[Federal Register Volume 86, Number 246 (Tuesday, December 28, 2021)]
[Rules and Regulations]
[Pages 73641-73658]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-28168]


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FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1282

RIN 2590-AB12


2022-2024 Single-Family and 2022 Multifamily 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 single-family housing goals for Fannie Mae and Freddie Mac 
(the Enterprises) for 2022 through 2024, as well as the multifamily 
housing goals for 2022. 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 single-
family housing goals and subgoals for 2022 through 2024. The final rule 
also replaces the low-income areas subgoal with separate area-based 
subgoals targeting the individual components of the low-income areas 
subgoal (minority census tracts and low-income census tracts). The 
final rule establishes the multifamily housing goals for 2022 only. For 
the small low-income multifamily subgoal, the final rule establishes 
separate benchmarks for Fannie Mae and Freddie Mac. Finally, the final 
rule makes several technical changes to definitions and other 
provisions to conform the regulation to existing practice.

DATES: The final rule is effective on February 28, 2022.

[[Page 73642]]


FOR FURTHER INFORMATION CONTACT: Ted Wartell, Associate Director, 
Housing & Community Investment, Division of Housing Mission and Goals, 
(202) 649-3157, [email protected]; Padmasini Raman, Supervisory 
Policy Analyst, Housing & Community Investment, Division of Housing 
Mission and Goals, (202) 649-3633, [email protected]; Kevin 
Sheehan, Associate General Counsel, Office of General Counsel, (202) 
649-3086, [email protected]; or Marshall Adam Pecsek, Assistant 
General Counsel, (202) 649-3380, [email protected]. These are 
not toll-free numbers. The mailing address is: Federal Housing Finance 
Agency, 400 Seventh Street SW, Washington, DC 20219. For TTY/TRS users 
with hearing and speech disabilities, dial 711 and ask to be connected 
to any of the contact numbers above.

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\ FHFA 
established housing goals levels for 2021 in a final rule published on 
December 21, 2020.\3\ FHFA proposed housing goals for 2022-2024 in a 
proposed rule published on August 25, 2021.\4\
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    \1\ See 12 U.S.C. 4561(a).
    \2\ See 12 U.S.C. 4501(7).
    \3\ See 85 FR 82881 (Dec. 21, 2020).
    \4\ See 86 FR 47398 (Aug. 25, 2021).
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    Single-family goals. The single-family goals as 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 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.
    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 established by FHFA regulation; and a 
market level that FHFA computes retrospectively based on Home Mortgage 
Disclosure Act (HMDA) data.
    Multifamily goals. The multifamily goals as 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 multifamily 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 establishes benchmark levels for the multifamily goals and 
subgoals, but it 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. Thus, in contrast to 
the single-family goals, FHFA currently measures Enterprise multifamily 
goals performance against the benchmark levels only.

B. Adjusting the Housing Goals

    If, after publication of this final rule, FHFA determines that any 
of the single-family or multifamily housing goals should be adjusted 
due to market conditions that are beyond current expectations, to 
ensure the safety and soundness of the Enterprises, or for any other 
reason, FHFA will take any steps that are necessary and appropriate to 
adjust that goal such as reducing the benchmark level through the 
processes in the existing regulation. FHFA may take other actions 
consistent with the Safety and Soundness Act and the Enterprise housing 
goals regulation based on new information or developments that occur 
after publication of the final rule.
    For example, under the Safety and Soundness Act and the Enterprise 
housing goals regulation, FHFA may reduce the benchmark levels in 
response to an Enterprise petition for reduction of any of the single-
family or multifamily housing goal benchmark levels in a particular 
year 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 Enterprises' charter acts.\5\
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    \5\ See 12 CFR 1282.14(d); 12 U.S.C. 4564(b).
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    The Safety and Soundness Act and the Enterprise housing goals 
regulation also take into account the possibility that achievement of a 
particular housing goal may or may not have been feasible for an 
Enterprise to achieve. If FHFA determines that a housing goal was not 
feasible for an Enterprise to achieve, then the statute and regulation 
provide for no further enforcement of that housing goal for that 
year.\6\
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    \6\ See 12 CFR 1282.21(a); 12 U.S.C. 4566(b).
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    If FHFA determines that an Enterprise failed to meet a housing goal 
and that achievement of the housing goal was feasible, then the statute 
and regulation provide FHFA with discretionary authority to require the 
Enterprise to submit a housing plan describing the specific actions the 
Enterprise will take to improve its housing goals performance.\7\
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    \7\ See 12 CFR 1282.21; 12 U.S.C. 4566(c).
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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.

[[Page 73643]]

II. Discussion of Proposed Rule and Public Comments

    FHFA published a Notice of Proposed Rulemaking (NPRM or proposed 
rule) in the Federal Register on August 25, 2021 that proposed new 
benchmark levels for each of the single-family and multifamily housing 
goals. The NPRM also proposed the replacement of the existing single-
family low-income areas subgoal with separate area-based subgoals 
targeting the individual components of the low-income areas subgoal 
(minority census tracts and low-income census tracts). The NPRM also 
included proposed technical changes to the regulation.\8\ The public 
comment period on the proposed rule ended on October 25, 2021.
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    \8\ See 86 FR 47398 (Aug. 25, 2021).
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    Overview. FHFA received 24 comment letters from 27 organizations 
and individuals in response to the proposed rule. Comments were 
submitted by both Fannie Mae and Freddie Mac, as well as by five 
nonprofit organizations, and ten trade associations representing 
lenders, home builders, credit unions, and other mortgage market 
participants. FHFA also received four comment letters from policy 
advocacy organizations, with one letter representing the views of three 
organizations and another representing the views of two organizations. 
Individuals submitted the remaining six comments. FHFA has reviewed and 
considered all of the comments. A number of comments 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.
    Single-family benchmark levels. FHFA proposed increases to the 
benchmark levels for the single-family housing goals. FHFA also 
proposed establishing a new area-based subgoals structure, which 
divided the existing low-income area purchase subgoal into two subgoals 
(a minority census tracts subgoal and a low-income census tracts 
subgoal). A majority of commenters, including Fannie Mae and Freddie 
Mac, expressed overall support for the proposed benchmark levels for 
the single-family goals, including the area-based subgoals. Many of 
these commenters characterized their support for the proposed single-
family benchmark levels as ``strong'' and ``enthusiastic.'' Several of 
these commenters specifically commended FHFA for proposing higher 
benchmark levels, which they described as in-line with the Enterprises' 
public missions and responsibilities to provide access to stable and 
affordable housing for all communities. Many of these commenters 
described the proposed increases in the benchmark levels as the type of 
concrete action necessary to address the affordable housing needs the 
country is facing, as well as to build a more equitable housing finance 
market. Several of them, including Fannie Mae, also described the 
proposed higher benchmark levels as reasonable, realistic, and 
achievable. Many of the commenters supporting the proposed benchmark 
levels described them as appropriately higher and necessary in order to 
support the Enterprises' mission to enable equitable and sustainable 
access to affordable housing. A number of these commenters focused on 
the critical role the goals play in providing credit for low-income and 
very low-income borrowers by ensuring that the Enterprises properly 
focus on this important aspect of their mission.
    Several commenters noted that higher benchmark levels will 
incentivize Fannie Mae and Freddie Mac to marshal their considerable 
resources and market presence to address the nation's affordable 
housing crisis. A number of commenters found the proposed single-family 
benchmark levels to be reasonable in relation to the market forecast. 
One commenter specifically supported setting the proposed benchmark 
levels for the low-income and very low-income purchase goals slightly 
above the midpoint of the projected confidence interval in the market 
forecast, as discussed in the proposed rule, on the basis that this 
will encourage the Enterprises to expend significant effort and execute 
thoughtful strategies to meet meaningful, yet attainable, goals.
    Single-family home purchase housing goals. Both Fannie Mae and 
Freddie Mac commented that the proposed increases in the benchmark 
levels for the single-family home purchase housing goals were 
substantial compared to the 2018-2020 and 2021 goals. Freddie Mac 
specifically noted that the proposed increases would set targets that 
exceed past performance by both Enterprises and the market as a whole 
in most of the past ten years.
    Although Fannie Mae and Freddie Mac expressed support for the 
proposed increases to the single-family home purchase benchmark levels, 
both Enterprises expressed concerns about uncertainty in the housing 
and loan origination markets. Fannie Mae expressed cautious optimism 
regarding its ability to achieve the proposed single-family home 
purchase benchmarks based on historical performance, while Freddie Mac 
committed to making every effort to meet the proposed goals. However, 
both Fannie Mae and Freddie Mac emphasized that market factors and 
regulatory issues outside the Enterprises' control could pose risks to 
their ability to meet the proposed benchmark levels during the period 
covered by the final rule. Freddie Mac specifically requested a 
designated ``implementation period'' to adjust to the significant 
increases in the single-family benchmark levels in light of the current 
and foreseeable market conditions. Both Enterprises encouraged FHFA to 
consider how external factors could complicate their efforts to achieve 
the proposed benchmark levels given the current and forecasted 
conditions in the housing and origination markets. They emphasized how 
extreme home price appreciation, the shortfall in affordable housing 
supply, and disruptions in income and employment stability resulting 
from the COVID-19 pandemic could reduce demand and disproportionately 
impact lower-income borrowers' mortgage loan eligibility. The 
Enterprises also emphasized how secondary market dynamics, such as 
lender interest in holding loans in their portfolios rather than 
selling them, consumer demand, lender preference for conventional loans 
versus non-conventional loans, and the secondary market activities of 
other investors will influence the Enterprises' ability to achieve the 
proposed benchmark levels.
    Area-based subgoals. The NPRM proposed establishing a new area-
based subgoals structure by dividing the existing low-income areas 
purchase subgoal into two subgoals: A minority census tracts subgoal 
and a low-income census tracts subgoal. Most commenters offered strong 
support for the proposed area-based subgoals structure. Several 
commenters, including Freddie Mac, applauded FHFA for its focus on 
equitable housing finance and efforts to address the minority 
homeownership gap through these proposed subgoals. One commenter stated 
that the proposed minority census tracts subgoal is a necessary step 
toward ensuring the Enterprises fulfill their statutory duty to 
facilitate the financing of affordable housing for all low- and 
moderate-income families, including families of color. A number of 
commenters urged FHFA to increase the benchmark level for the minority 
census tracts subgoal above the proposed 10 percent. Two

