[Federal Register Volume 86, Number 162 (Wednesday, August 25, 2021)]
[Proposed Rules]
[Pages 47398-47417]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-18008]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 86, No. 162 / Wednesday, August 25, 2021 / 
Proposed Rules

[[Page 47398]]



FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1282

RIN 2590-AB12


2022-2024 Enterprise Housing Goals

AGENCY: Federal Housing Finance Agency.

ACTION: Proposed rule.

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SUMMARY: The Federal Housing Finance Agency (FHFA) is issuing a 
proposed rule with request for comments on the housing goals for Fannie 
Mae and Freddie Mac (the Enterprises) for 2022 through 2024. The 
Federal Housing Enterprises Financial Safety and Soundness Act of 1992 
(the Safety and Soundness Act) requires FHFA to establish annual 
housing goals for mortgages purchased by the Enterprises. The housing 
goals include separate categories for single-family and multifamily 
mortgages on housing that is affordable to low-income and very low-
income families, among other categories. The existing housing goals for 
the Enterprises include benchmark levels through the end of 2021. This 
proposed rule would establish new benchmark levels for the housing 
goals and subgoals for 2022 through 2024. The proposed rule would also 
replace the low-income areas subgoal with separate area-based subgoals 
targeting the individual components of the low-income areas subgoal 
(minority census tracts and low-income census tracts). Finally, the 
proposed rule would make several technical changes to definitions and 
other provisions to conform the regulation to existing practice.

DATES: FHFA will accept written comments on the proposed rule on or 
before October 25, 2021.

ADDRESSES: You may submit your comments on the proposed rule, 
identified by regulatory information number (RIN) 2590-AB12, by any one 
of the following methods:
    <bullet> Agency Website: www.fhfa.gov/open-for-comment-or-input.
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments. If you submit your 
comment to the Federal eRulemaking Portal, please also send it by email 
to FHFA at <a href="/cdn-cgi/l/email-protection#7f2d1a183c1012121a110b0c3f1917191e51181009"><span class="__cf_email__" data-cfemail="f1a39496b29e9c9c949f8582b197999790df969e87">[email protected]</span></a> to ensure timely receipt by FHFA. 
Include the following information in the subject line of your 
submission: Comments/RIN 2590-AB12.
    <bullet> Hand Delivered/Courier: The hand delivery address is: 
Clinton Jones, General Counsel, Attention: Comments/RIN 2590-AB12, 
Federal Housing Finance Agency, 400 Seventh Street SW, Washington, DC 
20219. Deliver the package at the Seventh Street entrance Guard Desk, 
First Floor, on business days between 9 a.m. and 5 p.m.
    <bullet> U.S. Mail, United Parcel Service, Federal Express, or 
Other Mail Service: The mailing address for comments is: Clinton Jones, 
General Counsel, Attention: Comments/RIN 2590-AB12, Federal Housing 
Finance Agency, 400 Seventh Street SW, Washington, DC 20219. Please 
note that all mail sent to FHFA via U.S. Mail is routed through a 
national irradiation facility, a process that may delay delivery by 
approximately two weeks.

FOR FURTHER INFORMATION CONTACT: Ted Wartell, Associate Director, 
Housing & Community Investment, Division of Housing Mission and Goals, 
(202) 649-3157, <a href="/cdn-cgi/l/email-protection#a2f6c7c68cf5c3d0d6c7cecee2c4cac4c38cc5cdd4"><span class="__cf_email__" data-cfemail="f5a19091dba2948781909999b5939d9394db929a83">[email protected]</span></a>; Padmasini Raman, Supervisory 
Policy Analyst, Housing & Community Investment, Division of Housing 
Mission and Goals, (202) 649-3633, <a href="/cdn-cgi/l/email-protection#9bcbfafff6fae8f2f5f2b5c9faf6faf5dbfdf3fdfab5fcf4ed"><span class="__cf_email__" data-cfemail="0c5c6d68616d7f656265225e6d616d624c6a646a6d226b637a">[email protected]</span></a>; Kevin 
Sheehan, Associate General Counsel, Office of General Counsel, (202) 
649-3086, <a href="/cdn-cgi/l/email-protection#ace7c9dac5c282ffc4c9c9c4cdc2eccac4cacd82cbc3da"><span class="__cf_email__" data-cfemail="d49fb1a2bdbafa87bcb1b1bcb5ba94b2bcb2b5fab3bba2">[email protected]</span></a>; or Marshall Adam Pecsek, Assistant 
General Counsel, (202) 649-3380, <a href="/cdn-cgi/l/email-protection#64290516170c0508084a34010717010f24020c02054a030b12"><span class="__cf_email__" data-cfemail="317c50434259505d5d1f61545242545a71575957501f565e47">[email protected]</span></a>. These are 
not toll-free numbers. The mailing address is: Federal Housing Finance 
Agency, 400 Seventh Street SW, Washington, DC 20219. The telephone 
number for the Telecommunications Device for the Deaf is (800) 877-
8339.

SUPPLEMENTARY INFORMATION:

I. Comments

    FHFA invites comments on all aspects of the proposed rule and will 
take all comments germane to the proposed rule into consideration 
before issuing a final rule. Copies of all such comments will be posted 
without change, including any personal information you provide such as 
your name, address, email address, and telephone number, on FHFA's 
public website at http://www.fhfa.gov. In addition, copies of all such 
comments received will be available for examination by the public 
through the electronic rulemaking docket for this proposed rule also 
located on the FHFA website.
    Commenters are encouraged to review and comment on all aspects of 
the proposed rule, including the proposed single-family housing goals 
and subgoals benchmark levels, the proposed multifamily housing goals 
benchmark levels, and the other proposed changes to the regulation.

II. Background

A. Statutory and Regulatory Background for the Existing Housing Goals

    The Safety and Soundness Act requires FHFA to establish several 
annual housing goals for both single-family and multifamily mortgages 
purchased by the Enterprises.\1\ The 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\ See 12 U.S.C. 4561(a).
    \2\ See 12 U.S.C. 4501(7).
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    Since 2010, FHFA has established annual housing goals for 
Enterprise purchases of single-family and multifamily mortgages 
consistent with the requirements of the Safety and Soundness Act. The 
structure of the housing goals and the rules for determining how 
mortgage purchases are counted or not counted are defined in the 
housing goals regulation.\3\ The most recent rule established benchmark 
levels for the housing goals for 2021.\4\

[[Page 47399]]

This proposed rule would establish benchmark levels for 2022-2024.
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    \3\ See 12 CFR part 1282.
    \4\ See 85 FR 82881 (Dec. 21, 2020). Prior to the rule 
establishing housing goals for 2021, the most recent rule 
establishing Enterprise housing goals applied to years 2018 through 
2020. See 83 FR 5878 (Feb. 12, 2018). The 2020 final rule extended 
the housing goals benchmark levels applicable to 2018-2020 through 
2021 only, a departure from historical FHFA practice of establishing 
goals at three-year intervals. As stated in the preamble to the 2020 
final rule, this choice was motivated by the unique market 
conditions created by the COVID-19 pandemic. 85 FR at 82881 (``Due 
to the severe nature of the COVID-19 pandemic and associated 
economic uncertainty, FHFA is establishing benchmark levels for the 
Enterprise single-family and multifamily housing goals for calendar 
year 2021 only.'')
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    Single-family goals. The single-family 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.\5\ The Safety and Soundness 
Act defines ``low-income area'' \6\ to 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); \7\ (2) 
families with incomes less than or equal to 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); \8\ and (3) families with incomes less than or equal to 100 
percent of AMI who reside in designated disaster areas.\9\ The 
Enterprise housing goals regulation also includes a subgoal, within the 
low-income areas goal, that is limited to families in low-income census 
tracts and moderate-income families in minority census tracts.\10\ FHFA 
is proposing a change to the structure of the low-income areas subgoal, 
as further discussed in Section III.A. below. Performance on the 
single-family home purchase goals 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 
refinancing mortgages for low-income families, and performance on the 
refinancing goal is determined in a similar way.
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    \5\ 12 U.S.C. 4562(a)(1).
    \6\ 12 U.S.C. 4502(28).
    \7\ 12 U.S.C. 4502(28); 12 CFR 1282.1 (par. (i) of definition of 
``families in low-income areas'').
    \8\ 12 U.S.C. 4502(29); 12 CFR 1281.1 (par. (ii) of definition 
of ``families in low-income areas'' and definition of ``minority 
census tract'').
    \9\ 12 U.S.C. 4502(28); 12 CFR 1281.1 (definition of 
``designated disaster area'' and par. (iii) of definition of 
``families in low-income areas'').
    \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 total. The single-family goals cover conventional, conforming 
mortgages, defined as mortgages that are not insured or guaranteed by 
the Federal Housing Administration or another government agency and 
with principal balances that do not exceed the conforming loan limits 
for Enterprise mortgages.
    Two-part evaluation approach. The performance of the Enterprises on 
the housing goals is evaluated using a two-part approach, comparing the 
goal-qualifying share of the Enterprise's mortgage purchases to two 
separate measures: A benchmark level and a market level. In order to 
meet a single-family housing goal, the percentage of mortgage purchases 
by an Enterprise that meet 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.\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 (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 (PLS), although very 
few such securities have been issued for conventional conforming 
mortgages since 2008.
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    \11\ See 12 U.S.C. 4562(e).
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    While both the benchmark level and the retrospective market level 
are designed to measure the current year's mortgage originations, the 
performance of the Enterprises on the housing goals includes all 
Enterprise purchases in that year, regardless of the year in which the 
loan was originated. This includes providing housing goals credit when 
the Enterprises acquire qualified seasoned loans. (Seasoned loans are 
loans that were originated in prior years and acquired by the 
Enterprise in the current year.)
    Multifamily goals. The multifamily goals defined under the Safety 
and Soundness Act include categories for mortgages on multifamily 
properties (properties with five or more units) with rental units 
affordable to low-income families and mortgages on multifamily 
properties with rental units affordable to very low-income families. 
The Enterprise housing goals regulation also includes a small 
multifamily low-income subgoal for properties with 5-50 units. The 
multifamily housing goals include all Enterprise multifamily mortgage 
purchases, regardless of the purpose of the loan. The multifamily goals 
evaluate the performance of the Enterprises based on numeric targets, 
not percentages, for the number of affordable units in properties 
backed by mortgages purchased by an Enterprise. The Enterprise housing 
goals regulation does not include a retrospective market level measure 
for the multifamily goals, due in part to a lack of comprehensive data 
about the multifamily market. As a result, FHFA currently measures 
Enterprise multifamily goals performance against the benchmark levels 
only.
    The Safety and Soundness Act requires that affordability for rental 
units under the multifamily 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.'' \12\ The Enterprise housing goals regulation 
considers the net rent paid by the renter and, therefore, nets out any 
subsidy payments that the renter may receive, including housing 
assistance payments.
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    \12\ See 12 U.S.C. 4563(c). This affordability definition is 
sometimes referred to as the ``Brooke Amendment,'' which states that 
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.
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B. Adjusting the Housing Goals

