[Federal Register Volume 89, Number 168 (Thursday, August 29, 2024)]
[Proposed Rules]
[Pages 70127-70145]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-19261]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 89, No. 168 / Thursday, August 29, 2024 / 
Proposed Rules  

[[Page 70127]]



FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1282

RIN 2590-AB34


2025-2027 Enterprise Housing Goals

AGENCY: Federal Housing Finance Agency.

ACTION: Proposed rule.

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SUMMARY: The Federal Housing Finance Agency (FHFA) is issuing a 
proposed rule and requesting comments on the housing goals for Fannie 
Mae and Freddie Mac (the Enterprises) for 2025 through 2027 as required 
by the Federal Housing Enterprises Financial Safety and Soundness Act 
of 1992. The housing goals and subgoals include separate categories for 
single-family and multifamily mortgages on housing affordable to low-
income and very low-income families, among others. The proposed rule 
also includes criteria for when housing plans would be required for 
2025-2027, and it makes several technical changes to enhance clarity 
and conform the regulation to existing practice.

DATES: FHFA will accept written comments on the proposed rule on or 
before October 28, 2024.

ADDRESSES: You may submit your comments on the proposed rule, 
identified by regulatory information number (RIN) 2590-AB34, by any one 
of the following methods:
     Agency Website: https://www.fhfa.gov/regulation/federal-register?comments=open.
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments. If you submit your 
comment to the Federal eRulemaking Portal, please also send it by email 
to FHFA at [email protected] to ensure timely receipt by FHFA. 
Include the following information in the subject line of your 
submission: Comments/RIN 2590-AB34.
     Hand Delivered/Courier: The hand delivery address is: 
Clinton Jones, General Counsel, Attention: Comments/RIN 2590-AB34, 
Federal Housing Finance Agency, 400 Seventh Street SW, Washington, DC 
20219. Deliver the package at the Seventh Street entrance Guard Desk, 
First Floor, on business days between 9 a.m. and 5 p.m. EST.
     U.S. Mail, United Parcel Service, Federal Express, or 
Other Mail Service: The mailing address for comments is: Clinton Jones, 
General Counsel, Attention: Comments/RIN 2590-AB34, Federal Housing 
Finance Agency, 400 Seventh Street SW, Washington, DC 20219. Please 
note that all mail sent to FHFA via U.S. Mail is routed through a 
national irradiation facility, a process that may delay delivery by 
approximately two weeks.

FOR FURTHER INFORMATION CONTACT: For general questions, please contact 
[email protected]. For technical questions, please 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]; or Carey Whitehead, Assistant General 
Counsel, (202) 649-3630, [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. Comments

    FHFA invites comments on all aspects of the proposed rule and will 
take all comments into consideration before issuing a final rule. 
Comments will be posted to the electronic rulemaking docket on the FHFA 
public website at https://www.fhfa.gov, except as described below. 
Commenters should submit only information that the commenter wishes to 
make available publicly. FHFA may post only a single representative 
example of identical or substantially identical comments, and in such 
cases will generally identify the number of identical or substantially 
identical comments represented by the posted example. FHFA may, in its 
discretion, redact or refrain from posting all or any portion of any 
comment that contains content that is obscene, vulgar, profane, or 
threatens harm. All comments, including those that are redacted or not 
posted, will be retained in their original form in FHFA's internal 
rulemaking file and considered as required by all applicable laws. 
Commenters that would like FHFA to consider any portion of their 
comment exempt from disclosure on the basis that it contains trade 
secrets, or financial, confidential or proprietary data or information, 
should follow the procedures in section IV.D. of FHFA's Policy on 
Communications with Outside Parties in Connection with FHFA 
Rulemakings, see https://www.fhfa.gov/sites/default/files/documents/Ex-Parte-Communications-Public-Policy_3-5-19.pdf. FHFA cannot guarantee 
that such data or information, or the identity of the commenter, will 
remain confidential if disclosure is sought pursuant to an applicable 
statute or regulation. See 12 CFR 1202.8, 12 CFR 1214.2, and the FHFA 
FOIA Reference Guide at https://www.fhfa.gov/about/foia-reference-guide 
for additional information.

[[Page 70128]]

II. Background

A. Statutory and Regulatory Background for Enterprise Housing Goals

    The Federal Housing Enterprises Financial Safety and Soundness Act 
of 1992 (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 annual housing goals are one 
measure of the extent to which the Enterprises are meeting their public 
purposes, which include ``an affirmative obligation to facilitate the 
financing of affordable housing for low- and moderate-income families 
in a manner consistent with their overall public purposes, while 
maintaining a strong financial condition and a reasonable economic 
return.'' \2\
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    \1\ 12 U.S.C. 4561(a).
    \2\ 12 U.S.C. 4501(7).
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    Since 2010, FHFA has established annual housing goals for 
Enterprise purchases of single-family and multifamily mortgages 
consistent with the requirements of the Safety and Soundness Act. The 
structure of the housing goals and the parameters for determining how 
mortgage purchases are counted or not counted are defined in the 
housing goals regulation.\3\ The most recent amendments to the housing 
goals regulation were a final rule published in 2021 to establish 
benchmark levels for the 2022-2024 single-family housing goals and the 
2022 multifamily housing goals, and a final rule published in 2022 to 
establish benchmark levels for the 2023-2024 multifamily housing 
goals.\4\ This proposed rule would establish benchmark levels for the 
single-family and multifamily housing goals for 2025-2027.
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    \3\ 12 CFR part 1282.
    \4\ See 86 FR 73641 (Dec. 28, 2021), 87 FR 78837 (Dec. 23, 
2022). The 2021 final rule departed from historical FHFA practice of 
establishing single-family and multifamily housing goals at three-
year intervals. As stated in the preamble to the 2021 final rule, 
this choice was motivated by the unique market conditions created by 
the COVID-19 pandemic.
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    Single-family housing goals. The single-family housing goals 
defined under the Safety and Soundness Act include separate categories 
for home purchase mortgages for low-income families, very low-income 
families, and families that reside in low-income areas.\5\ For purposes 
of the single-family housing goals, families that reside in low-income 
areas \6\ include: (1) families in low-income census tracts, defined as 
census tracts with median income less than or equal to 80 percent of 
area median income (AMI); \7\ (2) families with incomes less than or 
equal to 100 percent of AMI who reside in minority census tracts 
(defined as census tracts with a minority population of at least 30 
percent and a tract median income of less than 100 percent of AMI); \8\ 
and (3) families with incomes less than or equal to 100 percent of AMI 
who reside in designated disaster areas.\9\ The Enterprise housing 
goals regulation also includes subgoals, within the low-income areas 
housing goal, that focus on single-family housing occupied by families 
in low-income census tracts and moderate-income families in minority 
census tracts.\10\ Performance on the single-family home purchase goals 
and subgoals 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 single-family 
refinance mortgages for low-income families, and performance on the 
refinance goal is determined in a similar way.
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    \5\ 12 U.S.C. 4562(a)(1).
    \6\ See 12 U.S.C. 4502(28); 12 CFR 1282.1 (definition of 
``families in low-income areas'').
    \7\ 12 CFR 1282.1 (par. (i) of definition of ``families in low-
income areas'').
    \8\ 12 U.S.C. 4502(29); 12 CFR 1282.1 (par. (ii) of definition 
of ``families in low-income areas'' and definition of ``minority 
census tract'').
    \9\ 12 U.S.C. 4502(28); 12 CFR 1282.1 (definition of 
``designated disaster area'' and par. (iii) of definition of 
``families in low-income areas'').
    \10\ 12 CFR 1282.12(f).
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    Under the Safety and Soundness Act, the single-family housing goals 
are limited to mortgages on owner-occupied housing with one to four 
units. The single-family goals cover first lien, conventional, 
conforming mortgages, meaning mortgages that are not subordinate to 
other mortgage liens, that are not insured or guaranteed by the Federal 
Housing Administration or another government agency, and that have 
principal balances that do not exceed the conforming loan limits for 
Enterprise mortgages.
    Two-part evaluation approach for single-family housing goals. The 
Enterprises' performance on the single-family housing goals is 
evaluated using a two-part approach that compares the goal-qualifying 
share of each Enterprise's mortgage purchases to two separate measures: 
a benchmark level and a market level. To meet a single-family housing 
goal, the percentage of mortgage purchases by an Enterprise that 
qualifies for credit under each goal must equal or exceed either the 
benchmark level or the market level for that year. The benchmark level 
is set prospectively by rulemaking based on various factors set forth 
in the Safety and Soundness Act.\11\ The market level is determined 
retrospectively for each year, based on the actual goal-qualifying 
share of the overall market as measured by the Home Mortgage Disclosure 
Act \12\ (HMDA) data for that year. The overall market that FHFA uses 
for setting both the prospective benchmark level and the retrospective 
market level consists of all single-family, owner-occupied, 
conventional, conforming mortgages that would be eligible for purchase 
by either Enterprise. It includes loans purchased by the Enterprises as 
well as comparable loans held in a lender's portfolio. It also includes 
any loans that are part of a private label security (PLS), although few 
such securities have been issued for conventional conforming mortgages 
since 2008. Since 2018, several new HMDA data fields have become 
available. FHFA continues to monitor reporting of these new fields to 
consider potential adjustments to the way FHFA measures the overall 
market. Because FHFA's econometric market models use past years' data 
to construct the models, a potential transition to incorporate any new 
data variables will require time to obtain an adequate input data 
series.
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    \11\ See 12 U.S.C. 4562(e).
    \12\ 12 U.S.C. 2801 et seq.
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    While the retrospective market levels measure mortgage originations 
in a particular year, the performance of the Enterprises on the housing 
goals includes all Enterprise purchases in that year, regardless of the 
year in which the loan was originated. This includes any loans that are 
originated in one year and purchased by an Enterprise in a later year.
    Multifamily housing goals. The multifamily housing goals defined 
under the Safety and Soundness Act include separate categories for 
mortgages on multifamily properties (properties with five or more 
units) with rental units affordable to low-income and very low-income 
families. The Safety and Soundness Act also requires reporting on 
smaller properties, and the Enterprise housing goals regulation 
includes a small multifamily low-income subgoal for properties with 5-
50 units. The multifamily housing goals include all Enterprise 
multifamily mortgage purchases, regardless of the purpose of the loan. 
The multifamily housing goals evaluate the performance of the 
Enterprises based on the share of affordable units in properties backed 
by mortgages purchased by an Enterprise. The Enterprise housing goals 
regulation does not include a retrospective market level measure for 
the multifamily housing goals, due in part to a lack of

