Pandemic pushes FHFA to keep Fannie and Freddie 2021 goals static

With the coronavirus creating continued uncertainty in the housing market, the Federal Housing Finance Agency announced that it will extend the same benchmarks of the past three years for Fannie Mae and Freddie Mac in 2021.

The government-sponsored enterprises will need to reach goals of 24% for low-income home purchases (borrowers whose incomes do not exceed 80% of their area median income), 6% on very low-income purchases (borrowers below 50% of their AMI), 14% for low-income area purchases (borrowers in low-income census tracts or opportunity zones) and 21% in low-income refinancing.

On the multifamily side, the FHFA set the bar at purchasing mortgages of 315,000 units that are affordable at the low-income level, followed with subgoals of 60,000 very low-income units and 10,000 low-income small multifamily units — properties containing between five and 50 units.

If the GSEs fall short of their single-family home goal but beat the market, they still pass. Multifamily doesn't allow that. While the enterprises will occasionally miss the single-family goals, they've never missed a multifamily goal, according to Kevin Sheehan, associate general counsel at the FHFA.

If they miss a goal, the GSEs go back and forth with the FHFA about the feasibility of that goal, factoring in the amount by which they failed to reach the benchmark. The agency bases its goals on the best information available at the time, but a benchmark could be determined unfeasible due to extenuating circumstances. In those cases, there is no further action.

However, if the FHFA determines a missed benchmark was feasible, it has the discretion to impose a housing plan.

"It requires the enterprise to come up with a detailed game plan of improved performance and not continue missing the goal," Sheehan said in an interview. "Fines and penalties can apply if the GSEs don't follow the process. If the enterprise disagrees and doesn't submit the plan, there can be penalties including cease and desist orders. I think it's unlikely, especially in conservatorship. There's virtually no chance an enterprise tells its regulator to go jump in a lake."