[Federal Register Volume 87, Number 246 (Friday, December 23, 2022)]
[Rules and Regulations]
[Pages 78837-78846]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-27467]


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FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1282

RIN 2590-AB21


2023-2024 Multifamily Enterprise Housing Goals

AGENCY: Federal Housing Finance Agency.

ACTION: Final rule.

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SUMMARY: The Federal Housing Finance Agency (FHFA or the Agency) is 
issuing a final rule on the multifamily housing goals for Fannie Mae 
and Freddie Mac (the Enterprises) for 2023 and 2024. 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. Under FHFA's existing 
housing goals regulation, the multifamily housing goals for the 
Enterprises include benchmark levels through the end of 2022 based on 
the total number of affordable units in multifamily properties financed 
by mortgage loans purchased by the Enterprise each year. This final 
rule amends the regulation to establish benchmark levels for the 
multifamily housing goals for 2023 and 2024 based on a new 
methodology--the percentage of affordable units in multifamily 
properties financed by mortgages purchased by the Enterprise each year.

DATES: The final rule is effective on February 21, 2023.

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]. 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 Housing Goals

    The Safety and Soundness Act requires FHFA to establish several 
annual housing goals for both single-family and multifamily mortgages 
purchased by the Enterprises.\1\ The achievement of the annual housing 
goals is one measure of the extent to which the Enterprises are meeting 
their public purposes, which include ``an affirmative obligation to 
facilitate the financing of affordable housing for low- and moderate-
income families in a manner consistent with their overall public 
purposes, while maintaining a strong financial condition and a 
reasonable economic return.'' \2\
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    \1\ See 12 U.S.C. 4561(a).
    \2\ See 12 U.S.C. 4501(7).
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    Since 2010, FHFA has established annual housing goals for 
Enterprise purchases of both single-family and multifamily mortgages by 
rulemaking, consistent with the requirements of the Safety and 
Soundness Act. FHFA's most recent final rule amending the housing goals 
regulation was issued in December 2021 and established benchmark levels 
for the single-family housing goals for 2022 through 2024 and benchmark 
levels for the multifamily housing goals for 2022 only.\3\ On August 
18, 2022, FHFA issued a proposed rule that proposed a new methodology 
and benchmark levels for the multifamily housing goals for 2023 and 
2024.\4\
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    \3\ See 86 FR 73641 (December 28, 2021).
    \4\ See 87 FR 50794 (August 18, 2022).
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B. Adjusting the Housing Goals

    If, after publication of the final rule establishing the 
multifamily housing goals for 2023 and 2024, FHFA determines that any 
of the multifamily housing goals or subgoals should be adjusted in 
light of market conditions to ensure the safety and soundness of the 
Enterprises, or for any other reason,

[[Page 78838]]

FHFA will take any steps that are necessary and appropriate to adjust 
the goal(s) such as reducing the benchmark level(s) through the 
processes in the existing regulation.
    FHFA may also 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 any of the single-
family or multifamily housing goals or subgoals 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).
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    The Safety and Soundness Act and the Enterprise housing goals 
regulation also take into consideration the possibility that 
achievement of a particular housing goal or subgoal may or may not have 
been feasible for an Enterprise to achieve. If FHFA determines that a 
housing goal or subgoal was not feasible for an Enterprise to achieve, 
then the statute and regulation provide for no further enforcement of 
that housing goal or subgoal for that year.\6\ If FHFA determines that 
an Enterprise failed to meet a housing goal or subgoal and that 
achievement of the housing goal or subgoal 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 or 
subgoals performance.
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    \6\ See 12 CFR 1282.21(a); 12 U.S.C. 4566(b).
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    The actions described in this section provide FHFA some flexibility 
to respond to new information or developments that occur after 
publication of the final rule. As proposed, the new methodology for 
establishing the benchmarks in the final rule sets the levels as a 
percentage of goal-eligible units backing mortgages acquired by each 
Enterprise,\7\ which could reduce the likelihood that FHFA will be 
required to modify the benchmark levels in response to unexpected 
market developments after publication of the final rule.
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    \7\ In this final rule, ``goal-eligible units'' is used as a 
synonym for ``denominator,'' to refer to all dwelling units that are 
financed by mortgage purchases that could be counted for purposes of 
the multifamily housing goals and subgoals. The counting rules in 12 
CFR 1282.16(b) exclude certain types of mortgages from eligibility 
for housing goals credit, such as multifamily mortgages with Federal 
guarantees and subordinate lien multifamily mortgages. Such loans 
are not included in the denominator. ``Goal-qualifying units'' is 
used as a synonym for ``numerator,'' to refer to the goal-eligible 
units that meet the respective affordability requirements of each 
multifamily goal. For example, low-income units are affordable to 
families with incomes less than or equal to 80 percent of area 
median income (AMI) and very low-income units are affordable to 
families with incomes less than or equal to 50 percent of AMI.
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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.

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 18, 2022, that proposed a new 
methodology for measuring the Enterprise multifamily housing goals. 
Rather than measuring the multifamily housing goals based on an 
absolute number of affordable units in multifamily properties financed 
by mortgages purchased by the Enterprises, FHFA proposed using 
percentages of affordable units in multifamily properties financed by 
mortgages purchased by the Enterprises. The NPRM also proposed specific 
benchmark levels for each of the multifamily housing goals. The public 
comment period for the proposed rule ended on October 17, 2022.
    Overview. FHFA received 77 comment letters from organizations and 
members of the public in response to the proposed rule. Comment letters 
were submitted by both Fannie Mae and Freddie Mac, as well as nonprofit 
organizations, policy advocacy organizations, and trade associations 
representing lenders, homebuilders, and other mortgage market 
participants. FHFA received one joint letter from two policy 
organizations focused on renters and one letter signed by 35 housing 
and community development organizations. FHFA also received 64 comment 
letters from members of the public and organizations which were part of 
a letter-writing campaign concerned about the high cost of rent and the 
lack of tenant protections.
    FHFA has reviewed and considered all of the comment letters 
received in response to the NPRM. A number of those letters raised 
issues that are unrelated to the housing goals or are beyond the scope 
of the proposed rule. As a result, those issues are not addressed in 
this final rule. Specific provisions of the proposal and comments 
received in response to those provisions are discussed below.
    Change in methodology for measuring the multifamily goals. Although 
not all of the comment letters received in response to the NPRM 
addressed the proposed change in methodology, those that did supported 
the proposed change. The Enterprises, trade organizations, policy 
advocacy organizations, and one member of the supported the proposed 
methodology change, stating that it would be more responsive to market 
conditions, offer flexibility for the Enterprises, and enable the 
Enterprises to maintain a focus on affordability while facilitating 
their ability to provide necessary liquidity.
    Although not opposed to the proposed change, a trade association 
representing homebuilders stressed the importance of preserving the 
Enterprises' countercyclical role and expressed concern that the 
proposed methodology could potentially result in a decline in the 
absolute number of affordable units acquired by each Enterprise.
    The Safety and Soundness Act provides that the Director shall, by 
regulation, establish a single annual goal, by either unit or dollar 
volume, of purchases by each Enterprise of mortgages on multifamily 
housing that finance dwelling units affordable to low-income 
families.\8\ FHFA has established the multifamily housing goals based 
on a specific number of units each year since 2010. However, the volume 
of Enterprise multifamily purchases has varied considerably from year 
to year due to a variety of market and economic conditions. Changing to 
a percentage-based methodology will better reflect the market and 
economic conditions the Enterprises encounter in acquiring mortgages. 
Percentage-based multifamily goals will require that the Enterprises 
continue to support the affordable segment of the market in years where 
their multifamily mortgage acquisitions increase, while ensuring