[[Page 73644]]

commenters recommended an increase in the benchmark level for the 
proposed low-income census tracts subgoal above the proposed 4 percent. 
Two commenters suggested that restructuring the low-income areas 
subgoal as proposed might provide FHFA with data to determine ``whether 
the enterprise housing goals are unintentionally contributing to the 
displacement of low-income families.''
    While no commenters objected to the proposed area-based subgoals 
structure, one commenter expressed concern that the proposed low-income 
census tracts subgoal would deter the Enterprises from purchasing loans 
in minority census tracts for moderate- to high-income minority 
borrowers who opt to live in minority census tracts. FHFA notes that 
the new subgoals would permit housing goals credit under at least one 
of the subgoals for many moderate- and high-income borrowers in 
minority census tracts. All loans to moderate-income borrowers (defined 
as having incomes no greater than 100 percent of area median income 
(AMI)) in minority census tracts would be eligible for credit under the 
minority census tracts subgoal, and in minority census tracts that are 
also low-income census tracts, loans to borrowers with incomes above 
100 percent of AMI would be eligible for credit under the low-income 
census tracts subgoal. While it is true that loans to higher income 
borrowers in minority census tracts that are not low-income census 
tracts would not be eligible for credit under either subgoal, FHFA does 
not expect this to create a significant disincentive for Enterprise 
purchases of such loans.
    Another commenter recommended future inclusion of race and 
ethnicity of borrowers into housing goal formulation and modification. 
FHFA will continue to monitor Enterprise performance on the housing 
goals and the demographics of borrowers with goals-qualifying loans. 
FHFA may explore avenues that may be permitted under applicable law in 
future housing goals rulemakings.
    Single-family low-income refinancing goal. In addition to their 
support for the proposed increases in the benchmark levels for the 
single-family home purchase goals, a number of commenters specifically 
expressed support for the proposed benchmark level for the single-
family low-income refinancing goal. Several of these commenters 
emphasized the crucial role that responsible and affordable refinance 
loans play in preserving homeownership and the important role the 
Enterprises play in ensuring that more borrowers can benefit from the 
current refinance boom to save money on mortgage payments. They 
expressed concern that, during the COVID-19 pandemic and a period of 
historically low interest rates, the current surge in refinancing is 
not adequately reaching lower-income families, lower-wealth families, 
and borrowers with smaller loan balances. To address these concerns, 
these commenters recommended that FHFA and the Enterprises help reduce 
the cost of refinancing by ensuring that rate-term refinances are more 
available, but not more costly, for lower-income families who would 
save greatly on mortgage payments. They also urged FHFA and the 
Enterprises to create a streamlined refinance program for low-balance 
mortgages to ensure that affordable refinances are more accessible to 
borrowers, and particularly those of color. One commenter that 
supported the proposed benchmark level for the single-family low-income 
refinancing goal expressed optimism that the proposed higher benchmark 
level would encourage the Enterprises to purchase refinance mortgages 
from credit unions and other financial institutions whose mission is to 
serve their local communities. Another commenter urged FHFA to increase 
the benchmark level for the low-income refinancing goal from the 
proposed 26 percent to 28 percent to help ensure that the Enterprises 
can respond to current market conditions and promote fair access to 
affordable housing effectively. One commenter recommended that FHFA 
increase the income level for mortgages eligible for the low-income 
refinance goal from 80 percent of AMI to 100 percent of AMI and provide 
more support to more low[hyphen]income homeowners looking to refinance. 
FHFA notes that while this proposal would be beyond the scope of the 
current rule, FHFA will continue to consider the needs of moderate-
income households that are seeking to refinance loans.
    Several commenters expressed support for the higher proposed 
benchmark level while acknowledging that interest rates are forecast to 
increase in the years 2022-2024. Two of these commenters described the 
proposal, which set the low-income refinancing goal slightly below the 
midpoint of the confidence interval in the market forecast, as 
appropriate given the greater volatility in refinance projections and 
the sizable increase over the current benchmark level of 21 percent. 
One of these commenters endorsed FHFA's proposal to set the benchmark 
level lower than the projected market level due to fluctuations in 
interest rates.
    Fannie Mae expressed concern over the proposed low-income refinance 
benchmark level, characterizing the proposed increase over the current 
benchmark level as significant. Fannie Mae stated that the 
unpredictability of future interest rates and refinancing volumes could 
have a significant impact on the low-income refinance share of the 
market. Fannie Mae further stated that this volatility makes it 
difficult to determine the likelihood of the Enterprises' ability to 
meet the proposed benchmark level, particularly in 2023 and 2024. 
Fannie Mae also stated that meeting the proposed benchmark level may be 
challenging if future refinance volume stalls because homeowners who 
have taken advantage of historically low interest rates will have less 
incentive to refinance their loans, especially those lower income 
borrowers with low loan balances. FHFA emphasizes that the Enterprises 
are required to meet the lower of the benchmark level or the market 
level for each single-family goal. Therefore, if the benchmark level 
that FHFA set is higher than the market level, then the Enterprise can 
still meet this goal by exceeding the market level, even if it falls 
short of the benchmark. However, if FHFA sets a low benchmark level in 
the context of an expected strong or high market level, then FHFA would 
be not be meeting its statutory obligation to set meaningful and robust 
goals to ensure that an appropriate share of Enterprise refinance 
acquisitions are loans made to low-income borrowers.
    Multifamily benchmark levels. The NPRM proposed increases in the 
benchmark levels for all three multifamily goals. A significant number 
of commenters supported these proposed increases in the benchmark 
levels. The commenters characterized the proposed benchmark levels as 
reasonable and attainable, notwithstanding known market challenges, 
like the cost of materials, labor shortages and supply chain issues. 
Several of the commenters stated that the significant and growing need 
for affordable rental housing across the country aligns with the 
missions of the Enterprises and should be a priority in the near 
future. One commenter stated that while the proposed increases in the 
benchmark levels would be an improvement, FHFA should set the 
multifamily benchmark levels even higher, citing both the need for more 
affordable rental housing and the Enterprises' recent performance on 
these goals. Two commenters expressed concern that the proposed 
benchmark levels would be too high relative to previous levels.

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    Measuring multifamily goals. Several commenters suggested 
expressing the multifamily goals in percentages or dollar volumes 
instead of numbers of units. Those proposals are outside the scope of 
this rulemaking, and the final rule does not change how the multifamily 
goals are measured. FHFA may consider changes to the structure or 
measurement of the multifamily housing goals in future rulemaking to 
establish multifamily benchmark levels for 2023 and beyond.
    Duration of goals. A number of commenters recommended that FHFA 
establish the housing goals more frequently than once every three 
years. Several of these commenters urged FHFA to set the multifamily 
goal benchmark levels annually, rather than for three years as set 
forth in the proposed rule. One of these commenters stated that because 
the 2022-2024 goals are subject to the lasting uncertainty in housing 
markets due to the COVID-19 pandemic, FHFA should issue one-year 
multifamily goal benchmark levels applicable to 2022. This commenter 
argued that a shorter goal duration could also mitigate the potential 
need for FHFA to adjust longer-term housing goal benchmark levels if 
unforeseen changes to market conditions arise. Other commenters also 
recommended a one-year multifamily goal duration, stating that the 
proposed increases to the benchmark levels may be too high and the 
three-year time frame too long and may cause the Enterprises to act 
irrationally if the market dynamics change during the three-year 
period. One commenter urged FHFA to set two-year benchmark levels for 
both the single-family and multifamily goals. The commenter reasoned 
that because forecasts are more accurate in shorter time frames, two-
year goals could allow for more aggressive, but feasible, benchmark 
levels within the upper range of loan purchase forecasts.
    Small multifamily subgoal. FHFA received several comment letters, 
including from Freddie Mac, supporting the proposed increase in the 
small multifamily housing goal benchmark level. Fannie Mae highlighted 
concerns around the proposed increase in the benchmark level and 
identified a potential need to change existing underwriting standards 
in order to meet the goal.
    Other issues. A number of commenters raised concerns in response to 
the proposed rule that, while important to note, have limited 
implementation feasibility or relevance in the final housing goals 
rulemaking. Additionally, commenters recommended changes to the 
proposed rule that are outside the scope of the housing goals, such as 
issues related to the Enterprises' Senior Preferred Stock Purchase 
Agreements (PSPA) with the U.S. Department of Treasury, and 
recommendations for alignment with other regulatory requirements, such 
as the Community Reinvestment Act. These comments are further discussed 
below.
    (i) PSPA amendments. A number of commenters expressed general 
concern over the impact of the covenants added to the PSPA in January 
2021 on Enterprise housing goals performance. Several of the commenters 
recommended permanently suspending these covenants, which were 
temporarily suspended by the U.S. Department of Treasury in September 
2021, to best support communities of color and bolster Enterprise 
performance. One commenter stated that while FHFA has important safety 
and soundness responsibilities, those responsibilities should be 
exercised using supervisory authority rather than as part of the PSPA.
    (ii) Equitable Housing Finance Plans. Several commenters, including 
Fannie Mae, commended FHFA's efforts to support sustainable affordable 
housing--specifically, FHFA's requirement that the Enterprises prepare 
three-year Equitable Housing Finance Plans. The Enterprises' Equitable 
Housing Finance Plans, due by December 31, 2021, will identify barriers 
to housing opportunities, list measurable objectives and meaningful 
goals, and describe plans for meaningful actions to reduce the racial 
homeownership gap. FHFA expects that the Equitable Housing Finance 
Plans, together with the new housing goals area-based subgoals 
structure, will contribute to promoting equitable and wide-reaching 
credit opportunities.
    (iii) Disaster-related and climate change considerations. One 
commenter recommended explicitly including indicators for climate 
change and environmental justice into the formulation of Enterprise 
housing goals. Citing apparent disproportionate effects of climate 
change on historically underserved communities, particularly those of 
color, the commenter pushed for consideration of environment-related 
risk into housing goal risk assessment. The commenter asserted that 
FHFA should take actions to support sustainable affordable housing 
initiatives in response to the risks posed by climate change to the 
housing finance market, and low- and moderate-income communities and 
communities of color in particular. FHFA has been actively engaging 
with industry stakeholders and working to evaluate climate and natural 
disaster risk management at the Enterprises and will continue to do 
so.\9\
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    \9\ See https://www.fhfa.gov/Media/PublicAffairs/Documents/Climate-and-Natural-Disaster-RFI.pdf.
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    (iv) Manufactured housing loans. The NPRM did not propose targets 
specific to the purchase of manufactured housing loans. One commenter 
urged FHFA to establish a new manufactured housing single-family 
subgoal based on the commenter's claim that the Enterprises' separate 
Duty to Serve plans and performance do not adequately support 
manufactured housing finance. Fannie Mae suggested that FHFA allow 
housing goals credit for rented units within manufactured housing 
communities.
    FHFA recognizes the importance of manufactured housing as a 
significant source of affordable housing and homeownership. However, 
the final rule does not establish a new manufactured housing single-
family subgoal and does not allow housing goals credit for rented units 
in manufactured housing communities. The multifamily Conservatorship 
Scorecard cap currently requires at least 50 percent of an Enterprise's 
multifamily loan purchases to be mission-driven, affordable housing, 
including manufactured housing communities. In addition, the 
Enterprises' proposed Duty to Serve plans include Enterprise 
manufactured home loan purchases for 2022-2024. FHFA will continue to 
evaluate the treatment of loans on manufactured housing communities and 
may consider changes in connection with the Enterprises' Duty to Serve 
efforts.
    FHFA also will consider providing additional guidance to the 
Enterprises to permit blanket loans on manufactured housing communities 
that meet certain conditions to count towards the multifamily housing 
goals on a case-by-case basis. It is difficult to accurately determine 
a manufactured housing unit's affordability under the housing goals 
because bedroom count information on individual manufactured housing 
units in the communities is typically 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. 
Therefore, the practical question of how to determine housing costs and 
affordability, including how to adjust household size for the number of 
bedrooms in a unit to accurately apply the rent estimation alternative, 
cannot be answered at this time given available data.

