2026-2028 Enterprise Housing Goals

se performance). The Enterprise housing goals regulation does not include a retrospective market level measure for the multifamily housing goals, due in part to a lack of comprehensive data about the multifamily market. As a result, FHFA measures Enterprise multifamily housing goals performance against the benchmark levels only and the proposed rule retains this approach.

14 12 U.S.C. 4563(a)(3).

The Safety and Soundness Act requires that affordability for rental units under the multifamily housing goals be determined based on rents that “[do] not exceed 30 percent of the maximum income level of such income category, with appropriate adjustments for unit size as measured by the number of bedrooms.” 15 The Enterprise housing goals regulation considers the net rent paid by the renter, i.e., the rent is decreased by any subsidy payments that the renter may receive, including housing assistance payments. 16

15 See 12 U.S.C. 4563(c).

16 See 12 CFR 1282.1 (par. (i)(B) of definition of “rent”).

B. Adjusting the Housing Goals

If, after publication of this proposed rule, new information indicates that any of the single-family or multifamily housing goals should be adjusted in light of market conditions or the safety and soundness of the Enterprises, or for

any other reason, FHFA may take any steps that are necessary and appropriate to respond, consistent with the Safety and Soundness Act and the Enterprise housing goals regulation.

For example, under the Safety and Soundness Act and the Enterprise housing goals regulation, FHFA is permitted to reduce a benchmark level in response to an Enterprise petition for reduction for any of the single-family or multifamily housing goals in a particular year

necessary and appropriate to respond, consistent with the Safety and Soundness Act and the Enterprise housing goals regulation.

For example, under the Safety and Soundness Act and the Enterprise housing goals regulation, FHFA is permitted to reduce a benchmark level in response to an Enterprise petition for reduction for any of the single-family or multifamily housing goals in a particular year. Any adjustment in response to such a petition must be based on a determination by FHFA that: (1) market and economic conditions or the financial condition of the Enterprise require a reduction; or (2) efforts to meet the goal or subgoal would result in the constraint of liquidity, over-investment in certain market segments, or other consequences contrary to the intent of the Safety and Soundness Act or the purposes of the Enterprises' charter acts. 17

17 See 12 U.S.C. 4564(b); 12 CFR 1282.14(d).

The Safety and Soundness Act and the Enterprise housing goals regulation also provide for the possibility that achievement of a particular housing goal or subgoal may not have been feasible for an Enterprise. If FHFA determines that a housing goal or subgoal was not feasible for an Enterprise to achieve, then the statute and regulation do not require any further action related to that housing goal or subgoal for that year. 18

18 See 12 U.S.C. 4566(b); 12 CFR 1282.22(a).

If FHFA determines that an Enterprise did not meet a housing goal or subgoal and that achievement of the housing goal or subgoal was feasible, the statute and regulation provide FHFA with discretion in determining whether to require the Enterprise to submit a housing plan describing the specific actions the Enterprise will take to improve its housing goals performance. 19

19 See 12 U.S.C. 4566(c); 12 CFR 1282.22(a).

III. Summary of Proposed Rule

A

00 percent of area median income in census tracts where (i) tract income is less than 100 percent of area median income, and (ii) minorities comprise at least 30 percent of the tract population. N/A 16.0 The proposed rule would combine the current low-income census tracts home purchase subgoal and the minority census tracts home purchase subgoal into a single low-income areas home purchase subgoal. Similar to the existing regulation, the benchmark level for the low-income areas home purchase goal would be the sum of the benchmark levels for the low-income areas home purchase subgoal, plus an additional amount that will be determined separately by FHFA that takes into account families in disaster areas with incomes no greater than 100 percent of AMI. 20 The low-income areas home purchase goal is published annually on FHFA's website. 21

20 See 12 CFR 1282.12(e). The low-income areas home purchase goal benchmark level for 2025 is 21 percent.

21 See Housing Goal Annual Housing Activity Reports and Determinations for each Enterprise at https://www.fhfa.gov/programs/affordable-housing/enterprise-housing-goals.

To simplify the structure of the Enterprise housing goals regulation, FHFA is proposing to remove temporary measurement buffers for the housing goals that the Agency previously established for 2025-2027. The measurement buffers were established to encourage the Enterprises to focus on achieving certain single-family housing goals by meeting the market level, if the benchmark level turns out to be higher than the market level. These measurement buffers partly addressed the uncertainty in forecasting the market several years in advance as well as the time lag in determining the actual market level retrospectively

t buffers were established to encourage the Enterprises to focus on achieving certain single-family housing goals by meeting the market level, if the benchmark level turns out to be higher than the market level. These measurement buffers partly addressed the uncertainty in forecasting the market several years in advance as well as the time lag in determining the actual market level retrospectively. Since the 2026-2028 proposed benchmarks are set below the forecasted marketed level, FHFA expects that the Enterprises will be able to calibrate their mortgage purchase strategies to anticipate small fluctuations in market uncertainty, making it unnecessary to maintain an additional regulatory buffer. This would accomplish the original intent of the measurement buffers, rendering the buffers duplicative and unnecessary.

B. Proposed Benchmark Levels for the Multifamily Housing Goals and Subgoal

The proposed rule would establish the benchmark levels for the multifamily housing goals and subgoal for 2026-2028 as follows:

Goals and subgoal Criteria Current benchmark level (percent) Proposed benchmark level for 2026-2028 (percent) Low-Income Goal Percentage share of all goal-eligible units in multifamily properties financed by mortgages purchased by the Enterprises in the year that are affordable to low-income families, defined as families with incomes less than or equal to 80 percent of AMI. 61.0 61.0 Very Low-Income Goal Percentage share of all goal-eligible units in multifamily properties financed by mortgages purchased by the Enterprises in the year that are affordable to very low-income families, defined as families with incomes less than or equal to 50 percent of AMI. 14.0 14.0 Small Multifamily Low-Income Subgoal Percentage share of all goal-eligible units in all multifamily properties financed by mortgages purchased by the Enterprises in the year that are units in small multifamily properties affordable to low-income families, defined as families with incomes less than or equal to 80 percent of AMI

typically relies on statistical market models developed by FHFA to evaluate four of the seven factors (national housing needs; economic, housing, and demographic conditions; other reliable mortgage data; and the size of the conventional purchase money or refinance mortgage segment). These market models generate a point forecast for each goal as well as a confidence interval for the point forecast. FHFA monitors information on market developments and Enterprise financial condition that are not reflected in the models. FHFA also considers the other statutory factors that are not explicitly modeled in the statistical forecast models ( i.e., performance and effort of the Enterprises to lead the industry in making mortgage credit available; the ability of the Enterprises to do so; and the need to maintain sound financial condition of the Enterprises) to make post-model adjustments to the point forecast for each goal.

Market forecast models. The purpose of FHFA's market forecast models is to forecast the market share of the goal-qualifying mortgage originations for the relevant goal period. The models are intended to generate reliable forecasts rather than to test various economic hypotheses about the housing market or to explain the relationship between variables. Therefore, following standard practice among forecasters and economists at other federal agencies, FHFA estimates a reduced-form equation for each of the housing goals and fits an Autoregressive Integrated Moving Average (or ARIMA) model to each goal share. The models look at the statistical relationship between (a) the historical market share for each single-family housing goal or subgoal, as calculated from monthly HMDA data, and (b) the historical values for various factors that may influence the market shares, such as interest rates, inflation, home prices, home sales, the unemployment rate, and other factors. The models then project the future value of the affordable market share using forecast values of the model inputs

decrease to 3 percent by the fourth quarter of 2026. 28

25 Ibid.

26 Press Release, “Federal Reserve issues FOMC statement,” (December 2024), available at https://www.federalreserve.gov/newsevents/pressreleases/monetary20241218a.htm.

27 Press Release, “Federal Reserve issues FOMC statement,” (May 2025) available at https://www.federalreserve.gov/newsevents/pressreleases/monetary20250507a.htm.

28 Moody's Analytics, “Economic Data and Forecasts,” August 2024 and April 2025.

Moody's April 2025 baseline forecast for the 30-year fixed mortgage rate indicates a slightly more elevated trajectory compared to the August 2024 baseline forecast, with a projected decline of 0.2 percentage points from 6.5 percent in 2025 to 6.3 percent in 2027 versus the earlier projection of 6.4 percent in 2025 to 6.0 percent in 2027. However, this difference is not considered material for the purposes of this rulemaking. Notably, the projected 30-year mortgage rate for 2025 in both forecasts is nearly identical (6.5 percent versus 6.4 percent). Given the inherent uncertainties in long-term economic projections and the relatively modest divergence in out-year forecasts, particularly when the initial year remains largely consistent, the Agency finds these projections to be substantially similar and, therefore, appropriate to use to inform our current policy considerations. 29

29 Ibid.

EP02OC25.018

Home prices increased rapidly in 2021 and 2022, as indicated by the HPI, due to a strong demand for housing and limited supply of homes for sale. 30 The rapid rise in mortgage rates through 2022 and their stabilization at new

elevated levels in 2023 slowed down the pace of house price growth. Although slower, house price growth was still significant, rising 3.9 percent from February 2024 to February 2025. 31 Moody's predicts that home price appreciation will continue to slow in 2026

24 baseline forecast saw a similar rise in the index from 99.5 in 2024 to 111.6 in 2027. 35

33 NAR's HAI is a national index. It measures, nationally, whether an average family could qualify for a mortgage on a typical home. A typical home is defined as the national median-priced, existing single-family home as reported by NAR. An average family is defined as one earning the median family income. The calculation assumes a down payment of 20 percent of the home price and a monthly payment that does not exceed 25 percent of the median family income. An index value of 100 means that a family earning the median family income has exactly enough income to qualify for a mortgage on a median-priced home. An index value above 100 signifies that a family earning the median family income has more than enough income to qualify for a mortgage on a median-priced home. A decrease in the index value over time indicates that housing is becoming less affordable.