[[Page 78839]]

that the goals remain feasible in years where the Enterprise 
multifamily mortgage acquisitions are lower.
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    \8\ See 12 U.S.C. 4563(a).
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    FHFA notes that setting the multifamily goal benchmark levels as 
the percentage share of all goal-eligible units backing mortgages 
acquired by the Enterprise that are affordable units is consistent with 
the statutory requirement that the multifamily housing goal be based on 
unit or dollar volume. While the Safety and Soundness Act defines the 
single-family housing goals and multifamily housing goals using 
different terms, the difference is focused on the single-family housing 
goals being based on mortgages and the multifamily housing goals being 
based on units or dollar volume. FHFA does not interpret the difference 
between the single-family and multifamily housing goals to prohibit 
using percentages for the multifamily housing goals. Setting the 
multifamily housing goals as a minimum percentage also aligns the 
multifamily goals more closely with the statutory factors that FHFA is 
required to consider in setting the multifamily housing goals. Those 
factors include consideration of national multifamily mortgage credit 
needs and the size of the multifamily mortgage market for housing 
affordable to low-income and very low-income families. Because market 
conditions can change significantly each year, it is difficult to 
identify in advance a specific number of units for the multifamily 
housing goals that would be ambitious yet feasible for the Enterprises. 
Percentage-based multifamily housing goals address this difficulty and 
are intended to ensure the Enterprises appropriately support the 
housing finance market while fulfilling their affordable housing 
mission requirements each year.
    Therefore, FHFA is adopting as final the percentage-based 
methodology for measuring the multifamily goals as set forth in the 
proposed rule. The new methodology will not affect FHFA's ability to 
track, report, and verify data on multifamily units backing mortgages 
purchased by the Enterprises, including data on affordable units by 
income level. FHFA will continue to closely monitor Enterprise 
performance on the multifamily housing goals and trends in the 
multifamily market in general.
    Multifamily benchmark levels. Both Enterprises and groups 
representing bankers, mortgage bankers, and lenders expressed support 
for the proposed benchmark levels for all three of the multifamily 
housing goals. However, a trade association representing homebuilders, 
a policy advocacy organization representing housing finance agencies, 
and 35 housing and community development nonprofits urged FHFA to raise 
the proposed benchmark levels to be in line with, or higher than, the 
Enterprises' recent performance. A policy advocacy organization 
maintained that the proposed benchmark levels should be higher given 
the tremendous demand for affordable housing and the need to ensure 
that the Enterprises fulfill their countercyclical role during economic 
downturns. This commenter further argued that higher benchmark levels 
would better align with FHFA's recent focus on increasing Enterprise 
support for affordable housing. One comment letter, endorsed by 35 
housing and community development organizations, supported the change 
in methodology but recommended setting the benchmark levels above 
recent Enterprise performance. Section IV below provides additional 
detail on the benchmark levels set in this final rule.
    Conservatorship Scorecard Cap. Comment letters from Fannie Mae, a 
trade organization representing mortgage bankers, and two policy 
advocacy organizations representing renters discussed the interaction 
between the multifamily benchmark levels and the Conservatorship 
Scorecard Cap. Although some comments were beyond the scope of the 
proposed rule, FHFA took the comments into consideration in finalizing 
the Conservatorship Scorecard Cap for 2023.\9\ FHFA notes that the 
methodology adopted in the final rule for measuring the multifamily 
housing goals sets the goals as percentages rather than number of units 
and was designed to better harmonize the requirements of the housing 
goals and the Conservatorship Scorecard Cap, which is one of the 
objectives discussed by these organizations.
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    \9\ See https://www.fhfa.gov/Media/PublicAffairs/Pages/2023-Multifamily-Caps-for-Fannie-Mae-and-Freddie-Mac.aspx.
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    Multifamily data. Two policy advocacy organizations representing 
renters requested that FHFA study and publish findings on various 
issues related to the multifamily market. FHFA notes that both the 
Enterprises and the Agency regularly publish performance data on the 
Enterprises' multifamily acquisitions, including in the Annual Housing 
Activities Reports and Annual Mortgage Reports produced by the 
Enterprises in March each year, the Annual Housing Report published by 
FHFA in October each year, and in FHFA's preliminary and final 
determination letters on the Enterprises' annual housing goals 
performance, all of which are posted to the FHFA website. However, FHFA 
plans to continue to identify ways to improve and enhance its ability 
to share multifamily research and analysis with the public.
    Other issues. A number of commenters raised concerns that went 
beyond the scope of the proposed rule. For example, FHFA received 
numerous comments focused on a variety of renter issues and concerns. 
One comment letter signed by 35 housing and community development 
organizations urged FHFA to consider ways to address issues such as 
displacement and substandard living conditions for low-income tenants 
and tenants of color. The comment letter provided recommendations for 
underwriting, tracking, and evaluating the affordability of rental 
units, as well as holding landlords accountable for the needs of their 
tenants. FHFA notes in regard to this comment that the Safety and 
Soundness Act requires FHFA to determine affordability for purposes of 
the housing goals based on whether the rent level is at or below 30 
percent of the maximum income level for the relevant category, adjusted 
for unit size.\10\ FHFA also received 64 comment letters from members 
of the public and organizations concerned about the high cost of rent 
and the lack of tenant protections for renters. The comment letters 
were submitted as part of a letter-writing campaign organized by an 
advocacy group. The commenters cited the tenant protections that were 
offered during the COVID-19 pandemic as part of the Enterprise 
forbearance programs as positive actions taken by FHFA. These letters 
specifically urged FHFA to regulate rents for all federally-backed 
mortgages in order to support sustainable, affordable housing. FHFA 
recognizes the significant issues that families face in finding 
affordable rental housing and in remaining secure in the face of 
economic uncertainty. Section IV below includes additional discussion 
of these affordability challenges. FHFA also has met with stakeholders 
to discuss these issues and will continue working to identify ways that 
FHFA and the Enterprises can support renters across the country.
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    \10\ See 12 U.S.C. 4563(c).
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III. Summary of the Final Rule