[[Page 70129]]

comprehensive data about the multifamily market. As a result, FHFA 
currently measures Enterprise multifamily housing goals performance 
against the benchmark levels only.
    The Safety and Soundness Act requires that affordability for rental 
units under the multifamily housing goals be determined based on rents 
that ``[do] not exceed 30 percent of the maximum income level of such 
income category, with appropriate adjustments for unit size as measured 
by the number of bedrooms.'' \13\ The Enterprise housing goals 
regulation considers the net rent paid by the renter, i.e., the rent is 
decreased by any subsidy payments that the renter may receive, 
including housing assistance payments.\14\
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    \13\ See 12 U.S.C. 4563(c). The 30 percent test for measuring 
affordability traces back to the ``Brooke Amendment,'' which amended 
the United States Housing Act of 1937 to cap public housing rents 
(Pub. L. 91-152). For purposes of the multifamily housing goals, to 
be affordable at the 80 percent of AMI level, the rents must not 
exceed 30 percent of the renter's income which must not exceed 80 
percent of AMI. See https://www.huduser.gov/portal/pdredge/pdr_edge_featd_article_092214.html for a description of the Brooke 
Amendment and background on the notion of affordability embedded in 
the housing goals.
    \14\ See 12 CFR 1282.1 (par. (i)(B) of definition of ``rent'').
    \15\ See 12 CFR 1282.14(d).
    \16\ See 12 U.S.C. 4566(b); 12 CFR 1282.21(a).
    \17\ See 12 CFR 1282.12(e). The benchmark level for 2024 is 19 
percent. The notices setting this benchmark level can be found on 
FHFA's website at https://www.fhfa.gov/sites/default/files/2024-06/2024-Low-Income-Areas-Goal-Fannie-Mae.pdf and https://www.fhfa.gov/sites/default/files/2024-06/2024-Low-Income-Areas-Goal-Freddie-Mac.pdf.
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B. Adjusting the Housing Goals

    If, after publication of the final rule establishing the Enterprise 
housing goals for 2025-2027, new information indicates that any of the 
single-family or multifamily housing goals are not feasible in light of 
market conditions or the safety and soundness of the Enterprises, or 
for any other reason, FHFA may take any steps that are necessary and 
appropriate to respond, consistent with the Safety and Soundness Act 
and the Enterprise housing goals regulation.
    For example, under the Safety and Soundness Act and the Enterprise 
housing goals regulation, FHFA is permitted to reduce the benchmark 
levels in response to an Enterprise petition for reduction for any of 
the single-family or multifamily housing goals 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.\15\
    The Safety and Soundness Act and the Enterprise housing goals 
regulation also consider the possibility that achievement of a 
particular housing goal may or may not have been feasible for an 
Enterprise. 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.\16\
    If FHFA determines that an Enterprise did not 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.
    FHFA is proposing in Sec.  1282.22 new criteria that would apply in 
assessing whether a housing plan would be required for certain single-
family housing goals during the 2025-2027 housing goals period. The 
purpose of these ``Enforcement Factors,'' discussed below, is to 
encourage the Enterprises to focus on meeting the market levels rather 
than focusing exclusively on the housing goals benchmark levels in the 
event of unexpected disruptions to the market that occur after 
publication of the final rule.

C. Housing Goals Under Conservatorship

    On September 6, 2008, FHFA placed each Enterprise into 
conservatorship. Although the Enterprises remain in conservatorship, 
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.

III. Summary of Proposed Rule

A. Benchmark Levels for the Single-Family Housing Goals and Subgoals

    This proposed rule would establish the benchmark levels for the 
single-family housing goals for 2025-2027 as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                                       Proposed
                                                                                                      benchmark
                 Goal or subgoal                                       Criteria                       level for
                                                                                                      2025-2027
                                                                                                      (percent)
----------------------------------------------------------------------------------------------------------------
Low-Income Home Purchase Goal...................  Home purchase mortgages on single-family, owner-            25
                                                   occupied properties, to borrowers with incomes
                                                   no greater than 80 percent of area median income
                                                   (AMI).
Very Low-Income Home Purchase Goal..............  Home purchase mortgages on single-family, owner-             6
                                                   occupied properties, to borrowers with incomes
                                                   no greater than 50 percent of AMI.
Low-Income Refinance Goal.......................  Refinance mortgages on single-family, owner-                26
                                                   occupied properties, to borrowers with incomes
                                                   no greater than 80 percent of AMI.
Minority Census Tracts Home Purchase Subgoal....  Home purchase mortgages on single-family, owner-            12
                                                   occupied properties to borrowers with incomes no
                                                   greater than 100 percent of AMI in minority
                                                   census tracts \1\.
Low-Income Census Tracts Home Purchase Subgoal..  (i) Home purchase mortgages on single-family,                4
                                                   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.
----------------------------------------------------------------------------------------------------------------
\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.

    The low-income areas housing goal benchmark level is not included 
in this proposed rule. Under the existing regulation, the benchmark 
level will be the sum of the benchmark levels for the minority census 
tracts subgoal and the low-income census tracts subgoal established 
above, plus an additional amount that will be determined separately by 
FHFA by notice that takes into account families in disaster areas with 
incomes no greater than 100 percent of AMI.\17\

[[Page 70130]]

B. Proposed Benchmark Levels for the Multifamily Housing Goals and 
Subgoal and Clarification on Terminology

    The proposed rule would establish the benchmark levels for the 
multifamily housing goals and subgoal for 2025-2027 as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                                       Proposed
                                                                                                      benchmark
                Goals and subgoal                                      Criteria                       level for
                                                                                                      2025-2027
                                                                                                      (percent)
----------------------------------------------------------------------------------------------------------------
Low-Income Goal.................................  Percentage share of all goal-eligible units in              61
                                                   multifamily properties financed by mortgages
                                                   purchased by the Enterprises in the 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 Goal............................  Percentage share of all goal-eligible units in              14
                                                   multifamily properties financed by mortgages
                                                   purchased by the Enterprises in the 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............  Percentage share of all goal-eligible units in               2
                                                   all multifamily properties financed by mortgages
                                                   purchased by the Enterprises in the 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.
----------------------------------------------------------------------------------------------------------------

    This proposed rule also would revise the current regulation to 
refer to the multifamily very low-income housing benchmark level as a 
housing goal, instead of referring to it as a subgoal. The Safety and 
Soundness Act requires FHFA to establish additional requirements for 
units affordable to very low-income families when it establishes the 
goal for mortgages on multifamily properties that finance dwelling 
units affordable to low-income families.\18\ Revising the text of the 
Enterprise housing goals regulation to refer to the multifamily very 
low-income housing goal as a ``goal'' is consistent with the Safety and 
Soundness Act, with the reference to the single-family very low-income 
home purchase benchmark level as a goal and not a subgoal, and with 
FHFA's own practice of referring to ``multifamily housing goals.''
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    \18\ 12 U.S.C. 4563(a)(2).
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C. Enforcement Factors

    FHFA is proposing new criteria for the 2025-2027 housing goals 
period that clarify when housing plans would be required. Section 
1282.22 would establish Enforcement Factors that FHFA will apply in 
determining whether to require a housing plan if an Enterprise fails to 
meet certain single-family housing goals in 2025 through 2027. FHFA 
expects that this proposal will provide guidance to the Enterprises 
should the market for the single-family low-income home purchase, very 
low-income home purchase, or low-income refinance segment turn out to 
be significantly lower than what is forecasted in this rule. FHFA is 
seeking public comment on all aspects of these Enforcement Factors.
    FHFA is proposing this change because the mortgage market has 
experienced unexpected challenges that continue to produce uncertainty. 
Interest rates increased in 2022 and 2023, home prices remained 
elevated, and housing supply remained constricted, resulting in low 
mortgage loan volumes. Lender competition for the smaller number of 
loans escalated, and the Enterprises struggled to manage their 
acquisition mix to meet the benchmark levels for the low-income home 
purchase and very low-income home purchase housing goals. The 2022-2024 
housing goals, which were designed to be ambitious in the rule that was 
finalized in 2021, were set in advance of these recent, unexpected 
market changes.
    There remains a great deal of uncertainty with respect to the 
overall volume and composition of the mortgage market in 2025-2027. 
FHFA is proposing Enforcement Factors that would be considered when 
determining whether an Enterprise would be required to submit a housing 
plan if it fails to meet certain single-family housing goals in 2025-
2027. FHFA expects that this will allow the Enterprises to focus on 
meeting or exceeding the expected market level as opposed to the 
benchmark level in the event that market levels are significantly below 
the benchmark level established in the regulation. Additionally, the 
Enforcement Factors should encourage the Enterprises to focus on 
estimating and forecasting the market levels for the different housing 
goals. Specifically, FHFA is proposing that for 2025-2027, if the 
benchmark level for a single-family housing goal is higher than the 
market level for the goal, an Enterprise that fails to meet the goal 
will not be required to submit a housing plan if the Enterprise's 
performance meets or exceeds: (i) the market level minus 1.3 percentage 
points for the low-income home purchase goal; (ii) the market level 
minus 0.5 percentage points for the very low-income home purchase goal; 
or (iii) the market level minus 1.3 percentage points for the low-
income refinance goal. To ensure that an Enterprise does not rely 
entirely on these Enforcement Factors, if an Enterprise fails to meet 
one of the applicable goals in both 2025 and 2026, the Enforcement 
Factor would not apply to that goal in 2027.

