Did Affordable Housing Performance Meet its Goals? by Nicole Casperson

On Monday, the Federal Housing Finance Agency (FHFA) released its Annual Housing Report, reporting data on the affordable housing activities of the enterprises, Fannie Mae and Freddie Mac, during 2016.

Based on Fannie Mae’s single-family housing goals and performance results for 2016, according to the FHFA, Fannie Mae achieved the single-family low-income home purchase goal and the low-income areas home purchase goal. In addition, Fannie reached its sub-goal for 2016. However, the enterprise failed to meet the very low-income home purchase goal and the low-income refinance goal for 2016.

Conversely, FHFA determined that Freddie Mac achieved all of the single-family goals for 2016.

Overall, Fannie Mae’s total business volume in 2016 was $637.4 billion. As a result, the total affordable housing allocation transferred was $268 million, the report noted. Meanwhile, Freddie Mac’s total business volume in 2016 was $445.7 billion and the total affordable housing allocation transferred was $187.1 million.

Combined, Fannie Mae and Freddie Mac acquired $976.4 billion of single-family loans in 2016, an increase of about 18 percent from the $825.6 billion in single-family loans the enterprises acquired in 2015—excluding second liens and reverse mortgages. Additionally, “these totals include loans that collateralize mortgage-backed securities guaranteed by either enterprise and loans purchased for cash,” according to the FHFA.

When it comes to fully amortizing fixed-rate mortgages, it accounted for 98.4 percent of combined acquisitions—an increase from last year. In 2016, amortizing hybrid adjustable-rate mortgages accounted for 1.57 percent acquisitions, a decrease from 2.78 percent in 2015.

For 2016, the combined share of loans with loan-to-value ratios above 95 percent increased from 1.23 percent in 2015 to 1.85 percent in 2016 for Fannie and Freddie. Mortgages with loan-to-value ratios of 80 percent or below increased to 73.54 percent of loans acquired in 2016.

There was some change in the distribution of the borrower credit (FICO) scores of single-family mortgages in this report. “The share of loans with credit scores below 620 fell slightly from 0.66 percent in 2015 to 0.45 percent in 2016,” the report noted. Meanwhile, “mortgages with credit scores between 620 and 659 fell from 4.07 percent of loans acquired in 2015 to 3.75 percent of loans acquired in 2016.”

The report includes a breakdown of the single-family mortgage product-types purchased by each enterprise, as well as information on mortgage payment type, loan-to-value ratios, and credit scores for 2016.

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