Hello, LOs!
Yesterday, the Federal Housing Finance Agency — which oversees mortgage market engines Fannie Mae and Freddie Mac — made public the GSEs' plans to provide financing for rural markets and manufactured housing, and support affordable housing preservation.
Both of the plans were long, together totaling more than 200 pages. I'd like to highlight some interesting parts of Freddie Mac's plan.
Freddie Mac, although it doesn't have a product to purchase manufactured homes titled as personal property, said it plans to have one up and running by 2024. Doing so would require approval from FHFA (which historically does not appreciate it when its regulated entities go to the market with a new product without getting approval). But the GSE was nevertheless willing to set a numerical target of 1,500 loans by 2024.
In a passage of the plan marked "Non-public content for FHFA only," the GSE balked at the loan purchase targets for income-restricted multifamily units, which were set at 4,200 for 2022 to 2024.
Freddie Mac argued that the targets might be an "outsize share" of the market. Typically, FHFA's benchmark for GSE support is about 20% of the market. Meeting the target, according to Freddie Mac, would mean financing about 37% of the market.
"Targets set beyond these levels could be infeasible or could result in safety and soundness concerns derived from overly aggressive loan pricing or increased credit risk in order to meet [duty to serve] goals and win transactions that already have multiple capital sources available to them," Freddie Mac wrote.
For purchases of mortgages on income-restricted manufactured homes, Freddie Mac also raised concerns — again, marked for FHFA's eyes only — that the numerical targets might be strained by rising prices in that market, if the volume caps were not revised upward.
LOs, what do you see as the pros and cons of the GSEs having an outsize presence in any given market? Let me know your thoughts at georgia@hwmedia.com
Georgia Kromrei
Senior Mortgage Reporter, HousingWire
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