D. Proposed Technical Changes

    The proposed rule would make minor technical changes intended to 
better conform the regulation to statutory text and existing FHFA 
practices and procedures, as further discussed below. FHFA welcomes 
comments on these technical changes and any other technical changes or 
corrections that are necessary. FHFA may include additional technical 
changes or corrections in the final rule based on comments received.
    The proposed rule would amend the definition of ``designated 
disaster area'' to reflect that major disasters are designated 
(declared) by the President under the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.).
    The proposed rule also would make technical changes to consistently 
reference goals and subgoals. For example, in the current regulation, 
Sec.  1282.11(a)(1) refers to the various housing goals, including one 
single-family subgoal, one multifamily special affordable housing goal, 
and two multifamily special affordable housing subgoals. The proposed 
rule would modify that paragraph to reference the two single-family, 
owner-occupied, purchase money mortgage housing subgoals. The proposed 
rule also would modify that paragraph to remove the words ``special 
affordable'' in each

[[Page 70131]]

reference to a multifamily housing goal or subgoal.
    In addition, the proposed rule would make other, non-substantive 
changes to the enforcement provisions located at Sec. Sec.  1282.20 and 
1282.21 of the current Enterprise housing goals regulation. Section 
1282.20 currently addresses both preliminary and final determinations 
of housing goals compliance and would be divided into two distinct 
sections: Sec.  1282.20 would address preliminary determinations of 
housing goals compliance; and Sec.  1282.21 would address final 
determinations of housing goals compliance. As proposed, these sections 
would include revised wording that conforms to FHFA's established 
practices.
    Current Sec.  1282.21 addresses housing plans and would accordingly 
be redesignated as Sec.  1282.22 and amended to include the proposed 
Enforcement Factors provisions described above in paragraph (b). The 
provisions in current Sec.  1282.21(b) through (e) would be relocated 
to proposed Sec.  1282.22(c) through (f). Paragraph (f) would include 
technical changes to clarify that if a proposed amended housing plan is 
not acceptable to the Director, the Director may afford the Enterprise 
15 days to submit additional amendments to its proposed plan for 
approval or disapproval, rather than requiring a ``new'' proposed plan.
    Finally, the proposed rule would include a new provision at Sec.  
1282.22(g) that incorporates the housing plan enforcement provisions 
contained in the Safety and Soundness Act. This would provide that if 
the Director requires an Enterprise to submit a housing plan and the 
Enterprise refuses to submit such a plan, submits an unacceptable plan, 
or fails to comply with the plan, the Director may issue a cease and 
desist order in accordance with 12 U.S.C. 4581, impose civil money 
penalties in accordance with 12 U.S.C. 4585, or take any other action 
that the Director determines to be appropriate. While FHFA has 
authority to enforce the housing plans under the statutory authority in 
the Safety and Soundness Act whether or not these specific references 
are incorporated into the Enterprise housing goals regulation, 
incorporating the enforcement provisions would provide a more complete 
description of FHFA's enforcement authority. This would support the 
goal of transparency and make it easier for anyone unfamiliar with the 
Safety and Soundness Act to understand the potential consequences if an 
Enterprise fails to submit an acceptable housing plan or fails to 
comply with the plan as required.

IV. Single-Family Housing Goals and Subgoals

A. Factors Considered in Setting the Proposed 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.\19\
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    \19\ See 12 U.S.C. 4562(e)(2)(B).
---------------------------------------------------------------------------

    FHFA has considered each of these seven statutory factors in 
setting the proposed benchmark levels for each of the single-family 
housing goals and subgoals.
    In setting the proposed benchmark levels for the single-family 
housing goals, FHFA typically relies on statistical market models 
developed by FHFA to evaluate many of these statutory factors, 
including national housing needs, the size of the market, and expected 
market developments. These market models generate a point forecast for 
each goal as well as a confidence interval for the point forecast. FHFA 
then considers other statutory factors, including the need to maintain 
the sound financial condition of the Enterprises, in proposing a 
specific benchmark level.
    Market forecast models. The purpose of FHFA's market forecast 
models is to forecast the market share of the goal-qualifying mortgage 
originations for the 2025-2027 period. The models are intended to 
generate reliable forecasts rather than to test various economic 
hypotheses about the housing market or to explain the relationship 
between variables. Therefore, following standard practice among 
forecasters and economists at other federal agencies, FHFA estimates a 
reduced-form equation for each of the housing goals and fits an 
Autoregressive Integrated Moving Average (or ARIMA) model to each goal 
share. The models look at the statistical relationship between (a) the 
historical market share for each single-family housing goal or subgoal, 
as calculated from monthly HMDA data, and (b) the historical values for 
various factors that may influence the market shares, such as interest 
rates, inflation, home prices, home sales, the unemployment rate, and 
other factors. The models then project the future value of the 
affordable market share using forecast values of the model inputs. 
Separate models are developed for each of the single-family housing 
goals and subgoals.
    FHFA has employed similar models in past Enterprise housing goals 
rulemaking cycles to generate market forecasts. The models are 
developed using monthly series generated from HMDA and other data 
sources, and the resulting monthly forecasts are then averaged into an 
annual forecast for each of the three years in the goal period. The 
models rely on 19 years of HMDA data, from 2004 to 2022, the latest 
year for which public HMDA data was available at the time of model 
construction. FHFA will update the models with HMDA data for 2023 when 
developing the final rule. Additional discussion of the market forecast 
models can be found in a research paper, available at https://www.fhfa.gov/research/papers/2025-2027-enterprise-single-family-housing-goals.\20\
---------------------------------------------------------------------------

    \20\ Details on FHFA's single-family market models will be 
available in the technical report ``The Size of the Affordable 
Mortgage Market: 2022-2024 Enterprise Single-Family Housing Goals.'' 
Available at https://www.fhfa.gov/research/papers/2025-2027-enterprise-single-family-housing-goals.
---------------------------------------------------------------------------

    Current market outlook. There are many factors that impact the 
affordable housing market, and changes to any of them could 
significantly impact the ability of the Enterprises to meet the goals. 
In developing the market models, FHFA used Moody's forecasts as the 
source for macroeconomic variables where available.\21\ 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.\22\ Variables that impact the

[[Page 70132]]

models and the determinations of benchmark levels, including interest 
rates, home prices, and the supply of affordable housing, are discussed 
below.
---------------------------------------------------------------------------

    \21\ Ibid.
    \22\ 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.
---------------------------------------------------------------------------

    Interest rates are important determinants of the trajectory of 
financial markets, including the mortgage market. As Moody's notes in 
its February 2024 forecasts, the Federal Reserve has signaled that it 
may be at the end of its current tightening cycle. At its January 2024 
meeting, the Federal Open Market Committee (FOMC) further signaled that 
it would consider rate cuts once inflation is moving sustainably 
towards the Federal Reserve's 2.0 percent inflation target. Moody's 
baseline scenario in February 2024 assumed that this will occur in mid-
2024 and expected a 25 basis point cut in May, June, July, and December 
2024. After that, Moody's baseline scenario expects that further rate 
cuts will be spread out over a longer period so that the Federal Funds 
rate for 2025, 2026, and 2027 will be 4.0 percent, 3.2 percent, and 2.9 
percent, respectively. Thus, Moody's assumes that the FOMC will adjust 
monetary policy slowly as inflation eases slowly. The Consumer Price 
Index (CPI), which stood at 4.1 percent for 2023, is projected to be 
2.7 percent in 2024, and is projected to decline to 2.2 percent by 
2027. The unemployment rate is expected to gradually rise to 4.0 
percent by the end of 2024, before peaking just above that in mid-2025. 
It is forecast to be 4.1 percent for 2025, before declining to 4.0 
percent for 2026 and 2027.\23\
---------------------------------------------------------------------------

    \23\ Moody's Analytics, ``Economic Data and Forecasts,'' 
February 2024.
---------------------------------------------------------------------------

    Home prices increased rapidly in 2021 and 2022 as indicated by 
FHFA's purchase-only House Price Index (HPI), due to a combination of 
high demand for housing resulting from demographic trends and limited 
supply of homes for sale.\24\ The rapid rise in mortgage rates through 
2022 and their stabilization at new elevated levels in 2023 slowed down 
the pace of house price growth. However, in 2023, the HPI remained 
high, with median existing home prices rising in 171 of 177 metro areas 
in the second quarter of 2023, and prices in the typical metro area 
increasing 9.0 percent during the quarter.\25\ For future years, 
Moody's baseline scenario calls for a much more modest increase, with 
an annual rate of increase of 0.7 percent in 2024, followed by a 
slightly negative rate of growth of 1.0 percent in 2025, then modest 
increases (0.3 and 1.8 percent annual rates of increases in 2026 and 
2027, respectively).\26\
---------------------------------------------------------------------------

    \24\ FHFA, ``FHFA House Price Index Report--Monthly Report,'' 
July 2024, available at https://www.fhfa.gov/sites/default/files/2024-07/FHFA-HPI-Monthly-07302024.pdf.
    \25\ Daniel McCue, ``Home Prices and Interest Rates Still 
Rising, Shutting out More Potential Homebuyers'' Joint Center for 
Housing Studies of Harvard University, September 28, 2023, available 
at https://jchs.harvard.edu/blog/home-prices-and-interest-rates-still-rising-shutting-out-more-potential-homebuyers.
    \26\ Moody's Analytics, ``Economic Data and Forecasts,'' 
February 2024.
---------------------------------------------------------------------------

    The rise in the effective Federal Funds rate from 0.08 percent in 
January 2022 to 5.33 percent in July 2023 contributed to rapid 
increases in mortgage rates: for instance, the average 30-year fixed 
rate mortgage rate increased from 3.1 percent to 6.6 percent over the 
same period.27 28 Loan origination volume in mortgage 
markets declined as the demand for refinances decreased in the second 
half of 2022 and in 2023, along with significant declines in home 
purchase loan volume. For example, sales in August 2023 were down 15 
percent from the previous year and more than 30 percent below peak 
levels in 2021.\29\ Even though mortgage interest rates are forecast to 
decline modestly, many households are locked into low interest rates 
and are less likely to refinance. Hence, Moody's baseline scenario 
forecasts a slight decline in the refinance share between 2023 and 
2024, before increasing gradually thereafter, reflecting the 
expectation that the average 30-year fixed rate mortgage rate will 
continue to be in the 5.9-6.1 percent range over 2025-2027.\30\
---------------------------------------------------------------------------

    \27\ ``Effective Federal Funds Rate--FEDERAL RESERVE BANK of NEW 
YORK,'' Federal Reserve Bank of New York, available at https://www.newyorkfed.org/markets/reference-rates/effr.
    \28\ ``Mortgage Rates,'' Freddie Mac, available at https://www.freddiemac.com/pmms.
    \29\ Daniel McCue, ``Home Prices and Interest Rates Still 
Rising, Shutting out More Potential Homebuyers,'' Joint Center for 
Housing Studies of Harvard University, September 28, 2023, available 
at https://jchs.harvard.edu/blog/home-prices-and-interest-rates-still-rising-shutting-out-more-potential-homebuyers.
    \30\ Moody's Analytics, ``Economic Data and Forecasts,'' 
February 2024.
---------------------------------------------------------------------------

