle
                        News
                                                      Media Resources
          
                        Careers
                toggle
                Our Teams
                                              toggle
                        Corporate Teams
                                                      Data & Analytics
                                                      Digital & Technology
                                                      Mortgage & Customer Solutions
                                                      Risk Management
                                      Life at Fannie Mae
                                      Diversity & Inclusion
                                      Benefits & Professional Development
                                      Campus
          
                        Contact Us
                      
            Google Translate Disclaimer
            The Google Translate feature is a third-party service that is available for informational purposes only. Fannie Mae is unable to guarantee the accuracy of any translation resulting from the tool and is not responsible for any event or damage that occurs as a result of using the translations generated by the Google Translate feature.
            OK
  Translate
        Translation Disclaimer
          Chinese, Traditional
            English
            Filipino
            Korean
            Spanish
            Vietnamese
 FM Site Nav
  

        

Homepage
                    
      Fannie Mae logo
    Toggle navigation
      Rent
                
                All Renter Resources
                                      The Rental Process
                                      Make Your Rent Count
                                      Credit Basics
                      
            Buy
                
                All Homebuyer Resources
                                      7 Steps to Homeownership
                                      HomeView Homeownership Education Course
                      
            Own
                
                All Homeowner Resources
                                      Make the Most of Your Home
                                      Refinancing Your Mortgage
                                      When It’s Time to Sell
                      
            Get Relief
                  Manage Financial Uncertainty

All Resources to Manage Financial Uncertainty

Help for Homeowners

Help for Renters

Protect Yourself from Fraud
    
          Recover from a Disaster

All Resources for Recovering from a Disaster

Recovery Assistance for Homeowners

Recovery Assistance for Renters

Protect Yourself from Fraud
                      
            Calculators & Tools
                
                All Calculators & Tools
                                      Tools for Renters
                                      Tools for Homebuyers
                                      Tools for Homeowners
                                      HomeView® Homeownership Education Course
                                      Glossary
                                      Mobile AppToggle search
 Skip to main content
          
    
    Home
                        Research and Insights
                        Perspectives
                        A Proposed Methodology for Single-Family Social Disclosure
    Perspectives Blog
A Proposed Methodology for Single-Family Social Disclosure
August 17, 2022
Laurel Davis
    Laurel Davis
    Senior Vice President – Environment, Social, and Governance (ESG)
              Devang Doshi
    Devang Doshi
    Senior Vice President, Capital Markets - Single-Family Products
              Nick Sapirie
    Nick Sapirie
    Fannie Mae Vice President, Capital Markets – Single-Family Products
Fannie Mae's mission is to facilitate equitable and sustainable access to homeownership and quality affordable rental housing across America. We are committed to promoting a stronger and more efficient housing system for all, which appropriately entails reducing housing inequities for underserved individuals and underserved markets. As a leading source of mortgage financing in the United States at the forefront of affordable housing, we purchase mortgages from lenders and help facilitate the flow of capital into the housing market by issuing and guaranteeing mortgage-related securities that are purchased by investors across the globe.

In recent years, socially conscious investors have expressed an increased interest to allocate capital in support of affordable housing and to provide access to credit for underserved individuals. And, as part of their analysis, investors seek additional information to guide their investment decisions. However, mortgage-related disclosures may present data privacy concerns; specifically, a potential risk that certain disclosed information may be combined with other publicly available data leading to the ability to identify individuals – in our case, individual borrowers. As one of the largest issuers of mortgage-backed securities (MBS) in the United States, Fannie Mae plays a delicate role, one that seeks to support the mortgage consumer, the mortgage investor, and the efficient functioning of the MBS market. Balancing investors' desire for information with the need to protect the privacy of the mortgage consumer requires creative solutions that consider both sets of stakeholders.

With this Perspectives article, we are introducing a proposed methodology for single-family social disclosure. It aims to provide investors with insights into socially oriented lending in a creative and unique way that is designed to help preserve the confidentiality of the mortgage consumer's personal information. This methodology was designed with investors' needs in mind. We encourage feedback and are excited to engage with market stakeholders in refining the methodology's design.

A Single-Family Social Index

At the core of the design are three key outcomes we seek to achieve with the Single-Family Social Index (Social Index).

**Prioritize the borrower.**A key objective is to work to protect borrower information while seeking to meet the needs of MBS investors.
	**Allow investors to identify pools with high concentrations of loans that meet certain social criteria.** Underpinning this proposal is the concept that social disclosures should facilitate the identification of MBS pools containing loans made to borrowers meeting certain social criteria such that market participants are empowered to invest in support of these lending activities. While a correlation with loan performance is likely, the proposal contemplates that it is not essential for social disclosures to optimize performance insights. At the same time, we recognize that historical performance analysis is necessary to support investor decision-making.
	**Propose a solution for the industry**, not just for Fannie Mae. Create a methodology that other Agency and non-Agency residential MBS issuers may desire to adopt, which in turn we hope will drive greater standardization for social investment in residential MBS and amplify the impact of these activities, furthering support for mortgage consumers.The Social Index is contemplated as a scoring system comprised of three dimensions for which socially minded investors have expressed interest: income, borrower, and property characteristics. We then further define these dimensions using eight objective criteria that reflect Fannie Mae mission-focused activities, the same criteria we use to engage our lender partners to expand homeownership to these individuals in these markets. These eight criteria (Exhibit 1) would be evaluated for each loan pooled in a majority of our Single-Family MBS. Any loan meeting one or more of the eight criteria would be deemed socially oriented for the purpose of this disclosure.