    The Safety and Soundness Act requires FHFA to establish annual 
multifamily housing goals for purchases by each Enterprise of mortgages 
on multifamily housing that finance dwelling units affordable to low-
income and very low-income families. In accordance with the Safety and

[[Page 78840]]

Soundness Act, the final rule establishes the multifamily housing goals 
for 2023 and 2024 based on the percentage of affordable units in 
multifamily properties financed by mortgages purchased by the 
Enterprise.
    The final rule establishes the benchmark levels for the multifamily 
goal and subgoals for 2023 and 2024 as follows:

------------------------------------------------------------------------
                                                               Final
                                                             benchmark
              Goal                       Criteria         level for 2023
                                                           and 2024 (%)
------------------------------------------------------------------------
Low-Income Goal................  Percent of all goal-                 61
                                  eligible units in
                                  multifamily properties
                                  financed by mortgages
                                  purchased by the
                                  Enterprises in that
                                  year that are
                                  affordable to low-
                                  income families,
                                  defined as families
                                  with incomes less than
                                  or equal to 80 percent
                                  of area median income
                                  (AMI).
Very Low-Income Subgoal........  Percent of all goal-                 12
                                  eligible units in
                                  multifamily properties
                                  financed by mortgages
                                  purchased by the
                                  Enterprises in that
                                  year that are
                                  affordable to very low-
                                  income families,
                                  defined as families
                                  with incomes less than
                                  or equal to 50 percent
                                  of AMI.
Small Multifamily Low-Income     Percent of all goal-                2.5
 Subgoal.                         eligible units in all
                                  multifamily properties
                                  financed by mortgages
                                  purchased by the
                                  Enterprises in that
                                  year that are units in
                                  small multifamily
                                  properties affordable
                                  to low-income
                                  families, defined as
                                  families with incomes
                                  less than or equal to
                                  80 percent of AMI.
------------------------------------------------------------------------

    The final rule does not make any changes to the requirements for 
determining which multifamily mortgage purchases are counted, or not 
counted, as those requirements continue to be defined in the existing 
housing goals regulation. The Enterprises will continue to report on 
the number of multifamily units acquired each year, including data on 
units that are affordable to low-income households, very low-income 
households, and low-income households in small multifamily properties. 
The Enterprise housing goals regulation defines a small multifamily 
property as a property with 5 to 50 units. In order to meet each of the 
multifamily goals, each Enterprise will be required to ensure that the 
percentage of units that are affordable meets or exceeds the applicable 
benchmark level.
    While the final rule does not change the requirements for 
determining which multifamily mortgages are eligible to be counted 
towards the goals, the final rule makes technical revisions to Sec.  
1282.15 to reflect the new methodology. As in the proposed rule, the 
final rule revises Sec.  1282.15(c) to express the percentage of 
affordable units in multifamily properties financed by mortgages 
purchased by the Enterprises in terms of a defined numerator and 
denominator. As revised, Sec.  1282.15(c) mirrors the description of 
the single-family housing goals that currently exists in Sec.  
1282.15(a), which already measures the single-family housing goals as 
percentages. FHFA did not receive comments on these specific revisions 
in the proposed rule.
    In addition, as in the proposed rule, the final rule amends Sec.  
1282.15(e)(3) to clarify the treatment of rental units with missing 
affordability information. Under the existing regulation, an Enterprise 
is permitted to estimate the affordability of such units, up to a 
maximum of 5 percent of the total number of rental units in properties 
securing multifamily mortgages purchased by the Enterprise in the 
current year. Rental units with missing affordability information are 
not counted for purposes of the multifamily housing goals to the extent 
that the number of such units exceeds the nationwide maximum of 5 
percent. Rental units also are excluded if it is not possible to 
estimate the affordability of such units. The final rule clarifies that 
under the new methodology, any units with missing affordability 
information in excess of the 5 percent nationwide maximum will be 
excluded from the numerator of the multifamily goals but will be 
included in the denominator. This treatment is consistent with the 
objective to encourage the Enterprises to obtain affordability 
information whenever possible. The final rule excludes rental units 
with missing affordability information from both the numerator and the 
denominator if it is not possible to estimate the affordability of such 
units. This treatment reflects the fact that the availability of 
information needed to estimate affordability is outside the 
Enterprises' control.

IV. Multifamily Housing Goals

A. Factors Considered for the Final Multifamily Housing Goals Benchmark 
Levels

    In establishing benchmark levels for the multifamily housing goals 
for 2023 and 2024, FHFA has considered the statutory factors set forth 
in section 1333(a)(4) of the Safety and Soundness Act. The statutory 
factors are:
    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.\11\
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    \11\ See 12 U.S.C. 4563(a)(4).
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    FHFA considered each of these required statutory factors in setting 
the benchmark levels for the multifamily housing goals. The analysis 
below describes trends in the overall multifamily mortgage market as 
they apply to setting the final benchmark levels. Additional analyses 
of the trends in the overall multifamily mortgage market can be found 
in the proposed rule.\12\
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    \12\ See 87 FR 50794 (August 18, 2022).
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    Overall economic outlook. Many factors impact the affordable 
housing market as a whole, and changes to any one of them could 
significantly affect 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.
    On November 2, 2022, the Federal Reserve noted that despite recent 
strong job gains and a low unemployment rate,