34 Moody's Analytics, “Economic Data and Forecasts,” August 2024 and April 2025.

35 Ibid.

EP02OC25.020

Following the historic low in housing supply observed in March 2022, inventory levels have shown consistent growth. As of April 2025, active listings have increased by 30.1 percent compared to April 2024 and 70.4 percent relative to April 2023. 36 Current listing levels now exceed pre-pandemic benchmarks, surpassing January 2020 figures by 7,552 units. Single-family housing starts—which measure new construction of one-to-four-unit residential properties—registered a modest 7.3 percent increase from 2023 to 2024 but remain slightly below the decade-high levels recorded in 2021. 37

36 “Housing Inventory: Active Listing Count in the United States,” accessed on May 20, 2025, at https://fred.stlouisfed.org/series/ACTLISCOUUS.

37 “New Privately-Owned Housing Units Started: Single-Family Units,” accessed on May 20, 2025, at https://fred.stlouisfed.org/series/ACTLISCOUUS

n of this generation continues to enter their peak homebuying years, this demographic wave is poised to create additional, substantial demand across the housing market.

38 NAR, “2023 Home Buyers and Sellers Generational Trends Report,” (2023), p. 8, available at https://www.nar.realtor/sites/default/files/documents/2023-home-buyers-and-sellers-generational-trends-report-03-28-2023.pdf.

39 Ibid.

40 NAR, “2024 Home Buyers and Sellers Generational Trends Report,” (2024), p. 8, available at https://www.nar.realtor/sites/default/files/documents/2024-home-buyers-and-sellers-generational-trends-04-03-2024.pdf.

However, the nature of this demand, when considered in conjunction with prevailing market conditions, presents notable affordability challenges, particularly for first-time homebuyers and lower-income households. The NAR 2025 “Housing Affordability & Supply” report indicates a significant disparity between available inventory and affordability for this segment. 41 While overall housing inventory has experienced an increase, the preponderance of newly available housing is not affordable to first-time homeowners. Specifically, the NAR report identifies that buyers earning less than $50,000 per year now face a reduction in affordable options compared to the preceding year. This observation underscores a widening affordability gap, demonstrating that lower-income households are increasingly excluded from homeownership opportunities within the current market environment.

41 NAR, “Housing Affordability & Supply: Rising Inventory, But for Whom? A Look at Inventory Gaps by Price Range and Income Levels in 2025,” (May 2025), available at https://www.nar.realtor/sites/default/files/2025-05/2025-housing-affordability-and-supply-05-15-2025.pdf.

This evidence suggests that, despite robust demand originating from the Millennial cohort, the commensurate supply of available and affordable housing is insufficient to meet the needs of low- and moderate-income segments

ps by Price Range and Income Levels in 2025,” (May 2025), available at https://www.nar.realtor/sites/default/files/2025-05/2025-housing-affordability-and-supply-05-15-2025.pdf.

This evidence suggests that, despite robust demand originating from the Millennial cohort, the commensurate supply of available and affordable housing is insufficient to meet the needs of low- and moderate-income segments. Elevated housing goals, if unaligned with the realistic capacity of the market to deliver affordable units, possess the potential to exacerbate existing affordability pressures. Consequently, in consideration of these demographic trends and the persistent affordability constraints documented by NAR—particularly for low- and moderate-income homebuyers—the Agency deems it prudent to establish more modest benchmarks for the housing goals. This

adjustment acknowledges the current limitations in affordable inventory, facilitating a lending pace that more accurately reflects accessible supply and mitigating the potential for further price escalation that could disproportionately affect the intended beneficiaries of these goals.

Past performance and effort of the Enterprises to achieve the housing goals.

The Enterprises' primary method to meet the housing goal targets is through guarantee fee pricing subsidies. Guarantee fee subsidies designed to facilitate lending to housing goal-qualifying households include the elimination of upfront fees, cash window incentives, and variable ongoing fees. Notably, none of the three methods of providing incentives are generally required to be passed on to the borrower; rather, they incent sellers to deliver loans that qualify for the goals. The Enterprises charge guarantee fees to sellers to cover expected credit losses, administrative costs, and the cost of capital associated with their guarantees. There are two types of guarantee fees: ongoing and upfront. Ongoing fees are factored into each loan's interest rate and collected monthly over the life of a loan

subsidies encourage lenders to deliver these loans to the Enterprises. 44

43 HomeReady is Fannie Mae's low-down payment mortgage product designed for creditworthy low-income borrowers, available at https://singlefamily.fanniemae.com/media/8316/display. Home Possible is Freddie Mac's equivalent see: https://sf.freddiemac.com/working-with-us/origination-underwriting/mortgage-products/home-possible.

44 New Release, “FHFA Announces Updates to the Enterprises' Single-Family Pricing Framework,” (January 2023), available at https://www.fhfa.gov/news/news-release/fhfa-announces-updates-to-the-enterprises-single-family-pricing-framework.

The Enterprises also provide incentives for loans that qualify for goals that are delivered through the cash window. 45 The cash window allows sellers to deliver loans directly to an Enterprise in return for a cash payment. The Enterprises bundle these loans into mortgage-backed securities (MBS) and sell the MBS into the secondary market. The Enterprises can provide subsidies, in the form of pay-ups or other pricing benefits, to goal-qualifying loans. While pay-ups are used primarily to account for these loans' lower prepayment risk, an important secondary effect is to encourage the delivery of more goal-qualifying loans due to the overlapping populations.

45 Also known as the whole loan conduit channel and distinct from the MBS swap acquisition channel, whereby a seller exchanges a group of loans for an Enterprise-guaranteed mortgage-backed security, which the seller may then sell into the secondary market. See https://www.cbo.gov/publication/60978.

The Enterprises may also vary the ongoing guarantee fees they charge to lenders. Ongoing fees are based primarily on the product type, such as whether the loan is a 30-year fixed-rate or a 15-year fixed-rate loan, but also reflect other factors, which may include the share of mortgages delivered that are goals-qualifying

other large lender shared that to maintain its relationship with the Enterprises, they have to pay-up for goal-qualifying loans from third-party loan aggregators that they would have not ordinarily purchased in order to deliver those loans to the Enterprises, noting that the lower pricing is not passed to the borrower in the form of down payment assistance, closing cost assistance, or a lower rate. One large trade association reiterated these concerns, noting that the Enterprises' actions resulted in distorted pricing and an inefficient subsidy mechanism that benefits lenders, rather than “creating a bigger [affordable housing] pie” that benefits future homeowners, and that sellers' ability to participate in pilots and receive preferential pricing was directly tied to goals. 48 The trade association also noted that lenders felt compelled to turn away non-goals business in order to keep their goal percentages high, or place low-income borrowers in conventional loans when another product might be a better fit.

47 FHFA is not aware of a data source that would quantify the trends illustrated by these examples.

48 Ibid.

Anecdotal feedback from the Enterprises and industry notes that the housing goals often result in Fannie Mae and Freddie Mac competing with each other for the same low- and moderate-income borrowers. In Congressional testimony, Edward DeMarco of the Housing Policy Council, similarly stated that “the current target level of affordable loans materially exceeds what the market is capable of producing, given today's market conditions . . . As a result, there is a bidding war for these loans but there is no mechanism to ensure the homebuyer benefits. Moreover, competition between the two GSEs over goals loans does nothing to expand the number of borrowers reached.” 49 These insights highlight that the Enterprises compete over a limited pool of borrowers rather than ensuring all credit eligible applicants have access to a liquid market

ril 2025), available at https://aei.org/wp-content/uploads/2025/04/FHFA-White-Paper-Reforming-GSE-Lending-A-Sustainable-Path-for-Fannie-Mae-and-Freddie-Mac-FINAL-2.pdf.

51 See, e.g., John Meussner, MMCD, “Public Comment on FHFA 2025-2027 Proposed Housing Goals,” (August 26, 2024), available at https://www.fhfa.gov/regulation/federal-register/proposed-rulemaking/2025-2027-enterprise-housing-goals.

Further, on January 20, 2025, the President issued a Memorandum entitled “Delivering Emergency Price Relief for American Families and Defeating the Cost-of-Living Crisis,” instructing federal agencies to, among other actions, lower the cost of housing and expand housing supply. 52 FHFA, in carrying out this policy priority, is assessing the impact of the housing goals on the cost of housing, particularly to middle-class borrowers, who may be turned away or receive higher prices than they would in the absence of overly aggressive housing goals.

52 Presidential Memorandum “Delivering Emergency Price Relief for American Families and Defeating the Cost-of-Living Crisis,” (January 20, 2025), 90 FR 8245 (Jan. 28, 2025), available at https://www.federalregister.gov/documents/2025/01/28/2025-01904/delivering-emergency-price-relief-for-american-families-and-defeating-the-cost-of-living-crisis.

