[Federal Register Volume 83, Number 29 (Monday, February 12, 2018)]
[Rules and Regulations]
[Pages 5878-5899]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-02649]


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FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1282

RIN 2590-AA81


2018-2020 Enterprise Housing Goals

AGENCY: Federal Housing Finance Agency.

ACTION: Final rule.

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SUMMARY: The Federal Housing Finance Agency (FHFA) is issuing a final 
rule on the housing goals for Fannie Mae and Freddie Mac (the 
Enterprises) for 2018 through 2020. 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 final rule establishes the benchmark levels for each of the 
housing goals and subgoals for 2018 through 2020. In addition, the 
final rule makes a number of clarifying and conforming changes, 
including revisions to the requirements for the housing plan that an 
Enterprise may be required to submit to FHFA in response to a failure 
to achieve one or more of the housing goals or subgoals.

DATES: The final rule is effective on March 14, 2018.

FOR FURTHER INFORMATION CONTACT: Ted Wartell, Manager, Housing & 
Community Investment, Division of Housing Mission and Goals, at (202) 
649-3157. This is not a toll-free number. 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. Background

A. Statutory and Regulatory Background for the Existing Housing Goals

    The Safety and Soundness Act requires FHFA to establish annual 
housing goals for several categories of both single-family and 
multifamily mortgages purchased by Fannie Mae and Freddie Mac.\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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    The housing goals provisions of the Safety and Soundness Act were 
substantially revised in 2008 with the enactment of the Housing and 
Economic Recovery Act, which amended the Safety and Soundness Act.\3\ 
Under this revised structure, FHFA established housing goals for the 
Enterprises for 2010 and 2011 in a final rule published on September 
14, 2010.\4\ FHFA established housing goals levels for the Enterprises 
for 2012 through 2014 in a final rule published on November 13, 
2012.\5\ In a final rule published on September 3, 2015, FHFA announced 
the housing goals for the Enterprises for 2015 through 2017, including 
a new small multifamily low-income housing subgoal.\6\
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    \3\ Housing and Economic Recovery Act of 2008, Public Law 110-
289, 122 Stat. 2654 (July 30, 2008).
    \4\ See 75 FR 55892.
    \5\ See 77 FR 67535.
    \6\ See 80 FR 53392.
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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. 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.
    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

[[Page 5879]]

guaranteed by the Federal Housing Administration (FHA) or another 
government agency and with principal balances that do not exceed the 
loan limits for Enterprise mortgages.
    Market measurement. The performance of the Enterprises on the 
single-family housing goals is evaluated using a two-part approach, 
which compares the goal-qualifying share of the Enterprise's mortgage 
purchases to two separate measures: A benchmark level and a market 
level. FHFA considered alternatives to this method in the 2015-2017 
housing goals rulemaking and determined that the two-part approach 
continued to be the most appropriate method for evaluating performance 
on the single-family goals. FHFA is continuing that approach in this 
final rule.
    In order to meet a single-family housing goal or subgoal, the 
percentage of mortgage purchases by an Enterprise that meet each goal 
or subgoal must meet 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, including FHFA's forecast of the 
goal-qualifying share of the overall market for each year. The market 
level is determined retrospectively each year, based on the actual 
goal-qualifying share of the overall market as measured by FHFA based 
on Home Mortgage Disclosure Act (HMDA) data for that year. The overall 
mortgage market that FHFA uses for both the prospective market 
forecasts and the retrospective market measurement consists of all 
single-family owner-occupied conventional conforming mortgages that 
would be eligible for purchase by either Enterprise. It includes loans 
reported in HMDA as sold to the Enterprises as well as comparable loans 
reported to HMDA as held in a lender's portfolio. It also includes 
comparable loans that are reported in HMDA as ``sold to others.'' This 
category includes loans reported as sold to Farmer Mac, private 
securitization, commercial banks, savings banks, life insurance 
companies, credit unions, mortgage bank and finance companies and their 
affiliates. Because HMDA data is reported as of a single point in time, 
the same loan could be reported in any of these categories in a 
particular calendar year, regardless of the ultimate disposition of the 
loan.
    The market as measured based on HMDA data is different from the 
``actual market'' of loans that an Enterprise may purchase for purposes 
of meeting the goals. Both the benchmark level and the retrospective 
market level measure the goal-qualifying share of the overall market 
for the year in question and exclude ``seasoned loans.'' Seasoned loans 
are loans that were originated in prior years and acquired by the 
Enterprise in the current year. While both the benchmark and the 
retrospective market measure 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 provides 
housing goals credit when the Enterprises acquire qualified seasoned 
loans. The Enterprises' acquisition of seasoned loans provides an 
important source of liquidity for this market segment.
    The market as measured based on HMDA data is also different from 
the ``actual market'' because the ``actual market'' includes loans from 
institutions that are not required to report under HMDA.\7\ For 
instance, Bhutta, Laufer, and Ringo (2017) estimate that loans in HMDA 
data for 2016 represented 90% of the first-lien, home purchase and 
refinance loans found in Equifax's consumer credit files.\8\
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    \7\ See https://www.ffiec.gov/hmda/pdf/2017letter.pdf for 
complete list of institutions required to report under HMDA. For 
2016, this included depositories with greater than $44 million in 
assets and non-depositories with greater than $10 million in assets 
that originated more than 100 home purchase and refinance loans.
    \8\ See https://www.federalreserve.gov/publications/files/2016_HMDA.pdf.
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    The differences between the market as measured based on HMDA data 
and the ``actual market'' of loans available for purchase by the 
Enterprises may help explain why Enterprise performance on the income-
based home purchase goals generally do not coincide with the market as 
measured by HMDA. As noted by commenters on the proposed rule, between 
2010-2015, each Enterprise met the retrospective HMDA market level for 
the low-income home purchase goal in only one year (2014 for Fannie Mae 
and 2010 for Freddie Mac), and only one Enterprise met the 
retrospective HMDA market level for the very low-income home purchase 
goal in one year (2014 for Fannie Mae). While the performance of the 
Enterprises has generally lagged the retrospective HMDA market levels, 
particularly for the income-based home purchase goals, FHFA continues 
to believe that the HMDA market levels represent feasible targets for 
the Enterprises. FHFA expects the Enterprises to continue to make 
efforts to meet the retrospective HMDA market levels, consistent with 
maintaining safe and sound credit quality standards, regardless of 
whether the market levels exceed or fall below the benchmark levels.
    Recent changes to the HMDA regulations will likely result in the 
HMDA data covering an even greater portion of the single-family 
mortgage market.\9\ The changes will also provide more detailed 
information about the loans included in the HMDA data. The changes to 
the HMDA regulations generally took effect at the start of 2018, so the 
new, more detailed information will not be available until after the 
2018 performance year.
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    \9\ See Home Mortgage Disclosure Act final rule, 80 FR 66128 
(Oct. 28, 2015).
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    FHFA has considered the possible impact that certain changes to the 
HMDA regulations may have on the Enterprise housing goals. However, at 
this time the impact that such changes might have on the retrospective 
measure of the market is uncertain. FHFA is not making any changes to 
the Enterprise housing goals in anticipation of the revised HMDA data. 
FHFA will assess the impact of the changes and, if necessary, may 
propose changes to the housing goals regulation at a later date.
    Multifamily goals. The multifamily goals defined under the Safety 
and Soundness Act include separate categories for mortgages on 
multifamily properties (properties with five or more units) with rental 
units affordable to low-income families and for mortgages on 
multifamily properties with rental units affordable to very low-income 
families. FHFA has also established by regulation a small multifamily 
low-income subgoal for properties with 5-50 units. 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 
regulation does not include a retrospective market level measure for 
the multifamily goals and subgoals, due in part to a lack of 
comprehensive data about the multifamily market such as that provided 
by HMDA for single-family mortgages. As a result, FHFA currently 
measures Enterprise multifamily goals performance against the benchmark 
levels only. The expanded HMDA fields that will be available for the 
2018 performance year are expected to include information on the number 
of units in the properties securing each multifamily loan and should be 
helpful in evaluating performance for this market segment.

[[Page 5880]]

B. Adjusting the Housing Goals

    Under the housing goals regulation first established by FHFA in 
2010, as well as under this final rule, FHFA may reduce the benchmark 
levels for any of the single-family or multifamily housing goals in a 
particular year without going through notice and comment rulemaking 
based on a determination by FHFA that (1) market and economic 
conditions or the financial condition of the Enterprise require a 
reduction, or (2) ``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 Charter Acts.'' \10\ The 
housing goals regulation also takes into account the possibility that 
achievement of a particular housing goal may or may not have been 
feasible for the Enterprise. If FHFA determines that a housing goal was 
not feasible for the Enterprise to achieve, then the regulation 
provides for no further enforcement of that housing goal for that 
year.\11\
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    \10\ 12 CFR 1282.14(d).
    \11\ 12 CFR 1282.21(a).
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    If after publication of this final rule 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 steps as necessary 
and appropriate to adjust that goal. Such steps could include adjusting 
the benchmark levels through the processes in the existing regulation 
or establishing revised housing goal levels through notice and comment 
rulemaking.

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.

II. Proposed Rule and Comments

    FHFA published a proposed rule in the Federal Register on July 7, 
2017 that proposed benchmark levels for each of the single-family and 
multifamily housing goals and technical changes to the regulations.\12\ 
The comment period ended on September 5, 2017.
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    \12\ 82 FR 31514 (July 7, 2017).
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    FHFA received 24 comment letters on the proposed rule, representing 
the views of more than 40 organizations and individuals. Comments were 
submitted by seven individuals; eight policy advocacy organizations; 
seven trade associations representing lenders, home builders, credit 
unions, and other mortgage market participants; and Fannie Mae and 
Freddie Mac. FHFA has reviewed and considered all of the comments. A 
number of comment letters raised issues unrelated to the housing goals 
or beyond the scope of the proposed rule, and those comments are not 
addressed in this final rule. Specific provisions of the proposed rule, 
and the comments received on those provisions, are discussed below and 
throughout this final rule.
    Qualitative Measures. Four commenters--a trade organization, an 
advocacy organization, and Fannie Mae and Freddie Mac--suggested that 
FHFA consider qualitative efforts when evaluating the performance of 
the Enterprises under the housing goals, including building 
partnerships with community-based organizations and developing new or 
innovative products. Freddie Mac highlighted efforts like outreach, 
education, and relationship building with organizations, which take 
time and energy to create and maintain, but noted that these activities 
are not technically counted until they result in actual loan purchases. 
Fannie Mae stated that qualitative measures should be taken into 
account when determining whether the goals were met. Fannie Mae also 
suggested that qualitative measures should be considered by FHFA in 
determining whether an Enterprise should be required to submit a 
housing plan. FHFA recognizes that the quantitative performance 
outcomes of the Enterprises may not fully reflect the efforts that the 
Enterprises have made in seeking to improve their performance. In 
particular, quantitative measures will not always reflect the impact of 
market developments outside the control of the Enterprises that may 
have a significant impact on the ability of the Enterprises to meet the 
housing goals. On the other hand, quantitative benchmarks provide a 
bright line for measuring performance that qualitative measures do not. 
In addition, FHFA does take into account the qualitative efforts of the 
Enterprises in attempting to meet the housing goals when FHFA assesses 
the feasibility of any housing goals that an Enterprise fails to 
achieve, as well as whether to require an Enterprise to submit a 
housing plan if the Enterprise fails to achieve a goal that was 
feasible. On balance, FHFA remains unconvinced about the value of 
adding qualitative factors to the benchmarks or of replacing 
quantitative benchmarks against which progress can be objectively 
measured.
    Single-Family Rental. Two commenters discussed the treatment of 
single-family rental housing under the goals, recognizing that this is 
still an emerging segment. One comment letter (representing multiple 
consumer advocacy groups) noted that ``while our organizations have 
significant concerns about the Enterprises financing investors in the 
single-family rental market, if this financing becomes more firmly 
established as part of the Enterprise multifamily channel, it is 
critical that FHFA develop a goal that addresses affordability in this 
context.'' Further, noting that ``the Enterprises have always played a 
part in single-family rental by financing 2-4 unit properties owned by 
an owner-occupant,'' the letter recommended that FHFA offer ``bonus 
credit for owner-occupied 2-4 unit properties . . . when the owner has 
participated in a certified counseling program that includes landlord 
training.''
    The other comment letter (from a trade organization) encouraged 
FHFA to develop an approach to single-family rental as a part of the 
multifamily goals and to provide clarity on whether single-family 
rental will be counted for multifamily housing goals, and if so, how it 
will be categorized and measured.
    FHFA is actively monitoring this market segment and developing an 
overall regulatory approach to single-family rental. The housing goals 
regulation permits FHFA to ``determine whether and how any transaction 
or class of transactions shall be counted for purposes of the housing 
goals.'' \13\ FHFA may provide specific guidance to the Enterprises 
under this provision that may allow the Enterprises to count some 
single-family rental properties that are financed as multifamily 
transactions toward the performance of the Enterprises on the 
multifamily housing goals. Any such guidance would be subject to 
appropriate limits to ensure that the overall multifamily housing goals 
continue to provide meaningful incentives for the Enterprises in the 
categories targeted by the housing goals. FHFA may also consider 
options to address single-family rental properties