    Taken together, the elevated mortgage interest rates and high home 
price levels likely will continue to impact the ability of low- and 
very low-income households to purchase homes. The median home price to 
median household income ratio, which is often used to measure 
affordability, rose to 5.6 in 2022, the highest point since the early 
1970s. Since the beginning of the pandemic, the rise of home prices has 
been rapid in all parts of the country and especially so in metro 
areas. For example, in 2022, among the 100 largest metro areas in the 
county, 48 metro areas had home price to income ratios exceeding 5, 
compared to 2019 where only 15 markets had ratios above 5.\31\ 
Additionally, this rise in home prices has been more rapid than the 
rise in median household incomes. Further indication of worsening 
affordability in the housing market can be seen in the second quarter 
of 2023, where monthly payments on median priced homes hit new record 
highs in 159 of the 177 markets that the National Association of 
Realtors (NAR) tracks for typical 30-year fixed rate mortgages obtained 
by first-time homebuyers.\32\ As a result, between 2019 and 2021, the 
number of cost-burdened homeowners increased by 2.3 million 
households.\33\ Housing affordability in 2023, as measured by Moody's 
forecast of NAR's Housing Affordability Index (HAI), was at its lowest 
level since 1989. This is projected to improve incrementally in 2025-
2027.34 35
---------------------------------------------------------------------------

    \31\ Alexander Hermann and Peyton Whitney, ``Home Price-To-
Income Ratio Reaches Record High,'' Joint Center for Housing Studies 
of Harvard, January 22, 2024, available at https://www.jchs.harvard.edu/blog/home-price-income-ratio-reaches-record-high-0.
    \32\ Daniel McCue, ``Home Prices and Interest Rates Still 
Rising, Shutting out More Potential Homebuyers,'' Joint Center for 
Housing Studies of Harvard University,'' September 28, 2023, 
available at https://jchs.harvard.edu/blog/home-prices-and-interest-rates-still-rising-shutting-out-more-potential-homebuyers.
    \33\ ``The State of the Nation's Housing 2023,'' Joint Center 
for Housing Studies of Harvard University, 2023, p.6, available at 
https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2023.pdf.
    \34\ Moody's Analytics, ``Economic Data and Forecasts,'' 
February 2024.
    \35\ 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.
---------------------------------------------------------------------------

    The supply of affordable housing has not kept pace with the growth 
of demand.\36\ This has led to a shortage of homes, which became more 
acute during the pandemic. According to a report by the Urban 
Institute, listings have fallen 44.7 percent since 2019, with the 
supply of homes under $200,000 (representing lower priced homes that 
are likely to be more affordable to low- and very low-income

[[Page 70133]]

families) falling 74.5 percent.\37\ The inventory of homes as a share 
of home sales, or months' supply of existing homes, remains lower than 
pre-pandemic levels, at 2.9 in February 2024 compared to 3.1 in 
February 2020.\38\ Single-family housing starts, or the measure of new 
one-to-four-unit residential construction, dropped 10.8 percent from 
2021 to 2022, and continued to decline in 2023.\39\ For example, the 
Mortgage Bankers Association (MBA) estimates housing starts to have 
decreased about 8.8 percent from 1.55 million in 2022 to 1.42 million 
in 2023. MBA forecasts housing starts to decline about 1.5 percent in 
2024, before rising about 2.8 percent in 2025.\40\
---------------------------------------------------------------------------

    \36\ Moody's Analytics, ``Economic Data and Forecasts,'' 
February 2024.
    \37\ ``Housing Finance: At a Glance Monthly Chartbook February 
2024,'' Urban Institute Housing Finance Policy Center, February 27, 
2024, p.23, available at https://www.urban.org/research/publication/housing-finance-glance-monthly-chartbook-february-2024.
    \38\ ``Existing Home Sales: Months Supply,'' National 
Association of Realtors, FRED, Federal Reserve Bank of St. Louis, 
available at https://fred.stlouisfed.org/series/HOSSUPUSM673N.
    \39\ ``Exploring 2023's Housing Trends and Challenges [verbar] 
Housing Matters,'' Urban Institute, January 31, 2024, available at 
https://housingmatters.urban.org/research-summary/exploring-2023s-housing-trends-and-challenges.
    \40\ ``Housing Finance: At a Glance Monthly Chartbook, February 
2024,'' [verbar] Urban Institute Housing Finance Policy Center, 
Urban Institute,'' Urban Institute, February 27, 2024, p. 21, 
available at https://www.urban.org/research/publication/housing-finance-glance-monthly-chartbook-february-2024.
---------------------------------------------------------------------------

    The combination of high home prices and elevated mortgage rates 
along with continued limited housing supply has also contributed to a 
sharp decline in purchase loan origination volumes, as new homes are 
less affordable and existing homeowners are less likely to give up 
their low interest rate mortgage. For example, in 2022 lenders reported 
a 51 percent decrease in closed-end site-built single-family mortgage 
originations from 2021 volumes.\41\ Home prices grew by 43 percent 
between 2019 and 2022, while incomes grew by just 7 percent over the 
same time.\42\ Moody's baseline scenario for February 2024 has single-
family purchase mortgage originations similarly down in 2023, when 
originations totaled $1.341 trillion, compared to 2021, when 
originations totaled $1.864 trillion.\43\
---------------------------------------------------------------------------

    \41\ ``Data Point: 2022 Mortgage Market Activity and Trends,'' 
Consumer Financial Protection Bureau, 2023, p.8, available at 
https://files.consumerfinance.gov/f/documents/cfpb_data-point-mortgage-market-activity-trends_report_2023-09.pdf.
    \42\ Alexander Hermann and Peyton Whitney, ``Home Price-To-
Income Ratio Reaches Record High,'' Joint Center for Housing Studies 
of Harvard University,'' January 22, 2024, available athttps://www.jchs.harvard.edu/blog/home-price-income-ratio-reaches-record-high-0.
    \43\ Moody's Analytics, ``Economic Data and Forecasts,'' 
February 2024.
---------------------------------------------------------------------------

    Furthermore, Moody's notes that, ``Life events such as divorces, 
deaths, and the birth of children along with moderating interest rates 
will prompt more homeowners to list their homes in 2024 than in 2023, 
but the rise in existing home sales is expected to be limited.'' \44\ 
NAR predicts that 2024 will see only a 13.5 percent increase from 2023 
in existing home sales.\45\ This economic outlook is largely consistent 
with the outlook provided by other forecasters.
---------------------------------------------------------------------------

    \44\ Edward Friedman, ``U.S. Macroeconomic Outlook Baseline and 
Alternative Scenarios,'' Moody's Analytics, 2024.
    \45\ Lauren Cozzi, ``NAR Forecasts 4.71 Million Existing-Home 
Sales, Improved Outlook for Home Buyers in 2024,'' National 
Association of Realtors, December 13, 2023, available at https://www.nar.realtor/newsroom/nar-forecasts-4-71-million-existing-home-sales-improved-outlook-for-home-buyers-in-2024.
---------------------------------------------------------------------------

    FHFA continues to monitor how these changes in the housing market, 
as well as other market conditions, may impact various segments of the 
market, including those targeted by the housing goals.
    Post-model adjustments. While FHFA's models can address and 
forecast many of the factors referenced in the statute, including 
increasing interest rates and rising property values, some factors are 
not captured in the models. FHFA, therefore, considers additional 
factors when selecting the benchmark level within the model-generated 
confidence interval for each of the single-family housing goals.
    Demographic trends. Specific demographic changes, such as the 
housing demand patterns of millennials or the growth of minority 
households, are not included explicitly in the market forecast models. 
Millennials have continued to make up the largest share of home 
purchase mortgage applications for the past eight years.\46\ This 
generation's share of mortgage purchase applications appears to have 
peaked at 54 percent in 2022 before declining to 53 percent in 2023 
with the entry of Generation Z into the homebuying market.\47\ 
Furthermore, the number of minority households is projected to grow by 
22 percent, or 9.3 million, from 2018 to 2028.\48\
---------------------------------------------------------------------------

    \46\ Archana Pradhan, ``Millennials Continued to Lead the 
Homebuyer Pack in 2023,'' February 2024, CoreLogic Blog accessed on 
April 7, 2024 at https://www.corelogic.com/intelligence/millennials-continued-lead-homebuyer-pack-2023/.
    \47\ Ibid.
    \48\ Daniel McCue, ``Number of U.S. Households Projected to 
Increase by 12.2 Million in the Next Decade,'' Joint Center for 
Housing Studies of Harvard University, December 20, 2018, available 
at https://www.jchs.harvard.edu/blog/number-of-u-s-households-projected-to-increase-by-12-2-million-in-the-next-decade.
---------------------------------------------------------------------------

    Enterprises' share of the mortgage market. The Enterprises' overall 
share of the mortgage market is subject to fluctuation as well. In the 
years preceding the 2008 financial crisis, the Enterprises' share of 
the market dropped to about 44 percent. As shown in Graph 1, that share 
rose to about 65 percent in 2012, but declined to about 55 percent in 
2015. The Enterprises' share remained relatively stable until 2019, 
then jumped to 67 percent in 2020 as the Enterprises continued to 
acquire mortgages even as others in the market stepped back. Since 
then, this share has declined as the shares of government-guaranteed 
and government-insured loans, and well as other market participants, 
have grown.

[[Page 70134]]

[GRAPHIC] [TIFF OMITTED] TP29AU24.009

    As shown in Graph 1, the Enterprises' share of the conforming 
mortgage market returned to pre-pandemic levels in 2022 and rose 
slightly in 2023. Over the same period, the total Government share of 
the mortgage market (including the Federal Housing Administration, 
Department of Veterans Affairs, and Rural Housing Service) and the 
Other share (such as retained bank portfolios) expanded.
    Past performance of the Enterprises. Table 1 provides the annual 
performance of both Enterprises on the single-family housing goals 
between 2010 and 2023. FHFA has made preliminary determinations of the 
Enterprises' 2023 housing goals performance and will make final 
determinations later in 2024.

