Fannie Mae, Freddie Mac and the Federal Home Loan Banks (FHLBanks) have met their targets despite the challenges of dealing with the COVID-19 pandemic, according to the inaugural statement from the Federal Housing Finance Agency (FHFA). 2021 Mission Report: Regulated Affordable Housing Activities.

The FHFA is responsible for the oversight, regulation, and supervision of government-sponsored housing businesses (GSEs), Fannie Mae and Freddie Mac, and FHLBanks.

Blog Graphics: Missionary Programs and Initiatives Assessed by the FHFA through 2021

How GSE Fulfilled Their Rent-Oriented Missions

The Conservatorship Scorecard is the FHFA’s mechanism for communicating its GSE priorities and expectations and making those expectations transparent to the public. In February 2021, while still under former director Marc Calabria, FHFA released Scorecard outlining guardianship priorities with its joint venture Common Securitization Solutions LLC (CSS).

FHFA used the following guidelines to evaluate GSE and CSS:

  • The activities of each GSE contribute to the development of competitive, liquid, efficient and sustainable national housing finance markets that support homeowners and renters with responsible and sustainable products and programs.
  • Each GSE conducts business in a safe and secure manner, anticipates and mitigate emerging risk issues, and promptly resolves identified risk issues.
  • Each GSE meets expectations for all FHFA requirements, including capital, liquidity and resolution planning requirements.
  • Each GSE implements diversity and inclusion initiatives in accordance with legal requirements consistent with FHFA expectations.
  • Each GSE collaborates and collaborates with each other, industry and other stakeholders in consultation with the FHFA.
  • Each GSE delivers performance products that are high quality, thorough, creative, efficient and timely.

According to FHFA objectives as specified in the Glossary FHFA Mission Report 2021GSE multi-family loan purchases were to be 50% mission-focused and 20% were to be available to households earning at or below 60% of the regional median income (AMI). FHFA is classified as purposeful, “proportional loan amount for real estate in the target available category, depending on the percentage of units that are restricted by regulatory agreement or registered use restriction.” The FHFA will classify as mission oriented: 50% of the loan amount if the percentage of restricted units is less than 50% of the total units in the development, and 100% of the loan amount if the percentage of restricted units is equal to or greater than 50%. The guardianship scorecard capped GSE multi-family loan purchases at $70 billion. FHFA found that GSEs are compliant with Scorecard’s multi-family volume and mission-focused requirements for 2021.

Blog Graphics: GSE Mission-Driven Activities in 2021

GSEs also met or exceeded multifamily benchmark levels from 2016 to 2021. The collective annual loans of both GSEs ranged from 750,000 to 900,000 low income homes and 140,000 to 200,000 very low income homes, meaning that over 65% and approximately 15% of their funded rental homes meet their requirements, respectively , were available to low and very low income tenants. According to the FHFA, low-income households are defined as households with an income of 80% or less of the AMI. In addition, very low income households are those whose income does not exceed 50% of the AMI. In addition, since 2017, the GSE has funded approximately 50,000 small, low-income multifamily housing units (houses owned by 5 to 50 units) each year.

The most significant growth in rental housing loans purchased in the first cycle of the Duty to Serve (DTS) plan has occurred in the industrial housing market, where GSEs have significantly expanded funding support for industrial housing communities that have adopted DTS tenant protection measures. Research is needed to explain the significant decline in affordable housing retention in order to continue to meet the needs of US citizens.

Blog Graphic: Number of Rental House Maintenance Duties 2018-2021

Novogradac’s June 3 notes detailed that each GSE was allowed to invest $850 million in the LIHTC market as equity investors, up $350 million from previous levels. After increasing the funding cap, GSE invested $1.1 billion in LIHTC equity in 2021. Of this amount, DTS rural areas received $287 million and $718 million came from low investment deals, targeted LIHTC investments made by GSEs that maintain affordable housing, support mixed-income housing, provide supportive housing, or achieve other area goals. affordable housing. The same notes from Novogradac’s post detailed DTS GSE plans for 2022-2024 for LIHTC transactions. Notably, plans for 2022-2024 include an increase in LIHTC loans and LIHTC real estate equity investments with a focus on rural areas.

The mission report also includes data on the status of the LIHTC. The states with the highest GSE LIHTC volume in 2021 were California, Washington, and Texas.

Blog Graphics: California, Washington, and Texas have the highest GSE LIHTC volume in 2021

FHLBanks, tenants and COVID-19

Participating Financial Institutions are provided with financial products and services from FHLBanks that are used to help finance household activities of all income levels. FHFA tentatively determined that FHLBanks met their 2021 home mortgage purchase goals and small member housing participation goals; The agency plans to release a final decision on FHLBanks success for 2021 later this year.

In 2018, the Affordable Housing Program (AHP) assisted over 27,000 rental homes, but in 2021, the number of homes dropped sharply to less than 18,000. A similar but proportionately smaller decline was seen in the home ownership category. Pandemic-related decline in FHLBanks net income contributed to AHP fund cuts. They were made available to FHLBanks in 2020 and 2021 as mandatory contributions to AHP represent 10% of the bank’s net income for the previous year.

Blog Graphic: Number of AHP-Enabled Homes 2018-2021

The Community Investment Program (CIP) requires FHLBanks to offer advances to its participating financial institutions at a price equal to the value of FHLBank’s consolidated liabilities with comparable maturities, subject to reasonable administrative costs, to finance housing for households with an income of 115% or less . AMI. The number of CIP homes for rent has dropped significantly from 2018 to 2021 by about 12,000 units. No explanation was given as to what could be related to the decrease in the number of rental houses.

Blog graphic: The number of CIP rental houses in 2018-2021 is declining

Overcome the pandemic and beyond

In 2021, the United States was trying to recover from the economic fallout caused by the COVID-19 pandemic. Despite the challenges, GSE and FHLBanks have continued their mission to expand low-income households’ access to affordable housing. More research is needed to understand the impact of the COVID-19 pandemic and the decline reported in the 2018-2021 FHFA mission report. GSE and FHLBanks are playing an important role in tackling the country’s affordable housing crisis, and analysis such as the FHFA mission report helps to understand how well they are achieving their goals.

The FHFA, in its oversight role as a regulator and conservator, also “plays a vital role in supporting fair and sustainable access to mortgages throughout the country, promoting the stability and liquidity of the housing finance system, and protecting the safety and soundness of the housing finance system.” as detailed in his recent report to Congress. The Administration also understands how integral it is to the FHFA and GSE plans to meet the nation’s needs for affordable housing. In its recently released Housing Action Plan, the administration will take steps to work with the FHFA to increase GSE funding for construction and the restoration of affordable multifamily housing. More details about the plan can be found in this recent post “Notes from Novogradac”.

To keep abreast of affordable housing trends, register for the Novogradac 2022 Affordable Housing Tax Credit and Bonds Conference in Nashville, Tennessee and online September 29-30.

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