    If, after publication of the final rule establishing the housing 
goals for 2022-2024, FHFA determines that any of the single-family or 
multifamily housing goals should be adjusted in light of market 
conditions, to ensure the safety and soundness of the Enterprises, or 
for any other reason, FHFA will take any steps that are necessary and 
appropriate to adjust that goal such as reducing the benchmark level 
through the processes in the existing regulation. FHFA may take other 
actions consistent with the Safety and Soundness Act and the Enterprise 
housing goals regulation based on new information or developments that 
occur after publication of the final rule.
    For example, under the Safety and Soundness Act and the Enterprise 
housing goals regulation, FHFA may reduce the benchmark levels in 
response to an Enterprise petition for reduction for any of the single-
family or multifamily housing goals in a particular year based on a 
determination by FHFA that: (1) Market and economic conditions or the 
financial condition of the Enterprise require a reduction; or (2)

[[Page 47400]]

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.\13\
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    \13\ See 12 CFR 1282.14(d).
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    The Safety and Soundness Act and the Enterprise housing goals 
regulation also take into account the possibility that achievement of a 
particular housing goal may or may not have been feasible for an 
Enterprise to achieve. If FHFA determines that a housing goal was not 
feasible for an Enterprise to achieve, then the statute and regulation 
provide for no further enforcement of that housing goal for that 
year.\14\
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    \14\ See 12 CFR 1282.21(a); 12 U.S.C. 4566(b).
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    If FHFA determines that an Enterprise failed to meet a housing goal 
and that achievement of the housing goal 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.

C. Housing Goals Under Conservatorship

    On September 6, 2008, FHFA placed each Enterprise into 
conservatorship. Although the Enterprises remain in conservatorship at 
this time, they continue to have the mission of supporting a stable and 
liquid national market for residential mortgage financing. FHFA has 
continued to establish annual housing goals for the Enterprises and to 
assess their performance under the housing goals each year during 
conservatorship.

III. Summary of Proposed Rule

A. Benchmark Levels for the Single-Family Housing Goals

    This proposed rule would establish the benchmark levels for the 
existing single-family housing goals for 2022-2024 as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                                     Proposed
                                                                                      Current        benchmark
                     Goal                                   Criteria                 benchmark    level for 2022-
                                                                                  level for 2021  2024 (percent)
                                                                                     (percent)
----------------------------------------------------------------------------------------------------------------
Low-Income Home Purchase Goal.................  Home purchase mortgages on                    24              28
                                                 single-family, owner-occupied
                                                 properties, to borrowers with
                                                 incomes no greater than 80 of
                                                 area median income (AMI).
Very Low-Income Home Purchase Goal............  Home purchase mortgages on                     6               7
                                                 single-family, owner-occupied
                                                 properties, to borrowers with
                                                 incomes no greater than 50 of
                                                 AMI.
Low-Income Refinancing Goal...................  Refinancing mortgages on single-              21              26
                                                 family, owner-occupied
                                                 properties, to borrowers with
                                                 incomes no greater than 80 of
                                                 AMI.
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    The proposed rule would replace the existing low-income areas 
subgoal with two new area-based subgoals and corresponding benchmark 
levels. Implementation of the two new subgoals would modify the 
methodology for measuring the Enterprises' performance in these areas. 
The first of the proposed subgoals would establish a benchmark level 
for Enterprise purchases of mortgage loans on properties in minority 
census tracts, made to borrowers with incomes no greater than 100 
percent of AMI. The second of the proposed subgoals would establish a 
benchmark level for Enterprise purchases of (i) mortgage loans on 
properties in low-income census tracts that are not minority census 
tracts, as well as (ii) mortgage loans on properties in low-income 
census tracts that are minority census tracts, made to families with 
incomes greater than 100 percent of AMI. The proposed rule would 
establish the new subgoal benchmark levels for 2022-2024 as follows:

------------------------------------------------------------------------
                                                             Proposed
                                                             benchmark
              Subgoal                     Criteria        level for 2022-
                                                          2024 (percent)
 
------------------------------------------------------------------------
Minority Census Tracts Subgoal....  Home purchase                     10
                                     mortgages on single-
                                     family, owner-
                                     occupied properties
                                     to borrowers with
                                     income no greater
                                     than 100 percent of
                                     AMI in minority
                                     census tracts.\1\
Low-Income Census Tracts Subgoal..  (i) Home purchase                 4
                                     mortgages on single-
                                     family, 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.

    In addition, FHFA will continue to establish by notice to the 
Enterprises an annual benchmark level for the low-income areas housing 
goal that takes into account loans from disaster areas. The proposed 
rule would make one clarifying change to the definition of ``designated 
disaster area,'' as described below.

B. Proposed Benchmark Levels for the Multifamily Housing Goals

    The proposed rule would establish the benchmark levels for the

[[Page 47401]]

multifamily goal and subgoals for 2022-2024 as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                                     Proposed
                                                                                      Current        benchmark
                     Goal                                   Criteria                 benchmark    level for 2022-
                                                                                  level for 2021   2024 (units)
                                                                                      (units)
----------------------------------------------------------------------------------------------------------------
Low-Income Goal...............................   affordable to families with             315,000         415,000
                                                 incomes no greater than 80
                                                 percent of AMI in multifamily
                                                 rental properties with
                                                 mortgages purchased by an
                                                 Enterprise.
Very Low-Income Subgoal.......................   affordable to families with              60,000          88,000
                                                 incomes no greater than 50
                                                 percent of AMI in multifamily
                                                 rental properties with
                                                 mortgages purchased by an
                                                 Enterprise.
Small Multifamily Low-Income Subgoal..........   affordable to families with              10,000          23,000
                                                 incomes no greater than 80
                                                 percent of AMI in small
                                                 multifamily rental properties
                                                 (5 to 50 ) with mortgages
                                                 purchased by an Enterprise.
----------------------------------------------------------------------------------------------------------------

C. Other Proposed Changes

    The proposed rule would make minor technical changes to some 
regulatory definitions and counting rules. These changes would be non-
substantive changes intended to conform the regulation to existing FHFA 
practices in measuring the performance of the Enterprises under the 
housing goals.

D. Summary of Responses to the ANPR and Public Listening Session

    In December 2020, FHFA published an Advance Notice of Proposed 
Rulemaking (ANPR) requesting public comment on several questions 
related to potential changes to the Enterprise housing goals 
regulation.\15\ FHFA invited comments in the ANPR on four specific 
questions identified below, as well as on any other issues that 
commenters thought should be addressed as part of the rulemaking to 
establish the housing goals benchmark levels for 2022 and beyond.
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    \15\ See 85 FR 82965 (Dec. 21, 2020).
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    FHFA also held a public listening session in March 2021 to solicit 
additional input on the Enterprise housing goals regulation. FHFA 
received 16 letters in response to the ANPR and heard from 12 external 
speakers during the listening session. The comments provided through 
the letters and by the speakers addressed a range of topics related to 
the Enterprise housing goals and access to mortgages for low-income 
borrowers. FHFA appreciates the time and effort that commenters put 
into responses and has incorporated elements of the feedback received 
into the proposed rule. Some of the topics raised in the comments 
require further research or analysis, and FHFA may consider these 
issues in future rulemaking cycles. A summary of the comments received 
is included below. All comments received, as well as the transcript of 
the public listening session, are available at FHFA's website.\16\
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    \16\ See https://www.fhfa.gov/Videos/Pages/FHFA-Public-Listening-Session-Enterprise-Housing-Goals-ANPR.aspx.
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    Question 1: Are there categories of loans that should be excluded 
from receiving housing goals credit under the Federal Housing 
Enterprises Financial Safety and Soundness Act of 1992 (Safety and 
Soundness Act) provisions on ``unacceptable business and lending 
practices''?
    Numerous commenters opposed excluding loans from receiving housing 
goals credit because of certain credit or underwriting features like 
loan-to-value or debt-to-income ratios. Several commenters stressed 
their belief that loans that meet safety and soundness standards and 
are eligible for purchase by the Enterprises should be eligible for 
housing goals credit. In addition, many of the commenters argued that 
loans that are eligible for Qualified Mortgage (QM) status should also 
be eligible for housing goals credit. Two commenters stressed that FHFA 
should not exclude particular categories of loans from receiving 
housing goals credit unless the performance of the loan products is 
unsustainable. Other commenters supported excluding certain loans from 
receiving housing goals credit. For example, one commenter argued that 
mortgages with loan-level pricing adjustments should not receive 
credit. Another commenter recommended that FHFA require the Enterprises 
to use a historical mortgage default rate matrix to limit certain types 
of acquisitions.
    Several commenters expressed concerns about the January 2021 
amendments to the Senior Preferred Stock Purchase Agreements between 
the Enterprises and the U.S. Department of the Treasury (PSPAs), which 
place new limits on risk-layering in loans eligible for purchase by the 
Enterprises. The commenters stressed the potential negative impact the 
amendments to the PSPAs could have on communities and borrowers of 
color and encouraged FHFA to evaluate the effect of the new 
restrictions on the housing goals. The commenters also requested that 
FHFA provide more data on the impact of the housing goals by income and 
race or ethnicity in light of the changes to the PSPAs. One commenter 
requested that FHFA conduct annual evaluations of how its policies, 
including the PSPAs, impact the ability of the Enterprises to meet the 
housing goals and satisfy their charter missions. Several commenters 
raised concerns about the Enterprises' ability to meet the housing 
goals in light of FHFA's recently adopted capital regulation, which 
they believe will increase mortgage costs and, in turn, decrease access 
to mortgage credit for lower-income or lower-wealth borrowers and 
borrowers of color.
    Question 2: Are there ways to determine whether the low-income 
areas home purchase subgoal has resulted in the displacement of 
residents from certain communities, or to measure the extent of any 
such displacement? Should FHFA consider modifying the low-income areas 
home purchase subgoal to address such concerns? If so, how?
    FHFA provided an analysis of whether the low-income areas home 
purchase subgoal has resulted in the displacement of residents from 
certain communities in the ANPR based on HMDA data. The data showed 
that both low-income areas and high-minority areas have increasing 
shares of borrowers with incomes at or above 100 percent of AMI.\17\ 
The data also showed that the share of loans made to borrowers with 
incomes greater than 100 percent of AMI and residing in low-income 
census tracts increased from

[[Page 47402]]

40.7 percent in 2010 to 42.8 percent in 2016, but declined to a low of 
37 percent in 2019. Numerous commenters broadly agreed with the 
description of trends provided in the ANPR and encouraged FHFA to 
continue to provide data on this issue. A few commenters requested that 
FHFA provide additional data pertaining to the race and ethnicity of 
borrowers for loans that meet this subgoal. Two commenters recommended 
that FHFA analyze Census Bureau data over the next five years in an 
effort to determine if displacement is occurring in certain 
communities. Another commenter recommended that FHFA, in coordination 
with other regulators, monitor home sales prices, resident incomes, and 
other data to determine the impact of the subgoal.
---------------------------------------------------------------------------

