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Comment to the Federal Housing Finance Agency on 2021 Enterprise Housing Goals Proposed Rule

October 13, 2020
Mortgage Lending
Comment Letter

From the introduction to the comment to the Federal Housing Finance Agency:

On behalf of the undersigned consumer, civil rights, and housing organizations, we would like to thank you for the opportunity to comment on the affordable housing goals for Fannie Mae and Freddie Mac (the GSEs). In exchange for government support, the GSEs have an explicit public interest mission. This mission is foundational and part of their charters – the GSEs’ very reason for existing.

The mission includes promoting access to mortgage credit to underserved borrowers, serving a countercyclical role in the mortgage market, and FHFA’s duty to reasonably support the safety and soundness of the GSEs and U.S. housing finance system. The affordable housing goals are a key metric to ensure that the GSEs are striving to meet their mission obligations. The housing goals also push the GSEs to develop and market products that support the primary market to better serve underserved borrowers. We contend that the GSEs should focus explicitly on addressing racial homeownership gaps; marginal improvements are insufficient given the GSEs’ charters that cite the GSEs’ responsibility to underserved communities and borrowers of color, including to “minority census tracts.”

FHFA should significantly increase the GSEs’ affordable housing goals, particularly the low-income purchase goal. Furthermore, FHFA and the GSEs should take measures that make rate term refinancing more available to lower wealth borrowers and borrowers of color. In addition to bolstering access to responsible mortgage credit, the GSEs should also take all possible actions to mitigate foreclosures and to support affordable loan modifications for homeowners who have been hit hard by the COVID-19 pandemic and recession. FHFA and the GSEs should do more to provide guidance to servicers to help inform borrowers of forbearance options and ensure that borrowers can access relief.

FHFA proposes to set benchmark levels for the single-family and multifamily goals only for calendar year 2021 and to keep the levels the same as those for the 2018-2020 period. FHFA states it will subsequently conduct a new round of notice and comment rulemaking to establish benchmark levels for 2022 and beyond. Given that FHFA did not conduct its typical mortgage market study in setting the goals for this rulemaking, we urge FHFA to provide greater transparency into the goal-affected markets by conducting additional analysis and making more data publicly available. This is particularly important now, during an unprecedented health pandemic that created an economic crisis.

We reiterate our prior call for FHFA to increase the low-income purchase goal to 27%. But at a minimum, as FHFA plans for future rulemakings, the agency should increase the low-income purchase goal to at least 27% in 2022 and 2023. Additionally, as described in detail in our comment on the 2018-2020 goals, the GSEs should be required to meet both the benchmark and the market metrics. Also, it should be noted that the GSEs’ own policies obstruct them from increasing the goals and these policies should be modified. Lastly, FHFA should monitor the low-income areas home purchase subgoal to ensure policy objectives are met and that the subgoal does not facilitate displacement of lower-income families.