The Agency recognizes that it is difficult to fully isolate and quantify the extent to which setting inappropriately aggressive housing goals penalizes middle-class borrowers. However, insights from discussions with market participants suggest a material impact on access to liquidity and inefficient deployment of funds. While the scope and systemic impact of these unintended consequences are not yet fully understood, the Agency recognizes the importance of ensuring the Enterprises meet their charter act mission to provide liquidity to all markets at all times for all income segments. Further, the Agency has a policy interest in ensuring effective allocation of resources, as well as lowering costs for American families

ses' past performance and effort to achieve the housing goals in setting future benchmarks. This approach was largely predicated on a recognition that past performance data, while valuable, may not always capture the nuances of the Enterprises' efforts, particularly regarding the specific actions taken to achieve goals, and a larger weighting on the Enterprises' ability to lead the mortgage market. However, recent insights into the Enterprises' operational behaviors, coupled with an updated understanding of how various pricing mechanisms can affect overall housing affordability, necessitate a recalibration of the Agency's approach.

Table 1 provides the annual performance of both Enterprises on the single-family housing goals between 2010 and 2024.

BILLING CODE 8070-01-P EP02OC25.021

BILLING CODE 8070-01-C To better align the housing goals with the Agency's objectives, and to gain a more granular understanding of how Enterprise actions contribute to or detract from this aim, FHFA believes that adjustments to the weighting of past performance is appropriate for some of the benchmarks. As described above, FHFA's review of past Enterprise tactics used to achieve housing goals target indicates that some actions taken may have increased housing costs for some homebuyers. A key policy priority for the Agency is to reduce costs to

homeownership for all borrowers across all income brackets. FHFA is assessing both the Enterprises performance in meeting the goals and the effectiveness of strategies used to complete the goals in order to inform the establishment of more precise and appropriately calibrated benchmark housing goals in future rulemakings that reduce homeownership costs for all borrowers.

Ability of the Enterprises to lead the mortgage market. The Enterprises' overall share of the mortgage market at origination is subject to fluctuation. In the years preceding the 2008 financial crisis, the Enterprises' share of the market dropped to about 44 percent

ecise and appropriately calibrated benchmark housing goals in future rulemakings that reduce homeownership costs for all borrowers.

Ability of the Enterprises to lead the mortgage market. The Enterprises' overall share of the mortgage market at origination is subject to fluctuation. In the years preceding the 2008 financial crisis, the Enterprises' share of the market dropped to about 44 percent. As shown in Graph 4, that share rose to about 65 percent in 2012, but declined to about 55 percent in 2015. The Enterprises' share remained relatively stable until 2019, then jumped to 67 percent in 2020 as the Enterprises continued to acquire mortgages even as others in the market stepped back during the COVID-19 pandemic. Since then, the Enterprises' share has declined as the shares of government-guaranteed and government-insured loans, as well as the shares of other market participants, have grown. Government-guaranteed and government-insured loans are not eligible for housing goals credit.

BILLING CODE 8070-01-P EP02OC25.022

BILLING CODE 8070-01-C Graph 4 also shows that the Enterprises' share of the conforming mortgage market returned to pre-pandemic levels in 2022 but declined significantly the following year, by seven percentage points in 2023. In 2024, the Enterprises' share continued to decline, dropping one percentage point from the previous year. Compared to pre-pandemic levels of 2019, the Enterprise share in 2024 was 8 percentage points lower. Over the same period, the total direct government share of the mortgage market (not including the Enterprises) and the Other share (such as retained bank portfolios) expanded. Government share of the mortgage market increased seven percentage points from 2022 to 2023 and remained the same level in 2024.

It is neither efficient nor necessary for the Enterprises to serve the entire of the low- and moderate-income market

he total direct government share of the mortgage market (not including the Enterprises) and the Other share (such as retained bank portfolios) expanded. Government share of the mortgage market increased seven percentage points from 2022 to 2023 and remained the same level in 2024.

It is neither efficient nor necessary for the Enterprises to serve the entire of the low- and moderate-income market. The market serving low- and moderate-income households is a distinct segment of the housing market, offering tailored mortgage products and programs to serve the credit needs of these borrowers. The federal government—through the Federal Housing Administration (FHA), 53 Rural Housing Service (RHS), and Veterans Administration (VA)—also provide mortgage products geared toward low- and moderate-income households. 54 For example, HUD reports that in FY 2024 about 32 percent of FHA-insured mortgages were issued to borrowers earning less than 80 percent of the Area Median Income, compared with 26 percent in the rest of the broader market. 55 In FY 2024, FHA served 766,942 forward mortgage borrowers, including 603,040 purchase mortgages. 56 Assuming, of the 603,040 purchase mortgages, a similar

percentage were to low-income borrowers, FHA insured home purchase mortgages to roughly 193,150 borrowers earning less than 80 percent of the AMI—roughly on par with the 189,247 low-income home purchases mortgages supported by Fannie Mae and the 200,757 low-income home purchase mortgages supported by Freddie Mac. According to the Veterans' Administration report, similarly, in FY 2024, 22 percent (65,949 purchase loans) of Veterans Administration insured loans were to borrowers with incomes of less than $74,999. 57 That same year, 4,164 low-and very low-income borrowers received funding through the Section 502 Single Family Housing Direct Loan program under USDA's Rural Housing Programs

rted by Freddie Mac. According to the Veterans' Administration report, similarly, in FY 2024, 22 percent (65,949 purchase loans) of Veterans Administration insured loans were to borrowers with incomes of less than $74,999. 57 That same year, 4,164 low-and very low-income borrowers received funding through the Section 502 Single Family Housing Direct Loan program under USDA's Rural Housing Programs. 58 For the USDA rural housing program, data provided by USDA shows an average loan size of $102,154 for the most recent year with available data (2016), compared to an average conventional loan amount of $256,000 for that same year. 59

53 See HUD, “Let FHA Loans Help You,” available at https://www.hud.gov/helping-americans/loans.

54 See VA, “Rural Housing Programs,” available at https://www.va.gov/HOMELESS/docs/Rural-Housing-Programs-Fact-Sheet.pdf.

55 See FHA Annual Report to Congress FY2024, available at https://www.hud.gov/sites/dfiles/Housing/documents/2024FHAAnnualReportMMIFund.pdf.

56 Ibid.

57 See VA Annual Benefits Report FY2024, available at https://www.benefits.va.gov/REPORTS/abr/docs/2024-abr.pdf#.

58 See Congressional Research Service, “USDA Rural Housing Programs: An Overview,” (March 2022), available at https://www.congress.gov/crs-product/R47044; USDA's current low- and very low-income limits, “Rural Development Single Family Housing Guaranteed Loan Program,” available at https://www.rd.usda.gov/files/rd-grhlimitmap.pdf; and Housing Assistance Council, “USDA Rural Development Housing Activity Report Fiscal Year 2024,” available at https://ruralhome.org/wp-content/uploads/2025/03/2024-usda-rural-development-housing-activity-report.pdf

g-guide-part-2.pdf.

61 See HFA Preferred, available at https://singlefamily.fanniemae.com/media/8661/display; and HFA Advantage, available at https://sf.freddiemac.com/working-with-us/origination-underwriting/mortgage-products/hfa-advantage.

Finally, many financial institutions elect to keep mortgage loans in their portfolios to meet their obligations under the Community Reinvestment Act (CRA). A core component of CRA evaluations is an assessment of a bank's record of providing credit to low- and moderate-income households, and first-lien mortgages directly contribute to this test. 62 By originating and retaining these loans in their portfolio, financial institutions demonstrate their commitment to serving these communities.

62 See, generally, 12 CFR part 25.

As described above, the Enterprises are not the sole source of support for mortgage originations to low- and moderate-income households. Mortgage lenders offer a broad range of products and assess each individual borrower's circumstances to identify the best product. For affordable lending, lender considerations include strategies that ensure long-term affordability and borrower success. For an individual household, a conventional mortgage that is eligible to be purchased by the Enterprise may not always offer the best execution or product for their needs. 63 Loans held in portfolio for CRA purposes, and other non-Enterprise eligible loans may be a better fit based on a borrower's credit profile, down payment, and other factors. For example, a bank may offer a CRA product that provides a below-market interest rate, ensuring a more sustainable loan compared to the rates offered in the conventional market, or a household eligible for a Veterans Administration loan may wish to use a product with no down payment requirement. 64 Financial institutions serving low- to moderate-income borrowers may also seek liquidity through Federal Home Loan Bank advances to best meet affordability needs

ograms.

70 FHFA, “A Quarter Century of Mortgage Risk,” Figure 4, (February 2022 revised; January 2019 original), available at: https://www.fhfa.gov/document/wp1902.pdf.

71 MBA, “Mortgage Delinquencies Increase in the Fourth Quarter of 2024,” (February 2025), available at https://www.mba.org/news-and-research/newsroom/news/2025/02/06/mortgage-delinquencies-increase-in-the-fourth-quarter-of-2024.

Importantly, housing goals that are set too high may simply steer borrowers from other loan products, such as FHA loans, to conventional loans, rather than providing liquidity for new households. As defined in statute, the Enterprises have the objective of supporting financing for low- to moderate-income households, including ensuring the Enterprises promote access to mortgage capital throughout the Nation. 72 However, this does not require the Enterprises to diminish the vital role of other market participants in a diversified secondary market ecosystem or engage in a “race to the bottom” competition between the two Enterprises. These outcomes ultimately diminish the benefit to underserved and middle-class borrowers. In such scenarios, the Enterprises may gain a disproportionate share of the existing market for certain loan types, rather than expand the universe of eligible borrowers or foster new, innovative lending solutions across the entire market. This can lead to a phenomenon where the benefits of housing goals accrue more to the Enterprises' market presence than to a broader societal gain in housing accessibility.

72 12 U.S.C. 4501.

