The Biden administration has been very clear about its housing goals from day one: it doesn't believe the current level of minority homeownership is good enough, and it will use the considerable resources at its disposal to change that.
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Hello, LOs!
The Biden administration has been very clear about its housing goals from day one: it doesn't believe the current level of minority homeownership is good enough, and it will use the considerable resources at its disposal to change that.
The tip of the spear, of course, is the FHFA. Today, the housing regulator proposed new affordable housing mandates on Fannie Mae and Freddie Mac. And they appear significant.
The FHFA wants to raise the goal for single-family home purchases by low-income borrowers to 28% from 24% and for very low-income families to 7% from 6%. It is also calling on Fannie and Freddie to increase their goals for refinances by low-income families to 26% from 21%.
Beyond those measures, the proposal would also replace the existing low-income areas subgoal with two new area-based subgoals. The first would require that 10% of GSE purchases of mortgage loans be for properties in minority census tracts (defined as 30% minority), to borrowers with incomes no greater than 100% of the AMI. The second, related subgoal would establish a benchmark level of 4% for GSE purchases of mortgage loans on properties in low-income census tracts to borrowers at or below the AMI.
"To meet a single-family housing goal or subgoal, the percentage of mortgage purchases by an Enterprise in that category must exceed either the benchmark level set in advance by FHFA or the market level for that year," the FHFA said in a statement.
Should the new affordable housing goals be approved, the GSEs will surely be making demands on lenders. How do you think lenders will respond?
LOs who already do work with a large number of minority and/or low-income borrowers — what changes can the FHFA make to incentivize more home lending to those communities?
I'd love to hear your thoughts on the matter, folks. Feel free to email me anonymously at jkleimann@housingwire.com.
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