Housing MarketMortgageRegulatory

FHFA releases fair lending final rule

FHFA released the final rule this week in conjunction with its Equitable Housing Finance Plans

The Federal Housing Finance Agency (FHFA) this week released its fair lending final rule, following up on a proposal made last year in alignment with plans first laid out in 2022 by the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.

The rule “addresses barriers to sustainable housing opportunities for underserved communities by codifying existing FHFA practices in regulation and adding new requirements related to fair lending, fair housing, unfair or deceptive acts or practices, and Equitable Housing Finance Plans,” according to the rule’s entry in the Federal Register.

The final rule codifies FHFA’s fair lending oversight requirements for the GSEs and the Federal Home Loan Banks (FHLBs); the GSEs’ equitable housing finance plans; collections of homeownership education, housing counseling and language-preference information from the Supplemental Consumer Information Form; and new FHLB reporting requirements in the existing regulatory framework.

The rule itself goes into effect 60 days after its publication in the Federal Register. The only exception is the rule’s “subpart D.” This governs data collection actions by the GSEs and reporting requirements to the FHFA concerning borrowers’ language preferences and whether they’ve completed homeownership education or counseling. The effective date for this provision is Feb. 15, 2026.

FHFA explained some of the actions it has taken to address housing inequality. These include having served nearly 2.6 million families under the Equitable Housing Finance Plans ”by educating consumers, reducing closing costs, introducing innovation into underwriting, and combating appraisal bias,” the agency stated.

Fannie Mae and Freddie Mac are also proposing new actions for 2024, including a focus on promoting homeownership opportunities to first-generation homebuyers.

FHFA Director Sandra Thompson said that the publication of the final rule is necessary at a time of housing unaffordability for many Americans.

“As we reflect on the significance of Fair Housing Month, FHFA and its regulated entities will continue to address barriers that make affordable housing difficult to find,” Thompson said. “These initiatives are critically important at a time when housing affordability remains a persistent challenge.”

FHFA will hold a public session on the final rule in June and anticipates releasing updates to the Equitable Housing Finance Plans in January 2025.

On Tuesday, several housing groups and trade associations lauded the agency for passing the new rule.

“This rule represents a milestone in the agency’s ongoing efforts to promote a robust and inclusive housing market,” said David Dworkin, the CEO of National Housing Conference. “Through the introduction of new initiatives like Special Purpose Credit Programs, which provide new homebuyers with downpayment and closing cost assistance, and rent payment reporting programs to help renters use on-time rent payments to improve their credit scores, FHFA is taking proactive measures to address critical housing issues facing underserved communities. This rule promises to foster greater confidence and resilience within the housing finance ecosystem.”

The National Association of Realtors (NAR) also expressed support.

“The Equitable Housing Finance Plans are an active step in closing homeownership gaps among demographic groups,” Bryan Greene, NAR’s vice president of policy advocacy, said in a statement. “We applaud the work that FHFA has done to support lenders who create special-purpose credit programs.

“This work promotes more fairness and greater soundness in the housing finance system and, ultimately, more homeownership opportunities for more Americans. We look forward to working with FHFA to further support homeownership and narrow the homeownership gaps.”

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