Commenters on the proposed rule for the 2025-2027 housing goals expressed this concern about how high housing goals can shift borrowers away from other loan products to conventional loans, thereby creating competition between the Enterprises, rather than increasing affordable housing supply. For example, the Mortgage Bankers Association (MBA) wrote, “While well intended . .

72 12 U.S.C. 4501.

Commenters on the proposed rule for the 2025-2027 housing goals expressed this concern about how high housing goals can shift borrowers away from other loan products to conventional loans, thereby creating competition between the Enterprises, rather than increasing affordable housing supply. For example, the Mortgage Bankers Association (MBA) wrote, “While well intended . . . there is extreme competition for LIP and VLIP loans,” noting how there is a “tug of war effect,” over these loans that can “cause market disruption, mispricing of underlying risks, and potentially higher costs for nongoals loans— i.e., cross-subsidization beyond the levels intended in the Enterprises' pricing framework.” 73

73 MBA, Public Comment Letter on “FHFA 2025-2027 Proposed Housing Goals,” (October 28, 2024), available at https://www.fhfa.gov/sites/default/files/2024-10/FHFA_2025-2027_Housing_Goals_Final.pdf; LIP refers to low-income purchase mortgages and VLIP refers to very low-income purchase mortgages.

Conversely, if housing goals are set too low, there is a risk of a decrease in liquidity and outreach to low- and moderate-income borrowers if market participants are not sufficiently incented to provide mortgage liquidity to these borrowers. However, there are several countervailing reasons why this is unlikely. First, both Enterprises have a statutory mandate to provide ongoing assistance for residential mortgages, including “housing for low- and moderate-income families.” This broad mission is enshrined in their charter acts and extends beyond the specifics of housing goals. 74 Second, lenders and the Enterprises are incented to deliver loans to low- and moderate-income borrowers due to the pay-ups (premiums) they command through spec pool trading. 75 Loans to low- and moderate-income borrowers exhibit more stable prepayment behavior and other desirable attributes for investors

ssion is enshrined in their charter acts and extends beyond the specifics of housing goals. 74 Second, lenders and the Enterprises are incented to deliver loans to low- and moderate-income borrowers due to the pay-ups (premiums) they command through spec pool trading. 75 Loans to low- and moderate-income borrowers exhibit more stable prepayment behavior and other desirable attributes for investors. Third, and finally, low- and moderate-income households represent a significant (and still profitable) proportion of the overall potential homebuying market. 76 It is not in the Enterprises' interest to cease purchases from this market because it would result in a substantial loss of business and market reach.

74 See https://www.govinfo.gov/content/pkg/USCODE-2023-title12/pdf/USCODE-2023-title12-chap11A.pdf and https://www.govinfo.gov/content/pkg/USCODE-2023-title12/pdf/USCODE-2023-title12-chap13-subchapIII.pdf.

75 A spec pool is an MBS where all loans in the pool meet a specified criteria at issuance, and these characteristics are known at the time of the trade. Investors generally invest in spec pools because of the prepayment characteristics of these pools. For a discussion of this issue in the context of low-loan balance spec pools, see Fannie Mae, “Low Balance Lending Economics: The Role of the Spec Pay-up,” (December 2023), available at https://www.fanniemae.com/media/49786/display.

76 National Community Reinvestment Coalition, “Home Lending to LMI Borrowers and Communities by Banks Compared to Non-Banks,” (April 2019), available at https://ncrc.org/home-lending-to-lmi-borrowers-and-communities-by-banks-compared-to-non-banks/.

FHFA also looks to past performance to assess the likelihood that an Enterprise would cease or reduce liquidity to low- and moderate-income borrowers if the benchmarks were lowered. A review of performance in the 2018 and 2021 housing goals cycle finds that the Enterprises consistently delivered above the benchmark number

ods where the Enterprises had a high market share, their purchase activities could influence the overall market level.

For the reasons discussed above, FHFA believes that in some instances it is appropriate to set benchmarks that are lower than the market forecasts to encourage other secondary market outlets to participate in the market, and to avoid unnecessary and costly duplication of support. While the housing goals provide a quantitative framework for avoiding significant liquidity gaps in the market, the underlying business rationale, market dynamics, and the Enterprises' foundational mission ensure a continued, strong incentive to provide liquidity to low- and moderate-income borrowers. Moreover, the presence of the goals, even at a lower level, ensures that the low- and moderate-income mortgage market continues to be served and recognizes the crucial role the Enterprises play in maintaining this stability.

In previous Enterprise Housing Goals rules, the Agency's assessment of the Enterprises' ability to lead the mortgage market has primarily focused on their direct contributions to providing liquidity to low- and moderate-income borrowers. This approach historically placed less explicit emphasis on the broader market's composition, including the vital roles and activities of other federal housing programs, such as FHA, and of the PLS market, as well as lender decisions regarding their portfolio. While acknowledging the interconnectedness of the overall housing finance system, prior regulations were structured to primarily address the Enterprises' activities. Prior FHFA housing goal regulations often lacked a detailed consideration of potential overlaps or synergistic effects with other market participants.

However, recent policy priorities and market conditions necessitate a more holistic view

cknowledging the interconnectedness of the overall housing finance system, prior regulations were structured to primarily address the Enterprises' activities. Prior FHFA housing goal regulations often lacked a detailed consideration of potential overlaps or synergistic effects with other market participants.

However, recent policy priorities and market conditions necessitate a more holistic view. The Agency is now placing a significant policy focus on ensuring that Enterprise subsidies are deployed efficiently, minimizing unnecessary and costly duplication of efforts within the government share of the mortgage market. Additionally, the Agency will undertake a critical examination of how the Enterprises' activities intersect with, impact, and compete with FHA's mission, the health of the PLS market, and financial institutions' obligations under the Community Reinvestment Act. Furthermore, the Agency is aligning its approach with Treasury's recommendations regarding the appropriate roles and potential overlap between the Enterprises and FHA, with the goal of creating a more streamlined and effective housing finance system. Therefore, the Agency's analysis and weighting of the Enterprises' ability to lead the market will consider the Enterprises' role within the entire mortgage market, seeking to optimize resource allocation and ensure that each segment of the market efficiently serves its intended purpose without undue competition or inefficiency.

Need to maintain the sound financial condition of the Enterprises. A key factor guiding FHFA in setting the benchmark levels for the housing goals is FHFA's statutory mandate and critical policy objective to maintain the sound financial condition of the Enterprises. FHFA is reevaluating the housing goals to prioritize Enterprise safety and soundness, ensure adequate capital accumulation, and promote efficient deployment of Enterprise resources. This rulemaking occurs during a period of heightened housing affordability challenges and increased market uncertainty

mandate and critical policy objective to maintain the sound financial condition of the Enterprises. FHFA is reevaluating the housing goals to prioritize Enterprise safety and soundness, ensure adequate capital accumulation, and promote efficient deployment of Enterprise resources. This rulemaking occurs during a period of heightened housing affordability challenges and increased market uncertainty. FHFA carefully considered benchmark levels that represent a balanced approach to supporting access for low- and moderate-income families, and those living in low-income areas, while supporting the Enterprises' financial stability and overall market integrity.

The Housing and Economic Recovery Act (HERA) of 2008 mandates that Fannie Mae and Freddie Mac operate in a “safe and sound manner, including maintenance of adequate capital and internal controls.” 81 FHFA's unwavering policy priority is to ensure that the Enterprises accumulate statutorily required capital, mitigate risk exposures, and adjust financial strategies to ensure their long-term stability.

81 HERA, Public Law 110-289, title I, subtitle A, sec. 1102(a), 122 Stat 2664 (12 U.S.C. 4513(a)(1)(B)(i)), (2008), available at https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf.

Despite this statutory requirement, the Enterprises continue to face significant capital shortfalls. As noted in FHFA's 2024 Annual Report to Congress, while their capital positions have improved since the 2008 financial crisis, they have not yet accumulated the statutorily required capital. 82 At the end of 2024, both Fannie Mae and Freddie Mac failed to meet the minimum regulatory capital requirements established under the Enterprise Regulatory Capital Framework (ERCF). 83 Their continued reliance on government support through the Senior Preferred Stock Purchase Agreements (PSPAs) with Treasury, evidenced by accumulated deficits and negative retained earnings, underscores their ongoing capital needs

2024, both Fannie Mae and Freddie Mac failed to meet the minimum regulatory capital requirements established under the Enterprise Regulatory Capital Framework (ERCF). 83 Their continued reliance on government support through the Senior Preferred Stock Purchase Agreements (PSPAs) with Treasury, evidenced by accumulated deficits and negative retained earnings, underscores their ongoing capital needs. 84 Specifically, as of December 2024, Fannie Mae's statutory capital shortfall was $157 billion, with a total regulatory shortfall of $164 billion ($243 billion when including regulatory capital buffers). 85 For Freddie Mac, the statutory capital shortfall stood at $108 billion, with a total regulatory capital shortfall of $107 billion ($164 billion when including regulatory capital buffers). 86

82 2024 Annual Report to Congress, (June 2025), p. 15, available at https://www.fhfa.gov/document/fhfa-2024-annual-report-to-congress.pdf.

83 Fannie Mae, available at https://www.fanniemae.com/media/document/pdf/fnma-capital-disclosures-2024q4-022625.pdf; and Freddie Mac, available at https://www.freddiemac.com/investors/docs/4Q24_ERCF_Public_Disclosure.pdf.

84 2024 Annual Report to Congress, (June 2025), p. 15, available at https://www.fhfa.gov/document/fhfa-2024-annual-report-to-congress.pdf.