[[Page 70135]]

[GRAPHIC] [TIFF OMITTED] TP29AU24.010

B. Proposed Benchmark Levels for the Single-Family Housing Goals for 
2025-2027

    FHFA is proposing to establish the following benchmark levels for 
the single-family housing goals and subgoals for 2025-2027.
1. Low-Income Home Purchase Goal
    The low-income home purchase goal is based on the percentage share 
of all single-family, owner-occupied home purchase mortgages purchased 
by an Enterprise that are made to low-income families, defined as 
families with incomes less than or equal to 80 percent of AMI.

[[Page 70136]]

[GRAPHIC] [TIFF OMITTED] TP29AU24.011

    Between 2020 and 2023, the low-income purchase market level, as 
measured by HMDA data, declined from 27.6 percent to 26.3 percent. 
FHFA's current model forecasts that the annual market average over 
2025-2027 will be 26.6 percent. As noted previously and in the 
accompanying market model paper, this forecast is based on the 2022 
HMDA data and Moody's forecasts as of February 2024. As of July 2024, 
the interest rate cuts in the Moody's forecast have not materialized. 
FHFA will update this and the other forecast models before the release 
of the final housing goals rule.
    FHFA's 2022-2024 housing goals final rule established a benchmark 
of 28 percent for the low-income home purchase goal to serve as a 
``stretch goal'' to encourage the Enterprises to continue their efforts 
to promote safe and sustainable lending to low-income families. 
However, during that period, larger than expected increases in mortgage 
rates and home prices, and the continued shortfall in affordable 
housing supply, have disproportionately impacted lower-income 
borrowers' mortgage eligibility and lowered the number of low-income 
loans in the market to well below the Agency's initial expectations. 
Those factors, which are outside the Enterprises' control, continue in 
the market today along with great uncertainty about when conditions 
will change. Further, by statute, in setting new goals FHFA considers 
the Enterprises' past efforts to meet the housing goals as well as the 
impact of those efforts on the Enterprises' financial condition. During 
2023, FHFA observed that many competing actions taken by the 
Enterprises designed to help them meet the stretch benchmark (which 
exceeded the level of low-income loans being produced in the market) 
did not benefit low-income borrowers, risked constraining liquidity in 
the overall market, and potentially impacted the Enterprises' financial 
condition.
    Considering current and foreseeable market conditions, FHFA is 
proposing a benchmark level for the low-income home purchase goal of 25 
percent. This proposed benchmark level is below the benchmark level for 
2022-2024, but above the 24 percent benchmark level that was in place 
from 2015 through 2021. FHFA expects this proposed benchmark level to 
encourage the Enterprises to continue to find ways to support low-
income borrowers without compromising safe and sound lending standards 
during a period of affordability challenges and increased uncertainty 
around market conditions.
2. Very Low-Income Home Purchase Goal
    The very low-income home purchase goal is based on the percentage 
share 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.
[GRAPHIC] [TIFF OMITTED] TP29AU24.012


[[Page 70137]]


    Between 2020 and 2023, the very low-income purchase market level, 
as measured using HMDA data, declined from 7.0 percent to 6.5 percent. 
FHFA's current model forecasts that the market for this goal will 
remain around 6.6-6.7 percent for 2025-2027. This forecast is based on 
the 2022 HMDA data and Moody's forecasts as of February 2024 and will 
be updated before the release of the final housing goals rule.
    Like the low-income home purchase goal, FHFA's 2022-2024 housing 
goals final rule established a ``stretch'' benchmark of 7 percent for 
the very low-income home purchase goal, also designed to encourage the 
Enterprises to continue to promote safe and sustainable lending to very 
low-income families. However, the same adverse market conditions 
described in the previous section have also disproportionately impacted 
very low-income borrowers' mortgage eligibility, reducing the number of 
very low-income loans in the market to well below FHFA's earlier 
expectations. During 2023, the Enterprises deployed the same actions 
described above in their efforts to reach the very low-income 
benchmark, and those actions also failed to benefit very low-income 
borrowers, risked constraining liquidity in the overall market, and 
potentially impacted the Enterprises' financial condition. Those market 
conditions continue today along with great uncertainty about when 
conditions will change. Therefore, FHFA is proposing a benchmark level 
for the very low-income home purchase goal of 6 percent. FHFA expects 
this proposed benchmark will encourage the Enterprises to continue to 
find ways to support low-income borrowers without compromising safe and 
sound lending standards during a period of affordability challenges and 
increased uncertainty around market conditions.
3. Minority Census Tracts Home Purchase Subgoal
    The minority census tracts subgoal is based on the percentage share 
of home purchase mortgages on single-family, owner-occupied properties 
to borrowers with incomes no greater than 100 percent of AMI in 
minority census tracts. The Safety and Soundness Act defines minority 
census tracts as those with a minority population of 30 percent or more 
and median census tract income of less than 100 percent of AMI. The 
proposed rule would raise the annual benchmark level for this subgoal 
for 2025-2027 to 12 percent from its previous level of 10 percent.
[GRAPHIC] [TIFF OMITTED] TP29AU24.013

    FHFA's 2022-2024 housing goals final rule established the minority 
census tracts home purchase subgoal as a new subgoal within the broader 
low-income areas goal to encourage the Enterprises to fulfill their 
statutory duty to facilitate the financing of affordable housing for 
all low- and moderate-income families, including families of color. The 
final rule forecast for the new subgoal averaged 8.9 percent over the 
2022-2024 period, and the final rule set the annual minority census 
tracts subgoal benchmark for each of those years at 10 percent to 
ensure Enterprises focus on the needs of communities of color. The 
preamble also emphasized that FHFA would carefully monitor the 
performance of Fannie Mae and Freddie Mac on this new subgoal.
    Table 4 shows the implied market levels and Enterprise performance 
in 2020 and 2021 (before FHFA established the subgoal) as well as 
market levels and Enterprise performance since the subgoal was 
established. Both Enterprises exceeded the benchmark and market levels 
for this subgoal in 2022, the year this subgoal was introduced. Based 
on preliminary data, both Enterprises exceeded the benchmark level for 
this subgoal in 2023. The table also shows a pronounced increase in the 
market levels and both Enterprises' performance on this subgoal 
beginning in 2022. FHFA notes that 2022 was the first year of new 
census tract boundaries based on the 2020 Census, which could have 
contributed to the change. The Agency is continuing to analyze the 
issue and plans to publish more information in the final rule.
    FHFA's current model forecasts the market for this subgoal will 
remain around 12.3-12.4 percent for 2025-2027. This forecast is based 
on the 2022 HMDA data and Moody's forecasts as of February 2024, and 
will be updated before the release of the final housing goals rule. 
FHFA is proposing to increase the benchmark for this subgoal from 10 
percent to 12 percent, which is slightly lower than the midpoint of the 
market forecast. FHFA believes that this level emphasizes the 
importance of providing access to mortgage credit for borrowers who 
reside or seek to reside in minority census tracts.
4. Low-Income Census Tracts Home Purchase Subgoal
    The low-income census tracts home purchase subgoal is based on the 
percentage share of home purchase

[[Page 70138]]

mortgages that are either: (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. The proposed rule would set the annual 
benchmark level for this subgoal for 2025-2027 at 4 percent.
---------------------------------------------------------------------------

    \49\ See 86 FR 47408 (Aug. 25, 2021).
    [GRAPHIC] [TIFF OMITTED] TP29AU24.014
    
    Table 5 shows the implied market levels and Enterprise performance 
in 2020 and 2021, along with market levels and Enterprise performance 
since the subgoal has been established. As shown above, both 
Enterprises exceeded the benchmark level for this subgoal in 2022, the 
first year of this subgoal. Based on preliminary data, both Enterprises 
also exceeded the benchmark level in 2023.
    Prior to 2022, the subgoal structure included both low-income 
census tracts and minority census tracts in a single subgoal. As FHFA 
noted in the preamble to the 2022-2024 housing goals proposed rule, the 
performance of the Enterprises on that subgoal was heavily influenced 
by Enterprise purchases of loans for higher income families (over 100 
percent of AMI) rather than for families at or below 100 percent of 
AMI. FHFA adopted the current subgoal structure, with separate subgoals 
for low-income census tracts and minority census tracts, to ``refocus 
Enterprise efforts towards minority census tracts and families at or 
below 100 percent of AMI.'' \49\ In 2022, FHFA set the benchmark level 
for the new low-income census tract home purchase subgoal at 4 percent 
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.
    FHFA's current model forecasts that the market for this subgoal 
will remain around 9.9-10 percent for 2025-2027. This forecast is based 
on the 2022 HMDA data and Moody's forecasts as of February 2024, and 
will be updated before the release of the final housing goals rule. 
FHFA is proposing a benchmark level for this subgoal of 4 percent, 
which is lower than recent and forecast performance, to be cognizant of 
concerns about gentrification and the displacement of low-income 
families in these areas.
    FHFA believes that this 4 percent benchmark level addresses 
concerns about the potential that the Enterprises may seek to meet the 
goal by purchasing loans to higher-income borrowers in lower-income 
areas. In addition, this 4 percent benchmark level is intended to 
encourage the Enterprises to continue to provide access to mortgage 
credit in low-income census tracts.
5. Low-Income Refinance Goal
    The low-income refinance goal is based on the percentage share of 
all single-family, owner-occupied refinance mortgages purchased by an 
Enterprise that are for low-income families, defined as families with 
incomes less than or equal to 80 percent of AMI. The proposed rule 
would set the annual benchmark level for this goal for 2025-2027 at 26 
percent.

