November 27, 2012
New Affordable Housing Goals Set for Fannie and Freddie
The FHFA issued a final rule. The summary is as follows:
The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (Safety and Soundness Act) requires the Federal Housing Finance Agency (FHFA) to establish annual housing goals for mortgages purchased by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively, the Enterprises). FHFA previously established housing goals for the Enterprises through 2011. This final rule establishes new levels for the housing goals for 2012 through 2014, consistent with the requirements of the Safety and Soundness Act.
The new goal levels are lower than those from the last couple of years. For a taste of the controversy surrounding affordable housing goals see this, this and this on the one hand and see this, this and this on the other. My own take is that Wallison and Pinto make broad claims about the negative effects of affordable housing goals that attach big effects to long ago events. Their claims have not been supported empirically and have not gone through a peer review process. That being said, I think it is valuable to draw attention to the unintended effects of government policies. Going forward, Congress and the FHFA should be very careful in their program design to ensure that housing policies have their desired effects — no more, no less.
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