85 U.S. Securities and Exchange Commission Form 10-k, 2024, Fannie Mae, p. 125, available at https://www.fanniemae.com/media/document/pdf/q42024.pdf.

86 U.S. Securities and Exchange Commission Form 10-k, 2024, Freddie Mac, p. 93, available at https://www.freddiemac.com/investors/financials/pdf/10k_021325.pdf.

These shortfalls underscore why the Enterprises must make safety and soundness their primary focus, considering their size and role in the housing market. The Enterprises' profitability, crucial for organic capital generation, depends heavily on the credit risk associated with guarantee fees. However, the Enterprises often expect lower returns on mortgage loans for low- and moderate-income families

hese shortfalls underscore why the Enterprises must make safety and soundness their primary focus, considering their size and role in the housing market. The Enterprises' profitability, crucial for organic capital generation, depends heavily on the credit risk associated with guarantee fees. However, the Enterprises often expect lower returns on mortgage loans for low- and moderate-income families. 87 A study conducted by Fannie Mae in 2017 on “The Credit Risk of Low-Income Mortgages” describes how several risk factors, such as debt-to-income ratios, loan-to-value ratios, and credit scores can vary significantly across income groups, with loans to lower-income borrowers exhibiting higher risk profiles. The data illustrates that default rates for mortgages are higher when borrower income declines, reinforcing the need to carefully balance support for low- and moderate-income families with safety and soundness concerns. 88

87 FHFA, “Fannie Mae and Freddie Mac Single-Family Guarantee Fees in 2023,” (January 2025), p. 8, available at https://www.fhfa.gov/document/gfee-report-2023.pdf.

88 Hamilton Fout, Grace Li, Mark Palim, “Credit Risk of Low Income Mortgages, Economic and Strategic Research, Fannie Mae,” (May 2017), p. 7, available at https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/research/datanotes/pdf/credit-risk-of-low-income-mortgages-white-paper.pdf.

Given the current economic climate characterized by elevated mortgage rates, reduced transaction volume, and affordability concerns, as well as the Enterprises' current capital shortfalls, the Agency must reweight its policy priorities to emphasize the need to maintain the sound financial condition of the Enterprises. In prior housing goal rulemakings, FHFA has given less weight to safety and soundness considerations than it has to other considerations

ated mortgage rates, reduced transaction volume, and affordability concerns, as well as the Enterprises' current capital shortfalls, the Agency must reweight its policy priorities to emphasize the need to maintain the sound financial condition of the Enterprises. In prior housing goal rulemakings, FHFA has given less weight to safety and soundness considerations than it has to other considerations. In today's climate, reduced loan origination volumes, elevated interest rates, and economic uncertainty may make it harder for the Enterprises to generate sufficient retained earnings to meet ERCF requirements if benchmark levels are not reduced since housing goals loans generally earn a lower return relative to non-housing goals loans, harming their financial resiliency and independence. A strategic shift to weighing safety and soundness more heavily is necessary to continue to maintain sound financial positioning. Prioritizing full recapitalization and then maintaining sufficient capital reserves will be critical to fulfilling their statutory obligations and preserving their ability to support

the entire housing market sustainably while adhering to HERA requirements for financial stability.

During a period of affordability challenges and uncertainty around market conditions, 89 90 setting the single-family housing goals benchmark levels too high could compromise safe and sound acquisition standards. Failure to appropriately account for important risk management considerations, such as the need to maintain sound financial conditions and meet minimum regulatory capital requirements could lead to unintended consequences, including persistent capital shortfalls. The proposed benchmarks levels are designed to support access to mortgage lending for low- and moderate-income families while concurrently enabling the Enterprises to adequately support all other segments of the market fairly and fortify their financial foundations

rkets. McKinsey & Co, “Economic Conditions Outlook, June 2025,” (June 2025), available at https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/economic-conditions-outlook.

B. Proposed Benchmark Levels for the Single-Family Housing Goals for 2026-2028

FHFA is proposing to establish the following benchmark levels for the single-family housing goals for 2026-2028:

1. Low-Income Home Purchase Goal

The low-income home purchase goal is based on the percentage share of all conventional, conforming, single-family, owner-occupied home purchase mortgages purchased by an Enterprise that are made to low-income families, defined as families with incomes less than or equal to 80 percent of AMI. FHFA proposes setting the low-income home purchase benchmark at 21.0 percent. Lowering the benchmark is necessary to ensure the Enterprises' participation remains effective, avoids distorting the market and competing unnecessarily with other secondary market participants, and supports a policy objective of reducing overall housing costs for all borrowers.

EP02OC25.023

Recent performance and forecasts. As presented in Table 2, the low-income home purchase market level, derived from HMDA data, declined from 27.6 percent in 2020 to 26.3 percent in 2023. FHFA's most recent forecast for this goal projects a continued market level decline, averaging 25.9 ± 5.6 percent. FHFA's current model forecasts the market level to remain below 26.0 percent through 2027, with an average forecast midpoint value of 25.9 percent.

Regarding Enterprise performance, Freddie Mac recorded a low-income home purchase performance of 29.0 percent in 2022 and 28.5 percent in 2023, exceeding both the benchmark and market levels in those years. Fannie Mae's performance in 2022 was 27.4 percent, which was below the benchmark level but above the market level. In 2023, however, Fannie Mae's performance decreased to 26.1 percent, falling below both the benchmark and the market levels

recorded a low-income home purchase performance of 29.0 percent in 2022 and 28.5 percent in 2023, exceeding both the benchmark and market levels in those years. Fannie Mae's performance in 2022 was 27.4 percent, which was below the benchmark level but above the market level. In 2023, however, Fannie Mae's performance decreased to 26.1 percent, falling below both the benchmark and the market levels. For 2023, FHFA determined that while Fannie Mae did not meet the goal, the established benchmark was not feasible for the Enterprise. 91 Preliminary performance for 2024 indicates Fannie Mae at 26.7 percent and Freddie Mac at 26.6 percent. FHFA will issue its preliminary and final determinations on this goal when HMDA data becomes available.

91 FHFA's final determination of Fannie Mae's performance for 2023, available at https://www.fhfa.gov/sites/default/files/2024-11/2023-Final-Determination-Letter-Fannie-Mae.pdf.

FHFA rationale for the proposed benchmark. FHFA's holistic review of Enterprise pricing factors, coupled with a policy objective to facilitate lower housing costs for all borrowers and to ensure efficient deployment of Enterprise subsidy, supports a reduction in this goal's benchmark. It is imperative for the Enterprises to remain active participants within this market segment; however, FHFA must ensure that the established benchmark does not create distortive incentives or unintended consequences within the housing finance system.

As discussed previously in this preamble, feedback from lenders and

other market participants has indicated that, under the previous benchmark level, the Enterprises employed various pricing incentives and other competitive tactics to increase goals-eligible loan delivery, or decrease non-goals-eligible loan delivery, particularly for low-income and very low-income loans. This competition extended not only between the Enterprises themselves, but also with the government share of the mortgage market and private market participants

proposes setting the very low-income home purchase benchmark at 3.5 percent. Like the low-income home purchase goal, lowering the benchmark will ensure the Enterprises effectively support very low-income borrowers, while preventing market distortions and redundant efforts, all while advancing FHFA's policy of lower housing costs for all borrowers.

EP02OC25.024

Recent performance and forecasts. As detailed in Table 3, the very low-income home purchase market level, derived from HMDA data, decreased from 7.0 percent in 2020 to 6.5 percent in 2023. FHFA's most recent forecast projects a continued market level decline, averaging 6.0 ± 2.5 percent. FHFA's current model forecasts the market to continue its downward trajectory reaching below 6 percent through 2027, with an average forecast midpoint value of 5.9 percent.

Regarding the Enterprises, Freddie Mac's performance was 7.1 percent in 2022, exceeding both the benchmark and the market. In 2023, Freddie Mac's performance was 6.8 percent, which was above the market, but below the benchmark. Fannie Mae's performance was 6.9 percent in 2022, exceeding the market, but below the benchmark. In 2023, Fannie Mae's performance was 6.0 percent, which was below both the market and the benchmark. Preliminary 2024 performance shows Fannie Mae at 5.9 percent and Freddie Mac at 6.1 percent, both of which are below the benchmark. FHFA will issue final determinations later this year when HMDA data is released.

The observed decline is largely attributable to a constrained housing supply within the very low-income borrower purchase market. Sustained house price appreciation has reduced the inventory of homes affordable to

very low-income borrowers. 92 Concurrently, new construction of starter homes remains insufficient to meet consumer demand. 93 This deficit in the supply of new homes is compounded by current economic incentives within the construction sector

d housing supply within the very low-income borrower purchase market. Sustained house price appreciation has reduced the inventory of homes affordable to

very low-income borrowers. 92 Concurrently, new construction of starter homes remains insufficient to meet consumer demand. 93 This deficit in the supply of new homes is compounded by current economic incentives within the construction sector. Builders are drawn to developing properties at the higher end of the market due to more substantial profit margins. The increase in the cost of land acquisition, 94 construction materials, 95 lack of skilled labor, and regulatory barriers has compressed profit margins on starter homes significantly, thereby hindering the addition of new, affordable supply to the market.

92 NY Times, “Whatever Happened to the Starter Home?” (September 2022), available at https://www.nytimes.com/2022/09/25/upshot/starter-home-prices.html.

93 National Association of Realtors, “Housing Affordability & Supply: Rising Inventory, But for Whom? A Look at Inventory Gaps by Price Range and Income Levels in 2025,” (May 2025), available at https://www.nar.realtor/sites/default/files/2025-05/2025-housing-affordability-and-supply-05-15-2025.pdf.