[[Page 73646]]

    (v) Multifamily workforce housing goal. One commenter suggested 
that FHFA establish a multifamily goal targeting support for 
multifamily properties rented to households with incomes from 60 to 120 
percent of AMI (which is the common definition of incomes for workforce 
housing). The commenter recommended that FHFA give the Enterprises 
goals credit for purchasing mortgage loans on multifamily rental 
properties with a prescribed number of rental units that are affordable 
to moderate[hyphen]income families with incomes between 60 and 120 
percent of AMI. However, this proposal is outside the scope of this 
rulemaking. Therefore, the final rule does not change the structure of 
the multifamily housing goals to expand beyond the statutory 
requirements for establishing multifamily goals, which limit housing 
goals credit to households at or below 80 percent of AMI. FHFA 
acknowledges the importance of this market segment and may take 
workforce housing into consideration in future rulemakings.
    (vi) Qualitative considerations. Fannie Mae and another commenter 
proposed incorporating qualitative goals in FHFA's final determinations 
for Enterprise annual performance. The commenters argued that analyzing 
the Enterprises' qualitative efforts in addition to their quantitative 
performance metrics will bolster FHFA's determination of appropriate 
remedies for Enterprise noncompliance with housing goals. The 
commenters recommended that FHFA give the Enterprises credit for 
participation in stakeholder efforts to promote affordable and 
sustainable housing. The commenters also suggested that FHFA explore 
opportunities for developing qualitative goals in conjunction with the 
Enterprises' development and implementation of their Equitable Housing 
Finance Plans and their efforts to advance equity in housing finance.
    FHFA agrees that the implementation of qualitative measures plays 
an important role in the Enterprises' ability to achieve the 
quantitative housing goals. In particular, quantitative measures may 
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. However, FHFA 
continues to believe that the establishment of quantitative benchmark 
levels provides clearly defined standards for objectively measuring the 
Enterprises' performance. FHFA notes that the qualitative efforts of 
the Enterprises in attempting to meet the housing goals are an 
appropriate consideration when assessing 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.

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 subgoals for 2022-2024 as follows:

          Table 1--Single-Family Benchmark Levels for 2022-2024
------------------------------------------------------------------------
                                                               Final
                                                             benchmark
            Goal                       Criteria           level for 2022-
                                                          2024 (percent)
 
------------------------------------------------------------------------
Low-Income Home Purchase      Home purchase mortgages on              28
 Goal.                         single-family, owner-
                               occupied properties to
                               borrowers with incomes no
                               greater than 80 percent
                               of AMI.
Very Low-Income Home          Home purchase mortgages on               7
 Purchase Goal.                single-family, owner-
                               occupied properties to
                               borrowers with incomes no
                               greater than 50 percent
                               of AMI.
Minority Census Tracts        Home purchase mortgages on              10
 Subgoal.                      single-family, owner-
                               occupied properties to
                               borrowers with incomes no
                               greater than 100 percent
                               of AMI, in minority
                               census tracts \1\.
Low-Income Census Tracts      (i) Home purchase                        4
 Subgoal.                      mortgages on single-
                               family, owner-occupied
                               properties to borrowers
                               (regardless of income) in
                               low-income census tracts
                               \2\ that are not minority
                               census tracts, and (ii)
                               home purchase mortgages
                               on single-family, owner-
                               occupied properties to
                               borrowers with incomes
                               greater than 100 percent
                               of AMI in low-income
                               census tracts that are
                               also minority census
                               tracts.
Low-Income Refinancing Goal.  Refinancing mortgages on                26
                               single-family, owner-
                               occupied properties to
                               borrowers with incomes no
                               greater than 80 percent
                               of AMI.
------------------------------------------------------------------------
\1\ Census tracts that have a minority population of at least 30 percent
  and a median income of less than 100 percent of AMI.
\2\ Census tracts where the median income is no greater than 80 percent
  of AMI.

B. Multifamily Housing Goal Levels

    The final rule establishes the benchmark levels for the multifamily 
goal and subgoals for 2022 as follows:

                                 Table 2--Multifamily Benchmark Levels for 2022
----------------------------------------------------------------------------------------------------------------
               Goal                             Criteria                    Final benchmark level for 2022
----------------------------------------------------------------------------------------------------------------
Low-Income Goal...................  Units affordable to families      415,000 units.
                                     with incomes no greater than 80
                                     percent of AMI in multifamily
                                     rental properties with
                                     mortgages purchased by an
                                     Enterprise.
Very Low-Income Subgoal...........  Units affordable to families      88,000 units.
                                     with incomes no greater than 50
                                     percent of AMI in multifamily
                                     rental properties with
                                     mortgages purchased by an
                                     Enterprise.
Small Multifamily Low-Income        Units affordable to families      Freddie Mac: 23,000 units.
 Subgoal.                            with incomes no greater than 80  Fannie Mae: 17,000 units.
                                     percent of AMI in small
                                     multifamily rental properties
                                     (5 to 50 units) with mortgages
                                     purchased by an Enterprise.
----------------------------------------------------------------------------------------------------------------


[[Page 73647]]

C. Other Proposed Changes

    The final rule makes minor technical changes to some regulatory 
definitions and counting rules. These changes are non-substantive 
changes intended to conform the regulation to existing FHFA practices 
in measuring the performance of the Enterprises under the housing 
goals.

IV. Single-Family Housing Goals

A. Factors Considered in Setting the Single-Family Housing Goal 
Benchmark Levels

    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.\10\
---------------------------------------------------------------------------

    \10\ 12 U.S.C. 4562(e)(2)(B).
---------------------------------------------------------------------------

    FHFA considered each of these required statutory factors, as 
described in detail in the proposed rule, in setting the benchmark 
levels for the single-family housing goals.\11\
---------------------------------------------------------------------------

    \11\ See 86 FR 47398 (Aug. 25, 2021).
---------------------------------------------------------------------------

    FHFA's analysis and goal setting process includes developing 
econometric forecast models for each of the single-family housing goal 
segments that explicitly take some of the statutory factors into 
account, and then considering the other statutory factors and variables 
that impact affordable homeownership in selecting the specific 
benchmark level.\12\ Many of these factors 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 home prices 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 goals requirements in 
a safe and sound manner.
---------------------------------------------------------------------------

    \12\ See http://www.fhfa.gov/PolicyProgramsResearch/Research/PaperDocuments/Dec2021_Market-Estimates-2022-2024.pdf.
---------------------------------------------------------------------------

    Current market outlook. There are many factors that impact the 
affordable housing market as a whole, and changes to any one of them 
could significantly impact the ability of the Enterprises to meet the 
housing goals. FHFA will continue to monitor the affordable housing 
market and take these factors into account when considering the 
feasibility of the goals. In developing the market models, FHFA, as in 
past rulemakings, used Moody's forecasts as the source for 
macroeconomic variables where available.\13\ In cases where Moody's 
forecasts were not available (for example, the share of government-
insured/guaranteed home purchases and the share of government-insured/
guaranteed refinances), FHFA generated and tested its own forecasts as 
in past rulemakings.\14\ Elements that impact the models and the 
determination of benchmark levels are discussed in FHFA's market paper 
and some of these elements are discussed below.\15\
---------------------------------------------------------------------------

    \13\ The macroeconomic outlook described herein is based on 
Moody's forecasts as of September 2021.
    \14\ This refers to the mortgages insured or guaranteed by 
government agencies such as the Federal Housing Administration, 
Department of Veterans Affairs, and Rural Housing Service.
    \15\ See http://www.fhfa.gov/PolicyProgramsResearch/Research/PaperDocuments/Dec2021_Market-Estimates-2022-2024.pdf.
---------------------------------------------------------------------------

    Interest rates are very important determinants of mortgage market 
trajectory. Moody's September 2021 forecast projects that mortgage 
interest rates will rise gradually from 2.9 percent in 2021 to 3.7 
percent by 2024.\16\ Moody's forecast also projects that the 
unemployment rate will gradually fall from its April 2020 peak of 14.8 
percent to 3.9 percent in 2024.\17\ Moody's forecast also projects a 
modest increase in per capita disposable nominal income growth--from 
$52,800 in 2020 to $59,300 in 2024. Furthermore, Moody's forecast 
estimates that the inflation rate will be in the 2.3-2.8 percent range 
from 2022 through 2024.
---------------------------------------------------------------------------

