The

Congressional
Budget
Office
(CBO)
this
week

published
a
report
assessing
the
performance
of

government-sponsored
enterprises
(GSEs)


Fannie
Mae
and


Freddie
Mac
in
reaching
their
single-family
housing
goals.
The
CBO
found
that
the
GSEs
“met
or
exceeded”
nearly
all
goals
over
a
four-year
period
from
2018
to
2022.

The
CBO
analyzed
data
from
the


Federal
Housing
Finance
Agency
(FHFA)
data
in
its
report.
It
noted
that
the
GSEs
were
chartered
to
“ensure
a
stable
supply
of
credit
for
mortgages
nationwide,
including
those
for
low-
and
moderate-income
households.”
Fannie
and
Freddie
are
also
legally
mandated
to
follow
housing
goals
that
“serve
as
benchmarks
for
measuring
how
the
GSEs
facilitate
the
financing
of

affordable
housing
for
low-income
families,”
the
report
stated.

There
are
three
key
housing
goals
and
two
“subgoals”
that
the
GSEs
must
meet.
These
including
a
certain
number
of
purchase
loans
for
low-income
households
(defined
as
households
with
an
income
at
or
below
80%
of
the
area
median
income
(AMI).
They
also
must
purchase
a
number
of
loans
intended
for
“very
low
income
households,”
whose
income
is
at
or
below
50%
of
the
AMI,
as
well
as
refinance
loans
for
low-income
households.

One
of
the
subgoals
covers
two
types
of
purchase
loans.
One
is
tied
to
”households
at
any
level
of
income
that
live
in
a
low-income
census
tract
that
is
not
a
minority
census
tract,”
while
the
other
is
for
”households
whose
income
is
greater
than
100%
of
the
AMI
and
that
live
in
a
low-income
census
tract
that
is
also
a
minority
census
tract.”

An
additional
subgoal
covers
purchase
loans
for
households
living
in
minority
census
tracts
whose
income
is
at
or
below
100%
of
the
AMI.

The
GSEs
meet
these
goals
by
shifting
“their
purchases
toward
mortgages
that
meet
the
goals’
requirements,”
according
to
the
CBO.
They
also
“charge
lower
fees
than
they
otherwise
would
without
the
goals
for
lenders
who
sell
them
mortgages
that
are
eligible
in
meeting
their
goals,“
which
act
as
“an
implicit
subsidy.”

“Benchmark”
and
“market”
levels
are
used
to
determine
success
rates
in
meeting
these
goals.
The
benchmark
level
reflects
“FHFA’s
forecast
of
the
share
of
loans
that
meet
the
goals’
requirements.”
The
market
level
is
based
on
data
“showing
the
share
of
loans,
by
all
lenders,
that
fell
within
the
targets
for
the
respective
goals
using
the

Home
Mortgage
Disclosure
Act
(HMDA)
database.“

The
percentage
of
goal-eligible
mortgages
purchased
by
the
GSEs
“must
meet
or
exceed
at
least
one
of
those
levels,”
the
report
stated.
In
looking
at
FHFA
data
over
the
four-year
period
ending
in
2022,
the
CBO
said
that
the
majority
of
the
GSEs’
housing
goals
were
either
met
or
exceeded.
But
in
the
final
year
of
the
dataset,
Fannie
Mae
came
up
short
on
benchmark
levels
for
purchase
loans
from
low-
and
very
low-income
households.

That
is
“partly
because
those
levels
had
increased
since
2021,”
the
report
explained.
“The
increase
was
largely
attributable
to
the
way
that
FHFA
developed
its
market
forecast.”

Due
to
the
variables
FHFA
uses
to
set
its
benchmark
level,
which
includes
“actual
market
levels
in
recent
years,”
the
benchmarks
increased
by
4
percentage
points
in
2022
to
target
28%
of
purchase
loans
to
low-income
households.
They
also
grew
by

1
percentage
point
for
very
low-income
households.
Fannie
Mae,
however,
met
market
levels
for
both
goals
that
year.

If
the
GSEs
fail
to
meet
their
housing
goals,
this
comes
with
repercussions
that
include
being
subject
to
FHFA’s
authority
for
creating
a
plan
to
fulfill
the
goals.
Executive
compensation
at
the
agencies
is
also
impacted
by
fulfilling
the
goals,
the
report
said.

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