[[Page 5881]]

more systematically through future notice and comment rulemaking.
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    \13\ 12 CFR 1282.16(e).
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    Manufactured Housing--Chattel. One commenter stated that ``loans 
for owner-occupied real property and chattel manufactured home have 
always counted toward single-family housing goals, provided they meet 
the appropriate income threshold for the goal.'' This statement is not 
an accurate description of the housing goals regulation. Prior to 2010, 
the regulation defined the term ``mortgage'' to include a loan secured 
by ``a manufactured home that is personal property under the laws of 
the State in which the manufactured home is located.'' FHFA revised the 
definition in 2010 to remove this language and thus to exclude chattel 
loans on manufactured housing from coverage under the housing goals 
regulation. The Supplementary Information for the 2010 final rule 
recognized that the role of the Enterprises with respect to chattel 
loans on manufactured housing was subject to change, and also stated 
that ``FHFA may revise the definition of `mortgage' in future 
rulemaking to ensure conformance with the final regulation on duty to 
serve.'' \14\
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    \14\ 75 FR 55892, 55895 (Sept. 14, 2010).
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    In December 2016, FHFA published a final rule implementing the 
statutory requirements for the Fannie Mae and Freddie Mac Duty to Serve 
underserved markets. The Duty to Serve final rule does not require the 
Enterprises to purchase chattel loans on manufactured housing, but the 
final rule does permit the Enterprises to receive Duty to Serve credit 
for such purchases to the extent that the Enterprises choose to pursue 
a pilot initiative for chattel loans on manufactured housing and any 
required FHFA approvals are received.\15\
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    \15\ 81 FR 96242, 96251 (Dec. 29, 2016).
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    While both Enterprises have adopted Duty to Serve plans to pursue 
pilot initiatives for chattel loans on manufactured housing, those 
plans are still in the early stages. In addition, because neither 
Enterprise has purchased chattel loans on manufactured housing in 
recent years, there is limited data available on the market for such 
loans or their performance. As a result, FHFA would be unable to set 
benchmark levels for this market segment or assess the impact of any 
Enterprise purchases on their housing goals performance. Due to the 
limited information available at this time, the final rule does not 
make any change to the housing goals treatment of chattel loans on 
manufactured housing. FHFA may propose changes in a future rulemaking 
based on its assessment of additional information that may become 
available, especially from Enterprise chattel pilot activities. If FHFA 
does propose a change in the definition of the term ``mortgage'' to 
include chattel loans on manufactured housing, FHFA will also need to 
size this market segment and appropriately adjust the benchmark levels 
upwards to reflect the new definition.
    Blanket loans on Manufactured Housing Communities (MHCs). The 
housing goals regulation does not explicitly address blanket loans on 
MHCs, but FHFA has interpreted the regulation to exclude blanket loans 
on MHCs from counting toward the performance of the Enterprises under 
the multifamily housing goals. In the 2015-2017 Enterprise housing 
goals proposed rule, FHFA requested comment on whether such loans 
should be counted. FHFA received a number of comments at that time 
supporting housing goals credit for blanket loans on MHCs, but the 
final rule did not adopt that change due to the difficulty of 
accurately determining ``a manufactured housing unit's affordability 
under the housing goals, because bedroom count information on 
individual manufactured housing units in the communities is not 
collected by the Enterprises, and the pad rent alone does not include 
the full cost of housing for the residents, which includes paying for 
their unit financing.'' \16\
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    \16\ 80 FR at 53429.
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    One commenter on the July 17, 2017 proposed rule stated that 
blanket loans on MHCs should be included for counting toward the 
housing goals, arguing that it would be inconsistent to include them in 
the Duty to Serve regulation but not in the housing goals regulation. 
The commenter stated that goals eligibility should include investor-
owned rental communities as well as resident-owned communities, arguing 
that the former are the dominant segment of the MHC segment. The 
commenter further argued that housing goals credit should be limited to 
occupied units located in the community rather than the total number of 
rental spaces available. Given the large volume of the segment, the 
commenter asserted the proposed multifamily goals should be increased 
to ``reflect the expanded scope of the housing goals.''
    Both Enterprises renewed their requests for FHFA to provide housing 
goals credit for blanket loans on manufactured housing communities 
(MHCs). Freddie Mac also suggested a different affordability standard 
than either of the two affordability methods defined in the Duty to 
Serve regulation. The Duty to Serve regulation includes two methods for 
estimating the number of units that could be counted as ``affordable'' 
for purposes of receiving Duty to Serve credit. For an MHC owned by a 
government unit or instrumentality, a nonprofit organization, or the 
residents, units in the MHC may be treated as affordable for Duty to 
Serve purposes if they are subject to affordability restrictions under 
laws or regulations governing the affordability of the community, or 
the community's or ownership entity's founding, chartering, governing, 
or financing documents. The Duty to Serve regulation also allows 
affordability for blanket loans on MHCs to be determined by estimating 
the affordability of units in the community based on the median income 
of the census tract in which the MHC is located. Freddie Mac proposed 
instead that FHFA determine affordability under the housing goals for 
blanket loans on MHCs based on an estimated ``MHC Adjustment Factor'' 
that would estimate the total housing cost for manufactured housing 
units based on the actual site rent plus an estimated utility allowance 
and an estimated additional amount to reflect the cost of the unit 
itself (including insurance and taxes).\17\
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    \17\ FHFA found insufficient data supporting the Freddie Mac 
suggested ``MHC Adjustment Factor'' for determining affordability. 
The $450/unit estimate suggested by Freddie Mac was based on a very 
small and non-national sample, provided by an appraiser and is not 
suitable for a nationwide proxy.
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    FHFA does not believe that it would be inconsistent to allow credit 
for blanket loans on MHCs under Duty to Serve while not allowing credit 
for such loans under the housing goals. The scope of activities 
included under the Duty to Serve regulation differs from the scope of 
activities covered by the housing goals. The Duty to Serve regulation 
addresses certain specific market segments identified by Congress in 
the Safety and Soundness Act, one of which is manufactured housing, and 
appropriately includes credit related to blanket loans on MHCs. In 
contrast, the housing goals are directed at the full range of 
Enterprise loan purchase activities and are designed to evaluate the 
performance of the Enterprises particularly in serving low- and very 
low-income borrowers and renters. While FHFA has determined not to 
include credit for blanket loans on MHCs in this final rule, FHFA will 
continue to monitor this market segment. Moreover, as discussed in more 
detail below, FHFA exempts

[[Page 5882]]

blanket loans on MHCs from the annual Conservatorship Scorecard cap on 
multifamily mortgage purchases, to avoid discouraging the flow of 
capital to the MHC sector.

III. Summary of Final Rule

A. Benchmark Levels for the Single-Family Housing Goals

    The final rule establishes the benchmark levels for the single-
family housing goals and subgoal for 2018-2020 as follows:

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                                                                                     Benchmark       Benchmark
                                                                                  level for 2015- level for 2018-
                    Goal                                   Criteria               2017 (percent)  2020 (percent)
 
----------------------------------------------------------------------------------------------------------------
Low-Income Home Purchase Goal..............  Home purchase mortgages on single-               24              24
                                              family, owner-occupied properties
                                              with borrowers with incomes no
                                              greater than 80 percent of area
                                              median income.
Very Low-Income Home Purchase Goal.........  Home purchase mortgages on single-                6               6
                                              family, owner-occupied properties
                                              with borrowers with incomes no
                                              greater than 50 percent of area
                                              median income.
Low-Income Areas Home Purchase Subgoal \18\  Home purchase mortgages on single-
                                              family, owner-occupied properties
                                              with:.
                                              Borrowers in census tracts              14              14
                                              with tract median income no
                                              greater than 80 percent of area
                                              median income; or
                                                 Borrowers with incomes
                                                 no greater than 100 percent of
                                                 area median income in census
                                                 tracts where (i) tract income
                                                 is less than 100 percent of
                                                 area median income, and (ii)
                                                 minorities comprise at least 30
                                                 percent of the tract
                                                 population..
Low-Income Refinancing Goal................  Refinancing mortgages on single-                 21              21
                                              family, owner-occupied properties
                                              with borrowers with incomes no
                                              greater than 80 percent of area
                                              median income.
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B. Multifamily Housing Goal Levels

    The final rule establishes the levels for the multifamily goal and 
subgoals for 2018-2020 as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                                  Goal level for
                    Goal                                   Criteria               Goal level for     2018-2020
                                                                                   2017 (units)       (units)
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Low-Income Multifamily Goal................  Units affordable to families with           300,000         315,000
                                              incomes no greater than 80 percent
                                              of area median income in
                                              multifamily rental properties with
                                              mortgages purchased by an
                                              Enterprise.
Very Low-Income Multifamily Subgoal........  Units affordable to families with            60,000          60,000
                                              incomes no greater than 50 percent
                                              of area median income in
                                              multifamily rental properties with
                                              mortgages purchased by an
                                              Enterprise.
Small Multifamily Low-Income Subgoal.......  Units affordable to families with            10,000          10,000
                                              incomes no greater than 80 percent
                                              of area median income in small
                                              multifamily rental properties (5
                                              to 50 units) with mortgages
                                              purchased by an Enterprise.
----------------------------------------------------------------------------------------------------------------

C. Other Changes

    The final rule makes changes and clarifications to the existing 
regulation, including minor technical changes to some regulatory 
definitions. The final rule also revises the requirements applicable to 
the housing plan an Enterprise may be required to submit based on a 
failure to achieve one or more of the housing goals.
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    \18\ The Enterprise housing goals also include a low-income 
areas home purchase goal. The low-income areas goal benchmark level 
is established by a two-step process. The first step is setting the 
benchmark level for the low-income areas subgoal, as established by 
this final rule. The second step is establishing an additional 
increment for mortgages to families located in federally-declared 
disaster areas with incomes less than or equal to AMI. Each year, 
FHFA sets the disaster area increment separately from this rule and 
notifies the Enterprises by letter of the benchmark level for that 
year. The final rule sets the annual low-income areas home purchase 
goal benchmark level for 2018 through 2020 at the subgoal benchmark 
level of 14 percent plus a disaster areas increment that FHFA will 
set separately each year.
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IV. Single-Family Housing Goals

    This final rule establishes the single-family housing goals for 
2018-2020. FHFA considered the required statutory factors described 
below in setting the benchmark levels for the single-family housing 
goals. FHFA's analysis and goal setting process includes developing 
market forecast models for each of the single-family housing goals, as 
well as considering a number of other variables that impact affordable 
homeownership. Many of these variables indicate that low-income and 
very low-income households are facing, and will continue to face, 
difficulties in achieving homeownership or in refinancing an existing 
mortgage. These factors, such as rising property values and stagnant 
household incomes, also impact the Enterprises' ability to meet their 
mission and facilitate affordable homeownership for low-income and very 
low-income households. Nevertheless, FHFA expects and encourages the 
Enterprises to work toward meeting their housing goal requirements in a 
safe and sound manner. This may include steps the Enterprises take to 
fulfill FHFA's expectations for supporting access to credit expressed 
in the Conservatorship Scorecard, which requires the Enterprises to 
undertake a number of

[[Page 5883]]

research and related efforts including the development of pilots and 
initiatives.\19\
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    \19\ See 2017 Scorecard for Fannie Mae, Freddie Mac, and Common 
Securitization Solutions, December 2016, available at https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/2017-Scorecard-for-Fannie-Mae-Freddie-Mac-and-CSS.pdf.
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A. Setting the Single-Family Housing Goal Levels

FHFA Process for Setting the Single-Family Benchmark Levels
    Section 1332(e)(2) of 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.\20\
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    \20\ 12 U.S.C. 4562(e)(2).
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    FHFA has considered each of these seven statutory factors in 
setting the benchmark levels for each of the single-family housing 
goals and subgoal.
    Recognizing that some of the factors required by statute to be 
considered can be readily captured using reliable data series while 
others cannot, FHFA implemented the following approach. FHFA's 
statistical market models considered factors that are captured through 
well-known and established data series, and these are then used to 
generate a point forecast for each goal, as well as a confidence 
interval for the point forecast. FHFA then considered the remaining 
statutory factors, as well as other relevant policy factors, in 
selecting the specific point forecast within the confidence interval as 
the benchmark level. FHFA's market forecast models incorporate four of 
the seven statutory factors: National housing needs; economic, housing, 
and demographic conditions; other reliable mortgage data; and the size 
of the purchase money conventional mortgage market or refinance 
conventional mortgage market for each single-family housing goal. The 
market forecast models generated a point estimate, as well as a 
confidence interval. FHFA then considered the remaining three statutory 
factors (historical performance and effort of the Enterprises toward 
achieving the housing goal; ability of the Enterprises to lead the 
industry in making mortgage credit available; and need to maintain the 
sound financial condition of the Enterprises), as well as other 
relevant policy factors, in selecting the specific point forecast 
within the confidence interval as the benchmark level for the goal 
period.
    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 2018-2020 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. Following standard practice among 
forecasters and economists at other federal agencies, FHFA estimated a 
reduced-form equation for each of the housing goals and fit 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 factors that may influence the market shares, e.g., 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. FHFA 
developed separate models for each of the single-family housing goals 
and subgoal.
    FHFA has employed similar models in past housing goals rulemakings 
to generate market forecasts. The models were developed using monthly 
series generated from HMDA and other data sources, and the resulting 
monthly forecasts were then averaged into an annual forecast for each 
of the three years in the goal period. The models rely on 13 years of 
HMDA data, from 2004 to 2016, the latest year for which HMDA data are 
available. Additional discussion of the market forecast models can be 
found in an updated research paper, available at http://www.fhfa.gov/PolicyProgramsResearch/Research/.\21\
---------------------------------------------------------------------------

    \21\ Details on FHFA's single-family market models are available 
in the most recent technical paper, ``The Size of the Affordable 
Mortgage Market: 2018-2020 Enterprise Single-Family Housing Goals.''
---------------------------------------------------------------------------

    In the final rule establishing the housing goals for 2015-2017, 
FHFA stated that it would engage directly with commenters to obtain 
detailed feedback on FHFA's econometric models for the housing goals. 
Throughout 2016, FHFA met with industry modeling experts about 
potential improvements to the econometric models. Considering input 
received, FHFA has revised the market forecast models to include better 
specifications and new variables for all goal-qualifying shares, while 
still following generally accepted practices and standards adopted by 
economists, including those at other federal agencies. During the model 
development process, FHFA grouped factors that are expected by housing 
market economists to have an impact on the market share of affordable 
housing into seven broad categories. For each category of variables, 
many variables were tested but only retained when they exhibited 
predictive power. The new set of models includes new driver variables 
that reflect factors that impact the affordable housing market--for 
example, household debt service ratio, labor force participation rate, 
and underwriting standards.
    As is the case with any forecasting model, the accuracy of the 
forecast will vary depending on the accuracy of the inputs to the model 
and the length of the forecast period. FHFA has attempted to minimize 
the first source of variability by using third party forecasts 
published by Moody's and other accredited mortgage market forecasters. 
The second source of variability is harder to address. The models 
underlying this final rule rely on the most up-to-date data available 
as of November 2017, and use forecasted input values for the rest of 
2017 (depending on the data series) to produce the forecasts for 2018-
2020. The confidence intervals for the benchmark levels become wider as 
the forecast period lengthens. In other words, it becomes more likely 
that the actual market levels will be different from the forecasts the 
farther into the future the forecasts attempt to make predictions. 
Predicting three years out is not the usual practice in forecasting. A 
number of industry forecasters, including the Mortgage Bankers 
Association (MBA), Fannie Mae and Freddie Mac, do not publish forecasts 
beyond two years because accuracy of forecasts decreases substantially 
beyond a two-year period.
    Market outlook. There are many factors that impact the affordable