    \17\ Note that loans to borrowers with incomes over 100 percent 
of AMI do not qualify for the minority areas component of the 
subgoal.
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    Although one commenter recommended leaving the subgoal in its 
current form, citing its benefits to socioeconomic diversity, several 
commenters expressed concern about the Enterprises receiving housing 
goals credit for loans to borrowers who meet no standard other than 
living in a low-income area. A number of commenters recommended that 
FHFA continue to monitor and analyze trends regarding whether the low-
income areas home purchase subgoal has resulted in the displacement of 
residents. Other commenters suggested revising the subgoal to ensure 
that FHFA allows housing goals credit only for loans to borrowers at or 
below 80 percent of AMI. One commenter explicitly stated that the 
housing goals targets should be based only on income, not geography. 
Another commenter recommended allowing only a certain percentage of 
loans above 80 percent of AMI to qualify for the subgoal and encouraged 
FHFA to analyze the potential impact of different caps (i.e., 100 or 
125 percent of AMI).
    Question 3: Should FHFA revise the low-income areas home purchase 
subgoal to consider loans on properties located in Opportunity Zones, 
and if so, how should such loans be treated?
    Some commenters supported the idea of the Enterprises receiving 
housing goals credit for Opportunity Zone loans for low-income 
borrowers. For example, one commenter favored providing housing goals 
credit for loans in Opportunity Zones as a way to help encourage 
affordable housing investment but did not support giving the 
Enterprises extra or double credit for loans in Opportunity Zones. 
Other commenters opposed allowing housing goals credit for Opportunity 
Zone loans due to the relative newness of the program. One of these 
commenters encouraged FHFA to conduct more analysis on the types of 
housing developments found in Opportunity Zones before offering housing 
goals credit. Another commenter expressed concern about the ultimate 
beneficiaries of Opportunity Zones, as well as skepticism that low- or 
moderate-income households or communities would benefit from the 
program.
    Question 4: Is there evidence that the Enterprise housing goals 
have helped expand low-income homeownership in the marketplace?
    FHFA received a number of comments emphasizing the value of the 
housing goals over time and the importance of maintaining Enterprise 
focus on these segments of the market. Some commenters stated that 
there has been a positive impact on low-income homeownership and the 
housing goals have expanded access to low-income households. Other 
commenters noted that the housing goals are foundational to the mission 
of the Enterprises, as laid out in the statute and their charters. 
Another commenter argued for the importance of the housing goals in 
incentivizing lending to low-income borrowers.
    One commenter stated that the housing goals have served as a 
catalyst for expanding banks' abilities to serve low- and moderate-
income borrowers. Another commenter stated that the housing goals have 
contributed to increases in Latino home ownership. The commenter also 
described the benefits of the Enterprises' efforts to standardize 
eligibility criteria and underwriting factors, enabling more low-income 
households to obtain credit. The commenter also urged FHFA to monitor 
mortgage servicing standards and, if necessary, provide notice of any 
mortgage relief or loss mitigation options to ensure that servicers of 
Enterprise-backed loans proactively help homeowners who are struggling 
with payments.
    Several commenters encouraged FHFA to establish higher or more 
rigorous housing goals. One of the commenters argued that the 
Enterprises could better serve the manufactured housing market segment 
through purchasing chattel home loans and homes settled as real estate. 
Another commenter encouraged FHFA to support manufactured home consumer 
lending through the Enterprise housing goals and the Duty to Serve 
program.
    A number of commenters encouraged FHFA to review its policies to 
ensure there are no unnecessary barriers to meeting the housing goals 
and serving low-income households. One commenter specifically focused 
on the price of guarantee fees because pricing structures can impact 
whether a creditworthy borrower can afford a mortgage. The commenter 
highlighted the impact that guarantee fees have with respect to pooling 
risk, eliminating excessive risk-based pricing, and encouraging greater 
access to sustainable homeownership.
    Although the majority of the commenters expressed support for the 
housing goals, one commenter argued that they have not been successful 
and that the rates of homeownership for low-income households have 
declined over the last 30 years. The commenter recommended that FHFA 
address risk-layering (i.e., mortgages with multiple characteristics 
associated with higher risk) by limiting Enterprise acquisitions of 
mortgages for low-income borrowers to mortgages with a projected 
mortgage default rate of less than 14 percent and by encouraging 20-
year instead of 30-year mortgages. Another commenter expressed the 
belief that the housing goals have had a minimal effect on low-income 
homeownership. The commenter argued that the mortgages captured by the 
housing goals are not excessively risky and would have been made in the 
absence of the housing goals. The commenter also argued that there is 
no evidence that the housing goals have created a lower-priced or more 
affordable mortgage.
Other Comments
    There were additional topics that commenters raised in responses to 
the ANPR. For example, a number of commenters claimed that their 
responses to certain questions--specifically, those concerning whether 
there are categories of loans that should be excluded from the housing 
goals, the impact of the low-income areas home purchase subgoal, and 
the impact of the Enterprise housing goals over time--were affected by 
insufficient access to data. These commenters asserted that they would 
have been able to better respond to the questions in the ANPR if they 
had access to additional and more comprehensive data about the 
composition of housing goals loans and the historical performance of 
those loans. One commenter suggested supplementing existing reports 
like the Annual Housing Report with data on the risk characteristics 
and the performance of loans that receive housing goals credit.
    Several commenters focused on the racial homeownership gap between 
White households and Black or Latino households and emphasized the 
importance of homeownership to family wealth. The commenters cited the 
persistently lower rates of

[[Page 47403]]

homeownership for Black and Latino households and requested that FHFA 
try to address the gap through the housing goals. One commenter 
encouraged FHFA to specifically consider the impact that any changes or 
revisions to the housing goals would have on borrowers of color. 
Another commenter proposed the creation of a new housing goal to focus 
on the racial homeownership gap. A number of commenters also noted the 
disproportionate impact the COVID-19 pandemic has had on low-income 
households and people of color.
    Several commenters expressed concern about whether low-income 
borrowers have adequate access to affordable refinancing options, 
particularly in light of the recent low interest rate environment. Two 
of the commenters suggested that the Enterprises create a streamlined 
refinance program in order to ensure that rate/term refinances are more 
available to lower-income households.
    FHFA appreciates the thoughtful and thorough responses received on 
the ANPR and has analyzed the suggestions embedded in the comments. 
FHFA has taken these comments into account where relevant and possible 
in formulating the current proposed rule. Other comments or 
recommendations will require further analysis and the issues raised may 
be addressed in future rulemakings.
    With respect to requests for additional data, FHFA understands the 
value of data in evaluating and assessing the performance of the 
Enterprises in achieving the housing goals and is exploring additional 
ways to provide data to the public. FHFA intends to provide additional 
data on Enterprise loan purchases on the FHFA website. In determining 
which data can be provided, FHFA must consider that some data from the 
Enterprises are confidential or proprietary and may not be disclosed.
    In the rulemaking establishing the housing goals for 2021, FHFA did 
not publish the single-family model paper that it usually publishes for 
each housing goals rulemaking. FHFA received comments in response to 
the proposed 2021 housing goals rule and the ANPR that encouraged FHFA 
to publish the single-family model papers in future rulemakings. As 
with most previous housing goals rulemakings, FHFA has published the 
single-family model paper on its public website in conjunction with 
this housing goals proposed rule.\18\
---------------------------------------------------------------------------

    \18\ Details on FHFA's single-family market models are available 
in the technical report ``The Size of the Affordable Mortgage 
Market: 2022-2024 Enterprise Single-Family Housing Goals'' available 
at https://www.fhfa.gov/PolicyProgramsResearch/Research/PaperDocuments/Market-Estimates_2022-2024.pdf.
---------------------------------------------------------------------------

    In response to comments about the importance of access to 
refinancing options for lower income borrowers, FHFA notes that both 
Enterprises introduced new refinancing options in April 2021. Eligible 
borrowers must have incomes at or below 80 percent of AMI, and the 
lender must provide the borrower a savings of at least $50 per month 
and at least a 50-basis point reduction in the borrower's interest 
rate. FHFA estimates that borrowers who take advantage of this 
refinancing option could save an average of $1,200 to $3,000 per 
year.\19\ In addition, in July 2021, FHFA announced the elimination of 
the Adverse Market Refinance Fee, to help families reduce their housing 
costs.\20\
---------------------------------------------------------------------------

    \19\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-New-Refinance-Option-for-Low-Income-Families-with-Enterprise-Backed-Mortgages.aspx.
    \20\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Eliminates-Adverse-Market-Refinance-Fee.aspx.
---------------------------------------------------------------------------

    In response to comments about the racial homeownership gap, FHFA 
has taken a number of actions. For example, FHFA held a listening 
session on June 29, 2021 to obtain public input on the topic of closing 
the gap in sustainable homeownership. FHFA is also publishing on its 
website additional data on the race and ethnicity of loans that are 
eligible and qualified for housing goals credit. The additional data 
should assist those interested in analyzing the current housing goals 
performance of the Enterprises. Finally, as noted earlier and described 
in greater detail below, FHFA is proposing the creation of new area-
based subgoals that separately measure the Enterprises' purchases of 
mortgages in minority census tracts and low-income census tracts. FHFA 
is specifically requesting public comment on the proposed area-based 
subgoals, as well as all other aspects of this proposed rule.

