FHFA's Revised Goals Mirror 2005 Levels
The Federal Housing Finance Agency (FHFA) proposed Tuesday to adjust the government-sponsored enterprises’ (GSEs) 2009 housing goals to levels "almost identical" to those seen in 2005, according to the FHFA's proposal. “FHFA has determined that in light of current market conditions, the 2009 housing goal and home purchase subgoal levels previously established…are not feasible unless they are adjusted,” director James Lockhart said in a media statement. The agency did not specify why this period was picked as a benchmark for the revisions. FHFA proposed adjusting the low- and moderate-income housing goal to 51%, meaning low- and moderate-income families would represent 51% of the total dwelling units financed by the enterprises' mortgage purchases. It would represent a decline from the 56% 2008 goal established by the US Department of Housing and Urban Development in 2004 and set to continue into 09, FHFA said. FHFA also proposed adjusting the GSE goal for under-served areas to 37% of mortgage purchases from 39%, as well as reducing the GSE goal for so-called "special affordable" mortgages to 23% from 27%. "At the time the 04 rule was implemented, mortgage markets were still evidencing significant expansion," the FHFA's proposal reads, but "based on current market conditions, FHFA estimates market shares for certain goals...have declined significantly." Adverse market conditions such as stricter underwriting standards, increased standards of private mortgage insurers and high unemployment rates are likely to result in fewer goal-qualifying originations, FHFA said. The agency therefore proposed to include Fannie Mae’s and Freddie Mac’s loan modifications, geared toward low- and moderate-income families, in the housing goals credit. “The enterprises have taken the lead in implementing the Administration’s Home Affordable Modification Program,” Lockhart said. “By giving them goals credit for loan modifications, FHFA further encourages…promoting homeownership for targeted borrowers and communities.”
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