94 Joint Center for Housing Studies, Housing Perspectives, “Increasing Land Prices Make Housing Less Affordable,” (July 2019), available at https://www.jchs.harvard.edu/blog/increasing-land-prices-make-housing-less-affordable.

95 National Association of Home Builders, “How Soaring Prices for Building Materials Impact Housing,” (July 2024), available at https://www.nahb.org/blog/2024/07/how-soaring-prices-building-materials-impact-housing.

FHFA rationale for proposed benchmark

ers are often better served by other market participants, such as FHA or HFAs, which can offer more flexible products and underwriting. By setting a more appropriate benchmark, the Enterprises will no longer create as great an adverse competitive pressure in the market for these loans. Instead, they will provide a complementary level of support without overwhelming or distorting the broader market. In sum, FHFA believes that a benchmark of 3.5 percent is appropriate, offering a stronger emphasis on maintaining the Enterprises' sound financial condition, avoiding the displacement of potentially innovative market participants, and more effectively serving a wide range of borrowers, reflecting a prudent balance between mission achievement, market dynamics, and safety and soundness.

3. Low-Income Areas Home Purchase Subgoal

The proposed rule would establish a single low-income areas home purchase subgoal, rather than two separate area-based subgoals, each with their own benchmark level. The proposed subgoal would count all single-family, owner-occupied home purchase mortgages purchased that are either: (1) for families in low-income areas, defined to include census tracts with median income less than or equal to 80 percent of AMI; or (2) for families with incomes less than or equal to AMI who reside in minority census tracts (defined as census tracts with a minority population of at least 30 percent and a tract median income of less than 100 percent of AMI). The proposed rule would set the annual benchmark level for this subgoal for 2026-2028 at 16.0 percent.

EP02OC25.025

Recent performance and forecasts. Table 4 shows the market levels and Enterprise performance on this subgoal in 2021, along with implied market levels and Enterprise performance for the years 2022 through 2024, during which the low income areas subgoal was replaced by the low-income census tracts and minority census tracts subgoals

l for this subgoal for 2026-2028 at 16.0 percent.

EP02OC25.025

Recent performance and forecasts. Table 4 shows the market levels and Enterprise performance on this subgoal in 2021, along with implied market levels and Enterprise performance for the years 2022 through 2024, during which the low income areas subgoal was replaced by the low-income census tracts and minority census tracts subgoals. As shown above, both Enterprises exceeded the proposed benchmark level for this subgoal in 2022, 2023, and, based on preliminary data, in 2024.

FHFA rationale for the proposed benchmark: In 2010, FHFA established a low-income areas housing subgoal as a component of the overall low-income areas housing goal. 96 Both the low-income areas housing goal and subgoal were established as part of FHFA's implementation of the new housing goals structure created by Congress in the Housing and Economic Recovery Act of 2008. 97 HERA amended the Safety and Soundness Act to include a new single-family housing goal for “low-income areas,” which were defined to include census tracts where the median tract income does not exceed 80 percent of the areas median income, as well as moderate-income families in minority census tracts and moderate-income families in designated disaster areas. Because the areas of the country affected by disasters change each year, it was necessary to structure the overall low-income areas housing goal in a way that would allow the target level to be adjusted by notice each year. FHFA established the low-income areas housing subgoal as including the other two components of the goal, to facilitate the setting of the overall low-income areas housing goal.

96 “2010-2011 Enterprise Housing Goals; Enterprise Book-entry Procedures” (Final Rule), 75 FR 55892 (Sept. 14, 2010), available at https://www.federalregister.gov/documents/2010/09/14/2010-22361/2010-2011-enterprise-housing-goals-enterprise-book-entry-procedures.

97 HERA, Public Law 110-289, 122 Stat

omponents of the goal, to facilitate the setting of the overall low-income areas housing goal.

96 “2010-2011 Enterprise Housing Goals; Enterprise Book-entry Procedures” (Final Rule), 75 FR 55892 (Sept. 14, 2010), available at https://www.federalregister.gov/documents/2010/09/14/2010-22361/2010-2011-enterprise-housing-goals-enterprise-book-entry-procedures.

97 HERA, Public Law 110-289, 122 Stat. 2654 (2008), available at https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf.

The 2022-2024 Enterprise Housing Goal rule replaced the low-income areas housing subgoal that had been in place each year since 2010 with a new structure for the low-income areas goal. The 2022-2024 Enterprise Housiung Goals rule established two new area-based subgoals: the minority census tracts subgoal and the low-income census tract subgoals. The minority census tracts subgoal assesses the Enterprises' performance in minority areas with respect to loans for families with incomes no greater than 100 percent of AMI. The low-income census tracts subgoal assesses the Enterprises' performance in low-income census tracts, exclusive of loans that would qualify for the minority census tracts subgoal. In other words, the low-income census tracts subgoal is limited to: (1) loans in low-income census tracts that are not minority census tracts, and (2) loans to borrowers above 100 percent of AMI in low-income census tracts that are also minority census tracts.

FHFA adopted the two-part subgoal structure, with separate subgoals for low-income census tracts and minority census tracts, to “refocus Enterprise efforts towards . . . families at or below 100 percent of AMI.” 98 FHFA had observed that many goal-qualifying loans purchased by the Enterprises were for higher income families (over 100 percent of AMI) rather than for families at or below 100 percent of AMI. At the time, FHFA was concerned that the single subgoal structure incentivized the Enterprises to lend to higher-income households in low-income census tracts

phic and demographic inputs, and apply differing eligibility rules across multiple subgoals—tasks that increase implementation complexity, raise model risk, and divert resources from mission-oriented financing. Since publication of the 2025-2027 final rule, FHFA has become aware of operational challenges encountered by the Enterprises in accurately forecasting lending within minority census tracts. For example, the Enterprises have noted the difficulty in obtaining real-time metrics on the size of the market due to the timing of the HMDA data release, the availability of macroeconomic data at the census tracts level, and the lack of technology infrastructure available to lenders to help target and deliver the loans. 100 101 The Agency seeks to prevent the Enterprises from engaging in practices that could lead to an artificial increase in lending within this market segment solely to overcome forecasting uncertainties to meet the elevated benchmark level. These practices include distortive pricing and inefficient use of subsidy. Eliminating these subgoals returns the Enterprises to a simpler, more predictable framework that better supports underwriting, targeted investment, efficient deployment of pricing incentives, and consistent reporting.

100 Freddie Mac, “Proposed Rulemaking on 2025-2027 Enterprise Housing Goals—Comments/RIN 2590-AB34 (Enterprise Housing Goals),” (October 28, 2024), available at: https://www.fhfa.gov/sites/default/files/2024-10/FreddieMacCommentsRIN2590-AB34_2025-2027EHG_2024.pdf.

101 Fannie Mae, “Notice of Proposed Rule and Request for Public Comment concerning the 2025-2027 Enterprise Housing Goals, RIN 2590-AB34,” (October 25, 2024), available at: https://www.fhfa.gov/sites/default/files/2024-10/FNMACommentLetteron20252027HousingGoalsNPROct252024.pdf.

Empirical analysis and program experience indicate substantial overlap between beneficiaries captured by the minority area subgoal and those already reached through the low-income borrower goals

cerning the 2025-2027 Enterprise Housing Goals, RIN 2590-AB34,” (October 25, 2024), available at: https://www.fhfa.gov/sites/default/files/2024-10/FNMACommentLetteron20252027HousingGoalsNPROct252024.pdf.

Empirical analysis and program experience indicate substantial overlap between beneficiaries captured by the minority area subgoal and those already reached through the low-income borrower goals. Approximately 70 percent of minority census tracts subgoal loans otherwise qualify for the low-income purchase goal metrics. Maintaining the two-part subgoal structure therefore produces limited incremental benefit relative to the added complexity. The proposed low-income areas subgoal maintains the statutory focus on families that reside in low-income areas, including minority census tracts and designated disaster areas. The Agency acknowledges that in 2022, there was a noticeable increase in both the market level and the Enterprises' performance. While this increase could be attributed to Enterprise efforts at achieving the housing goal benchmark, several other factors may also explain this material change. For example, 2022 marked the implementation of new census boundaries derived from the 2020 Census, which included a substantial increase in minority census tracts. 102 Concurrently, 2022 also saw an unusually high average AMI increase, which led to more borrowers qualifying for the subgoal. 103 Another factor that may have contributed to increased Enterprise performance in this loan segment is a potential shift of loans from other entities that previously served these borrowers before 2022, rather than serving new borrowers or providing liquidity to areas that needed it. As noted in the 2025-2027 Enterprise Housing Goals final rule, isolating the precise driver of this increase—specifically, distinguishing between the Enterprises' efforts to meet the subgoal and the impact of external factors—was challenging

ce mortgage purchases decreased. This trend demonstrates the inverse relationship of low-income refinance mortgages. It also highlights that percentage-based performance metrics can reflect market contraction rather than increased absolute support for low-income borrowers during periods of reduced refinance activity.

116 Ibid.

As shown in Table 5, both Enterprises have met this goal since 2021. The table also shows that when mortgage rates were low in 2021 and refinance volume high, both Enterprises met the benchmark but only Fannie Mae performed higher than the actual market. However, when mortgage rates rose in the following year and years since then, refinance volume declined, and Enterprise performance rose and has remained elevated.