Exhibit 1. Proposed Social Index Dimensions and Criteria
Additionally, each loan would be assigned a score between zero (0) and three (3), reflecting the count of the three dimensions whose criteria are met by that loan. The Social Index is flexible, and the underlying criteria can be adjusted based on market feedback and as the focus of single-family social lending evolves.

To achieve the borrower privacy goals outlined above, neither the loan-level social scores, nor the borrower and geographical attributes used to generate them, would be made publicly available at the loan or pool-level. This mitigates the risk that additional disclosure elements might facilitate increased borrower identification from our disclosures or a combination of our disclosure with other third-party sources and helps avoid exposing this borrower information.

Rather, the loan-level social scores would be used to compute two pool-level values that measure the underlying mortgage loan collateral based on these criteria, while helping protect borrower privacy and meeting investors' needs to identify pools with high concentrations of loans with such criteria. The two pool-level values envisioned are:

Social Criteria Share (SCS): a number reflecting the share of the pool (by loan count) meeting any of the social criteria.
	Social Density Score (SDS): an aggregate average of the loan-level scores, capturing layering of social attributes and, thus, concentration of socially oriented lending activities.Let us walk through an example. The table below illustrates a hypothetical pool of 10 loans. Nine loans meet one or more of the social criteria and are thus deemed loans that are socially oriented in this construct. This yields a 90% SCS. When grouped among the three dimensions, these same social criteria result in loan-level social scores between 0 and 3. The average for these 10 loans is 1.5, which is the SDS for the pool.




Click image above for larger view

Cornerstones of the Design

**Prioritize the Borrower**

Fannie Mae is required by law to disclose to potential investors information related to the mortgage securities that it issues to the public. Since our first MBS issuance in 1981 and our first credit risk transfer (CRT) issuance in 2013, the amount of information that Fannie Mae makes available to the public with respect to the underlying mortgage loans backing these securities has steadily increased. At the same time, mortgage-related disclosures may present data privacy concerns; specifically, a potential risk that certain disclosed information may be combined with other publicly available data, potentially enabling third parties to identify the specific individuals — in our case, individual borrowers. We describe these unique challenges in more detail in Disclosure and Privacy: A Delicate Balance.

**Allow investors to identify pools with high concentrations of loans that meet certain social criteria**

By publishing insights at an index level, we seek to ensure consistency with the spirit of social investing, creating an investment vehicle that enables investors to express a preference for supporting socially oriented lending activities, rather than providing loan-level social disclosures that prioritize potential performance insights.

We do recognize the importance of understanding historical performance correlations with the proposed scores. Along with providing this disclosure on newly issued pools, we would plan to release this disclosure on historical pools to support the market in its analysis of historical performance relationships with the SCS and SDS.

**Propose a solution for the industry**

We seek to develop a solution that encourages more socially oriented lending across the mortgage industry. We have aimed to design the dimensions and criteria in the Social Index to encourage adoption by other Agency and non-Agency residential mortgage-backed securities issuers should they choose. We hope that broad industry adoption of this framework would create greater standardization for social investment in RMBS, amplify the impact of socially oriented lending, and further support mortgage consumers. While we envision beginning implementation with MBS, similar disclosure could be considered for CRT securities in the future.

In addition to supporting investors in determining which pools may meet their socially minded investment criteria, the Social Index could provide a thoughtful roadmap for issuers to bring labeled Single-Family Social Bonds to market with an approach that protects borrower privacy while seeking to meet investors' desire for expanded social disclosure.

Market Feedback

Our desire with this proposed solution is to develop the most responsible way to provide investors with insights while reducing the potential impacts on the privacy of the mortgage consumer, and to ensure industry alignment. Helpful conversations with investors and other market participants have influenced the proposed design of the Single-Family Social Index. With the release of this Perspective and Social Index methodology we aim to engage with investors and other MBS issuers to solicit feedback over the coming months prior to implementation and will work with FHFA to address investor and issuer feedback ahead of and pending FHFA approval.

TOPICS
  
Fannie Mae Corporate
  
  
      Twitter
              Facebook
              Linkedin
              Email
Research and Insights
                                                              Forecast
                                    Surveys & Indices
                                    Publications
                                    Perspectives
                                                              Archive - 2024
                                    Archive - 2023
                                    Archive - 2022
                                    Archive - 2021

**Related Links**

Single-Family Mission Index
	PoolTalk

Our Company
    About Us
      Contact Us
      Careers
      Investor Relations
      Newsroom
      Research & Insights
      ESG
  Business Partners
    Single-Family Business
      Multifamily Business
      Capital Markets
	      Suppliers
      Developer Portal
  Homebuyers, Owners, & Renters
    Educational Resources
      Credit Basics
      HomeView Homeownership Education Course
      HomePath - Search for Homes
      Make Your Rent CountCalculators & Tools
      All Calculators and Tools      Glossary of Key Terms
      Mortgage Calculator
      Down Payment Assistance Search Tool
      Mobile AppLet Us Help You
      Contact a Housing Counselor
      Manage Financial Uncertainty
      Recover from a Disaster
    
    
  

      
Social media
  

        
            Follow us
          Follow us
          Facebook
          Twitter
          LinkedIn
          Instagram
    Footer
  

        
            Legal
          Privacy
          Digital Accessibility
                Cookie Preferences
            © 2024 Fannie Mae