[[Page 5884]]

housing market as a whole, and changes to any one of them may 
significantly impact the ability of the Enterprises to meet the goals. 
In developing the market models, FHFA used Moody's forecasts, where 
available, as the source for macroeconomic variables.\22\ In cases 
where Moody's forecasts were not available (for example, the share of 
government-guaranteed/insured home purchases and the share of 
government-guaranteed/insured refinances), FHFA generated and tested 
its own forecasts.\23\ Elements that impact the models and the 
determination of benchmark levels are discussed below.
---------------------------------------------------------------------------

    \22\ The macroeconomic outlook described here is based on 
Moody's and other forecasts as of August 2017.
    \23\ This refers to the mortgages insured/guaranteed by 
government agencies such as FHA, Department of Veterans Affairs 
(VA), and Rural Housing Service (RHS).
---------------------------------------------------------------------------

    Interest rates are arguably one of the most important variables in 
determining the trajectory of the mortgage market. The Federal Reserve 
launched its ``interest rate normalization'' process in December 2015 
with a 0.25 percentage point increase. In the September 2017 meeting of 
the Federal Open Market Committee (FOMC), the FOMC indicated a 
commitment to a low federal funds rate policy for the time being. 
Storm-related disruptions and rebuilding, resulting from hurricanes 
Harvey, Irma, and Maria, are expected to affect economic activity in 
the near term.\24\ However, there is some consensus among economists 
that the Federal Reserve will resume rate hikes if the economic signals 
indicate a need for it. 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--are expected (in Moody's forecasts) to 
rise gradually from the historic low of 3.4 percent in August 2016 to 
4.8 percent by 2020.
---------------------------------------------------------------------------

    \24\ Board of Governors of the Federal Reserve System. Federal 
Open Market Committee Press Release, September 20, 2017.
---------------------------------------------------------------------------

    The unemployment rate has fallen steadily over the last few years 
to 4.1 percent in November 2017.\25\ Moody's forecasts expect it to 
remain around the same levels, between 4.1 and 4.5 percent over the 
next three years, given the expected growth of the economy at the 
modest range of 2.0 to 2.4 percent per year. Per capita disposable 
nominal income growth is forecast by Moody's to be modest as well: From 
$45,500 in 2018 to $48,400 in 2020. While household incomes are 
increasing slowly, the inflation rate is forecast to remain flat at 1.9 
to 2.3 percent throughout the period, although that depends in the near 
term on the recovery from the recent hurricane devastation and Federal 
Reserve policy in the near and medium term.
---------------------------------------------------------------------------

    \25\ Bureau of Labor Statistics, The Employment Situation--
November 2017, published on December 22, 2017.
---------------------------------------------------------------------------

    Industry analysts generally expect the overall housing market to 
continue its recovery, although the growth of house prices is not 
expected to be as large as in the last few years given the interest 
rate environment. As forecast by Moody's, FHFA's purchase-only House 
Price Index (HPI) is forecast to increase at the annual rates of 3.8, 
4.8, and 2.9 percent in 2018, 2019, and 2020, respectively.
    The expected increase in mortgage interest rates and house prices 
will likely 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 expected to decline from an index value 
of 156.5 in 2017 to 148.3 in 2020.\26\
---------------------------------------------------------------------------

    \26\ NAR's housing affordability index is a national index. It 
does not capture regional differences. 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 means that housing is becoming less 
affordable.
---------------------------------------------------------------------------

    Over the past few years, low interest rates coupled with rising 
house prices have created an incentive for many homeowners to 
refinance. The refinance share has increased from 39.9 percent of 
overall mortgage originations in 2014 to 47.4 percent in 2016. However, 
assuming that interest rates are going to rise over the next few years, 
Moody's forecasts that the refinance rate is expected to fall as low as 
27 percent during the 2018 to 2020 period.
    Additional factors reflecting affordability challenges in the 
single-family market. 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 an 
uneven economic recovery, stagnant wages even where unemployment is 
decreasing, 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.
    Throughout 2016 and 2017, the economy and the housing market 
continued to recover from the financial crisis, but the recovery has 
been uneven across the country.\27\ In some areas, economic growth, job 
gains, and demand are outpacing housing supply, sparking rapidly rising 
property values, while other areas of the country have not regained 
pre-crisis home values and are not projected to do so in the near 
future.
---------------------------------------------------------------------------

    \27\ National Association of Counties, ``County Economies 2016: 
Widespread Recovery, Slower Growth,'' February 2017: available at 
http://www.naco.org/sites/default/files/documents/County-Economies-2016.pdf.
---------------------------------------------------------------------------

    Income trends. Trends in factors such as area median income (AMI) 
point to a recovery in most areas in 2017. FHFA uses AMIs published by 
the U.S. Department of Housing and Urban Development (HUD) to determine 
affordability for Enterprise single-family and multifamily mortgage 
acquisitions. AMI is a measure of median family income derived from the 
Census Bureau's American Community Survey (ACS). Since the 1990s, AMIs 
have been used widely by HUD, state housing finance agencies, the 
Federal Deposit Insurance Corporation (FDIC), the U.S. Department of 
Treasury, and local governments across the nation to determine 
eligibility for various affordable housing and public assistance 
programs. The HUD-published AMIs are considered the standard benchmark 
in the affordable housing industry. HUD changed the methodology for 
determining AMIs in 2015 because of changes in the Census Bureau's data 
collection methodology and changes in the reporting schedules of the 
ACS data.
    AMI shifts reflect changes in borrower income levels at the census 
tract level. In general, a decrease in an area's AMI represents a 
decline in housing affordability in the area because the

[[Page 5885]]

households will have relatively less income with which to purchase a 
home where property values have either remained the same or increased 
during the same time period.\28\ This can make it more challenging for 
the Enterprises to meet the housing goals. Conversely, increases in 
AMIs would make it easier for the Enterprises to meet the housing 
goals. While there are annual fluctuations in AMI, the trends over a 
longer period (for instance, over two years or more) indicate that the 
economy is recovering, albeit in an uneven manner. Over the five-year 
period from 2012 to 2017, AMIs increased in approximately 80 percent of 
counties nationwide, indicating a geographically wide-spread recovery. 
However, some areas experienced AMI decreases in some years. For 
example, from 2015 to 2016 there were AMI decreases concentrated in 
South Dakota, Arizona, Pennsylvania, West Virginia, North Carolina, and 
the coast of South Carolina.
---------------------------------------------------------------------------

    \28\ The supply of single-family homes at the more affordable 
end of the market also impacts a low-income or very low-income 
household's ability to purchase a home. See The State of the 
Nation's Housing 2017, Joint Center for Housing Studies of Harvard 
University, June 2017.
---------------------------------------------------------------------------

    Overall, there are multiple trends in the single-family market that 
indicate that lower income households that are seeking to buy a home 
are likely to continue to face difficulty affording homes. While 
mortgage rates and home prices are projected to rise, the backdrop 
remains one of slow increases in average household income (as indicated 
by the AMI), and it is likely that the resources for lower income 
households seeking to buy a home will remain stretched. The current 
high house price appreciation, which is projected to continue even at 
the lower end of the house price spectrum, coupled with a limited 
supply of lower priced homes (largely due to the lack of construction 
of lower priced homes) suggests that it will be more challenging for 
the Enterprises to meet the single-family home purchase goals.\29\
---------------------------------------------------------------------------

    \29\ For example, according to the State of the Nation's Housing 
2017 Report, the construction of single-family homes has shifted 
toward larger, more expensive homes in recent years. The share of 
small-size single-family homes (under 1,800 square feet) dropped 
from 37 percent of all construction completions to 21 percent in 
2015, while the share of large-size homes (over 3,000 square feet) 
almost doubled from 17 percent to 31 percent.
---------------------------------------------------------------------------

    Additionally, many households have experienced stagnant wages or 
limited wage growth even though unemployment levels have decreased 
significantly since the peak of the financial crisis. Data released by 
the U.S. Census Bureau show that while median household income 
increased by 3.2 percent from 2015 to 2016, it was only the second year 
since 2007 that median household income increased.\30\ Further, real 
median earnings were not statistically different in 2016 compared to 
2015. Constrained wages, in addition to rising interest rates and 
increasing property values, could make it difficult for many low-income 
and very low-income households to achieve homeownership.
---------------------------------------------------------------------------

    \30\ See Income and Poverty in the United States: 2016, United 
States Census Bureau, September 2017: https://www.census.gov/content/dam/Census/library/publications/2017/demo/P60-259.pdf.
---------------------------------------------------------------------------

    Demographic factors. Demographic changes, such as the housing 
patterns of millennials or the growth of minority households, also 
reflect challenges in the affordable homeownership market. The 
homeownership rate among millennials is lower than other demographic 
groups, but household formation will likely increase as this group 
ages. However, many millennials will face multiple challenges, 
including difficulty finding affordable homes to buy and building 
enough wealth for a down payment and closing costs, particularly in 
light of student loan and other debt burdens. Another continuing 
demographic trend is the growth of minority households, which is 
projected to be over 70 percent of net household growth through 
2025.\31\ Because the median net worth of minority households 
historically has been low, building the necessary wealth to meet down 
payment and closing costs will likely also continue to be a challenge 
for many of these new households.
---------------------------------------------------------------------------

    \31\ Daniel McCue, Christopher Herbert, Working Paper: Updated 
Household Projections, 2015-2035: Methodology and Results, Joint 
Center for Housing Studies of Harvard University, December 2016.
---------------------------------------------------------------------------

    FHFA is committed to identifying new market conditions and 
challenges and working with the Enterprises to identify solutions to 
help meet these challenges. The effectiveness of these solutions, 
however, cannot be accounted for in a model.
    Enterprise market share. Another factor that can affect the 
Enterprises' ability to support affordable homeownership for low-income 
and very low-income households is the Enterprises' overall share of the 
mortgage market, which has fluctuated over time. Graph 1 shows the 
distribution of conforming mortgage originations by market segment from 
2011-2016. The Enterprises' share of the market was at its lowest 
immediately before and directly after the housing crisis in 2008, at 
around 45 percent. After that period, the Enterprises' share rose 
steadily for many years, but began to decline from a peak of 67 percent 
in 2013, accounting for about 53 percent of the market in 2016. 
Similarly, the total government share of the mortgage market remained 
stable for many years after the housing crisis, but expanded to 29 
percent in 2015 and 28 percent in 2016, up from 25 percent in 2014.

[[Page 5886]]

[GRAPHIC] [TIFF OMITTED] TR12FE18.003

    As discussed in the proposed rule, FHFA's analysis of the mortgage 
insurance market indicates that a substantial share of the conforming 
market could switch from private mortgage insurance to FHA insurance if 
FHA premiums are reduced by similar magnitudes as in the past. FHFA 
will continue to pay close attention to any changes in the mortgage 
insurance market.
    As discussed above, multiple factors impact the Enterprises' 
ability to meet their mission and support affordable homeownership 
through the housing finance market. Nevertheless, FHFA expects the 
Enterprises to continue efforts in a safe and sound manner to support 
affordable homeownership under the single-family housing goals 
categories.

B. Single-Family Benchmark Levels

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 final rule sets 
the annual low-income home purchase housing goal benchmark level for 
2018-2020 at 24 percent, the same as the 2015-2017 benchmark level. 
FHFA has determined that, despite the various challenges to 
affordability highlighted above, the Enterprises will be able to take 
steps to maintain or increase their performance on this goal. The 24 
percent benchmark level will serve as an appropriate target that will 
channel Enterprise efforts in this segment.

                                                    Table 1--Enterprise Low-Income Home Purchase Goal
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                           Historical performance (year)                             Projected performance (year)
                                     -------------------------------------------------------------------------------------------------------------------
                                        2013      2014      2015      2016           2017               2018               2019               2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benchmark (%).......................        23        23        24        24  24                 24                 24                 24
Actual Market * (%).................      24.0      22.8      23.6      22.9  21.9               22.7               24.4               24.3
                                                                              +/-2.5             +/- 4.3            +/- 5.5            +/-6.5
Fannie Mae:
    Low-Income Purchase.............   193,712   177,846   188,891   221,628
    Total Home Purchase.............   814,137   757,870   802,432   966,800
                                     ----------------------------------------
    % Low-Income....................      23.8      23.5      23.5      22.9
Freddie Mac:
    Low-Income Purchase.............    93,478   108,948   129,455   153,434
    Total Home Purchase.............   429,158   519,731   579,340   644,988
                                     ----------------------------------------
    % Low-Income....................      21.8      21.0      22.3      23.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Market forecast shown for 2017-2020.