[[Page 78841]]

inflation remains elevated.\13\ The Federal Reserve noted that the 
invasion of Ukraine by Russia and related events are causing additional 
upward pressure on inflation and affecting global economic activity. In 
an effort to achieve maximum employment and inflation of 2 percent in 
the long run, the Federal Open Market Committee (FOMC) raised its 
target range for the federal funds rate to 3.75 percent to 4 percent, 
with plans to increase the target range further as appropriate until 
its goals are achieved.\14\
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    \13\ See https://www.federalreserve.gov/newsevents/pressreleases/monetary20221102a.htm.
    \14\ Ibid.
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    Interest rates are very important determinants of mortgage market 
trajectory. Moody's November 2022 consensus forecast projects that 30-
year fixed-rate mortgage interest rates will rise from an annual 
average rate of 3.0 percent in 2021 to 5.4 percent in 2022, then rise 
even further to 6.4 percent in 2023, before declining to 5.4 percent in 
2024.\15\ As of December 1, 2022, the weekly average rate for a 30-year 
fixed-rate mortgage was 6.49 percent.\16\ Moody's forecast also 
projects that the unemployment rate will rise from 3.7 percent in 2022 
to 4.3 percent in 2023, and to 4.5 percent in 2024. In addition, 
Moody's projects a slight decline in per capita disposable nominal 
income from $56,100 in 2021 to $55,800 in 2022, before rising to 
$61,300 by 2024. Furthermore, Moody's forecast estimates that the 
annual average inflation rate will decline from a projected 40-year 
high of 8.1 percent in 2022 to 2.5 percent in 2024. The year-over-year 
inflation rate for October 2022 was 7.7 percent.\17\
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    \15\ The macroeconomic outlook described herein is based on 
Moody's consensus forecast as of November 2022.
    \16\ See https://www.freddiemac.com/pmms/docs/historicalweeklydata.xls.
    \17\ See https://data.bls.gov/timeseries/CUUR0000SA0&output_view=pct_12mths.

                                         Table 1--Historical and Projected Trends of Key Macroeconomic Variables
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                                                                   Household trends                                           Projected trends
                                    --------------------------------------------------------------------------------------------------------------------
                                         2016         2017         2018         2019         2020         2021         2022         2023         2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
Real GDP Growth Rate...............          1.7          2.2          2.9          2.3         -2.8          5.9          1.8          0.4          1.4
Unemployment Rate..................          4.9          4.4          3.9          3.7          8.1          5.4          3.7          4.3          4.5
Labor Force Participation Rate.....         62.8         62.8         62.9         63.1         61.8         61.7         62.3         62.6         62.7
Inflation Rate (Change in CPI).....          1.3          2.1          2.4          1.8          1.2          4.7          8.1          3.9          2.5
Consumer Confidence Index..........         99.8        120.3        130.2        128.3        101.0        112.7        104.2        107.7        112.9
30-Year Mortgage Fixed Rate........          3.6          4.0          4.5          3.9          3.1          3.0          5.4          6.4          5.4
Per Capital Disposable Income              $43.6        $45.3        $47.5        $49.6        $53.0        $56.1        $55.8        $58.9        $61.3
 (1,000s $)........................
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Note: Historical values and projected trends are provided by Moody's Analytics.

    Multifamily mortgage market. FHFA's consideration of the 
multifamily mortgage market addresses the size of and competition 
within the market, as well as the subset of the market that is 
affordable to low-income and very low-income renters. In October 2022, 
the Mortgage Bankers Association (MBA) forecast that multifamily 
mortgage originations would decline by 7 percent from the 2021 record 
of $487 billion to $455 billion in 2022, then to $451 billion in 
2023.\18\ However, the MBA also noted that while this forecast is based 
on their baseline economic forecast, the outlook is currently uncertain 
and further declines in multifamily mortgage originations could not be 
ruled out.\19\
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    \18\ See https://www.mba.org/news-and-research/newsroom/news/2022/10/03/commercial-multifamily-lending-expected-to-fall-in-2022-due-to-ongoing-economic-uncertainty.
    \19\ Ibid.
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    Affordability in the multifamily mortgage market. In October 2022, 
the Urban Institute stated that the affordable housing market had 
changed dramatically in the past year, with both rents and home prices 
rising more than 13 percent and interest rates more than doubling 
relative to a year earlier.\20\ The Joint Center for Housing Studies of 
Harvard University's (JCHS) State of the Nation's Housing Report 2022 
found that year-over-year rent growth in the professionally managed 
segment of the apartment market surged to a record 11.6 percent at the 
end of 2021, and stayed high at the beginning of 2022.\21\ In 
comparison, the average annual rent increase in the pre-pandemic years 
of 2015-2019 was 3.2 percent.\22\
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    \20\ See ``Mom-and-Pop Landlords Are Raising Rents, Albeit Less 
Than Market Rates, Leaving Renters with Few Places to Turn,'' Urban 
Institute, October 2022, p.1, available at https://www.urban.org/urban-wire/mom-and-pop-landlords-are-raising-rents-albeit-less-market-rates-leaving-renters-few.
    \21\ See ``The State of the Nation's Housing 2022,'' Joint 
Center for Housing Studies of Harvard University, June 2022, p.30, 
available at https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2022.pdf.
    \22\ Ibid.
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    The Safety and Soundness Act requires FHFA to determine 
affordability for purposes of the Enterprise housing goals based on a 
family's rent and utility expenses not exceeding 30 percent of AMI.\23\ 
The JCHS Report describes the growing presence of cost-burdened 
renters, particularly among low-income and very low-income 
households.\24\ A household is considered cost-burdened if they are 
spending more than 30 percent of their income on housing, or severely 
cost-burdened if they are spending more than 50 percent of their income 
on housing. The Report shows that the share of cost-burdened renters 
across all income segments rose from 43.6 percent in 2019 to 46.2 
percent in 2020.\25\ The Report also shows that 82.6 percent of renters 
earning less than $15,000 and 77.9 percent of renters earning between 
$15,000 and $29,999 were cost-burdened in 2020. The share of cost-
burdened renters earning between $30,000 and $44,999 increased the 
most, rising approximately 9.0 percent--from 49.2 percent in 2019 to 
58.3 percent in 2020.\26\
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    \23\ See 12 U.S.C. 4563(c).
    \24\ See ``The State of the Nation's Housing 2022,'' Joint 
Center for Housing Studies of Harvard University, June 2022, p.8, 
available at https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2022.pdf.
    \25\ See ``The State of the Nation's Housing 2022: Appendix and 
Web Tables,'' Joint Center for Housing Studies of Harvard 
University, June 2022, Table W-2, available at https://www.jchs.harvard.edu/sites/default/files/interactive-item/files/Harvard_JCHS_State_Nations_Housing_2022_Appendix_Tables_0.xlsx.
    \26\ Ibid.
---------------------------------------------------------------------------