    \16\ Refer to Exhibit 1 in the ``The Size of the Affordable 
Mortgage Market: 2022-2024 Enterprise Single-Family Housing Goals,'' 
available at http://www.fhfa.gov/PolicyProgramsResearch/Research/PaperDocuments/Dec2021_Market-Estimates-2022-2024.pdf.
    \17\ U.S. Bureau of Labor Statistics ``Labor Force Statistics 
from the Current Population Survey,'' available at: https://data.bls.gov/timeseries/LNS14000000.
---------------------------------------------------------------------------

    The combination of low interest rates, high deferred demand, and 
low supply fueled by the COVID-19 pandemic drove house prices up by 
18.5 percent in the third quarter of 2021 relative to the third quarter 
of 2020, based on FHFA's purchase-only House Price Index (HPI).\18\ 
Moody's September 2021 forecast of the same HPI index expects house 
prices to increase at the annual rates of 4.0, 1.2, and 0.2 percent in 
2022, 2023, and 2024, respectively.
---------------------------------------------------------------------------

    \18\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/US-House-Prices-Rise-18pt5-Percent-over-the-Last-Year-Up-4pt2-Percent-from-2Q.aspx.
---------------------------------------------------------------------------

    Taken together, 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 projected to decline from an 
index value of 166.8 in 2020 to 151.6 in 2024. Lower values of the HAI 
imply that housing has become less affordable.\19\ Further, the supply 
of affordable housing has not kept pace with the growth of the 
demographic demand for affordable housing, even before the COVID-19 
pandemic.
---------------------------------------------------------------------------

    \19\ NAR's HAI is a national index. 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 indicates that housing is becoming less 
affordable.
---------------------------------------------------------------------------

    In many ways, 2020 was an unusual year in its record volumes of 
both home purchase and home refinance loans. Low interest rates coupled 
with rising house prices created an incentive for many homeowners to 
refinance, resulting in a surge in refinance activity in 2020. The 
refinance share of overall mortgage originations increased from 28 
percent in 2018 to 61 percent in 2020. Moody's forecasts this share to 
decline slightly to 59 percent in 2021, subsequently increase to 64 
percent in 2022, and then decline to 51 percent and 38 percent in 2023 
and 2024, respectively.

[[Page 73648]]

B. Final Single-Family Housing Goal Benchmark Levels

    The final rule sets each of the single-family housing goal 
benchmark levels at the same levels as in the proposed rule, which are 
higher than the corresponding levels that have been in place since 
2018. Both Enterprise performance and the overall market shares 
generally have exceeded the benchmark levels in those years. FHFA 
recognizes that the new higher benchmark levels may require the 
Enterprises to expand their efforts to serve these markets in the 
future, particularly as market conditions continue to change. However, 
FHFA believes that the new benchmark levels are appropriate and 
feasible for the Enterprises to achieve in light of their past 
performance, FHFA's analysis of the market, and the statutory factors 
listed above. FHFA also notes that the Enterprises are required to meet 
the lower of the benchmark level or the market level for each single-
family goal. Therefore, if the benchmark level in the final rule is 
higher than the market level, an Enterprise can still meet the goal by 
exceeding the market level, even if it falls short of the benchmark 
level.
    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 single-
family housing goals to ensure the Enterprises' continued safety and 
soundness.
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. Consistent with the 
proposed rule and FHFA's market model, the final rule sets the annual 
low-income home purchase housing goal benchmark level for 2022-2024 at 
28 percent. Although the final benchmark level is significantly higher 
than the previous benchmark level of 24 percent and is above the 
midpoint of the confidence intervals of the market forecast, FHFA 
believes that the higher benchmark level is appropriate to ensure that 
the Enterprises fulfill their statutory duty to facilitate the 
financing of affordable housing for all low- and moderate-income 
families. Additionally, FHFA notes that setting the benchmark level 
above the midpoint of the confidence intervals in the market forecast 
will help ensure that the two-part benchmark/market level structure of 
the goal is meaningful even in a strong market for low-income 
borrowers.
[GRAPHIC] [TIFF OMITTED] TR28DE21.000

The current market forecast in Table 3 reflects a 90 percent confidence 
level for this goal.\20\
---------------------------------------------------------------------------

    \20\ A 90 percent confidence interval suggests that there is a 
90 percent probability that the market performance for a given year 
will be within the lower bound and upper bound as indicated in Table 
3.
---------------------------------------------------------------------------

    Recent performance and forecasts. As shown in Table 3, both 
Enterprises exceeded both the applicable benchmark and market levels 
for this goal in 2018, 2019, and 2020 while the low-income home 
purchase market levels were steadily increasing. FHFA's current model 
forecasts that the market level for this goal is expected to decline 
from the peak in 2020 and remain around 26 percent for each year from 
2022-2024.
    Proposed rule and comments. The NPRM proposed increasing the 
benchmark level for this goal for 2022-2024 from 24 percent, which had 
been in place since 2015, to 28 percent. At the time the NPRM was 
issued, using data through July 2021, the average market level forecast 
for 2022-2024 was 26.5 percent. Since the publication of the proposed 
rule, FHFA has updated the model using additional 2020 data from HMDA 
and Moody's forecasts as of September 2021. The updated FHFA model 
forecasts that the market level for this goal will be slightly lower, 
with the average forecast at 25.9 percent.
    A majority of the commenters on the proposed rule supported the 
proposed higher benchmark levels for the single-family goals, including 
the low-income home purchase goal, and no commenters recommended 
lowering them. Commenters described the proposed benchmark levels as 
reasonable, realistic, and achievable. Both Enterprises expressed 
concern that market factors and regulatory issues outside of their 
control could pose risks to their ability to meet the proposed 
benchmark levels, including for the low-income home purchase goal, 
during the three-year term of the rule. FHFA will continue to monitor 
the market for this

[[Page 73649]]

goal and take appropriate actions as needed.
    One commenter recommended that FHFA raise all of the single-family 
benchmark levels and specifically suggested that the single-family low-
income benchmark level be increased to 30 percent. The commenter stated 
that the recommended increase in the single-family benchmark levels 
would allow the Enterprises to better respond to the current market 
conditions and promote fair access to affordable housing effectively. 
The commenter further stated that an increase in the benchmark levels 
is necessary because the Enterprises have an even more pronounced 
responsibility to serve the entire market during times of crisis, 
including the current COVID-19 pandemic, through aggressively setting, 
or even surpassing, ambitious housing goals. Another commenter stated 
that because the Enterprises have routinely equaled or exceeded the 
single-family low-income benchmark levels during the last eleven years, 
this suggested that the benchmark levels have been too low. The 
commenter further noted that the single-family goals should be 
established at levels that would likely result in the Enterprises 
leading the market but did not specify what the increase to the 
proposed single-family low-income benchmark level should be.
    FHFA determination. Consistent with the proposed rule, the final 
rule sets the benchmark level for the low-income home purchase housing 
goal at 28 percent. This is above the average market forecast for the 
three years, to encourage the Enterprises to continue to find ways to 
support low-income borrowers while not compromising safe and sound 
lending standards. Even though this benchmark level 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 assess the 
Enterprises' year-end performance will be the lower of the market level 
or the benchmark level. Therefore, the 28 percent benchmark level is 
appropriate, reasonable, and supported by the current market forecast. 
FHFA recognizes that there may be challenges to meeting the goal, 
particularly in light of the recovery from the COVID-19 pandemic. FHFA 
will continue to monitor the Enterprises in its capacities as regulator 
and as conservator, and if FHFA determines that the benchmark level for 
the low-income home purchase goal is not feasible for the Enterprises 
to achieve in light of market conditions, or for any other reason, FHFA 
will 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 AMI. 
Consistent with the proposed rule and FHFA's market model, the final 
rule sets the annual very low-income home purchase housing goal 
benchmark level for 2022-2024 at 7 percent. While this benchmark level 
is above the previous benchmark level of 6 percent and is above the 
midpoint of the confidence intervals of the market forecast, FHFA has 
determined that the benchmark level will serve as an appropriate target 
that will channel Enterprise efforts in this market segment. FHFA 
recognizes that the various challenges to affordability highlighted 
above may require additional effort by the Enterprises to meet the 
benchmark level. As with the low-income home purchase goal discussed 
above, setting the benchmark level at a higher level will help ensure 
that the two-part structure of the goal is meaningful even in a strong 
purchase market for very low-income borrowers.
[GRAPHIC] [TIFF OMITTED] TR28DE21.001

The current market forecast in Table 4 reflects a 90 percent confidence 
level for this goal.