[[Page 5887]]

    Recent performance and forecasts. As shown in Table 1, performance 
at both Enterprises fell short of the benchmark level for the low-
income home purchase goal in 2015 and 2016, and both Enterprises missed 
both the benchmark level and the market level for the low-income home 
purchase goal in 2015. Both Enterprises met this goal in 2016 by 
exceeding the market level. Recent past performance of the Enterprises 
indicates that it has been difficult for the Enterprises to 
consistently exceed the benchmark level and lead this market segment in 
making credit available.
    From 2013 to 2014, the low-income home purchase market decreased 
from 24.0 percent to 22.8 percent. In 2015, the market rebounded to 
23.6 percent and then decreased to 22.9 percent in 2016. FHFA's current 
model forecasts that the market for this goal will continue to decrease 
to 21.9 percent in 2017 before increasing to 22.7 percent in 2018, 24.4 
percent in 2019 and 24.3 in 2020. The actual market for each of these 
years will be calculated by FHFA using HMDA data for the year when it 
becomes available.
    Although the Enterprises have been challenged in meeting the 
single-family housing goal levels in recent years, each Enterprise has 
increased the number of single-family home purchase loans it has 
purchased that were made to low-income households. Fannie Mae's 
eligible single-family loan purchases increased from 193,712 loans in 
2013 to 221,628 in 2016. Freddie Mac's eligible single-family loan 
purchases increased from 93,478 in 2013 to 153,434 in 2016.
    Proposed rule and comments. In the proposed rule, FHFA proposed 
maintaining the benchmark level for 2018-2020 at the 2015-2017 level of 
24 percent. At that time, using data through December 2016, the average 
market level forecast for 2018-2020 was 24.2 percent. Since the 
publication of the proposed rule, FHFA updated the model using data 
through November 2017 and additional 2016 data from HMDA and Moody's. 
The updated FHFA model forecasts that the market for this goal will be 
slightly lower, with the average forecast at 23.8 percent.
    Five comment letters expressed support for the proposed benchmark 
levels for the single-family goals, including the low-income home 
purchase goal. Commenters commended FHFA for appropriately challenging 
the Enterprises while taking into account safety and soundness and the 
realities of the mortgage market. Four comments endorsed a higher 
benchmark level for the low-income home purchase goal. These commenters 
recommended setting the low-income goal benchmark at levels between 27 
and 30 percent, arguing that more aggressive targets will encourage 
focus on this income segment, which will benefit consumers and improve 
access to credit. Only one commenter (Fannie Mae) asserted that the 
proposed benchmark level for the low-income home purchase goal was too 
high, and should be lowered to 21 percent. The letter cited ongoing 
market challenges that make it difficult to meet the benchmark level, 
including the lack of supply of moderately-priced homes and limited job 
growth.
    FHFA determination. Consistent with the proposed rule, the final 
rule sets the benchmark level for the low-income home purchase housing 
goal at 24 percent. This is slightly above the average market forecast 
for the three years, to encourage the Enterprises to continue to find 
ways to support lower income borrowers while not compromising safe and 
sound lending standards. Even though the benchmark is slightly higher 
than the average market forecast for this goal, due to the two-part 
nature of the goals, the level that will be used to judge the 
Enterprises' year-end performance will be the lower of the market level 
or the benchmark. Therefore, the 24 percent benchmark level is 
appropriate, reasonable, and supported by the current market forecast. 
FHFA recognizes that there may be challenges to meeting this goal, 
including uneven growth in AMI and the relative affordability of 
private mortgage insurance, which may be beyond the control of the 
Enterprises and impact their ability to achieve these goals. FHFA will 
continue to monitor the performance of the Enterprises on this goal 
and, if FHFA determines in later years that the benchmark level for the 
low-income home purchase housing goal is no longer feasible for the 
Enterprises to achieve in light of market conditions or for any other 
reason, FHFA may 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 the area 
median income. The final rule sets the annual very low-income home 
purchase housing goal benchmark level for 2018 through 2020 at 6 
percent. FHFA has determined that, despite the various challenges to 
affordability highlighted above, the Enterprises will be able to take 
steps to maintain or increase their performance on this goal. The 6 
percent benchmark level will serve as an appropriate target that will 
channel Enterprise efforts in this segment.

                                   Table 2--Very Low-Income Home Purchase Goal
----------------------------------------------------------------------------------------------------------------
                                       Historical performance (year)           Projected performance (year)
                                 -------------------------------------------------------------------------------
                                    2013      2014      2015      2016      2017      2018      2019      2020
----------------------------------------------------------------------------------------------------------------
Benchmark (%)...................         7         7         6         6         6         6         6         6
Actual Market * (%).............       6.3       5.7       5.8       5.4       5.1       5.3       5.9       5.9
                                                                            +/-0.9    +/-1.5    +/-1.9    +/-2.2
Fannie Mae:
    Very Low-Income Purchase....    48,810    42,872    45,022    49,932
    Total Home Purchase.........   814,137   757,870   802,432   966,800
                                 ----------------------------------------
    % Very Low-Income...........       6.0       5.7       5.6       5.2
Freddie Mac:
    Very Low-Income Purchase....    23,705    25,232    31,146    36,837
    Total Home Purchase.........   429,158   519,731   579,340   644,988
                                 ----------------------------------------
    % Very Low-Income...........       5.5       4.9       5.4       5.7
----------------------------------------------------------------------------------------------------------------
* Market forecast shown for 2017-2020.


[[Page 5888]]

    Recent performance and forecasts. As shown in Table 2, the market 
for very low-income home purchase loans has been declining since 2013, 
as reflected in HMDA data, although there was a slight uptick in 2015. 
FHFA has gradually lowered the benchmark level for this goal from 8 
percent in 2010 to 6 percent in 2015. Despite this reduction, the 
performance of both Enterprises has continued to fall below the 
benchmark level in each year since 2013. In 2016, Freddie Mac achieved 
the very low-income goal by meeting the market level, but Fannie Mae 
failed to meet the goal.
    FHFA's models forecast this segment to remain between 5.1 percent 
and 5.9 percent for 2017-2020. For the 2018-2020 goal period, FHFA's 
forecast indicates an increase from 5.1 percent in 2017 to 5.3 percent 
in 2018 and to 5.9 percent in 2019 and 2020. As noted earlier, the 
confidence intervals widen as the forecast period lengthens.
    Proposed rule and comments. In the proposed rule, FHFA proposed 
maintaining the benchmark level for 2018-2020 at the 2015-2017 level of 
6 percent. At that time, using data through December 2016, the average 
market level forecast for 2018-2020 was 6.4 percent. FHFA adjusted the 
model using data through November 2017 and additional 2016 data from 
HMDA and Moody's, and the current model forecasts that the average 
market level for 2018-2020 for this goal will be lower, at 5.7 percent.
    As highlighted in the low-income goal discussion above, there were 
five comment letters that expressed support for the proposed benchmark 
levels for the single-family goals, including the very low-income home 
purchase goal at 6 percent. Commenters commended FHFA for appropriately 
challenging the Enterprises while taking into account safety and 
soundness and the realities of the mortgage market. Four comments 
endorsed a higher benchmark level for the very low-income home purchase 
goal. Commenters recommended setting the very low-income goal benchmark 
at levels between 7 and 10 percent. These commenters argued that more 
aggressive targets will encourage the Enterprises to focus on this 
income segment, which will benefit consumers and improve access to 
credit. Only one commenter (Fannie Mae) asserted that the proposed 
benchmark level for the very low-income home purchase goal was too 
high, and should be lowered to 5 percent. Fannie Mae cited ongoing 
market challenges that make it difficult to meet the benchmark level, 
including lack of supply of moderately-priced homes and limited job 
growth.
    FHFA determination. Consistent with the proposed rule, the final 
rule sets the very low-income home purchase housing goal benchmark 
level at 6 percent, slightly higher than the current 5.7 percent 
forecast average. FHFA considered lowering the benchmark level for the 
very low-income home purchase goal to 5.5 percent but decided to keep 
the benchmark level at 6 percent for multiple reasons. This level is 
near but slightly higher than the market forecast average. This level 
should serve as a ``stretch goal'' to encourage the Enterprises to 
continue their efforts to promote safe and sustainable lending to very 
low-income families. As noted in the low-income home purchase goal 
discussion above, there are significant challenges to housing 
affordability that may be beyond the control of the Enterprises that 
could make the benchmark level a challenge for the Enterprises. 
However, given the two-part nature of the goals, the level that will be 
likely to constrain the Enterprises will be the lower of the market 
level or the benchmark. Thus, FHFA is persuaded that setting the 
benchmark level at 6 percent is appropriate, reasonable, and supported 
by the current market forecast.
    FHFA will continue to monitor the Enterprises' performance on this 
goal and, if FHFA determines in later years that the benchmark level 
for the very low-income areas home purchase housing goal is no longer 
feasible for the Enterprises to achieve in light of market conditions 
or for any other reason, FHFA may take appropriate steps to adjust the 
benchmark level.
3. Low-Income Areas Home Purchase Subgoal
    The low-income areas home purchase subgoal is based on the 
percentage of all single-family, owner-occupied home purchase mortgages 
purchased by an Enterprise that are 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). Mortgage loans 
may qualify under either or both conditions. As discussed in the 
proposed rule, mortgages satisfying condition (1) above, or borrowers 
in low-income areas, are typically almost double the share of mortgages 
satisfying condition (2), or moderate-income borrowers in minority 
census tracts. The share of mortgages that satisfy both conditions is 
generally small (for example, 4.6 percent of low-income areas subgoal 
mortgages in 2015).
    The final rule sets the annual low-income areas home purchase 
subgoal benchmark level for 2018 through 2020 at 14 percent, which is 
lower than the 15 percent in the proposed rule, based on comments 
received by FHFA. FHFA has determined that this benchmark level will 
serve as an appropriate target for the Enterprises. FHFA will continue 
to evaluate the impact and efficacy of this subgoal.

                                 Table 3--Low-Income Areas Home Purchase Subgoal
----------------------------------------------------------------------------------------------------------------
                                       Historical performance (year)           Projected performance (year)
                                 -------------------------------------------------------------------------------
                                    2013      2014      2015      2016      2017      2018      2019      2020
----------------------------------------------------------------------------------------------------------------
Benchmark (%)...................        11        11        14        14        14        14        14        14
Actual Market * (%).............      14.2      15.2      15.2      15.9      16.5      16.6      16.8      16.4
                                                                            +/-1.2    +/-2.0    +/-2.5    +/-3.0
Fannie Mae Performance:
    Low-Income Area Home            86,430    91,691    99,723   125,956
     Purchase Mortgages.........
    High-Minority Area Home         27,425    25,650    25,349    30,535
     Purchase Mortgages.........
    Subgoal-Qualifying Total       113,855   117,341   125,072   156,491
     Home Purchase Mortgages....
    Total Home Purchase            814,137   757,870   802,432   966,800
     Mortgages..................
    Low-Income Area % of Home         14.0      15.5      15.6      16.2
     Purchase Mortgages.........
Freddie Mac Performance:
    Low-Income Area Home            40,444    55,987    67,172    80,805
     Purchase Mortgages.........
    High-Minority Area Home         12,177    14,808    16,601    19,788
     Purchase Mortgages.........

[[Page 5889]]

 
    Subgoal-Qualifying Total        52,621    70,795    83,773   100,593
     Home Purchase Mortgages....
    Total Home Purchase            429,158   519,731   579,340   644,988
     Mortgages..................
    Low-Income Area % of Home         12.3      13.6      14.5      15.6
     Purchase Mortgages.........
----------------------------------------------------------------------------------------------------------------
* Market forecast shown for 2017-2020.

    Recent performance and forecasts. As shown in Table 3, both 
Enterprises have met this subgoal every year since 2013, regularly 
exceeding both the market and the benchmark levels. Fannie Mae's 
performance exceeded both the market and the benchmark level in 2014 
through 2016, although its performance was below the market level in 
2013. From 2013 through 2016, Freddie Mac's performance exceeded the 
benchmark level but was below the market level.
    The forecast for this subgoal was obtained by generating separate 
forecasts for the two sub-populations (the low-income areas component 
and the high-minority component). FHFA has tested alternate model 
specifications for this subgoal and determined that aligning the 
overlapping portion with the low-income areas component yields forecast 
estimates that are more precise (in terms of a narrower confidence 
interval).\32\ FHFA's forecast indicates that the market will increase 
slightly in the coming years, reaching a maximum level of 16.8 percent 
in 2019.
---------------------------------------------------------------------------

    \32\ Details are available in the market model paper, ``The Size 
of the Affordable Mortgage Market: 2018-2020 Enterprise Single-
Family Housing Goals,'' available at http://www.fhfa.gov/PolicyProgramsResearch/Research/PaperDocuments/Market-Estimates_2018-2020.pdf.
---------------------------------------------------------------------------

    Proposed rule and comments. In the proposed rule, FHFA proposed 
raising the benchmark level to 15 percent for 2018-2020 from the 2015-
2017 level of 14 percent. FHFA has adjusted the model using data 
through November 2017 and additional 2016 data from HMDA and Moody's, 
and the current model forecasts that the average market for 2018-2020 
for this goal will be approximately 16.6 percent, slightly higher than 
the 15.9 percent average from the proposed rule forecast. As noted in 
the proposed rule, FHFA's analysis found that the mortgage market (as 
measured by HMDA data) in both low-income areas and the high-minority 
areas had increasing shares of borrowers with incomes at or above 100 
percent of AMI.\33\ This trend lies at the heart of the public policy 
dilemma that FHFA is addressing: While the presence of higher income 
borrowers in lower income and high minority areas may be a sign of 
economic diversity in those areas and may be related to the possibility 
of improved economic indicators for the community, there is 
nevertheless some concern that such a trend could displace existing 
residents in those areas, especially lower income households. FHFA is 
aware that this particular subgoal may encourage the Enterprises to 
focus on purchasing loans for higher income households in low-income 
and high-minority areas while at the same time fueling concerns about 
the impact of rising housing costs on existing or displaced households 
in lower-income or higher-minority areas.
---------------------------------------------------------------------------

    \33\ 82 FR 31514 (July 7, 2017).
---------------------------------------------------------------------------

    FHFA sought comment on this issue in its proposed rule and received 
two comment letters that addressed this issue. Both commenters agreed 
with FHFA's concerns. One encouraged FHFA to continue to carefully 
monitor the policy objectives and efficacy of this goal. The other 
commenter opposed raising the benchmark levels for this goal. After 
considering these and other comments, FHFA is setting the very low-
income areas home purchase housing subgoal benchmark level at 14 
percent, which is lower than the current 16.6 percent average market 
forecast.
    FHFA determination. The final rule sets the benchmark level for the 
low-income areas home purchase subgoal at 14 percent. This level 
reflects a balance between the market and recent performance levels of 
the Enterprises while FHFA continues to evaluate whether the goal meets 
all policy objectives. FHFA will continue to monitor the Enterprises' 
performance on this subgoal and, if FHFA determines in later years that 
the benchmark level for the low-income areas home purchase subgoal is 
no longer feasible for the Enterprises to achieve in light of market 
conditions or for other reasons, FHFA may take appropriate steps to 
adjust the benchmark level.
4. Low-Income Areas Home Purchase Goal
    The low-income areas home purchase goal covers the same categories 
as the low-income areas home purchase subgoal, but it also includes 
moderate income families in designated disaster areas. As a result, the 
low-income areas home purchase goal is based on the percentage of all 
single-family, owner-occupied home purchase mortgages purchased by an 
Enterprise that are: (1) For families in low-income areas, defined to 
include census tracts with median income less than or equal to 80 
percent of AMI; (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); or (3) for families with incomes less 
than or equal to 100 percent of AMI who reside in designated disaster 
areas.
    The low-income areas goal benchmark level is established by a two-
step process. The first step is setting the benchmark level for the 
low-income areas subgoal, as established by this final rule. The second 
step is establishing an additional increment for mortgages to families 
with incomes less than or equal to AMI located in federally-declared 
disaster areas.\34\ Each year, FHFA sets the disaster area increment 
separately from this rule and notifies the Enterprises by letter of the 
benchmark level for the low-income areas home purchase goal that year. 
The final rule sets the annual low-income areas home purchase goal 
benchmark level for 2018 through 2020 at the subgoal benchmark level of 
14 percent plus a disaster areas increment that FHFA will set 
separately each year.
---------------------------------------------------------------------------

    \34\ Disaster declarations are listed on the Federal Emergency 
Management Agency (FEMA) website at https://www.fema.gov/disasters.