    The JCHS Report also notes the significant rise in new rental 
supply. The Report notes that in 2021, multifamily starts reached 
474,000 units, the highest since the mid-1980s,

[[Page 78842]]

94 percent of which were intended for the rental market.\27\ The first 
quarter of 2022 saw starts totaling 124,000 units, the highest first 
quarter since 1986, with 91 percent of those units intended for the 
rental market.\28\
---------------------------------------------------------------------------

    \27\ See ``The State of the Nation's Housing 2022,'' Joint 
Center for Housing Studies of Harvard University, June 2022, p.33, 
available at https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2022.pdf.
    \28\ Ibid.
---------------------------------------------------------------------------

    While the addition of these units is expected to temper rent 
growth, the JCHS Report notes that these units are primarily targeted 
at the upper end of the market, with rents unaffordable to low-income 
households.\29\ The Report states that the median asking rent for newly 
completed units in 2021 was $1,740, a 24 percent increase from 
2015.\30\ In addition, the share of newly completed units renting for 
less than $1,250 declined from 39 percent in 2015 to 15 percent in 
2021, and for units renting for less than $850, from 9 percent to 2 
percent for the same time period.\31\
---------------------------------------------------------------------------

    \29\ Ibid, p.34.
    \30\ Ibid.
    \31\ Ibid.
---------------------------------------------------------------------------

    Role of the Enterprises. In establishing the multifamily housing 
goal benchmark levels for 2023 and 2024, FHFA has considered the 
ability of the Enterprises to lead the market in making multifamily 
mortgage credit available. The share of the overall multifamily 
mortgage origination market that is purchased by the Enterprises 
increased in the years immediately following the financial crisis, but 
their share has declined more recently in response to growing private 
sector participation. The Enterprises' share of the multifamily 
mortgage origination market was over 70 percent in 2008 and 2009, 
compared to 36 percent in 2015.\32\ The total share was at 40 percent 
or higher from 2016 to 2020. However, in 2021, a record multifamily 
volume year, the combined Enterprise share was estimated to have been 
around 28 percent.\33\ Fannie Mae estimates that through the second 
quarter of 2022, Enterprise share was around 26 percent.\34\ With 
interest rates expected to continue to rise in 2023 and 2024 and fewer 
multifamily originations expected (consistent with the MBA's forecast 
for 2023 and 2024), much uncertainty remains around the number and 
types of multifamily loans that may be originated in the next two 
years.
---------------------------------------------------------------------------

    \32\ See Fannie Mae, ``Multifamily Business Information 
Presentation,'' November 2022, p.3: https://multifamily.fanniemae.com/media/9131/display.
    \33\ Ibid.
    \34\ Ibid.
---------------------------------------------------------------------------

    FHFA recognizes there are numerous Enterprise activities that 
impact how the Enterprises contribute to and participate in the 
multifamily market, including through their Duty to Serve Underserved 
Markets Plans, their Equitable Housing Finance Plans, and the mission-
driven elements of the Conservatorship Scorecard. Together with the 
housing goals, these programmatic activities provide support to renter 
households, including lower-income families spending more than 30 
percent of their income on housing. FHFA will continue to monitor the 
aforementioned initiatives and priorities to ensure appropriate focus 
by the Enterprises and compliance with the Enterprises' charter acts 
and safety and soundness considerations.
    FHFA expects the Enterprises to continue demonstrating leadership 
in multifamily affordable housing lending by providing liquidity and 
supporting housing for tenants at different income levels in various 
geographic markets and in various market segments. This support should 
continue throughout the economic cycle, with the Enterprises providing 
support even as the overall volume of the multifamily mortgage market 
fluctuates.
    Maintaining the sound financial condition of the Enterprises. In 
establishing multifamily housing goals benchmark levels for 2023 and 
2024, FHFA must balance the role that the Enterprises play in providing 
liquidity and supporting various multifamily mortgage market segments 
with the need to maintain the Enterprises' sound and solvent financial 
condition. The Enterprises have served as a stabilizing force in the 
multifamily mortgage market. The Enterprises' portfolios of loans on 
multifamily affordable housing properties have experienced low levels 
of delinquency and default, similar to the performance of multifamily 
loans on market-rate properties.
    FHFA continues to monitor the activities of the Enterprises in its 
capacity as safety and soundness regulator and as conservator. As 
discussed above, FHFA may take any steps it determines necessary and 
appropriate to address the multifamily housing goals benchmark levels 
to ensure the Enterprises' continued safety and soundness.

B. Final Multifamily Housing Goals Benchmark Levels

    This section describes FHFA's analysis for establishing the final 
benchmark levels based on its consideration of the statutory factors 
described above and the performance of the Enterprises.

----------------------------------------------------------------------------------------------------------------
                                                                                          Proposed      Final
                                                                                         benchmark    benchmark
                     Goal                                      Criteria                  level for    level for
                                                                                          2023 and     2023 and
                                                                                          2024 (%)     2024 (%)
----------------------------------------------------------------------------------------------------------------
Low-Income Goal...............................  Percent of all goal-eligible units in            61           61
                                                 multifamily properties financed by
                                                 mortgages purchased by the
                                                 Enterprises in that year that are
                                                 affordable to low-income families,
                                                 defined as families with incomes less
                                                 than or equal to 80 percent of AMI.
Very Low-Income Subgoal.......................  Percent of all goal-eligible units in            12           12
                                                 multifamily properties financed by
                                                 mortgages purchased by the
                                                 Enterprises in that year that are
                                                 affordable to very low-income
                                                 families, defined as families with
                                                 incomes less than or equal to 50
                                                 percent of AMI.
Small Multifamily Low-Income Subgoal..........  Percent of all goal-eligible units in           2.0          2.5
                                                 all multifamily properties financed
                                                 by mortgages purchased by the
                                                 Enterprises in that year that are
                                                 units in small multifamily properties
                                                 affordable to low-income families,
                                                 defined as families with incomes less
                                                 than or equal to 80 percent of AMI.
----------------------------------------------------------------------------------------------------------------