    Recent performance and forecasts. As shown in Table 4, the market 
for very low-income home purchase loans has increased each year 
beginning in 2018 through 2020, as reflected in HMDA data. During this 
timeframe, both Enterprises exceeded the applicable benchmark level for 
this goal. Fannie Mae also exceeded the applicable market levels for 
this goal for 2018 and 2020 but fell slightly below the market level 
for 2019. Conversely, Freddie Mac fell below the applicable market 
levels for this goal in 2018 and 2020 but exceeded the market level for 
2019. FHFA's current model forecasts that the market level for this 
goal is expected to

[[Page 73650]]

remain around 6.2 percent for 2022-2024.
    Proposed rule and comments. The NPRM proposed increasing the 
benchmark level for this goal for 2022-2024 from 6 percent, which had 
been in place since 2015, to 7 percent. At the time the NPRM was 
issued, using data through July 2021, the average market level forecast 
for 2022-2024 was 6.7 percent. Since the publication of the proposed 
rule, FHFA has updated the model using additional 2020 data from HMDA 
and Moody's forecasts as of September 2021. The updated FHFA model 
forecasts that the market level for this goal will be slightly lower, 
with the average forecast at 6.2 percent.
    As noted in the low-income goal discussion above, a majority of the 
commenters expressed support for the proposed higher benchmark levels 
for the single-family goals, including the very low-income home 
purchase goal. Several commenters emphasized the importance of 
establishing more aggressive targets in order to improve access to 
credit for lower-income home buyers. One commenter stated that setting 
the proposed very low-income purchase goal slightly above the midpoint 
of the projected confidence interval in the market forecast will 
encourage the Enterprises to expend significant effort and execute 
thoughtful strategies in order to meet meaningful, yet attainable 
goals. As noted in the low-income home purchase goal discussion above, 
both Enterprises expressed concern that market factors and regulatory 
issues outside Enterprise control could pose risks to their ability to 
meet the proposed benchmark levels, including for the very low-income 
home purchase goal, during the three-year term of the rule.
    As previously discussed, one commenter recommended that FHFA raise 
all of the single-family benchmark levels. The commenter further 
recommended that the single-family very low-income benchmark level be 
increased to 10 percent in order to better respond to current market 
conditions and to promote fair access to affordable housing 
effectively. Another commenter opted not to recommend a specific 
increase to the proposed very low-income goal benchmark level but 
encouraged FHFA to establish higher single-family benchmark levels that 
would likely result in the Enterprises leading the market.
    FHFA determination. Consistent with the proposed rule, the final 
rule sets the benchmark level for the very low-income home purchase 
housing goal at 7 percent. 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 this benchmark level a 
challenge for the Enterprises to meet. 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 
level. Thus, FHFA is persuaded that setting the benchmark level at 7 
percent is appropriate, reasonable, and supported by the current market 
forecast. FHFA will continue to monitor the Enterprises in its 
capacities as regulator and as conservator, and if FHFA determines that 
the benchmark level for the very low-income home purchase goal is not 
feasible for the Enterprises to achieve in light of market conditions, 
or for any other reason, FHFA will take appropriate steps to adjust the 
benchmark level.
3. Minority Census Tracts Subgoal
    The minority census tracts subgoal is based on the percentage of 
home purchase mortgages on single-family, owner-occupied properties to 
borrowers with income no greater than 100 percent of AMI in minority 
census tracts. Consistent with the proposed rule and FHFA's market 
model, the final rule sets the annual minority census tracts home 
purchase subgoal benchmark level for 2022-2024 at 10 percent. While 
this benchmark level is above the midpoint of the confidence intervals 
of the market forecast, it is important that the Enterprises expand 
their focus on this segment of the market. FHFA has determined that the 
final benchmark level is reasonable, realistic, and achievable for the 
Enterprises.
[GRAPHIC] [TIFF OMITTED] TR28DE21.002

The current market forecast in Table 5 reflects a 95 percent confidence 
level for this subgoal.\21\
---------------------------------------------------------------------------

    \21\ A 95 percent confidence interval is used for the two new 
area-based subgoals, unlike the 90 percent confidence interval used 
for the previously established goals.

    Recent performance and forecasts. Table 5 provides data on how both 
Enterprises would have performed had this new subgoal been in place 
during 2018-2020. Specifically, Fannie Mae would have exceeded the 
benchmark level each year by a small amount, and Freddie Mac would have 
missed the benchmark level each year by a small amount. FHFA's 2021 
market forecast for this subgoal is at 9.3 percent, with projected 
decreases in 2022 (9.2 percent), 2023 (8.9 percent), and 2024 (8.7 
percent). Because this is a new subgoal, the proposed rule did not 
include a forecast of the market levels for it. Based on the newly 
modeled forecasts using HMDA data and Moody's forecasts as of September 
2021, the average forecast for this subgoal for 2022-2024 is 8.9 
percent.
    Proposed rule and comments. Commenters offered strong support for 
this proposed subgoal. Several commenters highlighted the positive 
impact the proposed subgoal would have on ensuring the Enterprises 
fulfill their statutory duty to facilitate the financing of affordable 
housing for all low- and moderate-income families, including families 
of color. A number of commenters urged FHFA to set a higher benchmark 
level for the subgoal than the proposed 10 percent to increase borrower 
assistance and address the

[[Page 73651]]

racial homeownership gap. Several commenters also cited the COVID-19 
pandemic as a factor exacerbating racial disparities in homeownership 
and advocated for a higher benchmark level to address this issue. FHFA 
will continue to monitor data trends for this subgoal during 2022-2024 
and will share additional data with the public as appropriate.
    FHFA determination. Consistent with the proposed rule, the final 
rule sets the annual minority census tracts subgoal benchmark level for 
2022-2024 at 10 percent. While this is above the average market 
forecast for the three years, the 10 percent benchmark level is 
appropriate for ensuring that the Enterprises target the needs of 
communities of color, as well as emphasizing the importance of 
improving access to mortgage credit in these communities. FHFA will 
continue to monitor the Enterprises in its capacities as regulator and 
as conservator, and if FHFA determines that the benchmark level for 
this subgoal is not feasible for the Enterprises to achieve in light of 
market conditions, or for any other reason, FHFA will take appropriate 
steps to adjust the benchmark level.
4. Low-Income Census Tracts Subgoal
    The low-income census tracts subgoal is based on the percentage of 
home purchase mortgages on: (1) Single-family, owner-occupied 
properties to borrowers (regardless of income) in low-income census 
tracts that are not minority census tracts; and (2) home purchase 
mortgages on single-family, owner-occupied properties to borrowers with 
incomes greater than 100 percent of AMI in low-income census tracts 
that are also minority census tracts. Consistent with the proposed 
rule, the final rule sets the annual low-income census tracts home 
purchase subgoal benchmark level for 2022-2024 at 4 percent. FHFA 
recognizes that this benchmark level is significantly lower than both 
the midpoint of the confidence intervals of the market forecast and the 
recent performance of the Enterprises. However, FHFA has determined 
that a relatively low benchmark level for this subgoal is appropriate 
in light of the fact that the subgoal includes housing goals credit for 
higher income borrowers that may have ready access to mortgage credit 
even when purchasing homes in low-income census tracts.
[GRAPHIC] [TIFF OMITTED] TR28DE21.003

The current market forecast in Table 6 reflects a 95 percent confidence 
level for this subgoal.

    Recent performance and forecasts. Table 6 shows FHFA's estimates of 
Enterprise performance had this new subgoal been in place during 2018-
2020. Specifically, each of the Enterprises would have exceeded the 
benchmark level each year by a meaningful amount. FHFA's 2021 market 
forecast is at 9.7 percent, with projected increases in 2022 (10.0 
percent), 2023 (10.2 percent), and 2024 (10.3 percent). Because this is 
a new subgoal, the proposed rule did not include a forecast of the 
market levels for this subgoal. Based on the newly modeled forecasts 
using HMDA data and Moody's forecasts as of September 2021, the average 
forecast for this subgoal for 2022-2024 is 10.2 percent.
    Proposed rule and comments. Most commenters were supportive of the 
proposed low-income census tracts subgoal benchmark level. Two 
commenters encouraged FHFA to increase the benchmark level above the 
proposed 4 percent. Two other commenters urged FHFA to gather data and 
monitor potential displacement trends related to the proposed low-
income census tracts subgoal to determine if it would unintentionally 
contribute to displacement of low-income families.
    FHFA determination. Consistent with the proposed rule, the final 
rule sets the low-income census tracts subgoal benchmark level for 
2022-2024 at 4 percent. As noted above, the benchmark level is set 
below historic Enterprise performance to address concerns around 
gentrification and displacement of low-income families and the 
potential that the Enterprises may seek to meet the goal by purchasing 
loans to higher-income borrowers in lower-income areas. Thus, while the 
benchmark level is lower than historic market performance, FHFA has 
determined that 4 percent is an appropriate level. Setting this lower 
benchmark level addresses concerns about incentivizing purchases of 
loans to higher-income borrowers in low-income census tracts. However, 
the 4 percent benchmark level is also intended to encourage the 
Enterprises to continue providing critically needed access to mortgage 
credit in low-income census tracts. In response to commenters' concerns 
about displacement, FHFA will continue to monitor data trends for this 
subgoal during 2022-2024 and will share additional data with the public 
as appropriate. FHFA will also continue to monitor the Enterprises in 
its capacities as regulator and as conservator, and if FHFA determines 
that the benchmark level for this subgoal is not feasible for the 
Enterprises to achieve in light of market conditions, or for any other 
reason, FHFA will take appropriate steps to adjust the benchmark level.
5. Low-Income Areas Home Purchase Goal
    The benchmark level for the overall low-income areas housing goal 
is set annually by FHFA notice based on the benchmark level for the 
low-income areas housing subgoal, plus an adjustment factor to include 
areas affected by disasters. FHFA will continue to set a benchmark 
level for the overall low-income areas housing goal that will include 
mortgages to families with incomes less than or equal to 100 percent of 
AMI who are located

[[Page 73652]]

in federally declared disaster areas.\22\ The final rule defines the 
low-income areas housing goal to be the sum of (i) the benchmark level 
for the minority census tracts subgoal, (ii) the benchmark level for 
the low-income census tracts subgoal, and (iii) a disaster areas 
increment set in accordance with existing practice. Each year, FHFA 
notifies the Enterprises by letter of the benchmark level for the 
overall low-income areas housing goal for that year, and this practice 
will continue.
---------------------------------------------------------------------------

    \22\ Disaster declarations are listed on the FEMA website at 
https://www.fema.gov/disasters.
---------------------------------------------------------------------------

6. 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. Consistent with the 
proposed rule and FHFA's market model, the final rule sets the annual 
low-income refinancing goal benchmark level for 2022-2024 at 26 
percent. FHFA has determined that, despite the various challenges 
associated with forecasting the low-income refinancing highlighted 
above, a 26 percent benchmark level will serve as an appropriate target 
that will channel Enterprise efforts in this segment.
[GRAPHIC] [TIFF OMITTED] TR28DE21.004

The current market forecast in Table 7 reflects a 90 percent confidence 
level for this goal.

