U.S. Sets New Low-Income Housing Goals ; Mortgage Finance Firms Nudged to Make More Available to Poor People

By Searcey, Dionne | International New York Times, August 21, 2015 | Go to article overview

U.S. Sets New Low-Income Housing Goals ; Mortgage Finance Firms Nudged to Make More Available to Poor People


Searcey, Dionne, International New York Times


The Federal Housing Finance Agency clarified rules for determining affordability and put in place clearer procedures in establishing housing goals.

The American agency that regulates the mortgage finance companies Fannie Mae and Freddie Mac set goals on Wednesday for the next two years to nudge them to provide mortgages to more low-income borrowers and to landlords who offer low rents to poor people.

The Federal Housing Finance Agency is required by a 2008 law that took effect after the collapse of the housing market to set annual targets for mortgages bought by Fannie and Freddie, the government- run institutions that back most home loans.

The goals act as directives for Fannie and Freddie to focus more of their business on affordable housing. The companies buy loans from private lenders, package them into mortgage-backed securities and provide a credit guarantee to investors to ensure timely payment.

Some advocates of housing for the poor expressed disappointment that the goals were not more ambitious. But the agency hailed the rules as an important lever for helping more low-income families buy homes and for improving access to mortgages for landlords who rent out affordable apartments to low-income tenants in poverty-stricken neighborhoods.

"These goals establish a solid foundation for affordable and sustainable homeownership and rental opportunities in this country," Melvin L. Watt, the agency's director, said in a news release.

The housing market is improving, but still lags behind the boom years before the market collapsed. Many potential buyers still complain that they have trouble getting mortgages, that few homes are on the market and that rents are soaring.

The agency set separate targets for single-family housing, including categories for mortgages for low-income families, very low- income families and families in low-income areas, and for refinancing mortgages. The goals for mortgages for owners of multifamily property also include separate targets for low- and very low-income families.

The agency said 24 percent of mortgages should be bought by Freddie or Fannie for homes for low-income borrowers, or those with incomes no greater than 80 percent of an area's median income. …

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