IV. Single-Family Housing Goals

A. Factors Considered in Setting the Proposed Single-Family Housing 
Goal 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.\21\ FHFA has considered each of these seven statutory 
factors in setting the proposed benchmark levels for each of the 
single-family housing goals and subgoals.
---------------------------------------------------------------------------

    \21\ See 12 U.S.C. 4562(e)(2)(B).
---------------------------------------------------------------------------

    In setting the proposed benchmark levels for the single-family 
housing goals, FHFA typically relies on statistical market models to 
evaluate these statutory factors and generate a point forecast for each 
goal as well as a confidence interval for the point forecast. FHFA then 
considers other statutory factors, as well as other relevant policy 
issues, to select a specific point forecast within the confidence 
interval as the proposed benchmark level.
    In proposing the benchmark levels for the single-family housing 
goals for 2022-2024, FHFA considered the statutory factors, including 
the current economic conditions, national housing needs, recent market 
developments, and the past performance of the Enterprises on the 
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 in the market for the 2022-2024 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

[[Page 47404]]

factors that may influence the market shares, such as interest rates, 
inflation, house 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 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 16 years of HMDA 
data, from 2004 to 2019, the latest year for which public HMDA data was 
available at the time of model construction. FHFA will be updating the 
models with HMDA data for 2020 while developing the final rule. 
Additional discussion of the market forecast models can be found in a 
research paper, available at http://www.fhfa.gov/PolicyProgramsResearch/Research/.\22\
---------------------------------------------------------------------------

    \22\ Details on FHFA's single-family market models will be 
available in the technical report ``The Size of the Affordable 
Mortgage Market: 2022-2024 Enterprise Single-Family Housing Goals'' 
available at https://www.fhfa.gov/PolicyProgramsResearch/Research/PaperDocuments/Market-Estimates_2022-2024.pdf.
---------------------------------------------------------------------------

    Current market outlook. There are many factors that impact the 
affordable housing market as a whole, and changes to any one 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.\23\ 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.\24\ Elements that impact the 
models and the determination of benchmark levels are discussed below.
---------------------------------------------------------------------------

    \23\ The macroeconomic outlook described herein is based on 
Moody's forecasts as of July 2021.
    \24\ 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.
---------------------------------------------------------------------------

    Interest rates are very important determinants of the trajectory of 
the mortgage market. In an effort to continue its support of the U.S. 
economy and promote maximum employment and price stability, the Federal 
Reserve reiterated at its April 2021 meeting its commitment to seeking 
to achieve maximum employment and inflation at 2 percent in the long 
run by maintaining its target for the federal funds rate at between 0 
percent and 0.25 percent until its goals are achieved.\25\ The target 
was first lowered to this level in March 2020 to mitigate the effects 
of the COVID-19 pandemic.\26\ Moody's July 2021 forecast assumes that 
this target is maintained until the third quarter of 2022, and then 
projects that mortgage interest rates--in particular the 30-year fixed 
rate, which is closely tied to the federal funds rate and the 10-year 
Treasury note yield--will rise gradually from the current historic low 
of 3.1 percent in 2020 to 4.3 percent by 2024.\27\
---------------------------------------------------------------------------

    \25\ See https://www.federalreserve.gov/newsevents/pressreleases/monetary20210428a.htm.
    \26\ See https://www.federalreserve.gov/newsevents/pressreleases/monetary20200315a.htm.
    \27\ See Exhibit 1 in the technical report ``The Size of the 
Affordable Mortgage Market: 2022-2024 Enterprise Single-Family 
Housing Goals'' available at https://www.fhfa.gov/PolicyProgramsResearch/Research/PaperDocuments/Market-Estimates_2022-2024.pdf.
---------------------------------------------------------------------------

    Moody's July 2021 forecast projects that the unemployment rate will 
gradually fall from its 2020 peak to 4.0 percent in 2024. Moody's also 
forecasts a modest increase in per capita disposable nominal income 
growth--from $53,081 in 2020 to $59,365 in 2024. Furthermore, Moody's 
estimates that the inflation rate will be in the 2.2-2.4 percent range 
from 2022 through 2024.
    The combination of low interest rates, high deferred demand, and 
low supply fueled by the pandemic pushed house prices up by 18.0 
percent in May 2021 relative to May 2020, based on FHFA's purchase-only 
House Price Index (HPI).\28\ Moody's July 2021 forecast of the same HPI 
index expects house prices to increase at the annual rates of 4.0, 3.7, 
and 1.5 percent in 2022, 2023, and 2024, respectively.
---------------------------------------------------------------------------

    \28\ See https://www.fhfa.gov/AboutUs/Reports/Pages/US-House-Price-Index-July-2021.aspx.
---------------------------------------------------------------------------

    Taken together, the expected increase in mortgage interest rates 
and house prices likely will impact the ability of low- and very low-
income households to purchase homes. Housing affordability, as measured 
by Moody's forecast of the National Association of Realtors' (NAR) 
Housing Affordability Index (HAI), is projected to decline from an 
index value of 166.3 in 2020 to 135.4 in 2024. Lower values of the HAI 
imply that affordability has worsened.\29\ The third leg of the housing 
affordability stool is the supply of affordable housing, but this had 
not kept pace with the growth of the demographic demand even before the 
advent of the COVID-19 pandemic.
---------------------------------------------------------------------------

    \29\ 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.
---------------------------------------------------------------------------

    In many ways, 2020 was an unusual year as it saw record volumes of 
both home purchase and home refinance loans. Low interest rates coupled 
with rising house prices created an incentive for many homeowners to 
refinance, resulting in a surge in refinance activity in 2020. The 
refinance share of overall mortgage originations since 2001 increased 
from a low of 28 percent in 2018 to 61 percent in 2020. Moody's 
forecasts this share to sharply decline to 42 percent in 2021, and 
continue to decline to 39 percent in 2022, and then to 31 percent and 
24 percent in 2023 and 2024, respectively.
    The economic forecast from Moody's described above is largely 
consistent with that provided by other forecasters. According to the 
Bureau of Economic Analysis (BEA), real Gross Domestic Product (GDP) 
grew by 33.4 percent in the third quarter of 2020, following two 
quarters of losses. GDP growth was strong in the subsequent quarters, 
including the second quarter of 2021 when it grew by 6.5 percent 
according to the advance estimate released by the BEA.\30\ According to 
the most recent estimate published by the Congressional Budget Office 
(CBO), GDP is projected to grow by 7.4 percent in 2021, after which GDP 
growth is projected to decline to 3.1 percent in 2022, and then remain 
under 2 percent through 2031.\31\
---------------------------------------------------------------------------

    \30\ See https://www.bea.gov/news/2021/gross-domestic-product-second-quarter-2021-advance-estimate-and-annual-update.
    \31\ See https://www.cbo.gov/publication/57339.
---------------------------------------------------------------------------

    According to the Bureau of Labor Statistics (BLS), the unemployment 
rate peaked at 14.8 percent in April 2020, and fell to 5.9 percent in 
June 2021.\32\ CBO projects this number to be 4.6 percent in the fourth 
quarter of 2021 and that employment will surpass its pre-pandemic level 
in mid-2022.
---------------------------------------------------------------------------

    \32\ Accessed on 7/29/2021 at https://www.bls.gov/news.release/empsit.nr0.htm.
---------------------------------------------------------------------------

    FHFA continues to monitor how these changes in the housing market 
and recent legislation may impact various segments of the market, 
including those targeted by the housing goals.

[[Page 47405]]

    Post-model adjustments. While FHFA's models can address and 
forecast many of the statutory factors that can make affordability for 
single-family homeownership more challenging for low-income and very 
low-income households, 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. Some of these additional factors may 
affect a subset of the market rather than the market as a whole. These 
factors include the effectiveness of COVID-19 vaccination efforts and 
the path of the virus, as well as other factors that might contribute 
to an uneven economic recovery, demographic trends, and the 
Enterprises' share of the mortgage market. Variability in these factors 
can also have a substantial impact on the ability of the Enterprises to 
meet the housing goals. Consequently, as discussed further below, FHFA 
will carefully monitor these factors and consider the potential impact 
of market shifts or larger trends on the ability of the Enterprises to 
achieve the housing goals.
    Demographic trends. The impact that specific demographic changes, 
like the housing demand patterns of millennials or the growth of 
minority households, will have on the housing market is not included 
explicitly in the market forecast models. Millennials have made up the 
largest share of home purchase mortgage applications for the past five 
years.\33\ This generation's share of mortgage purchase applications 
rose about 2 to 4 percentage points a year from 33 percent in 2014 to 
47 percent 2019, but jumped dramatically in 2020 to 54 percent.\34\
---------------------------------------------------------------------------

    \33\ See Pradhan, Archana April 2021. ``Millennials Lead the 
Pack for Home Purchases,'' CoreLogic Blog accessed on 5/25/2021 at 
https://www.corelogic.com/blog/2021/4/millennials-lead-the-pack-for-home-purchases.aspx.
    \34\ Id. (``while half of the increase is consistent with the 
natural growth rate seen since 2014, the additional half of the 2020 
jump was likely driven by the pandemic. In other words, the increase 
was accelerated by record low mortgage interest rate [sic] and 
flexibility to work remotely.'').
---------------------------------------------------------------------------

    Enterprises' share of the mortgage market. The Enterprises' overall 
share of the mortgage market is subject to fluctuation. During the 
mortgage market bubble, the Enterprises' share of the market dropped to 
about 43 percent in 2005. That share rose to about 65 percent in 2012, 
but declined to about 55 percent in 2015. This share remained 
relatively stable until 2019, then jumped to 66 percent in 2020, as the 
Enterprises continued to acquire mortgages even as other private market 
participants stepped back.
[GRAPHIC] [TIFF OMITTED] TP25AU21.000

    As shown in Graph 1, over the same time period, the total 
government share of the mortgage market (including the Federal Housing 
Administration, Department of Veterans Affairs, and Rural Housing 
Service) has generally been expanding, albeit with a recent 
contraction. In 2015, the total government share accounted for about 30 
percent of overall mortgage originations, considerably up from about 5 
percent a decade earlier. That share was relatively stable until 2019, 
then declined to 22 percent in 2020.
Past Performance of the Enterprises
    Table 1 provides the annual performance of both Enterprises on the 
single-family housing goals between 2010 and 2020. Throughout this 
proposed rule, Enterprise performance data for 2020 is preliminary. 
FHFA will

[[Page 47406]]

make final determinations on Enterprise performance later in 2021.
[GRAPHIC] [TIFF OMITTED] TP25AU21.001

B. Proposed Benchmark Levels for the Single-Family Housing Goals for 
2022-2024

    FHFA is proposing to establish the following benchmark levels for 
the single-family housing goals and subgoals for 2022-2024.
1. Low-Income Home Purchase Goal
    The low-income home purchase goal is based on the percentage of all 
single-family, owner-occupied home purchase 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. The proposed rule 
would set the annual low-income home purchase goal benchmark level for 
2022 through 2024 at 28 percent.

[[Page 47407]]

[GRAPHIC] [TIFF OMITTED] TP25AU21.002

    As shown in Table 2, both Enterprises exceeded both the benchmark 
and market levels in 2018 and 2019. Although FHFA will not officially 
determine the 2020 housing goals performance of the Enterprises until 
later in 2021, both Enterprises exceeded the benchmark level in 2020.
    The low-income home purchase market levels have increased steadily 
since 2016. FHFA's current model forecasts that the market for this 
goal in 2020 will continue to increase and end up between 27 and 31.6 
percent. From 2022 through 2024, the proposed goal period, the current 
forecast is expected to decline slightly from these peaks and stay 
around 26 percent for each of the three years. As noted previously and 
in the accompanying market model paper, this forecast is based on the 
2019 HMDA data and Moody's forecasts as of July 2021 and will be 
updated before the release of the final housing goals rule.
    FHFA is proposing a benchmark level for the low-income home 
purchase goal of 28 percent, which is above the middle point of the 
market forecast but well within the confidence interval for each year. 
This proposed benchmark level is significantly higher than the 
benchmark level of 24 percent that has been in place each year since 
2015. FHFA is proposing a higher benchmark level for this goal in order 
to encourage the Enterprises to continue to find ways to support lower 
income borrowers without compromising safe and sound lending standards. 
FHFA recognizes that there may be challenges to meeting the goal, 
particularly in light of the recovery from the global pandemic. FHFA 
will continue to monitor the Enterprises in its capacities as regulator 
and as conservator, and if FHFA determines that the benchmark level for 
the low-income home purchase goal is not feasible for the Enterprises 
to achieve in light of market conditions, or for any other reason, FHFA 
will take appropriate steps to adjust the benchmark level.
2. Very Low-Income Home Purchase Goal
    The very low-income home purchase goal is based on the percentage 
of all 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. The 
proposed rule would set the annual very low-income home purchase goal 
benchmark level for 2022 through 2024 at 7 percent.
[GRAPHIC] [TIFF OMITTED] TP25AU21.003

    As shown in Table 3, both Enterprises exceeded the benchmark level 
in 2018 and 2019. In 2018, Fannie Mae exceeded both the benchmark and 
market levels, and in 2019, Freddie Mac exceeded both the benchmark and 
market levels. In 2020, both Fannie Mae and Freddie Mac exceeded the 
benchmark levels. FHFA will officially determine the 2020 market 
performance of the Enterprises later in 2021.

