The Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, recently requested public comments on the affordable housing goals. NHC provided comments developed through our Housing Mortgage Working Group. While it is important for FHFA to renew and enforce the existing laws to encourage the GSEs to finance affordable housing, it is even more important to focus on how to make affordable housing a central part of the next iteration of mortgage finance. We need to move beyond simple numerical housing goals and toward an economically sustainable, ongoing business commitment to reach the underserved.
It is clear that access to affordable housing must inform the entire system, not just the goals of some providers. A well-regulated system of housing finance creates business opportunities for private participants, including those without government backing. All participants in that market, therefore, should have some obligation to serve those left out. Participants who receive larger benefits, such as explicit government backing, should bear a greater obligation to pilot new approaches, design new products and otherwise demonstrate economically sustainable ways to address underserved market segments. The obligation to make sure that the benefits of an efficient secondary market extend broadly to all in America goes beyond a simple unit-counting goals approach to one that encourages an economically sustainable, ongoing business commitment to reach the underserved.
You can read the full comment letter, which also recommended:
- Implement the goals and Duty to Serve, while remaining open to adjustment. Specifically for multifamily, raising the goals per the proposed rule is appropriate.
- Encourage the GSEs to facilitate preservation of existing affordable housing. The evaluation of the statutory Duty to Serve should encourage GSEs to facilitate recapitalization of existing properties with their portfolio of Housing Credit investments.
- Allow no credit for multifamily conversion loans goals for any transaction where the underwriting assumes the conversion from goals-qualified to non-goals-qualified units, such as through elimination of state or federal affordability restrictions on rents.