[[Page 5890]]



                                  Table 4--Low-Income Areas Home Purchase Goal
----------------------------------------------------------------------------------------------------------------
                                                            Historical performance (year)
                                    ----------------------------------------------------------------------------
                                        2010       2011       2012       2013       2014       2015       2016
----------------------------------------------------------------------------------------------------------------
Benchmark (%)......................         24         24         20         21         18         19         17
Actual Market * (%)................       24.0       22.0       23.2       22.1       22.1       19.8       19.7
Fannie Mae Performance:
    Subgoal-Qualifying Home             59,281     54,285     83,202    113,855    117,341    125,072    156,441
     Purchase Mortgages............
    Disaster Areas Home Purchase        56,076     50,209     58,085     62,314     54,548     38,885     38,545
     Mortgages.....................
    Goal-Qualifying Total Home         115,357    104,494    141,287    176,169    171,889    163,957    194,986
     Purchase Mortgages............
    Total Home Purchase Mortgages..    479,200    467,066    633,627    814,137    757,870    802,432    964,847
    Goal Performance (%)...........       24.1       22.4       22.3       21.6       22.7       20.4       20.2
Freddie Mac Performance:
    Subgoal-Qualifying Home             32,089     23,902     32,750     52,621     70,795     83,773    100,608
     Purchase Mortgages............
    Disaster Areas Home Purchase        38,898     26,232     26,486     33,123     33,923     26,411     27,709
     Mortgages.....................
    Goal-Qualifying Total Home          70,987     50,134     59,236     85,744    104,718    110,184    128,317
     Purchase Mortgages............
    Total Home Purchase Mortgages..    307,555    260,796    288,007    429,158    519,731    579,340    644,991
    Goal Performance (%)...........       23.1       19.2       20.6       20.0       20.1       19.0       19.9
----------------------------------------------------------------------------------------------------------------

5. 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 final rule sets 
the annual low-income refinancing housing goal benchmark level for 2018 
through 2020 at 21 percent. FHFA has determined that this benchmark 
level will serve as an appropriate target for the Enterprises. While 
this benchmark level is unchanged from the current 2015 to 2017 
benchmark level, it will nevertheless be challenging for the 
Enterprises given the current level of interest rates (which are at 
historic low levels) and the likelihood of interest rate hikes. Because 
of the significant impact interest rate changes have on this market, 
Enterprise and market performance on this goal are particularly 
susceptible to fluctuation. Moderation in the setting of this goal is 
also supported by the fact that many borrowers have already refinanced 
during the recent extended period of historically low interest rates.

                                      Table 5--Low-Income Refinancing Goal
----------------------------------------------------------------------------------------------------------------
                                     Historical performance (year)             Projected performance (year)
                             -----------------------------------------------------------------------------------
                                 2013       2014       2015       2016      2017      2018      2019      2020
----------------------------------------------------------------------------------------------------------------
Benchmark (%)...............         20         20         21         21        21        21        21        21
Actual Market * (%).........       24.3       25.0       22.5       19.8      23.4      23.4      20.6      18.0
                                                                            +/-3.0    +/-5.1    +/-6.5    +/-7.7
Fannie Mae Performance:
    Low-Income Refinance        519,753    215,826    227,817    246,571
     Mortgages..............
    Total Refinance           2,170,063    831,218  1,038,663  1,270,542
     Mortgages..............
    Low-Income % of                24.0       26.0       21.9       19.4
     Refinance Mortgages....
    Low-Income HAMP              11,858      6,503      3,563      2,127
     Modification Mortgages.
    Total HAMP Modification      16,478      9,288      6,595      3,800
     Mortgages..............
    Low-Income % of HAMP           72.0       70.0       54.0       56.0
     Modification Mortgages.
    Low-Income Refinance &      531,611    222,329    231,380    248,698
     HAMP Modification
     Mortgages..............
    Total Refinance & HAMP    2,186,541    840,506  1,045,258  1,274,342
     Modification Mortgages.
    Low-Income % of                24.3       26.5       22.1       19.5
     Refinance & HAMP
     Modification Mortgages.
Freddie Mac Performance:
    Low-Income Refinance        306,205    131,921    179,530    172,987
     Mortgages..............
    Total Refinance           1,309,435    514,936    795,936    828,553
     Mortgages..............
    Low-Income % of                23.4       25.6       22.6       20.9
     Refinance Mortgages....
    Low-Income HAMP              14,757      6,795      3,064      1,721
     Modification Mortgages.
    Total HAMP Modification      21,599     10,335      4,433      2,335
     Mortgages..............
    Low-Income % of HAMP           68.3       65.7       69.1       73.7
     Modification Mortgages.
    Low-Income Refinance &      320,962    138,716    182,594    174,708
     HAMP Modification
     Mortgages..............
    Total Refinance & HAMP    1,331,034    525,271    800,369    830,888
     Modification Mortgages.
    Low-Income % of                24.1       26.4       22.8       21.0
     Refinance & HAMP
     Modification Mortgages.
----------------------------------------------------------------------------------------------------------------
* Market forecast shown for 2017-2020.


[[Page 5891]]

    Recent performance and forecasts. As shown in Table 5, the 
performance of the Enterprises on the low-income refinancing housing 
goal has historically been very close to the actual market levels. In 
2014, when the market level was at its highest point, both Enterprises 
met the goal by exceeding the market level. In 2015, Freddie Mac 
surpassed the market and the benchmark levels, and Fannie Mae exceeded 
the benchmark level. In 2016, Freddie Mac met the benchmark level and 
exceeded the market level with its performance at 21.0 percent, but 
Fannie Mae missed the benchmark and the market levels, with its 
performance reaching only 19.5 percent.
    The low-income share of the refinance market as measured by HMDA 
data has changed dramatically in recent years, increasing from 20.2 
percent in 2010 to a peak of 25 percent in 2014, and dropping from 22.5 
percent in 2015 to 19.8 percent in 2016. FHFA's model predicts that 
this share will increase to 23.4 percent in 2017 and 2018, and then 
decline to 20.6 percent in 2019 and 18.0 percent in 2020. The 
confidence intervals for this model are fairly wide because of the 
considerable uncertainty around interest rates. Recent macroeconomic 
forecasts have predicted interest rate hikes that have yet to 
materialize in any substantive way.
    Since 2010, the low-income refinancing housing goal has included 
modifications under the Home Affordable Modification Program 
(HAMP).\35\ HAMP modifications, however, are not included in the data 
used to calculate the market levels. Including HAMP modifications in 
the Enterprise performance numbers increases the measured performance 
of the Enterprises on the low-income refinancing housing goal because 
lower income borrowers make up a greater proportion of the borrowers 
receiving HAMP modifications than the low-income share of the overall 
refinancing mortgage market. However, HAMP modifications have been 
declining over time, and the program stopped taking applications at the 
end of 2016.\36\ The expiration of the HAMP program may make it 
slightly more difficult for the Enterprises to meet the low-income 
refinancing goal.
---------------------------------------------------------------------------

    \35\ The goal has included permanent HAMP modifications to low-
income borrowers in the numerator and all HAMP permanent 
modifications in the denominator.
    \36\ The HAMP program expired at the end of 2016. There will be 
some HAMP modifications that will count toward the Enterprise 
housing goals in 2017 as applications that were initiated before the 
end of the program are converted to permanent modifications.
---------------------------------------------------------------------------

    Proposed rule and comments. In the proposed rule, FHFA proposed 
maintaining the benchmark level for 2018-2020 at the 2015-2017 level of 
21 percent. FHFA received one comment stating generally that all 
single-family goals should be increased. The comment noted the 
importance of the low-income refinance goal in preserving 
homeownership.
    FHFA determination. Consistent with the proposed rule, the final 
rule sets the low-income refinance benchmark level at 21 percent, 
slightly higher than the current 20.7 percent average market forecast. 
FHFA is setting this benchmark at a relatively low level compared to 
the 23.4 percent market forecast for 2018, based in part on the 
forecast decreasing significantly over the three year period covered by 
the forecast. FHFA is also mindful of the higher level of uncertainty 
about the forecasts for this goal given the unpredictability of future 
interest rate changes. The 21 percent benchmark level reflects a 
balance between the market and recent performance levels of the 
Enterprises. FHFA will continue to monitor the performance of the 
Enterprises on this goal and, if FHFA determines in later years that 
the benchmark level for the low-income refinancing housing goal is no 
longer feasible for the Enterprises to achieve in light of market 
conditions or for other reasons, FHFA may take appropriate steps to 
adjust the benchmark level.

V. Multifamily Housing Goals

    This final rule also establishes the multifamily housing goals for 
2018-2020. FHFA considered the required statutory factors described 
below in setting the benchmark levels for the multifamily housing 
goals. Two divergent trends underlie FHFA's analysis: a strong 
multifamily mortgage market for units that are affordable to higher-
income households but a continued gap in the supply of units affordable 
to lower-income households. There are some forecasts that support a 
softening of the first trend but all forecasts uniformly expect the 
second trend to continue during the goal period. FHFA expects and 
encourages the Enterprises to fully support affordable multifamily 
housing, in part by fulfilling the multifamily housing goals in a safe 
and sound manner.

A. Factors Considered in Setting the Multifamily Housing Goal Levels

    In setting the benchmark levels for the multifamily housing goals, 
FHFA 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, 
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 market, for which HMDA 
provides a reasonably comprehensive dataset about single-family 
mortgage originations each year, the multifamily market (including the 
affordable multifamily market segment) has no comparable source of 
data. Consequently, it can be difficult to correlate different datasets 
on the multifamily market because they usually rely on different 
reporting formats. For example, some data are available by dollar 
volume of mortgages while other data are available by unit production. 
\38\
---------------------------------------------------------------------------

    \38\ The Consumer Financial Protection Bureau (CFPB) will 
collect additional data fields (including the number of units in the 
properties securing each multifamily loan that is reported) 
beginning in 2018 that may be useful in the future in considering 
whether to create a retrospective market measure for the multifamily 
housing goals.
---------------------------------------------------------------------------

    Another difference between the single-family and multifamily goals 
is that there are separate single-family housing goals for home 
purchase and refinance mortgages, while the multifamily 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 
volume of affordable multifamily

[[Page 5892]]

mortgage purchases rather than on a percentage of multifamily mortgage 
purchases. The use of total volume, which FHFA measures by the number 
of eligible units, rather than percentages of each Enterprises' overall 
multifamily purchases, 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 and the affordable share of 
those purchases.
    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. As required by the 
Safety and Soundness Act, FHFA determines affordability of multifamily 
units based on maximum rent levels not exceeding 30 percent of the area 
median income standard for low- and very low-income families.\39\ This 
affordability definition is sometimes referred to as the ``Brooke 
Amendment,'' and states that to be considered a low-income multifamily 
unit (i.e., affordable at the 80 percent AMI level), the rent levels 
must be less than or equal to 30 percent of the maximum income at 80 
percent of the AMI, with appropriate adjustments for unit size as 
measured by the number of bedrooms.\40\ Similarly, to be considered a 
very low-income multifamily unit (i.e., affordable at the 50 percent 
AMI level), the rent levels must be less than or equal to 30 percent of 
the maximum income at 50 percent of the AMI, with appropriate 
adjustments for unit size as measured by the number of bedrooms. While 
much of the analysis that follows discusses trends in the overall 
multifamily mortgage market, FHFA recognizes that these trends may not 
apply to the same extent to all segments of the multifamily market. 
Notwithstanding these challenges, FHFA has considered each of the 
required statutory factors (a number of which are related) as discussed 
below.
---------------------------------------------------------------------------

    \39\ 12 U.S.C. 4563(c).
    \40\ See https://www.huduser.gov/portal/pdredge/pdr_edge_featd_article_092214.html for description of the Brooke 
Amendment and background on the definition of affordability embedded 
in the housing goals.
---------------------------------------------------------------------------

    Multifamily mortgage market. FHFA's consideration of the 
multifamily mortgage market addressed the size of and competition 
within the multifamily mortgage market, as well as the subset of the 
multifamily market affordable to low-income and very low-income 
families. In 2016, the multifamily mortgage origination market 
experienced continued growth: Year-over-year origination volume grew 8 
percent from about $250 billion to $269 billion, fueled largely by a 
recovery in multifamily construction. Forecasts from various industry 
experts indicate that overall multifamily mortgage market volumes and 
mortgage originations are expected to increase only modestly in 2017, 
both for refinancing activity and for financing new multifamily units, 
and will likely decrease modestly in 2018. FHFA's internal forecasts 
are consistent with this view.
    The total number of renter households grew from 35 million in 2005 
to 44 million in 2015, an increase of about one quarter.\41\ According 
to the National Multifamily Housing Council's tabulation of 2016 
American Community Survey (ACS) data, about 43 percent of renter 
households (18.9 million households or 38.8 million residents) lived in 
structures with five or more rental units.\42\ This growth led to an 
increase in demand for rental units that has only partially been met by 
expansions in supply. Vacancy rates hit a 30-year low in 2016, and are 
especially low in lower-priced segments of the market, while climbing 
in the higher-priced segments of the market.\43\ Rents also continued 
to rise nationally and outpaced inflation in 2016.\44\
---------------------------------------------------------------------------