[[Page 47408]]

    Like the low-income home purchase market levels, the very low-
income home purchase market levels have increased steadily since a low 
in 2016 of 5.4 percent. FHFA's current model forecasts that the market 
for this goal in 2020 will continue to increase and end up between 6.5 
and 8.1 percent. From 2022 through 2024, the proposed goal period, the 
current forecast is expected to decline slightly from these peaks and 
stay between 6.4 and 6.8 percent for each of the three years. This 
forecast is based on the latest data available and will be updated 
before the release of the final housing goals rule.
    FHFA is proposing a benchmark level for the very low-income home 
purchase goal of 7 percent, which is close to the market forecast and 
well within the confidence interval for each year. This proposed 
benchmark level is an increase from the benchmark level of 6 percent 
that has been in place each year since 2015. FHFA is proposing a 
slightly higher benchmark level in order to encourage the Enterprises 
to continue to find ways to support very low-income borrowers without 
compromising safe and sound lending standards. FHFA recognizes that 
there may be challenges to meeting the goal, particularly in light of 
the recovery from the global pandemic. FHFA will continue to monitor 
the Enterprises in its capacities as regulator and as conservator, and 
if FHFA determines that the benchmark level for the low-income home 
purchase goal is not feasible for the Enterprises to achieve in light 
of market conditions, or for any other reason, FHFA will take 
appropriate steps to adjust the benchmark level.
3. Proposed Area-Based Subgoals
    The proposed rule would establish two new area-based subgoals, each 
with its own benchmark level. The new minority census tracts subgoal 
would specifically assess the Enterprises' performance in minority 
areas with respect to loans for families with incomes no greater than 
100 percent of AMI. The new low-income census tracts subgoal would 
assess the Enterprises' performance in low-income census tracts. The 
low-income census tracts subgoal would not include any loans that would 
qualify for the minority census tracts subgoal. In other words, the 
low-income census tracts subgoal would be limited to: (1) Loans in low-
income census tracts that are not minority census tracts, and (2) loans 
to borrowers above 100 percent of AMI in low-income census tracts that 
are also minority census tracts. The two proposed subgoals would 
replace the existing low-income areas home purchase subgoal and address 
some of the issues that FHFA previously identified in the 2018-2020 
proposed rule as well as in Question 2 of the recent ANPR (2020) 
discussed in Section III.D. above.\35\
---------------------------------------------------------------------------

    \35\ See https://www.fhfa.gov/SupervisionRegulation/Rules/Pages/Enterprise-Housing-Goals-Advance-Notice-of-Proposed-Rulemaking.aspx.
---------------------------------------------------------------------------

    The previous subgoal structure allowed the Enterprises to count all 
single-family, owner-occupied home purchase mortgages purchased that 
were either: (1) For families in low-income areas, defined to include 
census tracts with median income less than or equal to 80 percent of 
AMI; or (2) for families with incomes less than or equal to 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). As a result, borrowers could qualify 
under either or both conditions. Over the years, this has meant that 
many goal-qualifying loans purchased by the Enterprises were for higher 
income families (over 100 percent of AMI) rather than for families at 
or below 100 percent of AMI. The proposed rule would modify the 
previous structure and refocus Enterprise efforts towards minority 
census tracts and families at or below 100 percent of AMI. The new 
subgoal structure would require the Enterprises to achieve both of the 
new subgoal benchmark levels each year. FHFA will continue to establish 
the overall low-income areas housing goal on an annual basis by adding 
together the benchmark levels for the minority census tracts subgoal 
and the low-income census tracts subgoal, along with the disaster areas 
increment determined by FHFA each year.
    The proposed rule would establish the benchmark levels for the new 
subgoals for 2022-2024 as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                                     Proposed
                                                                                                     benchmark
                 Subgoal                                          Criteria                        level for 2022-
                                                                                                  2024 (percent)
 
----------------------------------------------------------------------------------------------------------------
Minority Census Tracts Subgoal...........  Home purchase mortgages on single-family, owner-                   10
                                            occupied properties to borrowers with income no
                                            greater than 100 percent of AMI in minority census
                                            tracts.\1\.
Low-Income Census Tracts Subgoal.........  (i) Home purchase mortgages on single-family, owner-                4
                                            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.
Minority Census Tracts Subgoal...........  Home purchase mortgages on single-family, owner-                   10
                                            occupied properties to borrowers with income no
                                            greater than 100 percent of AMI in minority census
                                            tracts.\1\.
----------------------------------------------------------------------------------------------------------------
\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.

    FHFA recognizes that, in the past, some loans acquired by the 
Enterprises were from locations considered both minority and low-income 
census tracts and, as a result, would have been counted under either 
criterion. The proposed rule would define the new subgoals so that a 
loan could not be counted under both of the new subgoals. Under 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 subgoal, and if the 
borrower's income is above 100 percent of AMI, the loan would be 
counted towards the low-income census tracts subgoal. FHFA believes 
that requiring the Enterprises to specifically and separately target 
loans for families living in minority and low-income census tracts will 
result in better and more transparent reporting on both of these 
categories.
    FHFA will continue to set a benchmark level for the overall low-

[[Page 47409]]

income areas housing goal that will include mortgages to families with 
incomes less than or equal to 100 percent of AMI who are located in 
federally declared disaster areas.\36\ The proposed rule would define 
the low-income areas housing goal to be the sum of (i) the benchmark 
level for the new minority census tracts subgoal, (ii) the benchmark 
level for the new low-income census tracts subgoal, and (iii) a 
disaster areas increment set in accordance with existing practice. 
Because the minority census tracts subgoal and the low-income census 
tracts subgoal are defined with no overlap between them, the proposed 
definition of the overall low-income areas housing goal is exactly 
equivalent to the current low-income areas housing goal. The disaster 
low-income areas housing goal benchmark level is set annually by FHFA 
separately from this rulemaking. Each year, FHFA notifies the 
Enterprises by letter of the benchmark level for that year, and this 
practice will continue.
---------------------------------------------------------------------------

    \36\ Disaster declarations are listed on the FEMA website at 
https://www.fema.gov/disasters.
---------------------------------------------------------------------------

    The tables below provide recent performance of both Enterprises in 
these subgoal areas.

----------------------------------------------------------------------------------------------------------------
                                                                           Recent performance (percent)
                 Minority census tracts subgoal                  -----------------------------------------------
                                                                       2018            2019            2020
----------------------------------------------------------------------------------------------------------------
Market..........................................................             9.0             9.2             9.2
Fannie Mae Performance..........................................            11.0            10.7            10.1
Freddie Mac Performance.........................................             9.0             9.5             9.2
----------------------------------------------------------------------------------------------------------------
Source: FHFA's tabulation of Home Mortgage Disclosure Act (HMDA) and Enterprises' data.


----------------------------------------------------------------------------------------------------------------
                                                                           Recent performance (percent)
                Low-income census tracts subgoal                 -----------------------------------------------
                                                                       2018            2019            2020
----------------------------------------------------------------------------------------------------------------
Market..........................................................             9.1             8.9             8.5
Fannie Mae Performance..........................................             9.1             8.8             8.3
Freddie Mac Performance.........................................             8.3             8.5             8.0
----------------------------------------------------------------------------------------------------------------
Source: FHFA's tabulation of Home Mortgage Disclosure Act (HMDA) and Enterprises' data.

    The proposed rule would establish the benchmark level for the 
minority census tracts subgoal at 10 percent. This proposed benchmark 
level is slightly higher than the Enterprises' recent performance, when 
measured as if the proposed subgoal had been in place. FHFA is 
proposing this higher benchmark level to ensure that the Enterprises 
are targeting the needs of communities of color and to emphasize the 
importance of improving access to credit in these communities.
    The proposed rule would establish the benchmark level for the low-
income census tracts subgoal at 4 percent. This proposed benchmark 
level is lower than the Enterprises' recent performance, when measured 
as if the proposed subgoal had been in place. FHFA is proposing this 
lower benchmark level due to concerns about incentivizing purchases of 
loans to higher-income borrowers in low-income areas. However, this 
proposed benchmark level is intended to encourage the Enterprises to 
continue providing critically needed access to credit in low-income 
areas.
    FHFA believes that the proposed benchmark levels for each of the 
new area-based subgoals are feasible and would not be disruptive to the 
market. FHFA specifically requests comments on the new proposed subgoal 
structure and the proposed benchmark levels.
4. Low-Income Refinancing Goal
    The low-income refinancing goal is based on the percentage of all 
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. The proposed rule 
would set the annual low-income refinancing housing goal benchmark 
level for 2022 through 2024 at 26 percent.

[[Page 47410]]

[GRAPHIC] [TIFF OMITTED] TP25AU21.004

    As shown in Table 4, both Enterprises exceeded the benchmark level 
for the low-income refinancing goal in 2018 and 2019. In 2020, Fannie 
Mae exceeded the benchmark level, while Freddie Mac did not. Fannie Mae 
exceeded the market levels for this goal in 2018 and 2020, but not in 
2019. Freddie Mac has trailed the market level each year from 2018 
through 2020. As noted, 2020 data reflects FHFA's preliminary 
determination of Enterprise performance on this goal.
    FHFA is proposing a benchmark level for the low-income refinancing 
goal of 26 percent, which is close to the market forecast and well 
within the confidence interval for each year. This proposed benchmark 
level is an increase from the current benchmark level of 21 percent, 
but on the lower end of the range of estimates for 2023 and 2024. FHFA 
is proposing a slightly lower benchmark level due to the 
unpredictability of future interest rates and refinancing volumes, 
which result in greater volatility in the low-income shares for 
refinancing mortgages than what is typical for the home purchase 
mortgage market. FHFA will continue to monitor the Enterprises in its 
capacities as regulator and as conservator, and if FHFA determines that 
the benchmark level for the low-income refinancing goal is not 
feasible, then FHFA will take appropriate steps to adjust the benchmark 
level.