[[Page 70139]]

[GRAPHIC] [TIFF OMITTED] TP29AU24.015

    Measured as a percent, annual performance in the overall market and 
by the Enterprises on low-income refinance mortgages tends to be 
inversely proportional to the volume of low-income refinance loans the 
market produces and the Enterprises purchase during a given year. For 
example, during the refinance boom of 2020, low-income refinance volume 
in the overall market soared to over 1.3 million loans, but the volume 
of all refinances in the market reached over 6.3 million.\50\ Measured 
as a percent, the low-income refinance percentage share of the market 
was 21 percent. Compare that performance to 2023, when due to higher 
interest rates low-income refinance volume in the overall market 
contracted to roughly 160 thousand loans and refinance volume overall 
fell to about 397 thousand.\51\ Measured as a percent, the low-income 
refinance percentage share of the market was 40.3 percent. The 
Enterprises' performance on the low-income refinance goal has followed 
the same pattern. Refinance share for both Enterprises has increased 
significantly during this period, even as the volume of their purchases 
of low-income refinance mortgages has fallen.
---------------------------------------------------------------------------

    \50\ FHFA's tabulation of HMDA data.
    \51\ Ibid.
---------------------------------------------------------------------------

    FHFA is proposing to maintain the current benchmark level of 26 
percent for this goal for 2025-2027. FHFA is proposing this benchmark 
level in recognition of the fact that FHFA's model cannot forecast low-
income refinance levels in the market for 2025-2027 with great 
confidence, due to the high degree of unpredictability of future 
interest rates and the strong sensitivity of refinance originations to 
interest rates. Additionally, many current mortgage holders are 
``locked-in'' and are unlikely to refinance without a substantial 
reduction in mortgage rates. FHFA is not aware of any long-term data 
series that captures this impact that can be used in the forecast 
model. FHFA also recognizes that if interest rates were to decline 
significantly, the proposed benchmark level of 26 percent could be 
difficult for the Enterprises to achieve based on market conditions. 
FHFA will continue to monitor the performance of the Enterprises and 
will take appropriate steps, after adoption of the final housing goals 
rule, to adjust the benchmark level if necessary.

V. Multifamily Housing Goals and Subgoal

A. Factors Considered in Setting the Proposed 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.\52\
---------------------------------------------------------------------------

    \52\ 12 U.S.C. 4563(a)(4).
---------------------------------------------------------------------------

    Unlike the single-family housing goals, performance on the 
multifamily housing goals is measured solely against benchmark levels 
set by FHFA in the regulation, without any retrospective market 
measure. The absence of a retrospective market measure for the 
multifamily housing goals results, in part, from the lack of 
comprehensive data about the multifamily mortgage market. Unlike the 
single-family mortgage market, where HMDA provides a reasonably 
comprehensive dataset about single-family mortgage originations each 
year, the multifamily mortgage market (and the affordable multifamily 
mortgage market segment) has no comparable single, unified source with 
coverage extending across many years. As a result, it is difficult to 
correlate different datasets that rely on different reporting metrics.
    The lack of comprehensive data for the multifamily mortgage market 
is even more acute with respect to the segments of the market that are 
targeted to low-income families, defined as families with incomes at or 
below 80 percent of AMI, and very low-income families, defined as 
families with incomes at or below 50 percent of AMI.
    Another difference between the single-family and multifamily 
housing goals is that while there are separate single-family housing 
goals for home purchase and refinance mortgages, the multifamily 
housing goals include all Enterprise multifamily mortgage purchases, 
regardless of the purpose of the loan.
    In consideration of public comments and to improve the 
responsiveness of the multifamily housing goals to market conditions, 
FHFA changed its process starting in 2023 for setting the multifamily 
benchmark levels from a numeric benchmark for units to a percentage of 
affordable units in multifamily properties financed by mortgages 
purchased by the Enterprise each year. This ensures that the 
multifamily housing goals remain

[[Page 70140]]

meaningful in different market conditions and enables the Enterprises 
to respond to those conditions while continuing to serve affordable 
segments.\53\
---------------------------------------------------------------------------

    \53\ 12 CFR 1282.13.
---------------------------------------------------------------------------

    FHFA has considered each of the six statutory factors in setting 
the proposed benchmark levels for each of the multifamily housing 
goals. Five of the factors relate to the multifamily mortgage market 
and the Enterprise role in that market. Those factors generally have 
similar impacts on each of the multifamily housing goals and are 
discussed below. The past performance of the Enterprises is discussed 
separately for each of the multifamily housing goals.
    Multifamily mortgage market. FHFA's consideration of the 
multifamily mortgage market credit needs addresses the size and 
competitiveness of the overall multifamily mortgage market as well as 
the subset that is affordable to low-income and very low-income 
families. In January 2024, MBA forecasted that multifamily mortgage 
originations would increase from the $271 billion estimated in 2023 to 
$339 billion in 2024, then to $404 billion in 2025.\54\ However, MBA 
noted that while this baseline scenario is an improvement from 2023 
levels, the outlook remains uncertain and it believes borrowing and 
lending in 2024 will be below the levels in 2017.\55\
---------------------------------------------------------------------------

    \54\ ``CREF Forecast: Commercial/Multifamily Borrowing and 
Lending Expected to Increase 29 Percent to $576 Billion in 2024,'' 
Mortgage Bankers Association, January 23, 2024, available at https://www.mba.org/news-and-research/newsroom/news/2024/01/23/cref-forecast-commercial-multifamily-borrowing-and-lending-expected-to-increase-29-percent-to-576-billion-in-2024.
    \55\ Ibid.
---------------------------------------------------------------------------

    According to the National Multifamily Housing Council's tabulation 
of American Community Survey microdata, in 2022, about 47 percent of 
renter households (21 million households) lived in multifamily 
properties with the remaining renter households living in one-to-four-
unit single-family structures.56 57
---------------------------------------------------------------------------

    \56\ Single-family properties are defined as structures with one 
to four units. Multifamily properties are defined as structures with 
five or more units.
    \57\ ``Review of Household Characteristics, (n.d.),'' National 
Multifamily Housing Council, available at https://www.nmhc.org/research-insight/quick-facts-figures/quick-facts-resident-demographics/household-characteristics.
---------------------------------------------------------------------------

    Affordability in the multifamily mortgage market. In the State of 
the Nation's Housing Report 2023, Harvard University's Joint Center for 
Housing Studies (JCHS) found that year-over-year rent growth in the 
professionally managed segment of the apartment market moderated 
significantly after rising 15.3 percent year-over-year in the first 
quarter of 2022, a 25-year high. By the end of the first quarter of 
2023, rent growth had slowed to 4.5 percent annually.\58\ However, 
rents still rose ``23.9 percent between the first quarter of 2020 and 
the first quarter of 2023.'' \59\ In comparison, the average annual 
rent increase in the pre-pandemic years of 2015-2019 was only 3.6 
percent.\60\ These trends point to the continued stress on renters, 
with the share of cost-burdened renters continuing to remain elevated.
---------------------------------------------------------------------------

    \58\ ``The State of the Nation's Housing 2023,'' Joint Center 
for Housing Studies of Harvard University, 2023, p.1, available at 
https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2023.pdf.
    \59\ ``The State of the Nation's Housing 2023,'' Joint Center 
for Housing Studies of Harvard University, 2023, p.13, available at 
https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2023.pdf.
    \60\ Ibid.
---------------------------------------------------------------------------

    For purposes of the Enterprise housing goals, the Safety and 
Soundness Act requires FHFA to determine affordability based on whether 
rent levels are affordable. The Safety and Soundness Act defines a rent 
level as affordable if a family's rent and utility expenses do not 
exceed 30 percent of the maximum income level for each income category, 
with appropriate adjustments for unit size as measured by the number of 
bedrooms.\61\ The JCHS report found that the share of cost-burdened 
renters, particularly among low-income and very low-income households, 
continues to grow.\62\ A household is considered cost-burdened if it 
spends more than 30 percent of its income on housing, or severely cost-
burdened if it spends more than 50 percent of its income on housing. 
The JCHS report shows that the share of cost-burdened renters across 
all income segments rose from 43.6 percent in 2019 to 49.0 percent in 
2021.\63\ The share of cost-burdened renters earning between $45,000 
and $74,999 increased the most, rising 3.5 percentage points from 30.8 
percent in 2019 to 34.3 percent in 2021.\64\
---------------------------------------------------------------------------

    \61\ 12 U.S.C. 4563(c).
    \62\ ``The State of the Nation's Housing 2023,'' Joint Center 
for Housing Studies of Harvard University, 2023, Table A-1, 
available at https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2023.pdf.
    \63\ Ibid.
    \64\ Ibid.
---------------------------------------------------------------------------

    The JCHS report also notes the significant rise in new rental 
supply from 2021 to 2023. In 2022 alone, 342,000 multifamily units were 
added.\65\ However, this growth has started to slow as overall housing 
starts in the multifamily sector decreased 37.9 percent in January 2024 
compared to the volume in January 2023, according to the U.S. 
Department of Housing and Urban Development (HUD) and the U.S. Census 
Bureau.\66\ While the addition of units may limit rent growth, the JCHS 
report found that new units are primarily targeted towards the upper 
end of the market, with rents unaffordable to low-income 
households.\67\ The JCHS report states that the share of newly 
completed units with asking rents of $2,050 or more doubled from 19 
percent in 2015 to 38 percent in 2022, while the share of new units 
that rent for less than $1,050 declined from 22 percent in 2015 to only 
5 percent in 2022.\68\
---------------------------------------------------------------------------

    \65\ Ibid. p. 34.
    \66\ ``Housing Market Indicators Monthly Update,'' U.S. 
Department of Housing and Urban Development, February 2024, p. 1, 
available at https://www.huduser.gov/portal/sites/default/files/pdf/Housing-Market-Indicators-Report-February-2024.pdf.
    \67\ ``The State of the Nation's Housing 2023,'' Joint Center 
for Housing Studies of Harvard University, 2023, p. 34, available at 
https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2023.pdf.
    \68\ Ibid. p. 34-35.
---------------------------------------------------------------------------

    Role of the Enterprises. In proposing the multifamily housing goal 
benchmark levels for 2025 through 2027, FHFA has considered the ability 
of the Enterprises to lead the market in making multifamily mortgage 
credit available. The Enterprises' share of the overall multifamily 
mortgage origination market increased in the years immediately 
following the 2008 financial crisis but 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,

[[Page 70141]]

compared to 36 percent in 2015.69 70 The total share was 40 
percent or higher from 2016 to 2020. However, in 2021and 2022, when 
multifamily origination volume was relatively robust, the combined 
Enterprise share was estimated to be below 30 percent before increasing 
to 38 percent in 2023.\71\ If interest rates drop in 2024 and 2025, 
multifamily origination volume are likely to rise in those years.\72\
---------------------------------------------------------------------------