[[Page 78843]]

1. Multifamily Low-Income Housing Goal
    The multifamily low-income housing goal is based on the percentage 
of rental units in multifamily properties financed by mortgages 
purchased by the Enterprises in that year that are affordable to low-
income families, defined as families with incomes less than or equal to 
80 percent of AMI. The final rule sets the annual benchmark level for 
this goal for both 2023 and 2024 at 61 percent of goal-eligible units 
acquired. This is consistent with FHFA's analysis of the current and 
expected multifamily market, with fewer affordable units to support, 
rising price per unit, and uncertain market conditions.
    Recent performance. Table 2 below shows the number of goal-
qualifying low-income multifamily units in properties backing mortgages 
acquired by each Enterprise, as well as the goal-qualifying multifamily 
low-income units as a percentage of the total goal-eligible units in 
properties backing mortgages that were acquired in each year. Although 
there were numeric benchmarks historically in place for low-income 
multifamily units, the Enterprise performance reflected below has been 
well above the numeric benchmarks. FHFA notes that the Enterprises' 
performance in 2021 is at or below the 2020 performance, which 
corresponded to the onset of the COVID-19 pandemic.

                                                      Table 2--Multifamily Low-Income Housing Goal
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Performance
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Year                    2015         2016         2017         2018         2019        2020       2021       2022     2023 (%)   2024 (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Low-Income Multifamily Benchmark      300,000      300,000      300,000      315,000      315,000    315,000    315,000    415,000         61         61
Fannie Mae Performance
    Low-Income Multifamily Units      307,510      352,368      401,145      421,813      385,763    441,773    384,488
    Total Multifamily Units *...      468,798      552,785      630,868      628,230      596,137    637,696    557,152
    Low-Income % Total..........        65.6%        63.7%        63.6%        67.1%        64.7%      69.3%      69.0%
Freddie Mac Performance
    Low-Income Multifamily Units      379,042      406,958      408,096      474,062      455,451    473,338    373,225
    Total Multifamily Units *...      514,275      597,399      630,037      695,587      661,417    667,451    543,077
    Low-Income % of Total Units.        73.7%        68.1%        64.8%        68.2%        68.9%      70.9%      68.7%
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Refers to the total multifamily units that are eligible for housing goals.

    Proposed rule and comments. FHFA proposed setting the benchmark 
level for the multifamily low-income goal at 61 percent. The 
Enterprises and three trade associations representing bankers, mortgage 
bankers, and mortgage lenders expressed support for this proposed 
benchmark level, describing it as appropriate, realistic, attainable, 
and representing a strong commitment to affordability. A trade 
association representing home builders, two policy advocacy 
organizations, and a comment letter signed by 35 housing and community 
development organizations urged FHFA to set the benchmark level at a 
level closer to or higher than recent Enterprise performance. No 
commenters recommended lowering the proposed benchmark level.
    FHFA determination. FHFA has considered the statutory factors for 
the multifamily housing goals, including current market conditions, the 
Enterprises' performance, and their role in the market. FHFA has also 
considered the comments received in response to the proposed 
multifamily low-income benchmark level. Rising interest rates are 
contributing to the increasing costs of acquiring low-income 
multifamily units, and expected continued declines in affordable 
originations and higher rents are also causing fewer units to qualify 
as affordable for low-income families, with affordability defined based 
on rents being less than or equal to 30 percent of the maximum income 
level that would qualify as low-income for the area, adjusted for unit 
size.\35\ These challenges are expected to continue in 2023 and 2024 as 
more low-income families are having to pay greater than 30 percent of 
their incomes for rent.\36\ In light of all these factors, FHFA has 
determined that the benchmark level for this goal should be set at 61 
percent for both Enterprises for 2023 and 2024, consistent with the 
proposed rule.
---------------------------------------------------------------------------

    \35\ See 12 U.S.C. 4563(c).
    \36\ See ``The State of the Nation's Housing 2022,'' Joint 
Center for Housing Studies of Harvard University, June 2022, p.6, 
available at https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2022.pdf.
---------------------------------------------------------------------------

2. Multifamily Very Low-Income Housing Subgoal
    The multifamily very low-income housing subgoal is based on the 
percentage 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 less than or equal to 
50 percent of AMI. The final rule sets the annual benchmark level for 
this subgoal for 2023 and 2024 at 12 percent of goal-eligible units 
acquired. FHFA believes that this benchmark level is appropriate to 
ensure that the Enterprises continue to adequately serve very low-
income families while accounting for the challenges associated with 
increasing interest rates, decreasing affordability in the multifamily 
market, and uncertain economic conditions.
    Recent performance. Table 3 below shows the number of goal-
qualifying very low-income multifamily units in properties backing 
mortgages acquired by each Enterprise, as well as goal-qualifying very 
low-income multifamily units as a percentage of the total goal-eligible 
units in properties backing mortgages that were acquired in each year. 
As noted in the NPRM, the recent performance of the Enterprises on the 
multifamily very low-income subgoal indicates that the number of goal-
qualifying units in properties backing mortgages purchased by the 
Enterprises varies more widely from year-to-year than the percentage of 
goal-qualifying units. Since 2015, one Enterprise has performed at 
levels close to the benchmark level of 12 percent that will apply for 
2023 and 2024, especially in the years prior to the pandemic. Both 
Enterprises have exceeded the numeric benchmark levels that were in 
place. However, the number of very low-income units in properties 
backing

[[Page 78844]]

mortgages acquired by both Enterprises was lower in 2021 compared to 
2020, reflecting changing market conditions.