V. Multifamily Housing Goals

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

    In setting the proposed benchmark levels for the multifamily 
housing goals, FHFA has considered the statutory factors outlined in 
Section 1333(a)(4) of the Safety and Soundness Act. These factors 
include:
    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.\37\
---------------------------------------------------------------------------

    \37\ 12 U.S.C. 4563(a)(4).
---------------------------------------------------------------------------

    Unlike the single-family housing goals, performance on the 
multifamily housing goals is measured solely against a benchmark level 
set by FHFA, 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.
    Another difference between the single-family and multifamily 
housing goals is that while there are separate single-family housing 
goals for home purchase and refinancing mortgages, the multifamily 
housing goals include all Enterprise multifamily mortgage purchases, 
regardless of the purpose of the loan. In addition, unlike the single-
family housing goals, the multifamily housing goals are measured based 
on the total number of affordable units in properties financed by 
multifamily mortgage loans rather than on a percentage of affordable 
units in properties financed by multifamily mortgage loans. The use of 
total number of eligible units rather than percentages requires that 
FHFA take into account the expected size of the overall multifamily 
mortgage market and the affordable share of the market, as well as the 
expected volume of the Enterprises' overall multifamily purchases (in 
dollar terms) and the affordable share of those purchases.
    Methodology. FHFA sets the multifamily benchmark levels by 
estimating the minimum number of affordable rental units in multifamily 
properties financed by mortgage loans purchased by each Enterprise that 
would be needed to ensure a strong focus on affordability by the 
Enterprises in the proposed goal period. FHFA achieves this by 
considering the required statutory factors, a number of which are 
related, as discussed below. For the proposed 2022-2024 goal

[[Page 47411]]

period, FHFA also took into account the PSPA limit on each Enterprise's 
multifamily mortgage acquisitions, which is $80 billion over a trailing 
52-week period and requires that 50 percent of that amount be mission-
driven mortgages, as determined by FHFA.\38\ Much of the analysis below 
describes trends in the overall multifamily mortgage market as they 
apply to setting the proposed benchmark levels. FHFA recognizes that 
these general trends may not apply to the same extent to all segments 
of the multifamily mortgage market.
---------------------------------------------------------------------------

    \38\ See https://home.treasury.gov/news/press-releases/sm1236.
---------------------------------------------------------------------------

    Affordability in the multifamily mortgage market. There are several 
factors that make it difficult to accurately forecast the affordable 
share of the multifamily mortgage market. First, the portion of the 
overall multifamily mortgage market that provides housing units 
affordable to low-income and very low-income families may vary from 
year-to-year. Second, the competition between purchasers of mortgages 
within the multifamily mortgage market overall may differ from the 
competition within the affordable multifamily mortgage market segment. 
Finally, the volume for the affordable multifamily mortgage market 
segment also will depend on the availability of affordable housing 
subsidies.
    FHFA determines affordability based on a family's rent and utility 
expenses not exceeding 30 percent of AMI.\39\ Using this measure, 
affordability for families living in rental units has decreased in 
recent years for many families. According to the Joint Center for 
Housing Studies (JCHS), in its 2020 State of the Nation's Housing 
Report, prior to 2020, the composition of housing stock had already 
negatively affected affordability. For example, the report stated that 
while housing stock grew by 7.5 million units between 2004 and 2019, 
most of these additions were in single-family rentals or properties 
with 20 units or higher, whereas the number of units in two- to four-
unit buildings declined by 38,000 units. The units in larger 
multifamily buildings tend to have higher median rents.\40\ The supply 
of apartments with rents of $600 or lower declined by 2.5 million 
between 2004 and 2019, unlike apartments with rents of over $1,000, 
which increased by 10.4 million units within the same time period, 
according to the JCHS report.
---------------------------------------------------------------------------

    \39\ See 12 U.S.C. 4563(c).
    \40\ ``The State of the Nation's Housing 2020,'' Joint Center 
for Housing Studies of Harvard University, December 2020, p. 32, 
available at https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2020_Report_Revised_120720.pdf.
---------------------------------------------------------------------------

    The JCHS study of the rental market noted the growing presence of 
cost-burdened renters in certain income segments. Although, in 2019, 
the share of tenants that paid more than 30 percent of household income 
for rental housing decreased, at close to 50 percent, that number was 
still high. Specifically, the share of cost-burdened households with 
incomes between $25,000 and $74,999 increased between 2011 and 
2019.\41\ This is significant because the housing goals statute defines 
affordability at the 30 percent threshold.\42\
---------------------------------------------------------------------------

    \41\ ``The State of the Nation's Housing 2020,'' Joint Center 
for Housing Studies of Harvard University, December 2020, p. 1, 
available at https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2020_Report_Revised_120720.pdf.
    \42\ See 12 U.S.C. 4563(c).
---------------------------------------------------------------------------

    The supply gap in affordable units combined with the prevalence of 
cost-burdened renters has led to an erosion of affordability, with 
fewer units qualifying for the housing goals. This affordability gap is 
also reflected in the falling share of the low-income multifamily units 
backing loans purchased by the Enterprises. While 77 percent of the 
multifamily units financed by mortgages purchased by Fannie Mae in 2011 
were low-income, that share dropped steadily in the intervening years 
to 64 percent in 2017, rising to 69 percent in 2020. At Freddie Mac, 
the low-income share also peaked in 2011 and 2012 at 79 percent, and 
decreased gradually to 65 percent in 2017, rising to 71 percent in 
2020.
    Financing for affordable multifamily buildings--particularly those 
that are affordable to very low-income families--often uses an array of 
state and federal housing subsidies, such as low-income housing tax 
credits (LIHTCs), tax-exempt bonds, Section 8 rental assistance, or 
soft subordinate financing.\43\ Investor interest in tax credit equity 
projects of all types and in all markets has been strong in recent 
years, especially in markets in which bank investors are seeking to 
meet Community Reinvestment Act (CRA) goals. Consequently, there should 
continue to be opportunities in the multifamily mortgage market to 
provide permanent financing for properties with LIHTCs during the 2022-
2024 period. Additionally, there should be opportunities for market 
participants, including the Enterprises, to purchase 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).
---------------------------------------------------------------------------

    \43\ LIHTCs are a supply-side subsidy created under the Tax 
Reform Act of 1986 and is the main source of new affordable housing 
construction in the United States. LIHTCs are used for the 
acquisition, rehabilitation, and/or new construction of rental 
housing for low-income households. LIHTCs have facilitated the 
creation or rehabilitation of approximately 2.4 million affordable 
units since inception of the program in 1986.
---------------------------------------------------------------------------

    Availability of public subsidies. Multifamily housing assistance is 
primarily available in two forms--demand-side subsidies which either 
directly assist low-income tenants (e.g., Section 8 vouchers) or 
provide project-based rental assistance (Section 8 contracts), and 
supply-side subsidies which 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 historic programs could impact the 
ability of the Enterprises to meet the housing goals. The Enterprises 
also play a role in providing liquidity to facilitate the preservation 
of public subsidies, like expiring Section 8 Housing Assistance Payment 
contracts and LIHTC properties reaching the end of the use restricted 
affordability period.
    The need for public subsidies persists as the number of cost-
burdened renters remains high, at over 20 million renter households in 
2019.\44\ The Center for Budget Policy Priorities estimates that only 
one in four households eligible for federal housing assistance 
currently receives it.\45\
---------------------------------------------------------------------------

    \44\ The State of the Nation's Housing 2020,'' Joint Center for 
Housing Studies of Harvard University, December 2020, p. 6, 
available at https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2020_Report_Revised_120720.pdf.
    \45\ See https://www.cbpp.org/research/housing/more-housing-vouchers-most-important-step-to-help-more-people-afford-stable-homes.
---------------------------------------------------------------------------

    Certain public subsidies have been provided since March 2020 to 
help the affordable housing sector and low-income households during the 
pandemic. The CARES Act provided supplemental unemployment benefits to 
help people pay their rent, but those benefits expired on July 31, 
2020. In December 2020, the Consolidated Appropriations Act, 2021 
reinstated supplemental unemployment benefits through March 14, 2021. 
In March, the American Rescue Plan Act of 2021 extended those benefits 
through September 6, 2021.

[[Page 47412]]

    Multifamily mortgage market. FHFA's consideration of the 
multifamily mortgage market addresses the size of and competition 
within the multifamily mortgage market, as well as the subset of the 
multifamily mortgage market affordable to low-income and very low-
income families. The pandemic has impacted the multifamily affordable 
housing market and renters across the country. In February 2021, the 
Mortgage Bankers Association (MBA) estimated that multifamily mortgage 
originations declined by 17 percent in 2020 relative to the previous 
year. The MBA also anticipated a partial recovery in 2021, with total 
multifamily mortgage originations projected to be $323 billion, a 7 
percent increase from 2020 but still below the 2019 level of $364 
billion.\46\
---------------------------------------------------------------------------

    \46\ See https://www.mba.org/2021-press-releases/february/mba-forecast-commercial/multifamily-lending-to-increase-11-percent-to-486-billion-in-2021; https://newslink.mba.org/cmf-newslinks/2020/november/mba-commercial-multifamily-newslink-nov-12-2020/mba-forecast-2020-commercial-multifamily-lending-down-34-from-2019-record-volumes/.
---------------------------------------------------------------------------

    In addition, MBA's February forecast anticipated an economic 
rebound in 2021 that should bring stability to the market and projected 
that multifamily mortgage lending should almost fully rebound in 2022 
to $358 billion, just shy of the 2019 level. Despite that overall 
expected rebound, recent multifamily housing trends point to likely 
prolonged and diverse impacts in subsegments. According to the National 
Multifamily Housing Council's tabulation of American Community Survey 
microdata, in 2019 about 45.4 percent of renter households (20 million 
households) lived in multifamily properties, defined as structures with 
five or more rental units with the remaining renter households living 
in 1-4 unit single-family structures.\47\ Nationally, on a year-over-
year basis, rent growth slowed during the pandemic to 0.3 percent in 
2020, according to CoStar data. Growth accelerated in the first half of 
the year, with the second quarter of 2021 growing by 7.1 percent 
relative to one year earlier. Vacancy rates rose during the pandemic 
but have begun to decline in 2021.
---------------------------------------------------------------------------

    \47\ Accessed on 5/18/2021 at https://www.nmhc.org/research-insight/quick-facts-figures/quick-facts-resident-demographics/household-characteristics.
---------------------------------------------------------------------------

    Role of the Enterprises. In setting the proposed multifamily 
housing goal benchmark levels, 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 
origination market increased in the years immediately following the 
financial crisis, but their share has declined more recently in 
response to growing private sector participation. The Enterprises' 
share of the multifamily mortgage origination market was approximately 
70 percent in 2008 and 2009, compared to 38 percent in 2015.\48\ The 
total share has remained at around 40 percent since 2015, due for the 
most part to the cap imposed by FHFA in its role as conservator under 
the Conservatorship Scorecard, with the exception of 2017 and 2020 when 
that share was around 50 percent.
---------------------------------------------------------------------------