    \41\ ``America's Rental Housing: Expanding Options for Diverse 
and Growing Demand,'' Joint Center for Housing Studies of Harvard 
University, December 2015.
    \42\ Source: http://www.nmhc.org/Content.aspx?id=4708#Type_of_Structure. Accessed 10/30/2017.
    \43\ ``State of the Nation's Housing 2017,'' Joint Center for 
Housing Studies of Harvard University,'' June 2017.
    \44\ Id.
---------------------------------------------------------------------------

    Affordability in the multifamily 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 varies from year to year. 
Second, competition between purchasers of mortgages within the 
multifamily market overall may differ from the competition within the 
affordable multifamily market segment. Finally, the volume for the 
affordable multifamily market segment depends on the availability of 
affordable housing subsidies. Thus in some ways, the multifamily market 
is segmented into the affordable and non-affordable segments with loose 
linkages between the two segments. Despite strength in the non-
affordable multifamily market in recent years, there has been little 
increase in the affordable segment. Using the standard measure of 
affordability, where rent and utilities do not exceed 30 percent of AMI 
(required by the Brooke Amendment), families living in rental units 
have faced decreasing affordability in recent years.
    The Joint Center for Housing Studies (JCHS) has released two 
reports noting concerning trends in the supply of affordable 
multifamily units. The overall inventory of affordable multifamily 
units is low, and rent on most newly built units are out of reach for 
lower-income families. As the JCHS's 2017 Report on America's Rental 
Housing notes:

    ``Soaring demand sparked a sharp expansion of the rental stock 
over the past decade. Initially, most of the additions to supply 
came from conversions of formerly owner-occupied units, particularly 
single family homes, which provided housing for the increasing 
number of families with children in the rental market. Between 2006 
and 2016, the number of single-family homes available for rent 
increased by nearly 4 million, lifting the total to 18.2 million. 
While single-family homes have always accounted for a large share of 
rental housing, they now make up 39 percent of the stock. More 
recently, though, growth in the single-family supply has slowed. The 
American Community Survey shows that the number of single-family 
rentals (including detached, attached, and mobile homes) increased 
by only 74,000 units between 2015 and 2016, substantially below the 
400,000 annual increase averaged in 2005-2015. With this slowdown in 
single-family conversions and a boom in multifamily construction, 
new multifamily units have come to account for a growing share of 
new rentals.'' \45\
---------------------------------------------------------------------------

    \45\ ``America's Rental Housing,'' Joint Center for Housing 
Studies of Harvard University, January 2018.
---------------------------------------------------------------------------

    The Report on America's Rental Housing goes on to note that much of 
this new multifamily construction is aimed at higher income households 
and located primarily in high-rise buildings in downtown neighborhoods 
while the supply of moderate and lower cost units has only grown 
modestly. The Report on America's Rental Housing notes that the share 
of new units renting for less than $850 a month has actually declined 
from two-fifths to one-fifth between 2001 and 2016.
    The JCHS's 2017 State of the Nation's Housing Report indicates that 
the majority of growth in rental housing stock in recent years was 
primarily the result of new multifamily construction. Moreover, most of 
this new construction consists of apartments with fewer

[[Page 5893]]

bedrooms and has been concentrated in urban areas with higher median 
rents. According to the State of the Nation's Housing Report, there 
have been significant declines in the supply of low-cost rental 
housing. Using ACS data from 2005 and 2015, the report notes that gains 
in the supply of high-end units and losses of low- and modest-priced 
units over the past decade have shifted the entire rental stock toward 
the high end. The State of the Nation's Housing Report notes, 
``bolstered by new, high-end construction and rising rents for existing 
apartments, the number of units renting for $2,000 or more per month 
increased 97 percent in real terms between 2005 and 2015.'' At the same 
time, ``the number of units renting for below $800 fell by 2 percent.'' 
\46\
---------------------------------------------------------------------------

    \46\ ``State of the Nation's Housing 2017,'' Joint Center for 
Housing Studies of Harvard University, June 2017. Available at 
www.jchs.harvard.edu/research/state_nations_housing.
---------------------------------------------------------------------------

    The State of the Nation's Housing Report also notes the significant 
prevalence of cost-burdened renters. In 2015, nearly one-third of all 
tenants paid more than 30 percent of their household income for rental 
housing, especially in high-cost urban markets where most renters 
reside and where a majority of the multifamily loans purchased by 
Fannie Mae and Freddie Mac have been located. Among lower-income 
households, cost burdens are especially severe.\47\ The same report 
notes that while housing affordability is a growing concern for 
communities nationwide, the cost-burdened shares in 11 of the country's 
largest metropolitan areas were above 40 percent. In addition, a recent 
study showed that the median incomes of renter households have 
experienced slight declines in some large metropolitan areas in recent 
years, leading to increased cost burdens for these households.\48\
---------------------------------------------------------------------------

    \47\ Id.
    \48\ ``Renting in America's Largest Metropolitan Areas,'' NYU 
Furman Center, March 2016.
---------------------------------------------------------------------------

    One source of growth in the stock of lower-rent apartments is 
``filtering,'' a process by which existing units become more affordable 
as they age. However, in recent years, this downward filtering of 
rental units has occurred at a slow pace in most markets. Coupled with 
the permanent loss of affordable units, as these units fall into 
disrepair or units are demolished to create new higher-rent or higher-
valued ownership units, this trend has severely limited the supply of 
lower rent units. As a result, there is an acute shortfall of 
affordable units for extremely low-income renters (earning up to 30 
percent of AMI) and very low-income renters (earning up to 50 percent 
of AMI). This supply gap is especially wide in certain metropolitan 
areas in the southern and western United States.\49\
---------------------------------------------------------------------------

    \49\ ``The Gap: The Affordable Housing Gap Analysis 2017,'' 
National Low Income Housing Coalition, March 2017.
---------------------------------------------------------------------------

    The combination of the supply gap in affordable units, which has 
resulted in significant increases in rental rates, and the prevalence 
of cost-burdened renters resulting from largely flat real incomes has 
led to an erosion of affordability, with fewer units qualifying for the 
housing goals.\50\ This challenge of affordability is also reflected in 
the falling share of low-income multifamily units financed by loans 
purchased by the Enterprises. While 77 percent of the multifamily units 
financed by Fannie Mae in 2011 were low-income, that ratio dropped 
steadily in the intervening years to 64 percent in 2016. At Freddie 
Mac, the low-income share also peaked in 2011 and 2012 at 79 percent, 
and decreased gradually to 68 percent in 2016. For the very low-income 
goal, the share at Fannie Mae peaked in 2012 at 22 percent before 
falling to 12 percent in 2016, and at Freddie Mac the share peaked at 
17 percent in 2013 before falling to 12 percent in 2016.
---------------------------------------------------------------------------

    \50\ ``State of the Nation's Housing 2017,'' Joint Center for 
Housing Studies of Harvard University, June 2017.
---------------------------------------------------------------------------

    Small multifamily properties with 5 to 50 units are also an 
important source of affordable rental housing and represent 
approximately one-third of the affordable rental market. Because they 
have different operating and ownership characteristics than larger 
properties, small multifamily properties often have different financing 
needs. For example, small multifamily properties are more likely to be 
owned by an individual or small investor and less likely to be managed 
by a third party property management firm.\51\ Likewise, the 
affordability of small multifamily units means they generate less 
revenue per unit than larger properties. These factors can make 
financing more difficult to obtain for small multifamily property 
owners. While the volume of Enterprise-supported loans on small 
multifamily properties has been inconsistent in recent years, each 
Enterprise continues to refine its approach to serving this market.
---------------------------------------------------------------------------

    \51\ ``2012 Rental Housing Finance Survey,'' U.S. Census Bureau 
and U.S. Department of Housing and Urban Development, Tables 2b, 2c, 
2d and 3.
---------------------------------------------------------------------------

    Availability of public subsidies. Multifamily housing subsidy 
assistance is primarily available in two forms--demand-side subsidies 
that either assist low-income tenants directly (e.g., Section 8 
vouchers) or provide project-based rental assistance (Section 8 
contracts), and supply-side subsidies that support the creation and 
preservation of affordable housing (e.g., public housing and Low-Income 
Housing Tax Credit (LIHTC)). The availability of public subsidies 
impacts the overall affordable multifamily housing market, and changes 
to longstanding housing subsidy programs could significantly impact the 
ability of the Enterprises to meet the goals.
    Financing for affordable multifamily buildings--particularly those 
affordable to very low-income families--often uses an array of state 
and federal supply-side housing subsidies, such as LIHTC, tax-exempt 
bonds, project-based rental assistance, or soft subordinate 
financing.\52\ In recent years, competition for affordable housing 
subsidies has been intense and investor interest in tax credit equity 
projects of all types and in all markets has been strong, especially in 
markets in which bank investors are seeking to meet Community 
Reinvestment Act (CRA) goals. By contrast, in recent months, the 
subsidy provided by the LIHTC program has been volatile and uncertain 
due to potential impacts of recent changes in tax laws. Projections 
carried out by housing industry groups suggest that the level of LIHTC 
production will decrease because of the reduction in corporate tax 
rates.\53\
---------------------------------------------------------------------------

    \52\ LIHTC is a supply-side subsidy created under the Tax Reform 
Act of 1986 and is the main source of new affordable rental housing 
construction in the United States today. Tax credits are used for 
the acquisition, rehabilitation, and/or new construction of rental 
housing for low-income and very low-income households. LIHTC has 
facilitated the creation or rehabilitation of approximately 2.4 
million affordable rental units since 1986.
    \53\ Novogradac & Company, ``Final Tax Reform Bill Would Reduce 
Affordable Rental Housing Production by Nearly 235,000.'' December 
19, 2017.
---------------------------------------------------------------------------

    Subject to the continuing availability of these subsidies, there 
should continue to be opportunities in the multifamily market to 
provide permanent financing for properties with LIHTC during the 2018-
2020 period. There should also 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 rental assistance contracts.
    In recent years, demand-side public subsidies and the availability 
of public housing have not kept pace with the growing number of low-
income and very low-income households in need of federal housing 
assistance. As a result,

[[Page 5894]]

the number of renter households with ``worst case needs'' has grown to 
8.3 million, an increase of more than one-third since 2005.\54\
---------------------------------------------------------------------------

    \54\ ``Worst Case Housing Needs: 2017 Report to Congress,'' U.S. 
Department of Housing and Urban Development, August 2017. Renters 
with worst case needs have very low incomes, lack housing 
assistance, and have either severe rent burdens or severely 
inadequate housing (or both).
---------------------------------------------------------------------------

    Role of the Enterprises. In setting the multifamily housing goals, 
FHFA considered the ability of the Enterprises to lead the market in 
making multifamily mortgage credit available. The share of the overall 
multifamily market purchased by the Enterprises increased in the years 
immediately following the financial crisis but has declined more 
recently in response to growing private sector participation. The 
Enterprise share (in dollar volume terms) of the multifamily 
origination market was approximately 70 percent of the market in 2008 
and 2009 compared to 38 percent in 2015 and 39 percent in 2016.\55 56\ 
The total share is expected to remain at around these lower levels in 
2017 and 2018, particularly in light of the Scorecard cap imposed by 
FHFA in its role as conservator, which is discussed below.
---------------------------------------------------------------------------

    \55\ Urban Institute, ``The GSEs' Shrinking Role in the 
Multifamily Market,'' April 2015.
    \56\ MBA, 2016 Annual Report on Multifamily Lending, October 
2017.
---------------------------------------------------------------------------

    Despite the Enterprises' reduced market share in the overall 
multifamily market and due to the segmented nature of the multifamily 
market noted earlier, FHFA expects the Enterprises to continue to 
demonstrate leadership in multifamily affordable housing 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). As conservator of the Enterprises, 
FHFA has established a yearly cap in the Conservatorship Scorecard that 
limits the amount of conventional, market-rate multifamily loans that 
each Enterprise can purchase. The multifamily cap is intended to 
further 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. This target for the 
Enterprise share of the multifamily origination market reflects what 
FHFA considers an appropriate market share for the Enterprises during 
normal market conditions. The cap prevents the Enterprises from 
crowding out other capital sources and restrains the rapid growth of 
the Enterprises' multifamily businesses that started in 2011.\57\ FHFA 
has designed the cap so that most loans eligible for housing goals 
credit, as well as certain other categories of transactions for 
underserved market segments, are excluded from the cap. As a result, 
increases and decreases in the cap itself should not impact the ability 
of the Enterprises to meet these goals.
---------------------------------------------------------------------------

    \57\ MBA, 2015 Annual Report on Multifamily Lending, October 
2016.
---------------------------------------------------------------------------

    In 2015, FHFA established a cap of $30 billion on new conventional 
multifamily loan purchases for each Enterprise in response to increased 
participation in the market from private sector capital. In 2016, the 
cap increased from $30 billion to $36.5 billion in response to growth 
of the overall multifamily origination market throughout the year. This 
increase maintained the Enterprises' current market share at about 40 
percent. In 2017, FHFA kept the cap at $36.5 billion. In 2018, the cap 
has been reduced to $35 billion.
    FHFA reviews the market size estimates quarterly, using current 
market data provided by the MBA, the National Multifamily Housing 
Council, and Fannie Mae and Freddie Mac. FHFA also produces an internal 
forecast. If FHFA determines during the year that the actual market 
size is greater than was projected, FHFA will consider an increase to 
the capped (conventional market-rate) category of the Conservatorship 
Scorecard for each Enterprise. In light of the need for market 
participants to be able to plan sales of mortgages during long 
origination processes, if FHFA determines that the actual market size 
is smaller than projected, there will be no reduction to the capped 
volume for the current year from the amount initially established under 
the Conservatorship Scorecard.
    As noted earlier, in order to encourage affordable lending 
activities, FHFA excludes many types of loans in underserved markets 
from the Conservatorship Scorecard cap on conventional multifamily 
loans. The Conservatorship Scorecard has no volume targets in the 
market segments excluded from the cap. There is significant overlap 
between the types of multifamily mortgages that are excluded from the 
Conservatorship Scorecard cap and the multifamily mortgages that 
contribute to the performance of the Enterprises under the affordable 
housing goals. The 2018 Conservatorship Scorecard excludes either the 
entirety of the loan amount or a pro rata share of the loan for the 
following categories: (1) Targeted affordable housing (such as loans on 
properties subsidized by LIHTC, properties developed under state or 
local inclusionary zoning, real estate tax abatement, loan or similar 
programs, and properties covered by a Section 8 Housing Assistance 
Payment contract limiting tenant incomes to 80 percent of AMI or 
below); (2) small multifamily properties; (3) blanket loans on 
manufactured housing communities; (4) blanket loans on senior housing 
and assisted living communities; (5) loans in rural areas; (6) loans to 
finance energy or water efficiency improvements; and (7) market rate 
affordable units in standard (60 percent of AMI), high cost (80 percent 
of AMI), very high cost (100 percent of AMI), and extremely high cost 
(120 percent of AMI) markets. By excluding these categories from the 
cap, the Conservatorship Scorecard continues to encourage the 
Enterprises to support affordable housing in their purchases of 
multifamily mortgages.\58\
---------------------------------------------------------------------------

    \58\ For more information on the Conservatorship Scorecard, see 
https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/2017-Scorecard-for-Fannie-Mae-Freddie-Mac-and-CSS.pdf.
---------------------------------------------------------------------------

B. Multifamily Housing Goal Benchmark Levels

    The final rule sets the multifamily housing goals at benchmark 
levels intended to encourage the Enterprises to provide liquidity and 
to support various multifamily finance market segments in a safe and 
sound manner. The Enterprises have served as a stabilizing force in the 
multifamily market in the years since the financial crisis. During the 
conservatorship period, the Enterprise portfolios of loans on 
multifamily affordable housing properties have experienced low levels 
of delinquency and default, similar to the performance of Enterprise 
loans on market rate properties. In light of this performance, the 
Enterprises should be able to sustain or increase their volume of 
purchases of loans on affordable multifamily housing properties without 
adversely impacting the Enterprises' safety and soundness or negatively 
affecting the performance of their total loan portfolios.
    FHFA continues to monitor the activities of the Enterprises, both 
in FHFA's capacity as regulator and as conservator. If necessary, FHFA 
will make appropriate changes in the benchmark levels for the 
multifamily housing goals to ensure the Enterprises' continued safety 
and soundness.