                                                      Table 3--Multifamily Very Low-Income Subgoal
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Performance
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Year                    2015         2016         2017         2018         2019        2020       2021       2022     2023 (%)   2024 (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Very Low-Income Multifamily            60,000       60,000       60,000       60,000       60,000     60,000     60,000     88,000         12         12
 Benchmark......................
Fannie Mae Performance
    Very Low-Income Multifamily        69,078       65,910       82,674       80,891       79,649     95,416     83,459
     Units......................
    Total Multifamily Units *...      468,798      552,785      630,868      628,230      596,137    637,696    557,152
    Very Low-Income % of Total          14.7%        11.9%        13.1%        12.9%        13.4%      15.0%      15.0%
     Units......................
Freddie Mac Performance
    Very Low-Income Multifamily        76,935       73,030       92,274      105,612      112,773    107,105     87,854
     Units......................
    Total Multifamily Units *...      514,275      597,399      630,037      695,587      661,417    667,451    543,077
    Very Low-Income % of Total          15.0%        12.2%        14.6%        15.2%        17.1%      16.0%      16.2%
     Units......................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Refers to the total multifamily units that are eligible for housing goals.

    Proposed rule and comments. FHFA proposed setting the benchmark 
level for the multifamily very low-income subgoal at 12 percent. 
Similar to the comments received in response to the proposed low-income 
goal, the Enterprises and three trade associations representing 
mortgage bankers, bankers, and mortgage lenders expressed support for 
setting the multifamily very low-income subgoal benchmark level at 12 
percent, describing it as appropriate, realistic, attainable, and 
representing a strong commitment to affordability. A comment letter 
signed by 35 housing and community development organizations, a trade 
association representing home builders, and another policy advocacy 
organization urged FHFA to set the benchmark level at a level closer to 
or higher than recent Enterprise performance. No commenters recommended 
lowering the proposed benchmark level.
    FHFA determination. FHFA has considered the statutory factors for 
the multifamily housing goals, including current market conditions and 
the Enterprises' role in the market. FHFA has also considered the 
comments received in response to the proposed multifamily very low-
income benchmark level. Very low-income renters face similar challenges 
as low-income renters. Rising interest rates are contributing to the 
increasing costs of acquiring very low-income multifamily units, and 
expected continued declines in affordable originations and higher rents 
are causing fewer units to qualify as affordable for very low-income 
families, with affordability defined based on rents being less than or 
equal to 30 percent of the maximum income level that would qualify as 
low-income for the area, adjusted for unit size.\37\ These challenges 
are expected to continue into 2023 as more very low-income families are 
having to pay greater than 30 percent of their incomes for rent.\38\ In 
light of all these factors, FHFA has determined that the multifamily 
very low-income benchmark level should be set at 12 percent for both 
Enterprises for 2023 and 2024, consistent with the proposed rule.
---------------------------------------------------------------------------

    \37\ See 12 U.S.C. 4563(c).
    \38\ See ``The State of the Nation's Housing 2022,'' Joint 
Center for Housing Studies of Harvard University, June 2022, p.6, 
available at https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2022.pdf.
---------------------------------------------------------------------------

3. Small Multifamily Low-Income Housing Subgoal
    The small multifamily low-income housing subgoal is based on the 
percentage of rental units in all multifamily properties financed by 
mortgages purchased by the Enterprises that are units in small 
multifamily properties affordable to low-income families, defined as 
families with incomes less than or equal to 80 percent of AMI. The 
Enterprise housing goals regulation defines a small multifamily 
property as a property with 5 to 50 units. This subgoal was created in 
conjunction with the 2015-2017 housing goals rulemaking to position the 
Enterprises to be able to respond quickly to potential need in this 
segment. In light of the current small multifamily market conditions 
discussed below, FHFA is interested in ensuring that the Enterprises 
remain positioned to support this market when needed without crowding 
out other sources of financing for small multifamily properties.
    The final rule sets the annual benchmark level for affordable units 
in small multifamily properties for 2023 and 2024 at 2.5 percent of the 
goal-eligible units in all multifamily properties securing mortgages 
acquired by an Enterprise each year, rather than as the affordable 
percentage of small multifamily properties only, consistent with the 
objectives FHFA has previously expressed for this subgoal. The final 
benchmark level is slightly higher than the proposed 2 percent 
benchmark level, as FHFA has determined that the 2.5 percent benchmark 
level would better ensure that the Enterprises maintain an appropriate 
level of support for this market, given expected uncertainty in market 
and economic conditions, the comments received in response to the 
proposed benchmark level, and other factors described in this final 
rule.
    As discussed in the preamble to the proposed rule, the small low-
income multifamily housing market historically has been challenging to 
size and monitor. FHFA is aware that following the pandemic-related 
slowdown in 2020, private sector financing returned to this sector more 
robustly.\39\ However, this private sector participation is expected to 
be highly sensitive to interest rates and other market conditions. FHFA 
believes that the final benchmark level for the small

[[Page 78845]]

multifamily low-income housing subgoal will ensure that the Enterprises 
maintain a limited but appropriate level of engagement in the small 
multifamily segment of the market that could be scaled up in the future 
should the need arise.
---------------------------------------------------------------------------

    \39\ See https://www.walkerdunlop.com/insights/2021/07/19/small-balance-multifamily-sizable-and-resilient/. FHFA defines small 
multifamily properties as properties with 5 to 50 units, while this 
article defines small multifamily properties to include properties 
with 5 to 99 units and multifamily properties with a principal loan 
balance at origination between $1 and $10 million.
---------------------------------------------------------------------------

    Recent performance. Table 4 below shows Enterprise performance on 
this subgoal both in terms of the actual numeric benchmark levels 
applicable through 2022, as well as the proposed subgoal metric that 
would be based on percentages. As noted in the NPRM and as reflected by 
the different numeric benchmark levels set for each Enterprise in the 
2021 final rule, FHFA recognizes that the Enterprises have different 
multifamily business approaches to this segment and that each 
Enterprise sets its own credit risk tolerance for multifamily products. 
As a result, each Enterprise has performed very differently on this 
subgoal. For example, Fannie Mae's performance was below the new 
benchmark level of 2.5 percent from 2015 through 2018, while Freddie 
Mac's performance has generally exceeded this level.