    \48\ Urban Institute, ``The GSEs' Shrinking Role in the 
Multifamily Market,'' April 2015, pg. 4: https://www.urban.org/sites/default/files/publication/48986/2000174-The-GSEs-Shrinking-Role-in-the-Multifamily-Market.pdf.
---------------------------------------------------------------------------

    FHFA and the Enterprises have also taken numerous actions to 
support the multifamily housing market and provide relief to renters 
since March 2020. For example, on March 23, 2020, FHFA and the 
Enterprises announced that forbearance would be available to 
Enterprise-backed multifamily property owners on the condition that 
they suspend eviction of tenants struggling to pay rent due to the 
pandemic.\49\ On June 29, 2020, FHFA announced that the Enterprises 
would offer extended forbearance agreements for multifamily property 
owners with existing forbearance agreements for up to three months, for 
a total forbearance of up to six months.\50\ Under the terms of the 
Enterprise forbearance agreements, while mortgage payments are in 
forbearance, the landlord must suspend all evictions for renters unable 
to pay rent and offer other protections for renters. This forbearance 
program was extended several times, with the most recent extension 
through September 30, 2021.<SUP>51 52 53</SUP> On May 4, 2020, the 
Enterprises published online multifamily property lookup tools so that 
tenants could determine if the multifamily property in which they 
reside has an Enterprise-backed mortgage and fell under the CARES Act's 
120-day eviction moratorium. On August 6, 2020, FHFA announced that 
multifamily property owners in new forbearance agreements must inform 
tenants in writing about tenant protections, and that the Enterprises 
are improving their online multifamily property loan lookup tools.
---------------------------------------------------------------------------

    \49\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Moves-to-Provide-Eviction-Suspension-Relief-for-Renters-in-Multifamily-Properties.aspx.
    \50\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Provides-Tenant-Protections.aspx.
    \51\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Extends-COVID-19-Multifamily-Forbearance-through-March-31-2021.aspx.
    \52\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Extends-COVID-19-Multifamily-Forbearance-through-June-30-2021.aspx.
    \53\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Extends-COVID-19-Multifamily-Forbearance-through-September-30-2021.aspx.
---------------------------------------------------------------------------

    FHFA expects the Enterprises to continue to demonstrate leadership 
in multifamily affordable housing lending by providing liquidity and 
supporting housing for tenants at different income levels in various 
geographic markets and in various market segments.
    Conservatorship limits on multifamily mortgage purchases 
(Conservatorship Scorecard cap) and other factors. Beginning in 2015, 
as conservator for the Enterprises, FHFA has set a yearly cap under the 
Conservatorship Scorecard that limits the total unpaid principal 
balance of multifamily loans that each Enterprise may purchase. The 
multifamily mortgage purchase cap furthers FHFA's conservatorship goals 
of maintaining the presence of the Enterprises as a backstop for the 
multifamily finance market while not impeding the participation of 
private capital. These targets for the Enterprise purchase share of the 
multifamily origination market reflect what is generally considered by 
FHFA as an appropriate market share for the Enterprises during normal 
market conditions. To encourage the Enterprises to participate in 
purchasing loans financing properties in underserved multifamily market 
segments, from 2015 through 2019, FHFA excluded several categories of 
multifamily business from the cap.
    FHFA revised the cap structure in September 2019 by placing a cap 
on all multifamily loan purchases (no exclusions) and requiring a 
minimum amount of this capped amount to be for affordable and 
underserved market segments. The cap was set at $100 billion for each 
Enterprise, a combined total of $200 billion, for the five-quarter 
period from the fourth quarter of 2019 through the fourth quarter of 
2020. In November 2020, FHFA announced the new multifamily loan 
purchase cap for the 2021 calendar year of $70 billion for each 
Enterprise, a combined total of $140 billion.\54\
---------------------------------------------------------------------------

    \54\ FHFA Announces 2021 Multifamily Loan Purchase Caps for 
Fannie Mae and Freddie Mac, November 17, 2020: https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-2021-MF-Loan-Purchase-Caps-for-Fannie-and-Freddie.aspx.
---------------------------------------------------------------------------

    The Conservatorship Scorecard cap applies to the entire multifamily 
business for each Enterprise without any exclusions. To ensure a strong 
focus on affordable housing and underserved markets, the 2021 
Conservatorship Scorecard requires that at least 50 percent of each 
Enterprises' multifamily

[[Page 47413]]

loan purchases be mission-driven, affordable housing. Multifamily loans 
considered to be mission-driven, affordable include: Subsidized/
assisted affordable housing; manufactured housing communities; 
affordable units in small multifamily properties; affordable properties 
in rural areas; affordable units in seniors housing assisted living 
properties; and market rate units affordable to residents at or below 
80 percent of AMI. Furthermore, the 2021 Conservatorship Scorecard 
requires that a minimum of 20 percent of Enterprise multifamily loan 
purchases be affordable to residents at 60 percent of AMI or below. 
Multifamily loan purchases that meet the minimum 20 percent requirement 
may also count as loan purchases that meet the minimum 50 percent 
requirement.<SUP>55 56</SUP>
---------------------------------------------------------------------------

    \55\ Appendix A: Multifamily Definitions to the 2021 Scorecard, 
November 17, 2020: https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/2021-Appendix-A.pdf.
    \56\ 2021 Scorecard for Fannie Mae, Freddie Mac, and Common 
Securitization Solutions, February 2021: https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/2021-Scorecard.pdf.
---------------------------------------------------------------------------

    In addition to the Conservatorship Scorecard cap, FHFA also 
incorporated the January 2021 PSPA requirements when determining 
appropriate multifamily benchmarks for 2022-2024. These requirements 
include a PSPA cap of $80 billion over the prior 52-week period, which 
is greater than the current Conservatorship Scorecard cap for 2021 and 
places an upper bound on Enterprise share. FHFA will continue to review 
its estimates of market size and mission-driven requirements throughout 
the year. FHFA may take appropriate action to adjust the multifamily 
housing goals benchmark levels should changes to the Conservatorship 
Scorecard cap, the PSPAs, or other market conditions warrant an 
adjustment, whether in 2021 or in future years.
    Maintaining the sound financial condition of the Enterprises. In 
setting the proposed multifamily housing goals benchmark levels, FHFA 
must balance the role that the Enterprises play in providing liquidity 
and supporting various multifamily mortgage market segments with the 
need to maintain the Enterprises in sound and solvent financial 
condition. The Enterprises have served as a stabilizing force in the 
multifamily mortgage market. During the conservatorship period, the 
Enterprises' portfolios of loans on multifamily affordable housing 
properties have experienced low levels of delinquency and default, 
similar to the performance of multifamily loans on market rate 
properties. The Enterprises, therefore, should be able to sustain or 
increase their volume of purchases of loans on affordable multifamily 
housing properties without impacting the Enterprises' safety and 
soundness or negatively affecting the performance of their total 
mortgage loan portfolios.
    FHFA continues to monitor the activities of the Enterprises in 
FHFA's capacity as safety and soundness regulator and as conservator. 
If necessary, FHFA will make appropriate changes in the multifamily 
housing goals benchmark levels to ensure the Enterprises' continued 
safety and soundness.

B. Proposed Multifamily Housing Goals Benchmark Levels

    Based on FHFA's consideration of the statutory factors described 
above and the performance of the Enterprises described in this section, 
the proposed rule would establish benchmark levels for the multifamily 
housing goals for the Enterprises, as further discussed below. Before 
finalizing the benchmark levels for the low-income and very low-income 
multifamily goals in a final rule, FHFA will review any additional data 
that becomes available about the multifamily housing goals performance 
of the Enterprises through 2020, any additional information about the 
Conservatorship Scorecard cap for 2022 that is available, and any other 
information about the multifamily mortgage market or other factors, 
along with any comments on the proposed multifamily housing goals 
benchmark levels.
1. Multifamily Low-Income Housing Goal
    The multifamily low-income housing goal is based on the total 
number of rental units in multifamily properties financed by mortgages 
purchased by the Enterprises that are affordable to low-income 
families, defined as families with incomes less than or equal to 80 
percent of AMI.
    Both Enterprises have exceeded the low-income multifamily housing 
goal by significant margins in recent years. Taking into account the 
Conservator Scorecard cap and PSPA limits, as well as the multifamily 
market conditions described above, FHFA is proposing to raise the 
multifamily low-income housing goal benchmark level to 415,000 units 
for 2022-2024. This proposed benchmark level would be a significant 
increase over the benchmark level that has been in place since 2018. 
FHFA believes that this proposed increase is appropriate and achievable 
for the Enterprise in light of the past performance of the Enterprises 
on this housing goal and the current loan purchase volumes that would 
be permitted for the Enterprises under the applicable Conservatorship 
Scorecard cap and PSPA limits.

[[Page 47414]]

[GRAPHIC] [TIFF OMITTED] TP25AU21.005

2. Multifamily Very Low-Income Housing Subgoal
    The multifamily very low-income housing subgoal includes units 
affordable to very low-income families, defined as families with 
incomes no greater than 50 percent of AMI.
    Both Enterprises have exceeded the multifamily very low-income 
housing subgoal by significant margins in recent years. Taking into 
account the Conservator Scorecard cap and PSPA limits, as well as the 
multifamily mortgage market conditions described above, FHFA is 
proposing to raise the multifamily low-income housing subgoal benchmark 
level to 88,000 units for 2022-2024. This proposed benchmark level 
would be a significant increase over the benchmark level that has been 
in place since 2018. FHFA believes that this proposed increase is 
appropriate and achievable for the Enterprise in light of the past 
performance of the Enterprises on this housing subgoal and the current 
loan purchase volumes that would be permitted for the Enterprises under 
the applicable Conservatorship Scorecard cap and PSPA limits.
[GRAPHIC] [TIFF OMITTED] TP25AU21.006

3. Small Multifamily Low-Income Housing Subgoal
    The Enterprise housing goals regulation defines a small multifamily 
property as a property with 5 to 50 units. The small multifamily low-
income housing subgoal is based on the total number of units in small 
multifamily properties financed by mortgages purchased by the 
Enterprises that are affordable to low-income families, defined as 
families with incomes less than or equal to 80 percent of AMI.
    This subgoal was created in the 2015-2017 housing goals rulemaking, 
and initially set at 6,000 units in 2015, gradually increasing to 
10,000 units in 2017. Monitoring trends in this multifamily market 
segment is challenging, and there is evidence that small multifamily 
properties were hit particularly hard in 2020 as a result of the 
pandemic. FHFA is proposing to raise the benchmark level for this 
subgoal to 23,000 units for 2022-2024. This proposed benchmark level 
would be a significant increase over the benchmark level that has been 
in place since 2018. FHFA believes that this proposed increase is 
appropriate and achievable for the Enterprise in light of the past 
performance of the Enterprises on this housing subgoal and the current 
loan purchase volumes that would be permitted for the Enterprises under 
the applicable Conservatorship Scorecard cap and PSPA limits.