[[Page 5895]]

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. The final rule sets the annual benchmark level for the 
low-income multifamily housing goal for each Enterprise at 315,000 
units in each year from 2018 through 2020.

                                                      Table 6--Multifamily Low-Income Housing Goal
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Historical Performance
                             Year                             -----------------------------------------------------------------     2017      2018-2020
                                                                   2012         2013         2014         2015         2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fannie Mae Goal..............................................      285,000      265,000      250,000      300,000      300,000      300,000      315,000
Freddie Mac Goal.............................................      225,000      215,000      200,000      300,000      300,000      300,000      315,000
Fannie Mae Performance:
    Low-Income Multifamily Units.............................      375,924      326,597      260,124      307,510      352,368  ...........  ...........
    Total Multifamily Units..................................      501,256      430,751      372,089      468,798      552,785  ...........  ...........
    Low-Income % Total.......................................        75.0%        75.8%        69.9%        65.6%        63.7%  ...........  ...........
Freddie Mac Performance:
    Low-Income Multifamily Units.............................      298,529      254,628      273,807      379,042      406,958  ...........  ...........
    Total Multifamily Units..................................      377,522      341,921      366,377      514,275      597,399  ...........  ...........
    Low-Income % of Total Units..............................        79.1%        74.5%        74.7%        73.7%        68.1%  ...........  ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Recent performance and forecasts. As shown in Table 6, from 2012 
through 2016, both Enterprises exceeded the low-income multifamily 
goal. Prior to 2015, Fannie Mae had higher goals than Freddie Mac. For 
the 2015-2017 goal period, FHFA set the same benchmark levels for both 
Enterprises for the first time, reflecting parity between Freddie Mac 
and Fannie Mae multifamily market share in terms of unit counts.
    In 2016, the goal for each Enterprise was 300,000 units. Fannie Mae 
purchased mortgages financing 352,368 low-income units, and Freddie Mac 
purchased mortgages financing 406,958 low-income units. While total 
volumes have increased, the share of low-income units financed at each 
Enterprise has been declining from peak levels in 2012.
    Industry forecasts and FHFA internal forecasts for the overall 
multifamily originations market indicate a modest increase in 2017 over 
2016 and a decrease in 2018.
    Proposed rule and comments. In the proposed rule, FHFA proposed 
setting the benchmark for 2018-2020 at 315,000 units. Three commenters 
supported the proposed benchmark levels for the multifamily goals. One 
commenter stated, ``the goals are only meaningful if they are 
achievable.'' The three commenters that argued for higher goals did not 
suggest a specific number. One commenter (Fannie Mae) suggested 
lowering the low-income multifamily goal to 300,000 units, which was 
the 2015-2017 benchmark level. Regardless of whether they supported the 
proposed benchmark levels or supported different benchmark levels, 
commenters pointed out the particular difficulty for renters in finding 
affordable units and paying for them, given decreasing affordable 
rental housing stock, stagnant wages, and rapid rent increases in 
recent years. Several commenters pointed out that the overall 
multifamily market had been strong and growing, and the demand for 
rental housing is projected to continue to increase in coming years.
    FHFA determination. As discussed above, the Conservatorship 
Scorecard cap has been lowered to $35 billion for 2018. Because the 
Scorecard cap has been designed to exclude affordable housing goal 
categories, lowering the cap should not significantly impact the 
ability of the Enterprises to meet the multifamily housing goals. 
However, FHFA expects that availability of housing subsidies will 
likely continue to be challenging for renter households. As a result, 
the gap between the supply of low-income and very low-income units and 
the needs of low-income households, as described in the affordability 
discussion above, is expected to continue in the next goal period. 
These trends, along with industry forecasts and FHFA internal 
forecasts, support a cautious approach in considering any increase in 
the benchmark levels for the multifamily housing goals.
    Given recent Enterprise performance and balancing these 
considerations, the final rule sets the annual benchmark level for the 
low-income multifamily housing goal for each Enterprise at 315,000 
units in each year from 2018 through 2020, a modest increase from the 
300,000 unit goal for each Enterprise in 2015-2017.
2. Multifamily Very Low-Income Housing Subgoal
    The multifamily very low-income housing subgoal is based on the 
total number of rental units in multifamily properties financed by 
mortgages purchased by the Enterprises that are affordable to very low-
income families, defined as families with incomes no greater than 50 
percent of AMI. The final rule sets the benchmark level for the very 
low-income multifamily housing subgoal for each Enterprise at 60,000 
units for each year from 2018 through 2020.

                                                      Table 7--Multifamily Very Low-Income Subgoal
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Historical performance
                             Year                             ------------------------------------------------------------------------------------------
                                                                   2012         2013         2014         2015         2016         2017      2018-2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fannie Mae Goal..............................................       80,000       70,000       60,000       60,000       60,000       60,000       60,000
Freddie Mac Goal.............................................       59,000       50,000       40,000       60,000       60,000       60,000       60,000
Fannie Mae Performance:
    Very Low-Income Multifamily Units........................      108,878       78,071       60,542       69,078       65,910  ...........  ...........
    Total Multifamily Units..................................      501,256      430,751      372,089      468,798      552,785  ...........  ...........
    Very Low-Income % of Total Units.........................        21.7%        18.1%        16.3%        14.7%        11.9%  ...........  ...........
Freddie Mac Performance:
    Very Low-Income Multifamily Units........................       60,084       56,752       48,689       76,935       73,030  ...........  ...........
    Total Home Purchase Mortgages............................      377,522      341,921      366,377      514,275      597,399  ...........  ...........
    Very Low-Income % of Total Units.........................        15.9%        16.6%        13.3%        15.0%        12.2%  ...........  ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 5896]]

    Recent performance and forecasts. As shown in Table 7, from 2012 
through 2016, both Enterprises exceeded the very low-income multifamily 
subgoal. In 2016, the subgoal for each Enterprise was 60,000 units. 
Fannie Mae purchased mortgages financing 65,910 very low-income units, 
while Freddie Mac purchased mortgages financing 73,030 very low-income 
units. Similar to the low-income multifamily goal, the share of very 
low-income units financed at each Enterprise has been declining in 
recent years.
    As discussed above, industry forecasts and FHFA internal forecasts 
for the overall multifamily originations market indicate a modest 
increase in 2017 over 2016 and a decrease in 2018.
    Proposed rule and comments. In the proposed rule, FHFA proposed 
setting the very low-income multifamily subgoal at 60,000 units. Three 
commenters supported the proposed benchmark levels for the multifamily 
goals. The three commenters that argued for higher goals did not 
suggest a specific number. One commenter (Fannie Mae) suggested 
lowering the very low-income goal to 55,000 units. Regardless of 
whether they supported the proposed benchmarks or supported different 
benchmarks, commenters pointed out the particular difficulty for 
renters in finding affordable units and paying for them, given 
decreasing affordable stock, stagnant wages, and rapid rent increases 
in recent years. Several comments pointed out the fact that the overall 
multifamily market had been strong and growing, and the demand for 
rental housing is projected to continue to increase in coming years.
    FHFA determination. The very low-income multifamily market faces 
many of the same constraints as the low-income multifamily market. 
However, very low-income multifamily housing is inherently even more 
difficult to build, finance, and maintain, and a larger element of 
public subsidy is required to make such projects viable. The 
availability of public subsidies has been severely diminished in recent 
years, and FHFA expects the availability of subsidies to remain at 
historically low levels or decline further. The recent disruption in 
the tax credit market, described above, will pose an additional 
challenge to the very low-income multifamily market. These factors 
suggest moderation in setting the benchmark level for the very low-
income multifamily subgoal for the Enterprises.
    Given the challenges associated with the Enterprises meeting this 
housing goal and the trends described, the final rule sets the 
benchmark level for the very low-income multifamily housing subgoal for 
each Enterprise at 60,000 units for each year from 2018 through 2020, 
the same as the 60,000 unit goal for each Enterprise in 2015-2017.
3. Small Multifamily Low-Income Housing Subgoal
    A small multifamily property is defined for purposes of the housing 
goals 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. The 
final rule sets the benchmark level for the small multifamily subgoal 
for each Enterprise at 10,000 units for each year from 2018 through 
2020.

                                                      Table 8--Small Multifamily Low-Income Subgoal
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Historical performance
                             Year                             ------------------------------------------------------------------------------------------
                                                                   2012         2013         2014         2015         2016         2017      2018-2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Small Low-Income Multifamily Goal........................  ...........  ...........  ...........        6,000        8,000       10,000       10,000
Fannie Mae Performance:
    Small Low-Income Multifamily Units.......................       16,801       13,827        6,732        6,731        9,312  ...........  ...........
    Total Small Multifamily Units............................       26,479       21,764       11,880       11,198       15,211  ...........  ...........
    Low-Income % of Total Small Multifamily Units............        63.5%        63.5%        56.7%        60.1%        61.2%  ...........  ...........
Freddie Mac Performance:
    Small Low-Income Multifamily Units.......................          829        1,128        2,076       12,801       22,101  ...........  ...........
    Total Small Multifamily Units............................        2,194        2,375        4,659       21,246       33,984  ...........  ...........
    Low-Income % of Total Small Multifamily Units............        37.8%        47.5%        44.6%        60.3%        65.0%  ...........  ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Recent performance and forecasts. The small multifamily low-income 
housing subgoal was a new subgoal established by regulation for the 
2015-2017 goal period. The subgoal was set at 6,000 units in 2015, 
8,000 units in 2016, and 10,000 units in 2017. As shown in Table 8, 
both Enterprises exceeded the subgoal of 8,000 units in 2016. Fannie 
Mae purchased mortgages financing 9,312 units, and Freddie Mac 
purchased mortgages financing 22,101 units. As discussed above, 
industry forecasts and FHFA internal forecasts for the overall 
multifamily originations market indicate a modest increase in 2017 over 
2016 and a decrease in 2018.
    Proposed rule and comments. In the proposed rule, FHFA proposed 
setting the small multifamily subgoal at 10,000 units for each year. 
FHFA received five comments specifically on the small multifamily goal, 
and those comments were generally positive. For example, one commenter 
stressed the importance of small multifamily properties and the lack of 
``consistent access to secondary market liquidity,'' and stated that 
the proposed benchmark levels for 2018-2020 were appropriate. Further, 
the commenter stated, ``keeping these goals at an achievable level 
keeps them as meaningful incentives.'' Other commenters also supported 
the benchmark levels and maintaining the small multifamily low-income 
subgoal. There were two commenters that recommended that FHFA increase 
the benchmark level for the small multifamily low-income subgoal, but 
neither commenter specified a number.
    FHFA determination. The final rule sets the annual small 
multifamily subgoal for each Enterprise at 10,000 units for each year 
from 2018 through 2020, the same as the 2017 goal. The Enterprises 
continue to innovate in their approaches to serving this market. FHFA 
is still monitoring the trends in this market segment as well as 
Enterprise performance for this new subgoal. Maintaining the current 
goal should continue to encourage the Enterprises' participation in 
this market and ensure the Enterprises have the expertise necessary to 
serve this market should private sources of financing become unable or 
unwilling to lend on small multifamily properties.
    Given the importance of this market segment, the final rule sets 
the benchmark level for the small multifamily subgoal for each 
Enterprise at 10,000 units for each year from 2018 through 2020, the 
same as the 10,000 unit subgoal for each Enterprise in 2017.

[[Page 5897]]

VI. Section-by-Section Analysis of Other Changes

    The final rule also revises other provisions of the housing goals 
regulation, as discussed below.