    \69\ ``The GSE's Shrinking Role in the Multifamily Market,'' 
Urban Institute, April 2015, p. 4, available at https://www.urban.org/sites/default/files/publication/48986/2000174-The-GSEs-Shrinking-Role-in-the-Multifamily-Market.pdf.
    \70\ ``Multifamily Business Information Presentation,'' Fannie 
Mae, May 2024, p. 3, available at https://multifamily.fanniemae.com/media/9131/display.
    \71\ Ibid.
    \72\ ``CREF Forecast: Commercial/Multifamily Borrowing and 
Lending Expected to Increase 29 Percent to $576 Billion in 2024.'' 
Mortgage Bankers Association, January 23, 2024, available at https://www.mba.org/news-and-research/newsroom/news/2024/01/23/cref-forecast-commercial-multifamily-borrowing-and-lending-expected-to-increase-29-percent-to-576-billion-in-2024.
---------------------------------------------------------------------------

    FHFA recognizes that the multifamily housing goals are just one 
measure of how the Enterprises contribute to and participate in the 
multifamily market. Other Enterprise multifamily activities include 
their Duty to Serve Underserved Markets Plans, Equitable Housing 
Finance Plans, Low-Income Housing Tax Credit (LITHC) equity financing, 
and the mission-driven elements of FHFA's Conservatorship Scorecard. 
Together with the housing goals, these programmatic activities provide 
support to renter households, including low-income families spending 
more than 30 percent of their income on housing. FHFA will continue to 
monitor these initiatives and priorities to ensure appropriate focus by 
the Enterprises, including compliance with the Enterprises' charter 
acts and safety and soundness considerations.
    FHFA expects the Enterprises to continue to demonstrate leadership 
in supporting affordable housing in the multifamily market by providing 
liquidity for housing for tenants at different income levels in various 
geographies and market segments. This support should continue 
throughout the economic cycle, even as the overall size of the 
multifamily mortgage market fluctuates.
    Availability of public subsidies. Multifamily housing assistance is 
primarily available in two forms--demand-side subsidies that either 
directly assist low-income tenants (e.g., Section 8 vouchers) or 
provide project-based rental assistance (e.g., Section 8 contracts), 
and supply-side subsidies that support the creation and preservation of 
affordable housing (e.g., public housing and LIHTCs). The availability 
of public subsidies impacts the overall affordable multifamily housing 
market, and significant changes to historic programs could impact the 
ability of the Enterprises to meet the housing goals. The Enterprises 
also provide liquidity to facilitate the preservation of public 
subsidies through their purchase of mortgages that finance the 
preservation of existing affordable housing units (especially for 
restructurings of older properties that reach the end of their initial 
15-year LIHTC compliance periods) and for refinancing properties with 
expiring Section 8 Housing Assistance Payment contracts.
    The need for public subsidies persists as the number of cost-
burdened renters remains high, at over 21.6 million renter households 
in 2021.\73\ The Center on Budget and Policy Priorities estimates that 
only one in four eligible households currently receive Federal housing 
assistance.\74\
---------------------------------------------------------------------------

    \73\ ``The State of the Nation's Housing 2023,'' Joint Center 
for Housing Studies of Harvard University, 2023, p. 36, available at 
https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2023.pdf.
    \74\ Sonya Acosta, ``Final 2023 Funding Bill Should Support, 
Expand Housing Vouchers. Center on Budget and Policy Priorities'', 
December 2022, available at https://www.cbpp.org/blog/final-2023-funding-bill-should-support-expand-housing-vouchers.
---------------------------------------------------------------------------

    In 2024 and beyond, there should continue to be opportunities in 
the multifamily mortgage market to provide permanent financing for 
properties with LIHTCs and to preserve existing affordable units, as 
described above.
    Maintaining the sound financial condition of the Enterprises. In 
proposing multifamily housing goals benchmark levels for 2025-2027, 
FHFA must balance the role of the Enterprises 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 across economic cycles, and their loans on 
affordable multifamily properties have experienced low levels of 
delinquency and default that are similar to those of market rate 
properties.
    FHFA continues to monitor the activities of the Enterprises in this 
market. As discussed above and consistent with the authorities 
described in the Enterprise housing goals regulation, FHFA may take any 
steps it determines necessary and appropriate after adoption of the 
final housing goals rule to address the multifamily housing goals 
benchmark levels to ensure the Enterprises' continued safety and 
soundness.

B. Proposed Multifamily Housing Goals Benchmark Levels

    Based on FHFA's consideration of the statutory factors described 
above and the past performance of the Enterprises under the multifamily 
housing goals, the proposed rule would establish benchmark levels for 
the multifamily housing goals, as further discussed below. Before 
finalizing the benchmark levels for the multifamily housing goals in 
the final rule, FHFA will review any additional data that becomes 
available about the performance of the Enterprises with regard to 
multifamily housing goals and any developments in the multifamily 
mortgage market, as well as any comments on the proposed multifamily 
housing goals benchmark levels.
1. Multifamily Low-Income Housing Goal
    The multifamily low-income housing goal is the percentage share of 
all goal-eligible units in multifamily properties financed by mortgages 
purchased by the Enterprises that are affordable to low-income families 
in any given year. Low-income families are defined as those with 
incomes less than or equal to 80 percent of AMI.

[[Page 70142]]

[GRAPHIC] [TIFF OMITTED] TP29AU24.016

    Table 7 shows the annualshare of goal-qualifying low-income 
multifamily units in properties backing mortgages acquired by each 
Enterprise from 2020 through 2023.\75\ In addition, the historical 
performance share average for the pre-pandemic years of 2017-2019 would 
have been 65.1 percent for Fannie Mae and 67.3 percent for Freddie 
Mac.\76\ Starting in 2023, the benchmark metric for this goal changed 
from the number of low-income units to the share of low-income units. 
Based on preliminary data, both Enterprises exceeded the benchmark 
level of 61 percent for this goal in 2023.
---------------------------------------------------------------------------

    \75\ 12 CFR 1282.16 (Special Counting Requirements).
    \76\ See 87 FR 50800 (Aug. 18, 2022).
---------------------------------------------------------------------------

    Higher interest rates are continuing to contribute to the 
increasing costs of acquiring low-income multifamily units, and 
expected declines in affordable originations and increases in rents are 
likely to cause fewer units to qualify as affordable for low-income 
families.\77\ These challenges are expected to persist in 2025-2027, as 
rent increases and insufficient supply of affordable housing are likely 
to result in more low-income families paying greater than 30 percent of 
their incomes for rent.\78\ In light of these factors, FHFA proposes to 
maintain the current benchmark level for this goal at 61 percent for 
both Enterprises for 2025-2027. The proposed benchmark takes into 
account the elevated interest rate environment and the additional 
challenges the Enterprises currently face in the competitive market, 
without diminishing the Enterprises' focus on affordability.
---------------------------------------------------------------------------

    \77\ See 12 U.S.C. 4563(c).
    \78\ See ``The State of the Nation's Housing 2024,'' Joint 
Center for Housing Studies of Harvard University, June 2024, 
available at https://www.jchs.harvard.edu/state-nations-housing-2024.
---------------------------------------------------------------------------

2. Multifamily Very Low-Income Housing Goal
    The multifamily very low-income housing goal is the percentage 
share of all goal-eligible units in multifamily properties financed by 
mortgages purchased by the Enterprises that are affordable to very low-
income families in any given year. Very low-income families are defined 
as those with incomes less than or equal to 50 percent of AMI.
[GRAPHIC] [TIFF OMITTED] TP29AU24.017

    Table 8 shows the number and share of goal-qualifying very low-
income multifamily units as a percentage of the total goal-eligible 
units in properties backing mortgages acquired by each Enterprise. In 
addition, the historical performance share average for the pre-pandemic 
years of 2017-2019 would have been 13.1 percent for Fannie Mae and 15.6 
percent for Freddie Mac.\79\ Starting in 2023, the benchmark metric for 
this goal changed from the number of very low-income units to the share 
of very low-income units. Based on preliminary data, both Enterprises 
exceeded the benchmark level of 12 percent for this goal in 2023.
---------------------------------------------------------------------------

    \79\ See 87 FR 50801 (Aug. 18, 2022).
---------------------------------------------------------------------------

    Considering the multifamily mortgage market conditions described 
above, FHFA is proposing to set the benchmark level for this goal at 14 
percent for 2025-2027, an increase from the benchmark level of 12 
percent for 2023-2024. FHFA proposes to set this benchmark at a higher 
level to ensure that the Enterprises continue to adequately serve very 
low-income families while accounting for the challenges associated with 
elevated interest rates, lower volume of loan transactions, and the 
lack of affordable units in the multifamily market, as well as 
continued uncertain economic conditions.
    FHFA believes that this proposed increase is appropriate and 
achievable for the Enterprises considering the past performance of the 
Enterprises on this housing goal.

[[Page 70143]]

3. Small Multifamily Low-Income Housing Subgoal
    The current Enterprise housing goals regulation defines a small 
multifamily property as having 5 to 50 units. The small multifamily 
low-income housing subgoal is based on the share of units in small 
multifamily properties affordable to low-income families as a 
percentage of all goal-eligible units in all multifamily properties 
financed by mortgages purchased by the Enterprises in a given year. 
Low-income families are defined as those with incomes less than or 
equal to 80 percent of AMI.
[GRAPHIC] [TIFF OMITTED] TP29AU24.018

    Table 9 shows Enterprise performance on this subgoal, including the 
previous numeric benchmark levels applicable through 2022 and the 
percentage-based metric that began in 2023. FHFA recognizes that the 
Enterprises have different business approaches to the small multifamily 
market segment, and that each Enterprise sets its own credit risk 
tolerance for these products. As a result, each Enterprise has 
performed very differently on this subgoal. Since 2020, Freddie Mac has 
acquired more units than Fannie Mae, both in terms of percentage share 
of total units and volume of small low-income units. Based on 
preliminary data, both Enterprises exceeded the benchmark level of 2.5 
percent for this subgoal in 2023.
    While FHFA has observed increased private sector financing for 
small multifamily properties in recent years, elevated interest rates 
have resulted in fewer multifamily transactions and therefore less 
activity among secondary mortgage market participants more broadly. 
Taking these factors into account, FHFA proposes to set the benchmark 
level for this subgoal at 2 percent for 2025-2027, which would be lower 
than the benchmark level of 2.5 percent applicable for 2023-2024. FHFA 
believes that this proposed benchmark level will ensure that the 
Enterprises support this market when needed without crowding out other 
sources of financing for small multifamily properties.

