The Federal Housing Finance Agency today issued a final rule for the housing goals of the nation’s network of Federal Home Loan Banks aimed at boosting mortgage lending to low-income neighborhoods.
“By creating housing goal targets that are achievable for the Federal Home Loan Banks, the final rule helps ensure they make meaningful contributions to affordable homeownership,” said FHFA Director Mark Calabria. “This rule will expand responsible homeownership opportunities for underserved communities across the country.”
The rule eliminates the $2.5 billion volume threshold that had been set in 2010 – now all mortgage purchases are subject to the guidelines. It also limits the extent the banks can use loans to higher-income borrowers to meet the housing goals. Only 25% of mortgages to borrowers with income above 80% of an area’s median income can qualify.
In addition, the final rule amends the housing goals to:
- Set a single prospective mortgage purchase housing goal as a share of each member bank’s total mortgage purchases.
- Eliminate the volume threshold and instead allow the banks to propose different levels for the goals for mortgage purchases and small member participation, subject to FHFA approval.·
- Simplify and clarify the eligibility criteria to enable federally backed loans sold by small institutions eligible to count for goals purposes.
The network of Federal Home Loan Banks, currently with 11 members, was charted by Congress in 1932 to bolster the availability of mortgages.
Like Fannie Mae and Freddie Mac, they are so-called government-sponsored enterprises, or GSEs, that can borrow cheaply because of the assumption the federal government won’t let them fail.