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62 | TH E M R EP O RT SECONDARY MARKET THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T Fannie Mae's Eye on Affordability How has the GSE been working to improve access to affordable housing? F annie Mae's Duty to Serve Plan has had a stel- lar year, according to Jef- frey Hayward, EVP, Mul- tifamily Business, Fannie Mae who outlined the GSE's 2018 achievements under this plan. In its Perspectives blog, Hayward wrote that the Duty to Serve plan was"a three-year roadmap that lays out how [Fannie Mae] will study, engage, and innovate to find new affordable housing solutions in some of the most challenging underserved markets across America." "As our first year on this jour- ney, 2018 was a year of learning and relationship-building, of seek- ing transformative solutions, and of demonstrating a commitment to action," said Hayward. "Our team fanned out across the coun- try to support home finance in rural markets, preserve affordable housing nationwide, and advance manufactured housing options. We attended dozens of conferences, conducted hundreds of customer and partner conversations, intro- duced new and enhanced prod- ucts, and gained insights that we can use to keep getting better." Fannie Mae's snapshot of the year by numbers in single-family housing includes over 59,000 loans purchased (preliminary), over 500 stakeholder agree- ments, eight policy updates, eight test-and-learn variances, over 20 research initiatives, and over 15 marketing and education cam- paigns. Hayward noted that Fannie Mae is making improvements to the rural housing market through easier home appraisals and agree- ments with Native American tribes to allow conventional financing on their lands. Additionally, Fannie Mae states that it made its HomeStyle Energy and HomeStyle Renovation single- family mortgage products "more flexible" and raised awareness of financing options for distressed properties. Fannie Mae has also launched MH Advantage, a pro- gram aimed at improving the lend- ing experience and affordability for factory-built home buyers. "When the Duty to Serve rule was tasked to us by the Federal Housing Finance Agency two years ago, we understood the enormity of the mission," Hayward said. "We also knew that we were well-positioned to deliver: The intersection of af- fordable housing and underserved markets is our sweet spot." "A year into implementing our Plan, I can confidently say we're all-in and making great strides owing to the passion and com- mitment that so many of us feel toward our affordable housing mission," Hayward added. The Impact of the ATR Rule These market segments were most affected, according to a CFPB assessment. D espite debt-to-income ratios rising in recent years, delinquencies have remained low in the five years since the Ability to Repay (ATR) requirements were introduced under the Dodd-Frank Act, according to the findings of the Consumer Financial Protection Bureau's (CFPB's) long-awaited report on the Ability to Repay (ATR) and the Qualified Mortgage (QM) Rule (ATR-QM Rule). The report, which looks at data of how these rules have impacted the mortgage market in the five years since they came into effect, revealed that despite the rise in home prices to pre-crisis levels, five to eight percent of conventional loans for home purchase have DTI exceeding 45 percent. In contrast, approximately 24 to 25 percent of loans originated in 2005-2007 exceeded that ratio. Despite these factors, in the conventional mortgage market, DTI ratios are constrained from returning to crisis-era levels by a combination of the ATR require- ment, GSE underwriting limits which define the loans which are eligible for purchase by the GSEs and the CFPB's General QM DTI threshold which limits this cat- egory of loans to those with DTIs at or below 43 percent. The report revealed that while housing prices had returned to the pre-crisis levels, only 5-8 percent of conventional home loans reflected DTI exceeding 45 percent. In contrast, around 24 to 25 percent of loans originated in 2005-2007 exceeded that ratio. However, it noted that the Rule was more likely to have affected access to credit on some segments of the market. They included borrowers with high DTI, self- employed borrowers, and those seeking smaller loan amounts. The report, citing HMDA data, noted that for the last group of borrowers the Rule likely had no effect on access to credit for smaller amount loans. Comparing the delinquency rates between QM and non-QM loans, the report revealed that while the delinquency rate of loans with DTIs exceeding 43 percent (non-QM loans) remained at a steady 0.6 percent, the delinquency rate of GSE loans with DTIs above 43 percent in- creased from 0.6 percent for loans originated in 2012-2013 to 1 percent among 2014-2015 originations. "Thus, although the performance of non-QM loans did not improve in absolute terms, it has improved relative to the performance of comparable QM loans," the CFPB report said. The report revealed that while housing prices had returned to the pre-crisis levels, only 5-8 percent of conventional home loans reflected DTI exceeding 45 percent.