    Recent performance and forecasts. As shown in Table 7, the market 
for low-income refinancing has fluctuated during the period 2018 to 
2020, as reflected in HMDA data. For example, the market level for low-
income refinancing was 30.7 percent in 2018 (in a strong purchase 
market), 24.0 percent in 2019 (in a market that was transitioning away 
from being strongly purchase), and 21.0 percent in 2020 (notable 
refinance market). The performance of the Enterprises also fluctuated 
during the 2018-2020 timeframe as the market turned from a 
predominantly purchase money market to a refinance market. For example, 
Fannie Mae exceeded the market levels for this goal in 2018 and 2020, 
but not in 2019, and exceeded the benchmark level for each of the three 
years. Freddie Mac exceeded the benchmark but not the market level in 
2019, exceeded both the market and benchmark levels for 2019, and fell 
short of both the benchmark and market levels for 2020.
    Proposed rule and comments. The NPRM proposed increasing the low-
income refinancing benchmark level for 2022-2024 from 21 percent, which 
had been in place since 2015, to 26 percent. FHFA noted that this 
proposed benchmark level was close to the market forecast and well 
within the confidence interval for each year during the period 2022-
2024. At that time, using data through July 2021, the average market 
level forecast for 2022-2024 was 27.6 percent. Since the publication of 
the NPRM, FHFA has updated the model using 2020 data from HMDA and 
Moody's forecasts as of September 2021. The current model forecasts 
that the average market level for 2022-2024 for this goal will be 
lower, at 25.6 percent.
    As previously noted, a majority of the commenters supported the 
proposed benchmark levels for the single-family goals, including the 
low-income refinancing goal. A number of these commenters stated that 
the proposed higher benchmark level for the low-income refinancing 
housing goal is necessary due to the crucial role the Enterprises play 
in ensuring that low-income homeowners are able to refinance their 
loans so they can save money on their mortgage payments. Several 
commenters acknowledged the challenges associated with establishing the 
benchmark level for the years 2022-2024 due to the volatility in 
refinance projections and the sizable increase over the current 
benchmark level. Nevertheless, none of the commenters recommended that 
FHFA lower the proposed benchmark level. One commenter recommended that 
FHFA increase the proposed benchmark level from 26 to 28 percent. 
Fannie Mae commented that it may be challenged to meet the proposed 
low-income refinance benchmark level if future refinance volume stalls 
due to changes in interest rates.
    FHFA determination. Consistent with the proposed rule, the final 
rule sets the benchmark level for the low-income refinancing goal at 26 
percent. This decision is supported by the Enterprises' year-to-date 
performance for 2021. While the low-income refinancing goal is 
difficult to forecast due to its sensitivity to interest rates, a 26 
percent benchmark level is reasonable given the current forecast and 
the two-part goal structure allowing the Enterprises to achieve the 
goal by meeting either the benchmark level or the market level. For 
this reason, FHFA

[[Page 73653]]

encourages the Enterprises to carefully monitor market conditions in 
pursuing this goal. FHFA also notes that during periods of increased 
refinance activity, the market, without additional intervention, would 
typically refinance more higher balance transactions which also tend to 
be made to higher income borrowers. Thus, the low-income share of 
refinances, other things remaining the same, is lower in times of high 
refinance activity than in times when the market is a purchase money 
market. FHFA will also continue to monitor the Enterprises in its 
capacities as regulator and as conservator, and if FHFA determines that 
the benchmark level for the low-income refinancing goal is not feasible 
for the Enterprises to achieve in light of market conditions, or for 
any other reason, FHFA will take appropriate steps to adjust the 
benchmark level.

V. Multifamily Housing Goals

A. Factors Considered in Setting the Multifamily Housing Goal Benchmark 
Levels

    The Safety and Soundness Act requires FHFA to consider the 
following six factors in setting the multifamily housing goals:
    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.
    FHFA considered each of these required statutory factors, as 
described in detail in the proposed rule, in setting the benchmark 
levels for the multifamily housing goals.\23\ The analysis below 
describes trends in the overall multifamily mortgage market as they 
apply to setting the final benchmark levels. Additional detailed 
analyses of the trends in the overall multifamily mortgage market can 
be found in the proposed rule's preamble.
---------------------------------------------------------------------------

    \23\ See https://www.govinfo.gov/content/pkg/FR-2021-08-25/pdf/2021-18008.pdf.
---------------------------------------------------------------------------

    Current market outlook. Affordability for families living in rental 
units has decreased in recent years for many families. According to the 
Joint Center for Housing Studies (JCHS), in its 2021 State of the 
Nation's Housing Report, the share of new multifamily completions of 
buildings with at least 50 units significantly increased from 30 
percent in 2011 to a peak of 62 percent in 2018.\24\ That share 
remained high and was at 56 percent in 2020.\25\ The units in larger 
multifamily buildings tend to have higher median rents, as noted in the 
JCHS 2020 State of the Nation's Housing Report.\26\ In addition, 
according to that JCHS Report, the supply of apartments with rents of 
$600 or lower declined by 2.5 million between 2004 and 2019, unlike 
apartments with rents of over $1,000, which increased by 10.4 million 
within the same time period.\27\
---------------------------------------------------------------------------

    \24\ ``The State of the Nation's Housing 2021,'' Joint Center 
for Housing Studies of Harvard University, June 2021, p. 28, 
available at https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2021.pdf.
    \25\ Ibid.
    \26\ ``The State of the Nation's Housing 2020,'' Joint Center 
for Housing Studies of Harvard University, December 2020, p. 32, 
available at https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2020_Report_Revised_120720.pdf.
    \27\ Ibid.
---------------------------------------------------------------------------

    The JCHS report of the rental market noted the growing presence of 
cost-burdened renters in certain income segments. According to the 2021 
JCHS report, 19 percent of households earning $25,000-$34,999 reported 
being behind on housing payments in the first quarter of 2021. In 
higher income households, 16 percent of households earning $35,000-
$44,999 and 11 percent for those earning $50,000-$74,999 reported being 
behind on housing payments in the first quarter of 2021.\28\ However, 
many households were already cost-burdened prior to the COVID-19 
pandemic. For example, close to 50 percent of renter households spent 
more than 30 percent of their incomes on housing in 2019. Specifically, 
almost 82 percent of renter households earning less than $25,000 and 58 
percent of renter households earning $25,000-$49,999 spent more than 30 
percent of their incomes on housing in 2019.\29\ This is significant 
because while the Safety and Soundness Act defines affordability for 
the multifamily housing goals based on rents that are affordable at the 
30 percent threshold, many low-income households are paying rents that 
are significantly above that level.\30\
---------------------------------------------------------------------------

    \28\ ``The State of the Nation's Housing 2021,'' Joint Center 
for Housing Studies of Harvard University, June 2021, p. 30, 
available at https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2021.pdf.
    \29\ ``The State of the Nation's Housing 2021,'' Joint Center 
for Housing Studies of Harvard University, June 2021, Figure 31, 
available at https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2021.pdf.
    \30\ See 12 U.S.C. 4563(c).
---------------------------------------------------------------------------

    FHFA's consideration of the multifamily mortgage market addresses 
the size of the multifamily mortgage market, as well as the subset of 
the multifamily mortgage market affordable to low-income and very low-
income families. In August 2021, the Mortgage Bankers Association (MBA) 
estimated 2020 multifamily mortgage originations to be $360 billion, a 
slight decline of 1 percent relative to the previous year.\31\ This was 
an upward revision from MBA's prior estimate (from February 2021) that 
2020 multifamily originations had declined by 17 percent in dollar 
terms from the previous year.\32\ MBA also forecasted in August 2021 
that there would be a 13 percent increase in total multifamily mortgage 
originations to $409 billion in 2021 and a more modest increase of 3 
percent to $421 billion in 2022.
---------------------------------------------------------------------------

    \31\ See https://www.mba.org/2021-press-releases/august/mba-forecast-commercial/multifamily-lending-on-track-to-increase-31-percent-to-578-billion-in-2021.
    \32\ See https://www.mba.org/2021-press-releases/february/mba-forecast-commercial/multifamily-lending-to-increase-11-percent-to-486-billion-in-2021.
---------------------------------------------------------------------------

    Based on nationwide CoStar data that FHFA obtains, on a year-over-
year basis, after rent growth slowed to 0.3 percent in 2020, it 
accelerated in 2021, growing by 10.6 percent as of the end of the third 
quarter compared to the end of the third quarter one year earlier.\33\ 
Significant rent increases were apparent in all subsegments of the 
rental market based on building ratings defined by CoStar (i.e., ``1, 
2, 3, 4, & 5 Star'' property designations).\34\ Rent increases were 
most significant for 4 & 5 Star properties, at 13.6 percent, while 
rents increased for 3 Star and 1 & 2 Star properties by 10.8 percent 
and 4.3 percent, respectively, according to CoStar data. After rising 
earlier in the COVID-19 pandemic, at 4.5 percent, vacancy rates are at 
historic lows as of the third quarter of 2021, according to CoStar 
data. Vacancies at 4 & 5 Star properties have declined from the COVID-
19 pandemic high of 10.6

[[Page 73654]]

percent to 6.2 percent in the third quarter of 2021. Vacancies in 3 
Star properties also reached a historic low of 4.0 percent, as did 
vacancies at 1 & 2 Star properties, which are the tightest, at 3.8 
percent.
---------------------------------------------------------------------------

    \33\ FHFA tabulations of CoStar data.
    \34\ CoStar building ratings definitions are available at 
https://www.costar.com/docs/default-source/brs-lib/costar_buildingratingsystem-definition.pdf.
---------------------------------------------------------------------------

    Multifamily volume caps. As conservator for the Enterprises, FHFA 
has set a yearly cap under the Conservatorship Scorecard that limits 
the total amount by dollar volume unpaid principal balance of 
multifamily loans each Enterprise may purchase. The multifamily 
mortgage purchase cap furthers 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. In October 2021, FHFA announced the new multifamily 
loan purchase cap for the 2022 calendar year of $78 billion for each 
Enterprise, a combined total of $156 billion.\35\
---------------------------------------------------------------------------

    \35\ FHFA Announces 2022 Multifamily Loan Purchase Caps for 
Fannie Mae and Freddie Mac, October 13, 2021: https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-2022-Multifamily-Loan-Purchase-Caps-for-Fannie-Mae-and-Freddie-Mac.aspx.
---------------------------------------------------------------------------