[[Page 47415]]

[GRAPHIC] [TIFF OMITTED] TP25AU21.007

VI. Section-by-Section Analysis of Other Proposed Changes

    The proposed rule would also revise other provisions of the 
Enterprise housing goals regulation, as discussed below. These proposed 
changes are non-substantive technical changes intended to conform the 
housing goals regulation text to FHFA's established practices and 
procedures in implementing the housing goals.
    FHFA welcomes comments on these technical changes and any other 
technical changes or corrections that are necessary. FHFA may include 
additional technical changes or corrections in its final rule based on 
comments received.

A. Definition of ``Designated Disaster Area''--Proposed Sec.  1282.1

    Section 1282.1 of the current Enterprise housing goals regulation 
defines ``designated disaster area'' as ``any census tract that is 
located in a county designated by the Federal Government as adversely 
affected by a declared major disaster administered by FEMA, where 
individual assistance payments were authorized by FEMA.'' While this 
definition accurately reflects the types of disasters that FHFA counts 
for purposes of calculating the disaster areas increment for the low-
income areas housing goal, the definition does not reflect FHFA's 
longstanding practice regarding the types of assistance covered. The 
proposed rule would revise the definition of ``designated disaster 
area'' to refer to major disasters ``where housing assistance payments 
were authorized by FEMA.''
    This proposed change to the definition of ``designated disaster 
area'' would be consistent with longstanding FHFA practice. Each year, 
FHFA identifies the areas that are considered ``designated disaster 
areas'' for purposes of the Enterprise housing goals in a dataset 
published on FHFA's website that can be used in conjunction with other 
information to determine whether mortgages purchased by an Enterprise 
would meet the criteria for the low-income areas housing goal.\57\ In 
practice, FHFA's identification of ``designated disaster areas'' for 
purposes of the Enterprise housing goals has been limited to areas that 
the Federal Emergency Management Agency (FEMA) has identified as 
eligible for ``housing assistance'' under FEMA's ``Individual and 
Households Program'' (IHP). ``Individual assistance'' is an umbrella 
term used by FEMA that encompasses a variety of types of assistance in 
addition to housing assistance under FEMA's IHP. ``Individual 
assistance'' includes other types of assistance under FEMA's IHP, as 
well as disaster case management, disaster legal services, and disaster 
unemployment assistance, among others.\58\ If FHFA included all areas 
for which individual assistance payments were authorized by FEMA, it 
would result in areas being included as ``designated disaster areas'' 
where the relevant disaster did not have any significant direct impact 
on the physical housing stock. For example, if FHFA had included all 
areas that FEMA identified as eligible for ``individual assistance'' in 
2020, every census tract in the United States would have been included 
as a ``designated disaster area'' for purposes of the housing goals in 
2020 due to assistance related to the COVID-19 pandemic. That outcome 
would have been inconsistent with the purposes of the low-income areas 
housing goal and with FHFA's longstanding practice. To avoid this 
outcome and to clarify the regulation with respect to FHFA's existing 
practice, the proposed rule would revise the definition of ``designated 
disaster area'' for purposes of the low-income areas housing goal to 
refer specifically to ``housing assistance'' rather than to the broader 
category of ``individual assistance.''
---------------------------------------------------------------------------

    \57\ These datasets can be accessed at: https://www.fhfa.gov/DataTools/Downloads/Pages/Underserved-Areas-Data.aspx.
    \58\ Individual Assistance Program and Policy Guide (IAPPG), 
Version 1.1, FP 104-009-03, May 2021, page 4, accessible at https://www.fema.gov/assistance/individual/program-policy-guide.
---------------------------------------------------------------------------

B. Newly Available Data--Proposed Removal of Sec.  1282.15(i)

    Section 1282.15(i) of the current Enterprise housing goals 
regulation provides that an Enterprise is not required to use new data 
related to housing goals treatment of mortgages it purchases until the 
start of the quarter after it receives the data. This provision was 
adopted originally by the U.S. Department of Housing and Urban 
Development (HUD) in its 1995 final rule establishing housing goals 
under the Safety and Soundness Act.\59\ However, this provision does 
not reflect FHFA's longstanding practice of independently calculating 
each Enterprise's housing goals performance on the basis of data 
provided to FHFA by the Enterprise. For example, FHFA determines the 
AMIs applicable to each census tract on an annual basis and provides 
that information to the Enterprises in the first half of each year. 
However, in calculating Enterprise housing goals performance for that 
year, FHFA applies the new data to all mortgage purchases in that year. 
Accordingly, the proposed rule would remove Sec.  1282.15(i) to avoid 
any implication that the housing goals regulation requires a particular 
method of calculating or applying affordability data such as AMIs. This 
proposed change is non-substantive and does not reflect or require any 
change in any of

[[Page 47416]]

the processes or standards that FHFA uses to determine Enterprise 
housing goals performance each year.
---------------------------------------------------------------------------

    \59\ See 60 FR 61846 (Dec. 1, 1995). Prior to the creation of 
FHFA in 2008, HUD was responsible for mission oversight of Fannie 
Mae and Freddie Mac, including the affordable housing goals.
---------------------------------------------------------------------------

C. Loan Modifications--Proposed Removal of Sec.  1282.16(c)(10)

    Section 1282.16(c)(10) of the current Enterprise housing goals 
regulation provides that the permanent modification of a mortgage under 
the Home Affordable Modification Program (HAMP) is counted as a 
refinancing for purposes of the low-income refinancing goal. Permanent 
loan modifications under HAMP are the only type of loan modification 
eligible for counting for purposes of the low-income refinancing goal. 
The HAMP modification program expired at the end of 2016. The proposed 
rule would remove Sec.  1282.16(c)(10) from the housing goals 
regulation as it is no longer necessary in light of the expiration of 
the HAMP modification program.

VII. Paperwork Reduction Act

    The proposed rule would not contain any information collection 
requirement that would require 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 submitted the proposed 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 
proposed rule under the Regulatory Flexibility Act. FHFA certifies that 
the proposed rule, if adopted as a final rule, will not have a 
significant economic impact on a substantial number of small entities 
because the rule applies to Fannie Mae and Freddie Mac, which are not 
small entities for purposes of the Regulatory Flexibility Act.

List of Subjects in 12 CFR Part 1282

    Mortgages, Reporting and recordkeeping requirements.

Authority and Issuance

    For the reasons stated in the Preamble, under the authority of 12 
U.S.C. 4511, 4513, and 4526, FHFA proposes to amend part 1282 of Title 
12 of the Code of Federal Regulations as follows:

CHAPTER XII--FEDERAL HOUSING FINANCE AGENCY

SUBCHAPTER E--HOUSING GOALS AND MISSION

PART 1282--ENTERPRISE HOUSING GOALS AND MISSION

0
1. The authority citation for part 1282 continues to read as follows:

    Authority: 12 U.S.C. 4501, 4502, 4511, 4513, 4526, 4561-4566.

0
2. Amend Sec.  1282.1 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 Federal Government as adversely affected by 
a declared major disaster administered by FEMA, 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 FEMA designation of the county, or 
such earlier date as determined by FHFA, and continuing through 
December 31 of the third full calendar year following the FEMA 
designation. This time period may be adjusted for a particular disaster 
area by notice from FHFA to the Enterprises.
* * * * *
0
3. Amend Sec.  1282.12 as follows:
0
a. Revise paragraphs (c)(2), (d)(2), (e)(2), and (f);
0
b. Redesignate paragraph (g) as paragraph (h);
0
c. Add new paragraph (g); and
0
d. Revise newly redesignated paragraph (h)(2). The revisions and 
additions read as follows:


Sec.  1282.12  Single-family housing goals.

* * * * *
    (c) * * *
    (2) The benchmark level, which for 2022, 2023, and 2024 shall be 28 
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 2022, 2023, and 2024 shall be 7 
percent of the total number of purchase money mortgages purchased by 
that Enterprise in each year that finance owner-occupied single-family 
properties.
    (e) * * *
    (2) A benchmark level which shall be 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 moderate-income families in designated disaster areas 
in the most recent year for which such data is available.
    (f) Low-income census tracts housing subgoal. The percentage share 
of each Enterprise's total purchases of purchase money mortgages on 
owner-occupied single-family housing that--
    (1) Consists of:
    (i) Mortgages in low-income census tracts that are not minority 
census tracts; and
    (ii) Mortgages for families with incomes in excess of 100 percent 
of the area median income in low-income census tracts that are also 
minority census tracts;
    (2) Shall meet or exceed either:
    (i) The share of such mortgages in the market as defined in 
paragraph (b) of this section in each year; or
    (ii) The benchmark level, which for 2022, 2023, and 2024 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) Minority census tracts housing subgoal. The percentage share of 
each Enterprise's total purchases of purchase money mortgages on owner-
occupied single-family housing that consists of mortgages for moderate-
income families in minority census tracts shall meet or exceed either:
    (1) The share of such mortgages in the market as defined in 
paragraph (b) of this section in each year; or
    (2) The benchmark level, which for 2022, 2023, and 2024 shall be 10 
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 2022, 2023, and 2024 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
4. Amend Sec.  1282.13 by revising paragraphs (b) through (d) to read 
as follows:


Sec.  1282.13  Multifamily special affordable housing goal and 
subgoals.

* * * * *
    (b) Multifamily low-income housing goal. The benchmark level for 
each

[[Page 47417]]

Enterprise's purchases of mortgages on multifamily residential housing 
affordable to low-income families shall be at least 415,000 dwelling 
units affordable to low-income families in multifamily residential 
housing financed by mortgages purchased by the Enterprise in each year 
for 2022, 2023, and 2024.
    (c) Multifamily very low-income housing subgoal. The benchmark 
level for each Enterprise's purchases of mortgages on multifamily 
residential housing affordable to very low-income families shall be at 
least 88,000 dwelling units affordable to very low-income families in 
multifamily residential housing financed by mortgages purchased by the 
Enterprise in each year for 2022, 2023, and 2024.
    (d) Small multifamily low-income housing subgoal. The benchmark 
level for each Enterprise's purchases of mortgages on small multifamily 
properties affordable to low-income families shall be at least 23,000 
dwelling units affordable to low-income families in small multifamily 
properties financed by mortgages purchased by the Enterprise in each 
year for 2022, 2023, and 2024.


Sec.  1282.15  [Amended]

0
5. Amend Sec.  1282.15 by removing paragraph (i).


Sec.  1282.16  [Amended]

0
6. Amend Sec.  1282.16 by removing and reserving paragraph (c)(10).

Sandra L. Thompson,
Acting Director, Federal Housing Finance Agency.
[FR Doc. 2021-18008 Filed 8-24-21; 8:45 am]
BILLING CODE 8070-01-P


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