                                                      Table 4--Small Multifamily Low-Income Subgoal
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Performance
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Year                    2015         2016         2017         2018         2019        2020       2021       2022     2023 (%)   2024 (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fannie Mae Benchmark............        6,000        8,000       10,000       10,000       10,000     10,000     10,000     17,000        2.5        2.5
Freddie Mac Benchmark...........        6,000        8,000       10,000       10,000       10,000     10,000     10,000     23,000        2.5        2.5
Fannie Mae Performance:
    Small Low-Income Multifamily        6,731        9,312       12,043       11,890       17,832     21,797     14,409
     Units......................
    Total Small Multifamily            11,198       15,211       20,375       17,894       25,565     36,880     25,416
     Units......................
    Total Multifamily Units *...      468,798      552,785      630,868      628,230      596,137    637,696    557,152
    Small Low-Income % of Total         60.1%        61.2%        59.1%        66.4%        69.8%      59.1%      56.7%
     Small Multifamily Units....
    Small Low-Income % of Total          1.4%         1.7%         1.9%         1.9%         3.0%       3.4%       2.6%
     Units......................
Freddie Mac Performance:
    Small Low-Income Multifamily       12,801       22,101       39,473       39,353       34,847     28,142     31,913
     Units......................
    Total Small Multifamily            21,246       33,984       55,116       53,893       46,879     41,275     41,874
     Units......................
    Total Multifamily Units *...      514,375      597,339      630,037      695,587      661,417    667,451    543,077
    Small Low-Income % of Total         60.3%        65.0%        71.6%        73.0%        74.3%      68.2%      76.2%
     Small Multifamily Units....
    Small Low-Income % of Total          2.5%         3.7%         6.3%         5.7%         5.3%       4.2%       5.9%
     Units......................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Refers to the total multifamily units that are eligible for housing goals.

    Proposed rule and comments. Three comment letters, including those 
from Fannie Mae, a group of mortgage lenders, and a trade organization 
representing mortgage bankers, expressed support for the proposed 
benchmark level of 2 percent, noting that this market is already well-
served by other sources of private capital. However, a trade 
organization representing home builders questioned the proposed 
benchmark level given the possibility of a recession in 2023, pointing 
out that many lenders in this market retreat from less lucrative 
business lines during economic downturns. A comment letter signed by 35 
housing and community development organizations and a policy advocacy 
organization representing housing finance agencies urged FHFA to set 
the benchmark level at a level closer to or higher than recent 
Enterprise performance. No commenters recommended lowering the proposed 
benchmark level.
    FHFA determination. The final rule sets the benchmark level for the 
small multifamily low-income subgoal at 2.5 percent, which is slightly 
higher than the proposed benchmark level of 2 percent.\40\ While this 
market is currently being served by other sources of private capital 
such as small and/or regional banks, the final benchmark level will 
ensure that the Enterprises maintain a presence in this specialized 
market. FHFA's determination is based on its consideration of the 
statutory factors for the multifamily housing goals, the purpose of 
this goal, and the comments received on the proposed benchmark level.
---------------------------------------------------------------------------

    \40\ FHFA notes that all previous percentage-based housing goals 
were established using whole numbers for the benchmark levels. 
However, the relatively low percentage for the small multifamily 
low-income subgoal necessitates using a small increment to ensure 
the benchmark level is appropriate. FHFA has an established practice 
of rounding Enterprise performance to the first decimal when 
evaluating Enterprise performance on previous percentage-based 
housing goals; that same practice will be followed for the 
percentage-based multifamily housing goals.
---------------------------------------------------------------------------

V. Paperwork Reduction Act

    The Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq.) requires 
that regulations involving the collection of information receive 
clearance from the Office of Management and Budget (OMB). The final 
rule contains no such collection of information requiring OMB approval 
under the PRA. Therefore, no information has been submitted to OMB for 
review.

VI. 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. FHFA need not undertake such an 
analysis 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 the final 
rule under the Regulatory Flexibility Act. FHFA certifies that the 
final rule will not have a significant economic impact on a substantial 
number of small entities because the regulation only applies to Fannie 
Mae and Freddie Mac, which are

[[Page 78846]]

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.  1282.13 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. The percentage share of 
dwelling units in multifamily residential housing financed by mortgages 
purchased by each Enterprise that consists of dwelling units affordable 
to low-income families shall meet or exceed 61 percent of the total 
number of dwelling units in multifamily residential housing financed by 
mortgages purchased by the Enterprise in each year for 2023 and 2024.
    (c) Multifamily very low-income housing subgoal. The percentage 
share of dwelling units in multifamily residential housing financed by 
mortgages purchased by each Enterprise that consists of dwelling units 
affordable to very low-income families shall meet or exceed 12 percent 
of the total number of dwelling units in multifamily residential 
housing financed by mortgages purchased by the Enterprise in each year 
for 2023 and 2024.
    (d) Small multifamily low-income housing subgoal. The percentage 
share of dwelling units in small multifamily properties financed by 
mortgages purchased by each Enterprise that consists of dwelling units 
affordable to low-income families shall meet or exceed 2.5 percent of 
the total number of dwelling units in all multifamily residential 
housing financed by mortgages purchased by the Enterprise in each year 
for 2023 and 2024.

0
3. Amend Sec.  1282.15 by revising paragraphs (c) and (e)(3) to read as 
follows:


Sec.  1282.15   General counting requirements.

* * * * *
    (c) Calculating the numerator and denominator for multifamily 
housing goals. Performance under the multifamily housing goal and 
subgoals shall be measured using a fraction that is converted into a 
percentage. Neither the numerator nor the denominator shall include 
Enterprise transactions or activities that are not mortgage purchases 
as defined by FHFA or that are specifically excluded as ineligible 
under Sec.  1282.16(b).
    (1) The numerator. The numerator of each fraction is the number of 
dwelling units that count toward achievement of a particular 
multifamily housing goal or subgoal in properties financed by mortgages 
purchased by an Enterprise in a particular year.
    (2) The denominator. The denominator of each fraction is the total 
number of dwelling units in properties financed by mortgages purchased 
by an Enterprise in a particular year.
* * * * *
    (e) * * *
    (3) The estimation methodology in paragraph (e)(2) of this section 
may be used up to a nationwide maximum of 5 percent of the total number 
of rental units in properties securing multifamily mortgages purchased 
by the Enterprise in the current year. Multifamily rental units with 
missing affordability information in excess of this maximum shall be 
included in the denominator for the multifamily housing goal and 
subgoals, but such rental units shall not be counted in the numerator 
of any multifamily housing goal or subgoal. Multifamily rental units 
with missing affordability information for which estimation information 
is not available shall be excluded from both the numerator and the 
denominator for purposes of the multifamily housing goal and subgoals.
* * * * *

Sandra L. Thompson,
Director, Federal Housing Finance Agency.
[FR Doc. 2022-27467 Filed 12-22-22; 8:45 am]
BILLING CODE 8070-01-P