FHFA rationale for proposed benchmark. As noted in the 2025-2027 Enterprise Housing Goals final rule, and shown in Table 5, the annual performance in the overall market and by the Enterprises on low-income refinance mortgages tends to be inversely proportional to the volume of low-income refinance loans in the market. 117 While FHFA's most recent forecast for this goal averaged 36.3 ± 6.9 percent, the Agency noted in the 2025-2027 final rule that “although mortgage rates are expected to decline during the 2025-2027 housing goals period, FHFA's model cannot forecast the low-income refinance market with a high degree of confidence due to the unpredictability of future interest rates and the strong sensitivity of refinance originations to interest rates.” 118 Particularly, if interest rates were to decline more significantly, and volume returned to the levels seen in 2021, a benchmark level within the confidence interval could be difficult for the Enterprises to achieve based on market conditions.

117 See “2025-2027 Enterprise Housing Goals,” (Final Rule), 89 FR 106253 (Dec. 30, 2024), available at https://www.federalregister.gov/documents/2024/12/30/2024-30793/2025-2027-enterprise-housing-goals

e more significantly, and volume returned to the levels seen in 2021, a benchmark level within the confidence interval could be difficult for the Enterprises to achieve based on market conditions.

117 See “2025-2027 Enterprise Housing Goals,” (Final Rule), 89 FR 106253 (Dec. 30, 2024), available at https://www.federalregister.gov/documents/2024/12/30/2024-30793/2025-2027-enterprise-housing-goals.

118 See “2025-2027 Enterprise Housing Goals,” (Final Rule), 89 FR 106253, 106270 (Dec. 30, 2024), available at https://www.federalregister.gov/documents/2024/12/30/2024-30793/2025-2027-enterprise-housing-goals.

FHFA is proposing to maintain the benchmark level of 26.0 percent for this goal because it believes that this level will keep the Enterprises focused on providing liquidity to this affordable segment in 2026-2028 under current and projected market conditions, as well as if interest rates decline more than projected and refinance volume materially increases. This benchmark level maintains the Enterprises' sound financial condition and avoids market participant displacement, while supporting low-income borrowers.

V. Measurement Buffers

The 2025-2027 final housing goal rule established measurement buffers, numerical factors to encourage each Enterprise to focus on achieving the housing goal by meeting the market level if the benchmark level is higher than the market level, thereby addressing uncertainties regarding the final market level throughout the year. 119 Specifically, an Enterprise that failed to meet the goal would not be required to submit a housing plan if its performance met or exceeded: (i) the market level minus 1.3 percentage points for the low-income home purchase goal; (ii) the market level minus 0.5 percentage points for the very low-income home purchase goal; or (iii) the market level minus 1.3 percentage points for the low-income refinance goal

20 12 U.S.C. 4563(a)(4).

Unlike the single-family housing goals, performance on the multifamily housing goals is measured solely against benchmark levels set by FHFA in the regulation, without any retrospective market measure. The absence of a retrospective market measure for the multifamily housing goals results, in part, from the lack of comprehensive data about the multifamily mortgage market. Unlike the single-family mortgage market, where HMDA provides a reasonably comprehensive dataset about single-family mortgage originations each year, 121 the multifamily mortgage market (and the affordable multifamily mortgage market segment) has no comparable single, unified data source with coverage extending across many years. As a result, it is difficult to correlate different datasets that rely on different reporting metrics.

121 Single family market performance is determined by FHFA through analyzing public HMDA data made available by the CFPB based on data that mortgage originators submit to the FFIEC.

The lack of comprehensive data for the multifamily mortgage market is even more acute with respect to the segments of the market that are targeted to low-income families, defined as families with incomes at or below 80 percent of AMI, and very low-income families, defined as families with incomes at or below 50 percent of AMI.

Unlike the single-family housing goals, which set separate benchmark levels for home purchase and refinance mortgages, the multifamily housing goals include all Enterprise multifamily mortgage purchases, regardless of the purpose of the loan.

In consideration of public comments and to improve the responsiveness of the multifamily housing goals to market conditions, in 2023, FHFA revised the housing goals regulation to change the multifamily housing goals benchmark levels from a numeric benchmark level for units to a percentage of affordable units in multifamily properties financed by mortgages purchased by the Enterprise each year

n.

In consideration of public comments and to improve the responsiveness of the multifamily housing goals to market conditions, in 2023, FHFA revised the housing goals regulation to change the multifamily housing goals benchmark levels from a numeric benchmark level for units to a percentage of affordable units in multifamily properties financed by mortgages purchased by the Enterprise each year. This ensures that the multifamily housing goals remain meaningful in different market conditions and enables the Enterprises to respond to those conditions while continuing to serve affordable segments. 122

122 12 CFR 1282.13.

The proposed rule would establish benchmark levels for the multifamily low-income housing goal, the multifamily very low-income housing goal, and the small multifamily low-income subgoal for 2026-2028 at the same levels that are currently in effect for 2025-2027. FHFA believes that these relatively conservative benchmark levels are appropriate for the multifamily housing goals given market uncertainty and a desire to avoid unintended consequences that may result if the multifamily goals are set at unrealistic levels. In proposing the benchmark levels for the multifamily housing goals, FHFA has considered each of the six statutory factors identified above. Five of the factors relate to the multifamily mortgage market and the Enterprises' role in that market. Those factors generally have similar impacts on each of the multifamily housing goals and have not changed significantly in the months since FHFA established the housing goals for 2025-2027. Each of those factors is discussed below. The past performance of the Enterprises is discussed separately for each of the multifamily housing goals.

Multifamily mortgage market. FHFA's consideration of the multifamily mortgage market credit needs addresses the size and competitiveness of the overall multifamily mortgage market

tudies (JCHS) found that rent growth for multifamily apartments remained modest through early 2025, even as rental demand increased, and vacancies declined. Asking rents rose 0.8 percent year-over-year in the first quarter of 2025, up slightly from 0.2 percent in 2024. 125 Such increases represent moderate growth compared with the same quarter in 2022 when rents rose by 15.3 percent year-over-year. Despite the continued slowdown in rent growth, the extended period of rising rents corresponds to the continued stress on renters, with the share of cost-burdened renters continuing to remain elevated.

125 Joint Center for Housing Studies of Harvard University, “The State of the Nation's Housing 2025,” (2025), p. 14, available at https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2025.pdf.

For purposes of the Enterprise housing goals, the Safety and Soundness Act requires FHFA to evaluate housing goals performance based on whether rent levels are affordable. The Safety and Soundness Act defines a rent level as affordable if a family's rent and utility expenses do not exceed 30 percent of the maximum income level for each income category, with appropriate adjustments for unit size as measured by the number of bedrooms. 126 In America's Rental Housing 2024 report, JCHS found that the share of cost-burdened renters, particularly among low-income and very low-income households, continues to grow. 127 A household is considered cost-burdened if it spends more than 30 percent of its income on housing, and severely cost-burdened if it spends more than 50 percent of its income on housing. The JCHS report shows that the share of cost-burdened renters across all income segments rose by 3.2 percentage points to 50 percent from 2019 to 2022. 128 The share of cost-burdened renters earning between $45,000 and $74,999 increased the most, rising by 5.4 percentage points. 129

126 12 U.S.C. 4563(c)

37 Together with the housing goals, these programmatic activities provide support to renter households, including low-income families spending more than 30 percent of their income on housing. FHFA will continue to monitor these initiatives and priorities to maintain appropriate focus by the Enterprises, including compliance with the Enterprises' charter acts and safety and soundness considerations.

137 Since FHFA placed the Enterprises into conservatorship on September 6, 2008, it has issued a Conservatorship Scorecard periodically to communicate its priorities and expectations for Fannie Mae and Freddie Mac.

FHFA expects the Enterprises to continue to demonstrate leadership in supporting affordable housing in the multifamily market by providing liquidity for housing for tenants at different income levels in various geographies and market segments. This support should continue throughout the economic cycle, even as the overall size of the multifamily mortgage market fluctuates.

Availability of public subsidies. Multifamily housing assistance is primarily available in two forms: demand-side public subsidies that either directly assist low-income tenants ( e.g., Housing Choice vouchers) or provide project-based rental assistance ( e.g., Project-Based Vouchers and Project-Based Rental Assistance contracts), and supply-side public subsidies that support the creation and preservation of affordable housing ( e.g., the housing trust fund and LIHTCs). The availability of public subsidies impacts the overall affordable multifamily housing market, and significant changes to long-standing public subsidy programs could impact the ability of the Enterprises to meet the housing goals

ntal Assistance contracts), and supply-side public subsidies that support the creation and preservation of affordable housing ( e.g., the housing trust fund and LIHTCs). The availability of public subsidies impacts the overall affordable multifamily housing market, and significant changes to long-standing public subsidy programs could impact the ability of the Enterprises to meet the housing goals. The Enterprises also provide liquidity to facilitate the preservation of public subsidies through their purchases of mortgages that finance the preservation of existing affordable housing units (especially for restructurings of older properties that reach the end of their initial 15-year LIHTC compliance periods) and for refinancing properties with expiring Project-Based Rental Assistance contracts.

In 2026 and beyond, there will continue to be opportunities in the multifamily mortgage market to provide permanent financing for properties with LIHTCs and to preserve existing affordable units, as described above.

Maintaining the sound financial condition of the Enterprises. In establishing the 2026-2028 benchmark levels for multifamily housing goals in the proposed rule, FHFA must balance the role of the Enterprises in providing liquidity and supporting various multifamily mortgage market segments with the need to maintain the Enterprises' sound and solvent financial condition. The Enterprises have served as a stabilizing force in the multifamily mortgage market across economic cycles, and their loans on affordable multifamily properties have experienced low levels of delinquency and default that are similar to those of market rate properties.