    The Conservatorship Scorecard cap applies to the entire multifamily 
business for each Enterprise without any exclusions. To ensure a strong 
focus on affordable housing and underserved markets, the 2022 
Conservatorship Scorecard requires that at least 50 percent of each 
Enterprises' multifamily loan purchases be mission-driven, affordable 
housing. In addition, 25 percent of their business must be affordable 
to households at 60 percent of AMI or below. Loans may qualify as 
mission-driven under the Conservatorship Scorecard even if the loans do 
not meet the criteria for counting units as affordable for purposes of 
the Enterprise housing goals. Details about the multifamily cap and the 
mission-driven requirements can be found in Appendix A of the 2022 
Conservatorship Scorecard.\36\
---------------------------------------------------------------------------

    \36\ See https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/2022-Appendix-A-10132021.pdf.
---------------------------------------------------------------------------

B. Final Multifamily Housing Goal Benchmark Levels for 2022

    This final rule establishes multifamily housing goal benchmark 
levels for 2022 only. FHFA considered comments recommending the 
establishment of benchmark levels for fewer than three years, and the 
differential impact of the COVID-19 pandemic on the various multifamily 
origination market segments, and FHFA has concluded that establishing 
multifamily housing goal benchmark levels for 2022 only is the prudent 
course of action at this time. Several commenters recommended annual 
multifamily goal benchmark levels, and one commenter encouraged two-
year benchmark levels for both single-family and multifamily goals. By 
setting the multifamily goal benchmark levels for 2022 only, FHFA will 
be able to take more recent economic data and conditions into account 
when setting benchmark levels for the following year. FHFA plans to 
publish an NPRM in the Federal Register in 2022 with proposed benchmark 
levels for each of the multifamily housing goals. The NPRM will also 
request additional information about the Enterprises' role in the small 
multifamily market, along with any other issues that FHFA finds 
appropriate to address in the rulemaking.
    This 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, particularly throughout the COVID-19 pandemic. 
Since 2008, the Enterprises' portfolios of loans on multifamily 
affordable housing properties have experienced low levels of 
delinquency and default, similar to the performance of the Enterprises' 
portfolios of 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.
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 multifamily low-income housing 
goal benchmark level for both Enterprises for 2022 at 415,000 units, 
consistent with the benchmark level that was proposed for 2022-2024. 
FHFA has determined that this benchmark level is reasonable and 
achievable for each Enterprise based on the multifamily volume cap for 
2022, the comments received, and FHFA's consideration of the statutory 
factors discussed above.
[GRAPHIC] [TIFF OMITTED] TR28DE21.005

    Recent performance. As shown in Table 8, both Enterprises have 
exceeded the applicable multifamily low-income goal benchmark levels by 
a significant amount each year since 2016. In most years, each 
Enterprise has also come close to or exceeded the new benchmark level 
of 415,000 units that will apply in 2022. Freddie Mac historically has

[[Page 73655]]

outperformed Fannie Mae on the multifamily low-income goal in terms of 
volume of low-income multifamily units.
    Proposed rule and comments. A number of commenters, including 
Freddie Mac, supported the proposal to increase the multifamily low-
income benchmark level, describing it as ambitious but attainable for 
the Enterprises. Overall, commenters supported FHFA making affordable 
rental housing a priority by setting higher multifamily housing goal 
benchmark levels. While one commenter advocated for higher multifamily 
goal benchmark levels than proposed, two commenters stated that the 
proposed benchmark levels were too high. Fannie Mae commented that the 
proposed multifamily low-income benchmark level would only be 
attainable if the Conservatorship Scorecard multifamily volume cap is 
maintained at or increased from $78 billion in 2022 and future years.
    FHFA determination. Based on FHFA's consideration of the statutory 
factors for the multifamily housing goals, as well as the general 
support from some commenters for the proposed increase in the 
multifamily low-income housing goal benchmark level, FHFA has 
determined that benchmark level for this goal for both Enterprises for 
2022 should be set at 415,000 units, consistent with the proposed rule. 
While this benchmark level is a significant increase from the benchmark 
level of 315,000 units for 2021, the increase reflects FHFA's 
commitment to ensuring that the Enterprises provide substantial support 
for affordable multifamily housing.
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 multifamily very low-income 
housing subgoal benchmark level for both Enterprises for 2022 at 88,000 
units, consistent with the benchmark level that was proposed for 2022-
2024. FHFA has determined that this benchmark level is reasonable and 
achievable for each Enterprise based on the multifamily volume cap for 
2022, the comments received, and FHFA's consideration of the statutory 
factors discussed above.
[GRAPHIC] [TIFF OMITTED] TR28DE21.006

    Recent performance. As shown in Table 9, both Enterprises have 
exceeded the applicable multifamily very low-income subgoal benchmark 
levels by a significant amount almost every year from 2016-2020. In 
most years, one or both Enterprises have also come close to or exceeded 
the new benchmark level that will apply in 2022.
    Proposed rule and comments. A number of commenters generally 
supported the proposed increased benchmark level for the multifamily 
very low-income housing subgoal, with some commenters describing it as 
reasonable and meaningful. Freddie Mac praised the proposed benchmark 
level as requiring Enterprises to maintain a strong and meaningful 
commitment to supporting affordable housing. While one commenter viewed 
the proposed benchmark level as too low, two commenters stated that the 
proposed benchmark level was too high. Fannie Mae expressed concern 
that the proposed benchmark level would be achievable only if the 
current Conservatorship Scorecard multifamily cap is maintained at or 
increased from $78 billion in 2022.
    FHFA determination. Based on FHFA's consideration of the statutory 
factors for the multifamily housing goals, as well as the general 
support from some commenters for the proposed increased benchmark level 
for the multifamily very low-income housing subgoal, FHFA has 
determined that the benchmark level for this subgoal for both 
Enterprises for 2022 should be set at the same level as in the proposed 
rule, i.e., 88,000 units. This benchmark level is a significant 
increase over the benchmark level in place since 2015. However, both 
Enterprises have overperformed the benchmark level by a wide margin 
since 2016. FHFA considers the increased benchmark level to be 
attainable for the Enterprises in 2022, and the increase reflects 
FHFA's commitment to ensuring that the Enterprises provide substantial 
support for affordable multifamily housing.
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 small multifamily low-income housing subgoal 
benchmark level for 2022 at different levels for each Enterprise. The 
benchmark level for Freddie Mac will be 23,000 units for 2022, while 
the benchmark level for Fannie Mae will be 17,000 units for 2022. FHFA 
has determined that these benchmark levels are reasonable and 
achievable for each Enterprise based on the multifamily volume cap for 
2022, the comments received, and FHFA's consideration of the statutory 
factors discussed above.

[[Page 73656]]

[GRAPHIC] [TIFF OMITTED] TR28DE21.007

    Recent performance. As shown in Table 10, both Enterprises achieved 
the small multifamily low-income subgoal for the years 2016-2020. 
Freddie Mac has performed substantially above the benchmark level for 
this subgoal, significantly outpacing Fannie Mae's performance on the 
subgoal. For example, Freddie Mac's average performance on the subgoal 
over the past three years was 34,114 units, while Fannie Mae averaged 
17,173 units during the same period. The Enterprises have different 
multifamily business models that complement one another and ensure 
continued liquidity in the multifamily market. Given these differences, 
each Enterprise must set its own credit risk tolerance for multifamily 
products. This produces variation in the number of affordable small 
units each Enterprise can support without crowding out private capital 
sources. Therefore, FHFA has decided to set different thresholds for 
each Enterprise for the affordable small multifamily subgoal that 
respond to these factors. These benchmarks 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.
    Proposed rule and comments. Most commenters were generally 
supportive of the proposed increased benchmark level for the small 
multifamily subgoal. Freddie Mac expressed support for the proposed 
benchmark level, which it described as ambitious and requiring the 
Enterprises to maintain a strong and meaningful commitment to 
supporting affordable multifamily housing. However, Fannie Mae 
expressed concerns about its ability to achieve the proposed benchmark 
level. Fannie Mae also stated that substantial changes in the 
Enterprise's business mix, deal flow, and underwriting standards might 
be necessary in order to accommodate the proposed increase in the 
benchmark level.
    FHFA determination. FHFA recognizes that the Enterprises have 
different approaches to serving this segment of the multifamily market 
and ensuring the safety and soundness of the Enterprises continues to 
be a fundamental priority for FHFA. Monitoring trends in the small 
multifamily market is challenging, and FHFA's non-public Enterprise 
reporting data suggests that loan performance for small multifamily 
properties were hit particularly hard in 2020 as a result of the COVID-
19 pandemic. However, small multifamily properties are a key source of 
affordable rental housing, and maintaining consistent access to 
secondary market liquidity for such housing is critical.
    At 23,000 units, the proposed small multifamily subgoal benchmark 
level for 2022 was a substantial increase from the 10,000-unit 
benchmark level that has been in place since 2017. In a departure from 
the proposed rule, the final rule establishes separate benchmark levels 
for the small multifamily low-income housing subgoal for each 
Enterprise. Although both Enterprises surpassed the small multifamily 
subgoal benchmark levels during this timeframe (from 2017-2020), 
Freddie Mac far exceeded the benchmark level. As a result, Freddie Mac 
is positioned to meet, if not exceed, the proposed small multifamily 
subgoal benchmark level for 2022. In light of historical performance on 
this subgoal, in addition to supportive comments on this proposed 
increase in the benchmark level, FHFA has determined that the proposed 
benchmark level of 23,000 units for 2022 is reasonable and meaningful 
for Freddie Mac. Accordingly, the final rule sets the final benchmark 
level for the small multifamily low-income housing subgoal at 23,000 
units for Freddie Mac in 2022.
    FHFA notes that the proposed small multifamily low-income benchmark 
level of 23,000 units for 2022 would have been a significant increase 
over Fannie Mae's historical performance under this subgoal, as well as 
a significant increase over the benchmark level of 10,000 units that 
has been in place since 2017. However, FHFA has determined that an 
increase in the benchmark level for Fannie Mae is reasonable and 
meaningful for Fannie Mae, and FHFA is setting the benchmark level for 
2022 at 17,000 units for Fannie Mae. This benchmark level should 
continue to encourage Fannie Mae to provide necessary liquidity to this 
market segment while operating in a safe and sound manner.

