Federal Housing Finance Agency (FHFA) Director Mark Calabria announced on Monday that he has authorized the disbursement of $1.09 billion for Fannie Mae and Freddie Mac‘s affordable housing allocations.
This is the largest amount ever disbursed by the government sponsored enterprises, and more than double what was provided the prior year.
Of the GSEs’ provided funds, $711 million will go to the U.S. Department of Housing and Urban Development for the Housing Trust Fund, an increase from the $326.4 million disbursed in 2019, and $383 million to the Department of the Treasury for the Capital Magnet Fund, an increase from $175.8 million the year prior.
According to Calabria, the $1 billion disbursement will help construct and preserve affordable housing nationally.
“The record increase in house prices last year exacerbated the affordable housing shortage,” Calabria said. “To help increase the supply of affordable housing in our communities, FHFA remains steadfast in support of the Housing Trust Fund and Capital Magnet Fund.”
How much the FHFA chooses to allocate is based off the revenue the GSEs make in the year prior, and given that 2020 was a record breaking year for nearly the entire industry, the GSEs will pay a higher disbursement.
Fannie Mae’s full year net revenues increased 16% to $25.3 billion largely on the back of record acquisition volumes, while Freddie Mac recorded a net revenue increase of 18% to $16.7 billion. However, refis, which made up nearly 70% of mortgage activity for the GSEs, are showing signs of slowing down.
In early January, a few weeks before the Biden administration took over, the FHFA published its strategic goals on how the GSEs can serve the most vulnerable communities through their Duty to Serve plans, which typically span a three-year period. However, due to disruptions caused by the COVID-19 pandemic, the FHFA released a one-year extension of their 2018 to 2020 plans.
Objectives named for 2021 included: increasing the purchase volume of conventional manufactured housing secured by real estate each year; purchasing loans secured by properties served by the Section 8 program; and developing offerings for loan credit enhancement for secondary market transactions.