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TH E M R EP O RT | 63 O R I G I NAT I O N S E R V I C I N G A NA LY T I C S S E C O N DA R Y M A R K E T SECONDARY MARKET THE LATEST FHFA Issues Fannie Mae & Freddie Mac Final Affordable Housing Goals Rule The final affordable housing goals rule includes a low-income home purchase goal of 24 percent for the GSEs. T he Federal Hous- ing Finance Agency (FHFA) announced the adoption of a final rule establishing the housing goals for Fannie Mae and Fred - die Mac for both single-family and multifamily housing for the years 2015 through 2017. The proposed housing goals rule for the GSEs was first issued in August 2014. More than 144 comments were made on the proposed rule, all of which were considered by the FHFA in the development of the final rule. According to the FHFA, the final rule sets identical benchmarks in all categories for both Fannie Mae and Freddie Mac. "The single-family goals ad - vance the Enterprises' statutory missions to provide access to credit for creditworthy borrowers and provide liquidity to the U.S. housing market while operating in a safe and sound manner," FHFA Director Melvin L. Watt said. "The multifamily goals will create rental opportunities for those who need affordable housing. Together, these goals establish a solid foun - dation for affordable and sustain- able homeownership and rental opportunities in this country." The final rule establishes the following single-family housing goals for Fannie Mae and Freddie Mac for each of the three years from 2015 to 2017: » » A low-income home purchase goal of 24 percent, which is a slight increase from the pro- posed benchmark for each year of 23 percent, which was also 2014's benchmark goal; » » A very-low income home purchase sub-goal of 6 percent, which is down 7 percent from the sub-goal in the proposed rule and down 1 percentage point from 2014's benchmark goal; » » A low-income areas home purchase sub-goal of 14 percent, the same as what was in the proposed rule and 3 percent - age points higher than 2014's benchmark goal; » » A low-income refinance goal of 21 percent, down 27 percent from what was in the proposed rule and 1 percentage point higher than 2014's benchmark goal. "The single-family goals ad - vance the Enterprises' statutory missions to provide access to credit for creditworthy borrowers and provide liquidity to the U.S. housing market while operating in a safe and sound manner." The final rule establishes goals for the first time for rental units affordable to low-income families in multifamily properties with five to 50 units. According to the final rule, both GSEs' multifam - ily low-income goal for each year from 2015 to 2017 is 300,000 units, an increase from the proposed number of 250,000 units for each year for Fannie Mae and the proposed number of 210,000 for 2015, 220,000 for 2016, and 230,000 for 2017 for Freddie Mac. FHFA is required to estab - lish housing goals annually for mortgages purchased by the GSEs under the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, which was amended by the Housing and Economic Recovery of 2008. The final rule will become ef - fective 30 days after it is published in the Federal Register, according to FHFA. Presidential Candidates Urged to Reform Fannie Mae & Freddie Mac Former FHFA acting director calls on presidential candidates to discuss housing finance reform and a return of private capital to the market. Y ears after the housing crash, American tax- payers still guarantee repayment for three out of every four mortgages, ac- cording an article from the Wall Street Journal. Author, Edward DeMarco challenges this impli- cation on taxpayers by suggest- ing that Fannie Mae and Freddie Mac be reformed and removed from taxpayers pockets. "Taxpayers shouldn't be left hold - ing the bag for mortgage defaults." DeMarco, a senior fellow at the Milken Institute's Center for Financial Markets who from 2009 to 2014 served as acting director of the Federal Housing Finance Agency (FHFA), conservator for Fannie Mae and Freddie Mac, be - lieves reform is necessary for the GSEs to fix fundamental prob- lems with the system. He also feels this is a policy presidential candidates need to address. "Several comprehensive legislative proposals to replace Fannie and Freddie and revisit overall housing policy have been made," DeMarco said. "But nothing has happened. So taxpayers guarantee repayment to investors on roughly three out of every four new mortgages today." He added, "Taxpayers shouldn't be left holding the bag for mortgage defaults," and as a solution, private capital needs to placed back into the system. In the article, Congress is urged to pass legislation that will ensure all securitizations involve enough risk transfer so taxpayers are left with credit risk only in dire situations. DeMarco also suggested reforms under the FHFA's direc - tion need to accommodate firms outside of Fannie and Freddie. The common securitization plat- form introduced by FHFA in 2012 will fix this issue by opening up the door to other firms to issue mortgage-backed securities equiva - lent to Fannie and Freddie's. "These two steps aren't con- troversial. Every major legislative proposal in the past few years, Democratic and Republican, included them," DeMarco noted. "What is needed is leadership, if not from the White House then from Congress. Government spends billions a year, including tax expenditures, on housing, much of which subsidizes higher- income homeowners. How could we eliminate some of this spend - ing while redirecting another portion of it to the truly disad- vantaged? Now that's a discussion worthy of a presidential debate." "Taxpayers shouldn't be left holding the bag for mortgage defaults." —Edward DeMarco, senior fellow, Milken Institute's Center for Financial Markets and former FHFA acting director