Mortgage

Freddie Mac misses low-income refi affordable housing target: FHFA

Freddie Mac misses low-income refi affordable housing target: FHFA
Written by Publishing Team

Freddie Mac failed to meet the performance target of refinancing low-income mortgages in 2020, and was ordered to submit a corrective action plan by the Federal Housing Finance Agency.

Other than that, Freddy Mac met the single-family mortgage purchase goals for low-income families, ultra-low-income families, low-income areas, and all multi-family goals. The FHFA said Fannie Mae has achieved all of its single-family and multi-family goals.

in 2019, Both companies met One of their goals is affordable single-family housing.

The Low Income Refinancing Benchmark, which measures loans granted to households whose income is less than 80% of the area average for each of the government-sponsored businesses, was 21%. The FHFA’s final decision for Freddie Mac’s activity through 2020 for this target was 19.7%, while for Fannie Mae it was 21.2%; These findings are unchanged from preliminary findings in September. In 2019, Freddie Mac’s share in this category was 22.4%, while Fannie Mae’s share was 23.8%.

“It is imperative that Freddie Mac develops a business strategy to support more low-income families to take advantage of this important refinancing opportunity,” FHFA Acting Director Sandra Thompson said in a press release. “With the new housing plan announced today, Freddie Mac can begin to correct course and position himself on the path to meeting his future commitments.”

(On December 14, President Biden nominated Thompson to head the agency on a permanent basis.)

The number of low-income borrowers refinancing was higher in 2020 than in other years, reflecting the overall market in a record year for total assets, helping both agencies achieve the majority of their goals. Refis made up 64% of all builds last year according to economists at Fannie Mae and Freddie Mac and the Mortgage Bankers Association.

“We achieved seven out of eight goals for affordable housing and purchased a record level of low-income refinancing loans in 2020,” Freddy Mac noted in a statement, when asked about the FHFA’s results. “We have a focused strategy to encourage additional refinancing activity and help improve equity in the housing finance system.”

GSE acknowledged that it underperformed slightly in one category based on market share in the FHFA report.

“The FHFA also determined that this 2020 goal by Freddie Mac was feasible,” said a letter sent on December 20 to Freddy Mac’s CEO Michael DeVito. In making these decisions, the FHFA analyzed the size and composition of the conventional matching primary mortgage market, as measured using Mortgage Disclosure Act 2020 data.

In a separate statement in response to the FHFA, Fannie Mae said she is “committed to achieving the housing goals set by the FHFA as part of our ongoing efforts to support equitable access to sustainable and affordable housing opportunities in a safe and sound manner,” that company said in the current situation.

Earlier this year, the FHFA was launched under the then director Mark Calabria Low-income compatible rehabilitation program. Fannie Mae’s version is called Refi Now, while Freddie Mac’s is Refi Possible. These programs will help higher education institutions achieve their 2021 goals.

In September, the FHFA released a proposed rule Raising the goals of single-family housing for the next three years. The new refinancing target for low-income earners will be 26%.

Freddie Mac now has 45 days to present a plan to the FHFA on how to improve its performance when it comes to buying low-income refinances from 2022 to 2024.

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