VI. Paperwork Reduction Act

    The proposed rule would 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 proposed rule to OMB for 
review.

VII. 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 the 
proposed rule under the Regulatory Flexibility Act. FHFA certifies that 
the proposed rule, if adopted as a final 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.

VIII. Providing Accountability Through Transparency Act of 2023

    The Providing Accountability Through Transparency Act of 2023 (5 
U.S.C. 553(b)(4)) requires that a notice of proposed rulemaking include 
the internet address of a summary of not more than 100 words in length 
of a proposed rule, in plain language, that shall be posted on the 
internet website under section 206(d) of the E-Government Act of 2002 
(44 U.S.C. 3501 note) (commonly known as Regulations.gov). FHFA's 
proposed rule and the required summary can be found at https://www.regulations.gov.

List of Subjects in 12 CFR Part 1282

    Mortgages, Reporting and recordkeeping requirements.

    For the reasons stated in the preamble, under the authority of 12 
U.S.C. 4511, 4513, and 4526, FHFA proposes to amend part 1282 of title 
12 of the Code of Federal Regulations as follows:

PART 1282--ENTERPRISE HOUSING GOALS AND MISSION

0
1. The authority citation for part 1282 continues to read as follows:

    Authority: 12 U.S.C. 4501, 4502, 4511, 4513, 4526, 4561-4566.

0
2. Amend Sec.  1282.1 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 President as adversely affected by a 
declared major disaster administered by FEMA under the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 
et seq.), 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 major 
disaster declaration of the county, or such earlier date as determined 
by FHFA, and continuing through December 31 of the third full calendar 
year following the major disaster declaration. This time period may be 
adjusted for a particular disaster

[[Page 70144]]

area by notice from FHFA to the Enterprises.
* * * * *
0
3. Amend Sec.  1282.11 by revising paragraph (a)(1) to read as follows:


Sec.  1282.11  General.

    (a) * * *
    (1) Three single-family owner-occupied purchase money mortgage 
housing goals, two single-family owner-occupied purchase money mortgage 
housing subgoals, a single-family refinancing mortgage housing goal, 
two multifamily housing goals, and a multifamily housing subgoal;
* * * * *
0
4. Amend Sec.  1282.12 by revising paragraphs (c)(2), (d)(2), 
(f)(2)(ii), (g)(2), and (h)(2) to read as follows:


Sec.  1282.12  Single-family housing goals and subgoals.

* * * * *
    (c) * * *
    (2) The benchmark level, which for 2025, 2026, and 2027 shall be 25 
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 2025, 2026, and 2027 shall be 6 
percent of the total number of purchase money mortgages purchased by 
that Enterprise in each year that finance owner-occupied single-family 
properties.
* * * * *
    (f) * * *
    (2) * * *
    (ii) The benchmark level, which for 2025, 2026, and 2027 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) * * *
    (2) The benchmark level, which for 2025, 2026, and 2027 shall be 12 
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 2025, 2026, and 2027 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
5. Revise Sec.  1282.13 to read as follows:


Sec.  1282.13   Multifamily housing goals and subgoal.

    (a) Multifamily housing goals and subgoal. An Enterprise shall be 
in compliance with a multifamily housing goal or subgoal if its 
performance under the housing goal or subgoal meets or exceeds the 
benchmark level for the goal or subgoal, respectively.
    (b) Multifamily low-income housing goal. The 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 2025, 2026, and 
2027.
    (c) Multifamily very 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 very low-income families shall meet or exceed 14 percent 
of the total number of dwelling units in multifamily residential 
housing financed by mortgages purchased by the Enterprise in each year 
for 2025, 2026, and 2027.
    (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 percent of the 
total number of dwelling units in all multifamily residential housing 
financed by mortgages purchased by the Enterprise in each year for 
2025, 2026, and 2027.
0
6. Amend Sec.  1282.15 as follows:
0
a. In paragraph (b)(2) remove the first instance of ``subgoal'' and add 
in its place ``subgoals'';
0
b. Revise the heading and the first sentence of paragraph (c);
0
c. In paragraphs (d)(1), (3), and (4) and (e)(3), remove the phrase 
``housing goal and subgoals'' wherever it appears and add in its place 
the phrase ``housing goals and subgoal'';
0
d. Revise the heading to paragraph (e); and
0
e. In paragraph (e)(2) remove the phrase ``housing goal or subgoals'' 
and add in its place the phrase ``housing goals or subgoal''.
    The revisions read as follows:


Sec.  1282.15  General counting requirements.

* * * * *
    (c) Calculating the numerator and denominator for multifamily 
housing goals and subgoal. Performance under the multifamily housing 
goals and subgoal shall be measured using a fraction that is converted 
into a percentage. * * *
* * * * *
    (e) Missing data or information for multifamily housing goals and 
subgoal.* * *
* * * * *
0
7. Revise Sec.  1282.20 to read as follows:


Sec.  1282.20  Preliminary determination of compliance with housing 
goals; notice of preliminary determination.

    (a) Preliminary determination. On an annual basis, the Director 
will evaluate each Enterprise's performance under each single-family 
housing goal and subgoal and each multifamily housing goal and subgoal. 
The Director will make a preliminary determination of whether an 
Enterprise has failed, or there is a substantial probability that an 
Enterprise will fail, to meet each housing goal or subgoal established 
by this subpart.
    (b) Notice of preliminary determination. The Director will provide 
written notice to each Enterprise of the preliminary determination of 
performance under each housing goal and subgoal established by this 
subpart, the reasons for such determination, and the information on 
which the Director based the determination.
    (c) Response by Enterprise. Any notification to an Enterprise of a 
preliminary determination under this section will provide the 
Enterprise with an opportunity to respond in writing in accordance with 
the procedures at 12 U.S.C. 4566(b). Relevant information in a timely 
written response from an Enterprise will be included in the information 
the Director considers when making a final determination of housing 
goals compliance under Sec.  1282.21.
0
8. Redesignate Sec.  1282.21 as Sec.  1282.22, and revise and republish 
newly redesignated Sec.  1282.22 to read as follows:


Sec.  1282.22   Housing plans.

    (a) General. If the Director determines that an Enterprise has 
failed, or that there is a substantial probability that an Enterprise 
will fail, to meet any housing goal or subgoal, and that the 
achievement of the housing goal or subgoal was or is feasible, the 
Director may require the Enterprise to submit a housing plan for 
approval by the Director.
    (b) Enforcement factors for 2025-2027. (1) Except as provided in 
paragraph (b)(3) of this section, the Director will not require an 
Enterprise to submit a housing plan based on the Enterprise's failure 
to meet the single-family low-income families housing

[[Page 70145]]

goal, the single-family very low-income families housing goal, or the 
single-family refinancing housing goal for the years 2025, 2026, or 
2027, if:
    (i) The share of the market as defined in Sec.  1282.12(b) for the 
applicable goal is lower than the benchmark level for the goal; and
    (ii) The Enterprise's performance meets or exceeds the share of the 
market minus the enforcement factor for the applicable goal as defined 
in paragraph (b)(2) of this section.
    (2) The following enforcement factors apply for the years 2025, 
2026, and 2027:
    (i) For the single-family low-income families housing goal, 1.3 
percentage points;
    (ii) For the single-family very low-income families housing goal, 
0.5 percentage points; and
    (iii) For the single-family refinancing housing goal, 1.3 
percentage points.
    (3) The enforcement factor in this paragraph (b) will not apply to 
a goal in 2027 if the Enterprise failed to meet that goal for each of 
the previous two years.
    (c) Nature of plan. If the Director requires a housing plan, the 
housing plan must:
    (1) Be feasible;
    (2) Be sufficiently specific to enable the Director to monitor 
compliance periodically;
    (3) Describe the specific actions that the Enterprise will take in 
a time period determined by the Director to improve the Enterprise's 
performance under the housing goal; and
    (4) Address any additional matters relevant to the plan as 
required, in writing, by the Director.
    (d) Deadline for submission. The Enterprise shall submit the 
housing plan to the Director within 45 days after issuance of a notice 
requiring the Enterprise to submit a housing plan. The Director may 
extend the deadline for submission of a plan, in writing and for a time 
certain, to the extent the Director determines an extension is 
necessary.
    (e) Review of housing plans. The Director shall review and approve 
or disapprove housing plans in accordance with 12 U.S.C. 4566(c)(4) and 
(c)(5).
    (f) Resubmission. If the Director disapproves an initial housing 
plan submitted by an Enterprise, the Enterprise shall submit an amended 
plan for approval or disapproval not later than 15 days after the 
Director's disapproval of the initial plan; the Director may extend the 
deadline if the Director determines an extension is in the public 
interest. If an amended plan is not acceptable to the Director, the 
Director may afford the Enterprise 15 days to submit additional 
amendments to its plan for approval or disapproval.
    (g) Enforcement of housing plans. If the Director requires an 
Enterprise to submit a housing plan and the Enterprise refuses to 
submit such a plan, submits an unacceptable plan, or fails to comply 
with the plan, the Director may issue a cease and desist order in 
accordance with 12 U.S.C. 4581, impose civil money penalties in 
accordance with 12 U.S.C. 4585, or take any other action that the 
Director determines to be appropriate.
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9. Add new Sec.  1282.21 to read as follows:


Sec.  1282.21   Final determination of compliance with housing goals; 
notice of final determination.

    (a) Final determination. On an annual basis, the Director will make 
a final determination of each Enterprise's performance under each 
single-family housing goal and subgoal and each multifamily housing 
goal and subgoal. The final determination will address whether an 
Enterprise has failed, or there is a substantial probability that an 
Enterprise will fail, to meet any single housing goal or subgoal and 
whether the achievement of that housing goal or subgoal was or is 
feasible.
    (b) Notice of final determination. The Director will provide each 
Enterprise with written notification of the final determination. If the 
Enterprise fails to meet any housing goal or subgoal, the notification 
will specify whether the Enterprise is required to submit a housing 
plan for approval under Sec.  1282.22.

Sandra L. Thompson,
Director, Federal Housing Finance Agency.
[FR Doc. 2024-19261 Filed 8-28-24; 8:45 am]
BILLING CODE 8070-01-P