As Congress considers different approaches to reform the housing finance system, one of the major policy issues to emerge concerns the role of the federal government in supporting affordable housing for low- and moderate-income households. Much of this debate centers on Fannie Mae and Freddie Mac, two government-sponsored enterprises (GSEs). As GSEs, Fannie Mae and Freddie Mac are hybrid entities, private companies with congressional charters that contain special privileges and certain responsibilities. Notably, Fannie Mae and Freddie Mac have traditionally been required to provide support for affordable housing in certain ways. Although the most prominent proposals to reform the housing finance system—the Protecting American Taxpayers and Homeowners Act (PATH Act; H.R. 2767 , Representative Garrett), the Housing Opportunities Move the Economy Forward Act proposal (HOME Forward Act, Representative Waters), and the Johnson-Crapo GSE Reform Proposal (Senator Johnson and Senator Crapo) —agree on the need to dissolve the GSEs and eventually revoke their charters, there is disagreement on what should replace the GSEs. Part of the disagreement involves whether any entity that replaces the GSEs should be required to support affordable housing activities and, if so, what form such support should take. Some argue that the hybrid nature of the GSEs—private companies with a public mission—led to perverse incentives to lower underwriting standards in an effort to expand credit availability to low-income borrowers. Instead, they argue, in a future system the government should support affordable housing primarily through existing government programs or agencies with an explicit mission of supporting affordable housing, such as the Federal Housing Administration (FHA) and other programs administered by the Department of Housing and Urban Development (HUD). Others argue that the perverse incentives can be realigned such that private companies could be encouraged to support affordable housing and broad access to credit in a responsible manner. This report explains the ways in which the GSEs currently support affordable housing and describes the different affordable housing approaches contained in the reform proposals. For a more general overview of the housing finance system, see CRS Report R42995, An Overview of the Housing Finance System in the United States , by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. For a more complete review of the housing finance reform proposals, see CRS Report R43219, Selected Legislative Proposals to Reform the Housing Finance System , by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. An issue of ongoing interest to Congress has been the availability of affordable housing that is of a decent physical quality. There can be many definitions of what constitutes "affordable," but one common definition classifies housing as affordable if a household is paying no more than 30% of its income toward housing costs. Households that pay more than 30% of their income for housing costs are considered to be cost burdened, and households that pay more than 50% of their income for housing costs are considered to be severely cost burdened. With a larger percentage of income going to housing costs, households that are cost burdened may have difficulty paying for other necessities. Generally speaking, the lower a household's income, the harder it might be to find housing that is affordable. When the concept of affordable housing is discussed, it is usually in reference to housing that is affordable to low- or moderate-income households. Low-income households are commonly defined to be households with incomes at or below 80% of area median income (AMI). Very low-income households are defined as households with incomes at or below 50% of AMI, and extremely low-income households are defined as households with incomes at or below 30% of AMI. There is not a consistent definition of "moderate-income," which is defined differently in different contexts. Affordable housing can be rental housing or owner-occupied housing. For the lowest income households, affordable housing will often be rental housing, because lower-income households might find it more financially feasible to rent rather than own their homes. Evidence shows that there is a shortage of rental housing that is physically adequate, affordable, and available to households at the lowest end of the income spectrum. (A unit is generally considered "available" to a household at a given income level if the unit is either currently occupied by a household at or below the same level of income or is vacant.) According to HUD, in 2011, there were about 93 adequate, affordable, and available rental units for every 100 low-income households. There were fewer adequate, affordable, and available rental units farther down the income spectrum: 57 units for every 100 very low-income households and 31 units for every 100 extremely low-income households. Affordable housing can also be owner-occupied housing, particularly for moderate-income households, households at the higher end of low income, or households in areas with little rental housing stock and inexpensive single-family housing (such as rural areas). When there is discussion of "affordable housing" in the context of homeownership, it is often in reference to ensuring that creditworthy households have opportunities to access mortgages on affordable terms. There has been particular concern about whether certain types of households are "underserved" by the mortgage market, meaning that they are less likely to be able to access affordable mortgages. Possible underserved market segments could include low- and moderate-income or minority households, households living in certain areas (such as neighborhoods with high concentrations of poverty or in rural areas), and households seeking less traditional types of housing, such as manufactured housing. To address this perceived need for affordable rental and owner-occupied housing, Congress has established several federal programs designed to increase the availability of housing that is affordable to low-income households. Most of these programs are administered by HUD, and they include rental assistance programs to support affordable rental housing and block grants that states and local governments can use for rental or owner-occupied housing. Congress has also established programs to support access to affordable homeownership, such as by providing mortgage insurance through FHA. FHA insures mortgages made by private lenders to certain creditworthy borrowers who might otherwise have difficulty qualifying for affordable mortgages, such as households with small down payments. FHA traditionally serves many first-time homebuyers, low- and moderate-income households, and minority households. In addition to insuring single-family mortgages, FHA also insures mortgages on multifamily buildings (i.e., apartment buildings with five or more units), which can encourage lenders to offer multifamily mortgages on better terms and in turn increase the supply of affordable rental housing. In addition to these programs and activities, Congress has also directed the GSEs to support affordable housing, primarily by purchasing both single-family and multifamily mortgages that provide affordable housing for low- and moderate-income households or households that are located in underserved areas. The GSEs' business model (see shaded box below) is intended to provide support to the broader mortgage market, but certain actions of the GSEs are geared primarily toward assisting low- and moderate-income households. This report focuses on the three main channels of support that are currently in statute, although only one of these channels has been fully operational for any length of time. The three channels focus on both affordable rental and owner-occupied housing to varying extents, but historically the GSEs' support for affordable housing has largely been more targeted to homeownership rather than rental housing. First, the GSEs have been directed to provide support through affordable housing goals mandated by Congress since 1992. The goals are numerical standards in which each GSE is required to focus a certain amount of its business on specified types of low-income borrowers and areas that are considered to be underserved by the mortgage market. Originally, the specific goals were set by HUD, but since 2008 they have been set by the GSEs' regulator, the Federal Housing Finance Agency (FHFA). Second, Congress in 2008 established a "duty to serve" requirement for the GSEs. Under the duty to serve requirement, the GSEs are required to provide leadership to assist low-income households in the manufactured housing, affordable housing preservation, and rural markets. Although FHFA published a proposed rule on the duty to serve requirement in 2010, a final rule has not yet been promulgated. Third, also in 2008, Congress directed the GSEs to make contributions to two affordable housing funds, the Housing Trust Fund and the Capital Magnet Fund. The funds were intended to increase the supply of housing affordable to low-income households, with a particular focus on rental housing. These contributions were suspended shortly after the GSEs were placed in conservatorship, and the GSEs have not made contributions to these affordable housing funds to date. The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (FHEFSSA; P.L. 102-550 ) established three numerical affordable housing goals for the GSEs: a low- and moderate-income goal, an underserved areas goal, and a special affordable housing goal. The Housing and Economic Recovery Act of 2008 (HERA; P.L. 110-289 ) replaced the previous housing goals with new single-family and multifamily goals for new categories of borrowers. Under the affordable housing goals established by HERA, each GSE is required to focus a certain amount of its business on specified types of borrowers. By purchasing mortgages that are made to lower-income borrowers, some argue, the GSEs can increase homeownership rates among segments of the population that are less likely to own their home. The " Effectiveness of GSE Affordable Housing Goals " section of this report provides a review of the research on the effectiveness of the GSEs in boosting homeownership for low-income households.