VI. Section-by-Section Analysis of Other Changes

    The final rule revises other provisions of the Enterprise housing 
goals regulation, as discussed below. These changes are non-substantive 
technical changes intended to conform the housing goals regulation text 
to FHFA's established practices and procedures in implementing the 
housing goals.

A. Definition of ``Designated Disaster Area''--Sec.  1282.1

    Consistent with the proposed rule, the final rule revises the 
definition of ``designated disaster area'' in Sec.  1282.1 to refer to 
major disasters ``where housing assistance payments were authorized by 
FEMA.''
    Comments on Proposed Rule. FHFA received one comment on this 
proposed revision. Fannie Mae supported the proposed revision based on 
its understanding that the intent of the proposal is to focus disaster-
related housing goal credit on discrete and localized events rather 
than broad-based

[[Page 73657]]

conditions like the COVID-19 pandemic response.
    FHFA determination. Section 1282.1 of the current Enterprise 
housing goals regulation defines ``designated disaster area'' as ``any 
census tract that is located in a county designated by the federal 
government as adversely affected by a declared major disaster 
administered by FEMA, where individual assistance payments were 
authorized by FEMA.'' While this definition accurately reflects the 
types of disasters that FHFA counts for purposes of calculating the 
disaster areas increment for the low-income areas housing goal, the 
definition does not reflect FHFA's longstanding practice of counting 
only those census tracts where housing assistance payments were 
authorized by FEMA.
    For those reasons, the final rule amends Sec.  1282.1 to clarify 
the regulation with respect to FHFA's existing practice by revising the 
definition of ``designated disaster area'' for purposes of the low-
income areas housing goal to refer specifically to ``housing 
assistance'' rather than to the broader category of ``individual 
assistance.''

B. Newly Available Data--Removal of Sec.  1282.15(i)

    Consistent with the proposed rule, the final rule removes Sec.  
1282.15(i) to avoid any implication that the housing goals regulation 
requires a particular method of calculating or applying affordability 
data such as AMIs.
    Section 1282.15(i) of the current Enterprise housing goals 
regulation provides that an Enterprise is not required to use new data 
related to housing goals treatment of mortgages it purchases until the 
start of the quarter after it receives the data. This provision was 
adopted originally by the U.S. Department of Housing and Urban 
Development (HUD) in its 1995 final rule establishing housing goals 
under the Safety and Soundness Act.\37\ However, this provision does 
not reflect FHFA's longstanding practice of independently calculating 
each Enterprise's housing goals performance on the basis of data 
provided to FHFA by the Enterprise. For example, FHFA determines the 
AMIs applicable to each census tract on an annual basis and provides 
that information to the Enterprises in the first half of each year. 
However, in calculating Enterprise housing goals performance for that 
year, FHFA applies the new data to all mortgage purchases in that year.
---------------------------------------------------------------------------

    \37\ See 60 FR 61846 (Dec. 1, 1995). Prior to the creation of 
FHFA in 2008, HUD was responsible for mission oversight of Fannie 
Mae and Freddie Mac, including the affordable housing goals.
---------------------------------------------------------------------------

    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. Loan Modifications--Removal of Sec.  1282.16(c)(10)

    Consistent with the proposed rule, the final rule removes Sec.  
1282.16(c)(10) as it is no longer necessary in light of the expiration 
of the Home Affordable Modification Program (HAMP) modification 
program.
    Section 1282.16(c)(10) of the current Enterprise housing goals 
regulation provides that the permanent modification of a mortgage under 
HAMP is counted as a refinancing for purposes of the low-income 
refinancing goal. Permanent loan modifications under HAMP are the only 
type of loan modification eligible for counting for purposes of the 
low-income refinancing goal. The HAMP modification program expired at 
the end of 2016.
    Comments on Proposed Rule. FHFA received one comment on this 
proposed revision. Fannie Mae acknowledged the need to remove the 
reference to the HAMP modification program but suggested that FHFA 
modify the regulation to take into account that the Enterprises have 
had and will continue to have additional loan modification programs. 
Fannie Mae recommended that FHFA add the phrase ``in accordance with a 
loan modification program implemented by the Enterprise'' to the 
existing regulation.
    FHFA determination. The final rule adopts the change as proposed. 
The final rule does not adopt Fannie Mae's recommendation to provide 
housing goals credit for other Enterprise loan modification programs. 
While FHFA supports the robust loss mitigation programs that the 
Enterprises have developed, treating all loan modifications as 
refinances for purposes of the housing goals would result in a 
misalignment between the Enterprise performance as measured and the 
benchmark level forecasts and market levels calculated by FHFA.

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 the rule 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. FHFA certifies that the rule 
will not 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.

IX. Congressional Review Act

    In accordance with the Congressional Review Act (5 U.S.C. 801 et 
seq.), FHFA has determined that this final rule is a major rule and has 
verified this determination with OMB.

List of Subjects in 12 CFR Part 1282

    Mortgages, Reporting and recordkeeping requirements.

Authority and Issuance

    For the reasons stated in the Preamble, under the authority of 12 
U.S.C. 4511, 4513, and 4526, FHFA amends part 1282 of Title 12 of the 
Code of Federal Regulations as follows:

CHAPTER XII--FEDERAL HOUSING FINANCE AGENCY

Subchapter E--Housing Goals and Mission

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 by revising the definition of ``Designated 
disaster area'' to read as follows:


Sec.  1282.1   Definitions.

* * * * *
    Designated disaster area means any census tract that is located in 
a county designated by the Federal Government as adversely affected by 
a declared major disaster administered by FEMA, where housing 
assistance payments were authorized by FEMA. A census tract shall be 
treated as a ``designated disaster area'' for purposes of this part 
beginning on the January 1 after the FEMA designation of the county, or

[[Page 73658]]

such earlier date as determined by FHFA, and continuing through 
December 31 of the third full calendar year following the FEMA 
designation. This time period may be adjusted for a particular disaster 
area by notice from FHFA to the Enterprises.
* * * * *

0
3. Amend Sec.  1282.12 as follows:
0
a. Revise paragraphs (c)(2), (d)(2), (e)(2), and (f);
0
b. Redesignate paragraph (g) as paragraph (h);
0
c. Add new paragraph (g); and
0
d. Revise newly redesignated paragraph (h)(2).
    The revisions and additions read as follows:


Sec.  1282.12   Single-family housing goals.

* * * * *
    (c) * * *
    (2) The benchmark level, which for 2022, 2023, and 2024 shall be 28 
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 2022, 2023, and 2024 shall be 7 
percent of the total number of purchase money mortgages purchased by 
that Enterprise in each year that finance owner-occupied single-family 
properties.
    (e) * * *
    (2) A benchmark level which shall be set annually by FHFA notice 
based on the sum of the benchmark levels for the low-income census 
tracts housing subgoal and the minority census tracts housing subgoal, 
plus an adjustment factor reflecting the additional incremental share 
of mortgages for moderate-income families in designated disaster areas 
in the most recent year for which such data is available.
    (f) Low-income census tracts housing subgoal. The percentage share 
of each Enterprise's total purchases of purchase money mortgages on 
owner-occupied single-family housing that--
    (1) Consists of:
    (i) Mortgages in low-income census tracts that are not minority 
census tracts; and
    (ii) Mortgages for families with incomes in excess of 100 percent 
of the area median income in low-income census tracts that are also 
minority census tracts;
    (2) Shall meet or exceed either:
    (i) The share of such mortgages in the market as defined in 
paragraph (b) of this section in each year; or
    (ii) The benchmark level, which for 2022, 2023, and 2024 shall be 4 
percent of the total number of purchase money mortgages purchased by 
that Enterprise in each year that finance owner-occupied single-family 
properties.
    (g) Minority census tracts housing subgoal. The percentage share of 
each Enterprise's total purchases of purchase money mortgages on owner-
occupied single-family housing that consists of mortgages for moderate-
income families in minority census tracts shall meet or exceed either:
    (1) The share of such mortgages in the market as defined in 
paragraph (b) of this section in each year; or
    (2) The benchmark level, which for 2022, 2023, and 2024 shall be 10 
percent of the total number of purchase money mortgages purchased by 
that Enterprise in each year that finance owner-occupied single-family 
properties.
    (h) * * *
    (2) The benchmark level, which for 2022, 2023, and 2024 shall be 26 
percent of the total number of refinancing mortgages purchased by that 
Enterprise in each year that finance owner-occupied single-family 
properties.

0
4. Amend Sec.  1282.13 by revising paragraphs (b) through (d) to read 
as follows:


Sec.  1282.13  Multifamily special affordable housing goal and 
subgoals.

* * * * *
    (b) Multifamily low-income housing goal. For the year 2022, the 
benchmark level for each Enterprise's purchases of mortgages on 
multifamily residential housing affordable to low-income families shall 
be at least 415,000 dwelling units affordable to low-income families in 
multifamily residential housing financed by mortgages purchased by the 
Enterprise in 2022.
    (c) Multifamily very low-income housing subgoal. For the year 2022, 
the benchmark level for each Enterprise's purchases of mortgages on 
multifamily residential housing affordable to very low-income families 
shall be at least 88,000 dwelling units affordable to very low-income 
families in multifamily residential housing financed by mortgages 
purchased by the Enterprise in 2022.
    (d) Small multifamily low-income housing subgoal. For the year 
2022, the benchmark level for each Enterprise's purchases of mortgages 
on small multifamily properties affordable to low-income families shall 
be, for Freddie Mac, at least 23,000 dwelling units affordable to low-
income families in small multifamily properties financed by mortgages 
purchased by that Enterprise in 2022, and for Fannie Mae, at least 
17,000 such dwelling units.


Sec.  1282.15  [Amended]

0
5. Amend Sec.  1282.15 by removing paragraph (i).


Sec.  1282.16   [Amended]

0
6. Amend Sec.  1282.16 by removing and reserving paragraph (c)(10).

Sandra L. Thompson,
Acting Director, Federal Housing Finance Agency.
[FR Doc. 2021-28168 Filed 12-27-21; 8:45 am]
BILLING CODE 8070-01-P