A. Changes to Definitions--Proposed Sec.  1282.1

    Consistent with the proposed rule, the final rule includes changes 
to definitions used in the current housing goals regulation. 
Specifically, the final rule revises the definitions of ``median 
income,'' ``metropolitan area,'' and ``non-metropolitan area'' and 
removes the definition of ``AHS.''
1. Definition of ``Median Income''
    The current regulation defines ``median income'' as the unadjusted 
median family income estimates for an area as most recently determined 
by HUD. While this definition accurately identifies the source that 
FHFA uses to determine median incomes each year, the definition does 
not reflect the longstanding practice FHFA has followed in providing 
the Enterprises with the median incomes that the Enterprises must use 
each year. The final rule revises the definition to be clear that the 
Enterprises are required to use the median incomes provided by FHFA 
each year in determining affordability for purposes of the housing 
goals.
    The final rule also makes two additional technical changes to the 
definition of ``median income.'' First, the final rule adds a reference 
to ``non-metropolitan areas'' in the definition because FHFA determines 
median incomes for both metropolitan areas and non-metropolitan areas 
each year. Second, the final rule removes the word ``family'' in one 
place so that the term ``median income'' is used consistently 
throughout the regulation.
    The revised definition reads: ``Median income means, with respect 
to an area, the unadjusted median family income for the area as 
determined by FHFA. FHFA will provide the Enterprises annually with 
information specifying how the median family income estimates for 
metropolitan and non-metropolitan areas are to be applied for purposes 
of determining median income.''
    Comments on Proposed Rule and FHFA determination. FHFA did not 
receive any comments on these technical revisions, and the final rule 
adopts the changes as proposed.
2. Definitions of ``Metropolitan Area'' and ``Non-Metropolitan Area''
    The current regulation defines both ``metropolitan area'' and 
``non-metropolitan area'' based on the areas for which HUD defines 
median family incomes. The definition of ``metropolitan area'' refers 
to median family income estimates ``determined by HUD,'' while the 
definition of ``non-metropolitan area'' refers to median family income 
estimates ``published annually by HUD.''
    To be consistent with the changes to the definition of ``median 
income,'' the final rule revises the definition of ``metropolitan 
area'' by replacing the phrase ``for which median family income 
estimates are determined by HUD'' with the phrase ``for which median 
incomes are determined by FHFA.'' For the same reason, the final rule 
revises the definition of ``non-metropolitan area'' by replacing the 
phrase ``for which median family income estimates are published 
annually by HUD'' with the phrase ``, for which median incomes are 
determined by FHFA.''
    Comments on Proposed Rule and FHFA determination. FHFA did not 
receive any comments on these technical revisions, and the final rule 
adopts the changes as proposed.
3. Definition of ``AHS'' (American Housing Survey)
    Consistent with the proposed rule, the final rule removes the 
definition of ``AHS'' from Sec.  1282.1 because the term is no longer 
used in the Enterprise housing goals regulation.
    Prior to the 2015 amendments to the Enterprise housing goals 
regulation, the term ``AHS'' was used to specify the data source from 
which FHFA derives the utility allowances used to determine the total 
rent for a rental unit which, in turn, is used to determine the 
affordability of the unit when actual utility costs are not available. 
The 2015 amendments consolidated and simplified the definitions 
applicable to determining the total rent and eliminated the reference 
to AHS in the part of the definition related to utility allowances, 
providing FHFA with flexibility in how it determines the nationwide 
average utility allowances. The current nationwide average utility 
allowances are still fixed numbers based on AHS data, but the 
regulation does not require FHFA to rely solely on AHS data to 
determine those utility allowances. The term ``AHS'' is not used 
anywhere else in the regulation, so the final rule removes the 
definition from Sec.  1282.1.
    Comments on Proposed Rule and FHFA determination. FHFA did not 
receive any comments on this technical revision, and the final rule 
adopts the change as proposed.

B. Data Source for Estimating Affordability of Multifamily Rental 
Units--Proposed Sec.  1282.15(e)(2)

    The final rule revises Sec.  1282.15(e)(2) to update the data 
source used by FHFA to estimate affordability where actual information 
about rental units in a multifamily property is not available.
    Section 1282.15(e)(3) permits the Enterprises to use estimated 
affordability information to determine the affordability of multifamily 
rental units for up to 5 percent of the total multifamily rental units 
in properties securing mortgages purchased by the Enterprise each year 
when actual rental information about the units is not available. The 
estimations are based on the affordable percentage of all rental units 
in the census tract in which the property for which the Enterprise is 
estimating affordability is located.
    The current regulation provides that the affordable percentage of 
all rental units in the census tract will be determined by FHFA based 
on the most recent decennial census. However, the 2000 decennial census 
was the last decennial census that collected this information. The U.S. 
Census Bureau now collects this information through the ACS. Since 
2011, FHFA has used the most recent data available from the ACS to 
determine the affordable percentage of rental units in a census tract 
for purposes of estimating affordability. The final rule revises Sec.  
1282.15(e)(2) to reflect this change. To take into account possible 
future changes in how rental affordability data is collected, the 
revised sentence does not refer specifically to data derived from the 
ACS. The final rule revises Sec.  1282.15(e)(2) to replace the phrase 
``as determined by FHFA based on the most recent decennial census'' 
with the phrase ``as determined by FHFA.''
    Comments on Proposed Rule and FHFA determination. FHFA did not 
receive any comments on this change, and the final rule adopts the 
change as proposed.

C. Determination of Median Income for Certain Census Tracts--Proposed 
Sec.  1282.15(g)(2)

    Consistent with the proposed rule, the final rule revises Sec.  
1282.15(g) to remove paragraph (g)(2), an obsolete provision describing 
the method that the Enterprises were required to use to determine the 
median income for a census tract where the census tract was split 
between two areas with different median incomes.
    Current Sec.  1282.15(g)(2) requires the Enterprises to use the 
method prescribed by the Federal Financial

[[Page 5898]]

Institutions Examination Council to determine the median income for 
certain census tracts that were split between two areas with different 
median incomes. This provision was put in place by the 1995 final rule 
published by HUD establishing Enterprise housing goals under the Safety 
and Soundness Act.\59\
---------------------------------------------------------------------------

    \59\ See 60 FR 61846 (Dec. 1, 1995).
---------------------------------------------------------------------------

    As discussed above regarding the definition of ``median income,'' 
the process of determining median incomes has changed over the years, 
so that the Enterprises are now required to use median incomes provided 
by FHFA each year when determining affordability for purposes of the 
housing goals. Because FHFA provides median incomes for every location 
in the United States, it is no longer necessary for the regulation to 
set forth a process for the Enterprises to use when it is not certain 
what the applicable median income would be for a particular location. 
Consequently, the final rule removes Sec.  1282.15(g)(2) from the 
regulation and renumbers Sec.  1282.15(g)(1).
    Comments on Proposed Rule and FHFA determination. FHFA did not 
receive any comments on this change, and the final rule adopts the 
change as proposed.

D. Housing Plan Timing--Proposed Sec.  1282.21(b)(3)

    Consistent with the proposed rule, the final rule revises Sec.  
1282.21(b)(3) to make clear that the Director has discretion to 
determine the appropriate period of time that an Enterprise may be 
subject to a housing plan to address a failure to meet a housing goal.
    The final rule revises Sec.  1282.21(b)(3) to state explicitly that 
a housing plan that is required based on an Enterprise's failure to 
achieve a housing goal will be required to address a time period 
determined by the Director. If FHFA requires an Enterprise to submit a 
housing plan, FHFA will notify the Enterprise of the applicable time 
period in FHFA's final determination on the housing goals performance 
of the Enterprise for a particular year. This change is based on (1) 
FHFA's experience in overseeing the housing goals, in particular the 
experience in requiring Freddie Mac to submit a housing plan based on 
its failure to achieve certain housing goals in 2014 and 2015, (2) the 
inherent conflict in the timeframes set out in the Safety and Soundness 
Act, and (3) the importance of ensuring that any housing plans are 
focused on sustainable improvements in Enterprise goals performance.
    Comments on Proposed Rule. FHFA received four comments on this 
proposed revision. One commenter supported the revision and FHFA's 
efforts to provide ``a clear and transparent process by which [the 
Enterprise] is expected to carry out the housing plan.'' One commenter 
was supportive but recommended that the housing plan timing be ``time 
bound and defined,'' rather than left to the discretion of the 
Director. Two commenters recommended a tougher approach to enforcement 
of the goals and encouraged FHFA to impose civil and monetary penalties 
for failure to meet the goals. One commenter also requested that FHFA 
publish the housing plans and progress reports, and provide an 
opportunity for the public to review and comment on the housing plans.
    FHFA determination. The final rule amends Sec.  1282.21(b)(3) to 
provide that a housing plan will be required to address a time period 
determined by the Director. This change is consistent with the proposed 
rule. The final rule does not define the applicable time period, which 
will allow FHFA to establish an appropriate time period based on the 
facts and circumstances in each case.
    FHFA is committed to enforcing the housing goals as provided in the 
Safety and Soundness Act. FHFA required that an Enterprise submit a 
housing plan for the first time in 2015. FHFA required Freddie Mac to 
submit a housing plan for 2016-2017 based on Freddie Mac's failure to 
meet the low-income and very low-income housing goals in 2013 and 2014. 
FHFA extended the housing plan through 2018 after Freddie Mac failed to 
meet the same goals in 2015. Freddie Mac submitted detailed proposals 
for improving its performance on those housing goals in the housing 
plan, and Freddie Mac continues to provide regular updates to FHFA. The 
Safety and Soundness Act provides for enforcement through civil money 
penalties and cease and desist orders if an Enterprise refuses to 
submit a housing plan when required, submits an unacceptable plan, or 
fails to comply with a housing plan.\60\ FHFA may take such action in 
appropriate circumstances.
---------------------------------------------------------------------------

    \60\ 12 U.S.C. 4566(c)(1).
---------------------------------------------------------------------------

    When FHFA has required an Enterprise to submit a housing plan based 
on a failure to meet one or more housing goals, FHFA has required that 
the housing plan include detailed plans for future business initiatives 
and other actions that the Enterprise will take to improve its 
performance on the housing goals. For example, the Freddie Mac housing 
plan included proprietary forecasts for specific initiatives and 
programs that Freddie Mac is undertaking to improve its performance on 
the applicable housing goals. The level of detail required means that 
almost all of the information in the housing plan will be competitively 
sensitive. For that reason, the final rule does not provide for 
publication of any housing plan that an Enterprise may be required to 
submit. FHFA values the input of external entities on this process and 
recognizes commenters' desires for more information. FHFA will continue 
to review policies and procedures related to housing goals enforcement 
and may consider options to increase transparency related to Enterprise 
housing plans, either by future rulemaking or other changes to FHFA's 
processes.

VII. Paperwork Reduction Act

    This final rule does 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 any information 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 this final 
rule under the Regulatory Flexibility Act. The General Counsel of FHFA 
certifies that the rule is not likely to 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 SUPPLEMENTARY INFORMATION, under the 
authority of 12 U.S.C. 4511, 4513 and 4526, FHFA amends part 1282 of 
Title

[[Page 5899]]

12 of the Code of Federal Regulations as follows:

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 as follows:
0
a. Remove the definition of ``AHS''; and
0
b. Revise the definitions of ``Median income,'' ``Metropolitan area,'' 
and ``Non-metropolitan area.''
    The revisions read as follows:


Sec.  1282.1   Definitions.

* * * * *
    Median income means, with respect to an area, the unadjusted median 
family income for the area as determined by FHFA. FHFA will provide the 
Enterprises annually with information specifying how the median family 
income estimates for metropolitan and non-metropolitan areas are to be 
applied for purposes of determining median income.
    Metropolitan area means a metropolitan statistical area (MSA), or a 
portion of such an area, including Metropolitan Divisions, for which 
median incomes are determined by FHFA.
* * * * *
    Non-metropolitan area means a county, or a portion of a county, 
including those counties that comprise Micropolitan Statistical Areas, 
located outside any metropolitan area, for which median incomes are 
determined by FHFA.
* * * * *

0
3. Revise paragraphs (c)(2), (d)(2), (f)(2), and (g)(2) of Sec.  
1282.12 to read as follows:


Sec.  1282.12   Single-family housing goals.

* * * * *
    (c) * * *
    (2) The benchmark level, which for 2018, 2019 and 2020 shall be 24 
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 2018, 2019 and 2020 shall be 6 
percent of the total number of purchase money mortgages purchased by 
that Enterprise in each year that finance owner-occupied single-family 
properties.
* * * * *
    (f) * * *
    (2) The benchmark level, which for 2018, 2019 and 2020 shall be 14 
percent of the total number of purchase money mortgages purchased by 
that Enterprise in each year that finance owner-occupied single-family 
properties.
    (g) * * *
    (2) The benchmark level, which for 2018, 2019 and 2020 shall be 21 
percent of the total number of refinancing mortgages purchased by that 
Enterprise in each year that finance owner-occupied single-family 
properties.

0
4. Revise Sec.  1282.13 to read as follows:


Sec.  1282.13   Multifamily special affordable housing goal and 
subgoals.

    (a) Multifamily housing goal and subgoals. An Enterprise shall be 
in compliance with a multifamily housing goal or subgoal if its 
performance under the housing goal or subgoal meets or exceeds the 
benchmark level for the goal or subgoal, respectively.
    (b) Multifamily low-income housing goal. The benchmark level for 
each Enterprise's purchases of mortgages on multifamily residential 
housing affordable to low-income families shall be at least 315,000 
dwelling units affordable to low-income families in multifamily 
residential housing financed by mortgages purchased by the Enterprise 
in each year for 2018, 2019, and 2020.
    (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 60,000 dwelling units affordable to very low-income families in 
multifamily residential housing financed by mortgages purchased by the 
Enterprise in each year for 2018, 2019, and 2020.
    (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 10,000 
dwelling units affordable to low-income families in small multifamily 
properties financed by mortgages purchased by the Enterprise in each 
year for 2018, 2019, and 2020.


Sec.  1282.15   [Amended]

0
5. Amend Sec.  1282.15 as follows:
0
a. In paragraph (e)(2) remove the phrase ``based on the most recent 
decennial census''; and
0
b. Revise paragraph (g).

    The revisions read as follows:


Sec.  1282.15   General counting requirements.

* * * * *
    (g) Application of median income. For purposes of determining an 
area's median income under Sec. Sec.  1282.17 through 1282.19 and the 
definitions in Sec.  1282.1, the area is:
    (1) The metropolitan area, if the property which is the subject of 
the mortgage is in a metropolitan area; and
    (2) In all other areas, the county in which the property is 
located, except that where the State non-metropolitan median income is 
higher than the county's median income, the area is the State non-
metropolitan area.
* * * * *

0
6. Amend Sec.  1282.21 by revising paragraph (b)(3) to read as follows:


Sec.  1282.21   Housing plans.

* * * * *
    (b) * * *
    (3) Describe the specific actions that the Enterprise will take in 
a time period determined by the Director to improve the Enterprise's 
performance under the housing goal; and
* * * * *

    Dated: February 5, 2018.
Melvin L. Watt,
Director, Federal Housing Finance Agency.
[FR Doc. 2018-02649 Filed 2-9-18; 8:45 am]
 BILLING CODE 8070-01-P