Freddie Mac failed to meet his low-income mortgage refinancing performance target in 2020 and was ordered to submit a corrective action plan by the Federal Housing Finance Agency.
Otherwise, Freddie Mac has met single family mortgage buying goals for low income families, very low income families, and low income areas as well as all multi-family goals. Fannie Mae has met all of her goals for single-family and multi-family housing, the FHFA said.
In 2019, the two companies have met all of their affordable single-family housing goals.
The low-income refinancing benchmark, measuring loans to families with incomes below 80% of the median area for the two government-funded companies, was 21%. The FHFA’s final determination for Freddie Mac’s activity in 2020 for this target was 19.7%, while for Fannie Mae it was 21.2%; these remained unchanged from the preliminary findings made in September. In 2019, Freddie Mac’s share in this category was 22.4%, while for Fannie Mae it was 23.8%.
“It is imperative that Freddie Mac develops a business strategy to help more low-income households take advantage of this important refinancing opportunity,” FHFA Acting Director Sandra Thompson said in a press release. “With the new housing plan announced today, Freddie Mac can start to put things right and get on track to meet his obligations going forward.”
(On December 14, President Biden appointed Thompson as the permanent head of the agency.)
The number of refinances from low-income borrowers was high in 2020 compared to other years, reflecting the overall market in a record year for total originations, helping both agencies achieve majority of their goals. Refis accounted for 64% of total mounts last year, according to measurements by economists Fannie Mae, Freddie Mac and the Mortgage Bankers Association.
“We have achieved seven of the eight affordable housing goals and purchased a record low level of refinancing loans for low-income people in 2020,” said Freddie Mac in a statement, when asked about the FHFA’s findings. “We have a focused strategy to encourage additional refinancing activity and help improve the equity of the housing finance system.”
The GSE admitted that it had slightly underperformed in a category based on market share in the FHFA report.
“The FHFA has further determined that the achievement of this 2020 target by Freddie Mac is achievable,” said a letter sent Dec. 20 to Freddie Mac CEO Michael DeVito. “In making these decisions, the FHFA analyzed the size and composition of the market for conventional compliant primary mortgages, as measured using data from the Home Mortgage Disclosure Act for 2020.”
In a separate statement in response to the FHFA, Fannie Mae said she “is committed to meeting the housing goals set by the FHFA as part of our ongoing efforts to support equitable access to affordable housing opportunities. and sustainable in a safe and healthy way, âsaid the company. in a report.
Earlier this year, the FHFA, led by then-director Mark Calabria, launched a compliant refi program for low income people. Fannie Mae’s version is called Refi Now, while Freddie Mac’s is Refi Possible. These programs will help GSEs achieve their goals for 2021.
In September, the FHFA published a rule proposal meet single-family housing goals for the next three years. The new low-income refinancing target will be 26%.
Freddie Mac now has 45 days to submit a plan to the FHFA on how it will improve its performance in purchasing low-income refinances for 2022 to 2024.