FHFA continues to monitor the activities of the Enterprises in this market to ensure their continued safety and soundness.

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h Enterprise from 2021 through 2024. 138 In addition, the historical performance share average for the pre-pandemic years of 2017-2019 would have been 65.1 percent for Fannie Mae and 67.3 percent for Freddie Mac. 139 Starting in 2023, the benchmark metric for this goal changed from the number of low-income units to the share of low-income units.

138 12 CFR 1282.16 (Special Counting Requirements).

139 See “2023-2024 Multifamily Enterprise Housing Goals,” (Proposed Rule), 87 FR 50794, 50800 (Aug. 18, 2022), available at https://www.federalregister.gov/documents/2022/08/18/2022-17868/2023-2024-multifamily-enterprise-housing-goals.

Ongoing shortages in the supply of affordable rental housing continue to contribute to the growing share of cost-burdened families in the United States. 140 There remains a liquidity need for Enterprise support in the multifamily affordable housing market due to evolving market conditions. These challenges are expected to persist in 2026-2028. In light of these factors, FHFA proposes to maintain the current benchmark level for this goal at 61.0 percent for both Enterprises in 2026-2028. The current benchmark for this goal enables the Enterprises to adequately support multifamily housing affordable to families with incomes at or below 80 percent of AMI. The proposed benchmark takes into account market dynamics and safety and soundness considerations, without diminishing the Enterprises' focus on affordability.

140 See Joint Center for Housing Studies of Harvard University, “The State of the Nation's Housing 2024,” (June 2024), available at https://www.jchs.harvard.edu/state-nations-housing-2024.

2. Multifamily Very Low-Income Housing Goal

The multifamily very low-income housing goal is the percentage share of all goal-eligible units in multifamily properties financed by mortgages purchased by the Enterprises that are affordable to very low-income families in any given year. Very low-income families are defined as those with incomes less than or equal to 50 percent of AMI

housing-2024.

2. Multifamily Very Low-Income Housing Goal

The multifamily very low-income housing goal is the percentage share of all goal-eligible units in multifamily properties financed by mortgages purchased by the Enterprises that are affordable to very low-income families in any given year. Very low-income families are defined as those with incomes less than or equal to 50 percent of AMI.

EP02OC25.016

Table 7 shows the number and share of goal-qualifying very low-income multifamily units as a percentage of the total goal-eligible units in properties backing mortgages acquired by each Enterprise from 2021 through 2024. In

addition, the historical performance share average for the pre-pandemic years of 2017-2019 would have been 13.1 percent for Fannie Mae and 15.6 percent for Freddie Mac. 141 Starting in 2023, the benchmark metric for this goal changed from the number of very low-income units to the share of very low-income units.

141 See “2023-2024 Multifamily Enterprose Housing Goals,” (Proposed Rule), 87 FR 50794, 50801 (Aug. 18, 2022), available at http://www.govinfo.gov/content/pkg/FR-2022-08-18/pdf/2022-17868.pdf.

In 2025, the benchmark for this goal was raised from 12.0 percent to 14.0 percent. FHFA set this benchmark at a higher level to ensure that the Enterprises continue to adequately serve very low-income families. Considering the multifamily mortgage conditions described above and the continued need for affordable rental housing support, FHFA proposes to maintain the current benchmark level for this goal at 14.0 percent for both Enterprises in 2026-2028. The current benchmark for this goal enable the Enterprises to adequately support multifamily housing affordable to families with incomes at or below 50 percent of AMI. The proposed benchmark takes into account market dynamics and safety and soundness consideration, without diminishing the Enterprises' focus on affordability.

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l fail, to meet any housing goal or subgoal. In sum, the proposed rule would simplify existing procedures and ensure adequate transparency.

VIII. Required Adjustments To Maximum Civil Money Penalty Amounts

The Adjustment Improvements Act amended the Federal Civil Penalties Inflation Adjustment Act of 1990 by establishing a mechanism for regular adjustment for inflation of civil money penalties. To maintain their deterrent effect, this law requires FHFA to adjust the level of civil monetary penalties for inflation (including an initial catch-up adjustment and annual adjustments thereafter). The law also requires FHFA to report inflation adjustments annually in its Agency Financial Report as directed by OMB Circular A-136.

FHFA complies with the requirement by publishing a final rule each year to adjust the amount of the civil money penalties in FHFA's Rules of Practice and Procedure (12 CFR part 1209); FHFA's Flood Insurance regulation (12 CFR part 1250); and FHFA's Implementation of the Program Fraud Civil Remedies Act regulation (12 CFR part 1217). FHFA published its most recent final rule to make the required adjustments on January 16, 2025. 143

143 See “Rules of Practice and Procedure; Civil Money Penalty Inflation Adjustment,” (Final Rule), 90 FR 4607 (Jan. 16, 2025), available at https://www.federalregister.gov/documents/2025/01/16/2025-00775/rules-of-practice-and-procedure-civil-money-penalty-inflation-adjustment.

This proposed rule would make explicit that the required inflation adjustments apply to civil money penalties described in section 1345 of the Safety and Soundness Act (12 U.S.C. 4585), including penalties applicable to the Enterprise and Federal Home Loan Bank housing goals.

A. Statutory Civil Money Penalties Related to Enterprise and Federal Home Loan Bank Housing Goals

The Safety and Soundness Act authorizes FHFA to seek civil money penalties to enforce several requirements related to the Enterprise and Bank housing goals

ire the Enterprise to submit a housing plan describing the specific actions the Enterprise will take to achieve the goal. Section 1336 further provides that if an Enterprise fails to submit an acceptable housing plan or fails to comply with the plan, the Director may impose civil money penalties against the Enterprise in accordance with section 1345 (12 U.S.C. 4585) of the Safety and Soundness Act. In addition, section 1345(a)(2) provides that the Director may impose civil money penalties if an Enterprise fails to report information on its housing activities to FHFA or Congress as required by subsection (m) or (n) of section 309 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1723a(m) or (n)) or subsection (e) or (f) of section 307 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1456(e) or (f)).

The Banks are subject to housing goals requirements pursuant to section 10C(a) of the Federal Home Loan Bank Act (Bank Act), as amended by section 1205 of HERA (12 U.S.C. 1430c(a)). This provision requires the Director of FHFA to establish housing goals with respect to the purchase of mortgages, if any, by the Banks. Section 10C(d) of the Bank Act provides that the monitoring and enforcement requirements of section 1336 of the Safety and Soundness Act shall apply to the Banks in the same manner and to the same extent as they apply to the Enterprises. Thus, in accordance with section 1336, FHFA's Bank housing goals regulation includes housing plan provisions similar to those in FHFA's Enterprise housing goals regulation. If a Bank fails to submit or follow an acceptable housing plan, the Director may impose civil money penalties against the Bank.

B. Other Civil Money Penalties in Section 1345

Section 1345(b)(1) of the Safety and Soundness Act (12 U.S.C. 4585(b)(1)) authorizes the Director to impose civil money penalties of up to $100,000 for each day of occurrence “for any failure described in paragraph (1), (5), or (6)” of section 1345(a)

ollow an acceptable housing plan, the Director may impose civil money penalties against the Bank.

B. Other Civil Money Penalties in Section 1345

Section 1345(b)(1) of the Safety and Soundness Act (12 U.S.C. 4585(b)(1)) authorizes the Director to impose civil money penalties of up to $100,000 for each day of occurrence “for any failure described in paragraph (1), (5), or (6)” of section 1345(a). The cross references to paragraphs (1), (5), and (6) are not clear. Section 1345(a) does not include a paragraph (5) or (6). Section 1345(a)(1) describes a failure to “submit a report under section 1327 [of the Safety and Soundness Act] following a notice of such failure, an opportunity for comment by the enterprise, and a final determination by the Director.” At the same time HERA added the current section 1345, it removed general reporting requirements in section 1327 and amended section 1314 of the Safety and Soundness Act to authorize the Director to issue general and specific reporting orders and penalties for violating those reporting orders. 144 Congress subsequently added a new section 1327 related to Enterprise guarantee fee requirements that provides for reporting by each Enterprise as part of its annual report submitted to Congress. 145

144 HERA, Public Law 110-289, title I, subtitle A, sec. 1104(b), 122 Stat. 2667; 12 U.S.C. 4514, available at https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf.

145 Temporary Payroll Tax Cut Continuation Act of 2011, Public Law 112-78, title IV, sec. 401, 125 Stat. 1287 (12 U.S.C. 4547(d)), (Dec. 23, 2011), available at https://www.govinfo.gov/content/pkg/PLAW-112publ78/pdf/PLAW-112publ78.pdf.

Regardless of whether Congress intended the civil money penalties provision in section 1345(b)(1) to apply to violations of reporting requirements under current section 1327, the statutory provision is subject to the

Adjustment Improvements Act requirements. Therefore, FHFA proposes to make explicit the mandatory inflation adjustments required by law.

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R 37101 (June 20, 2013), available at https://www.federalregister.gov/documents/2013/06/20/2013-14676/rules-of-practice-and-procedure-enterprise-and-federal-home-loan-bank-housing-goals-related.

147 12 CFR 1209.1(c)(4).

Section 1209.80 states explicitly the maximum penalty amounts that apply for civil money penalty proceedings under section 1376 of the Safety and Soundness Act (12 U.S.C. 4636). However, the section does not state explicitly the corresponding maximum penalty amounts for civil money penalty proceedings under section 1345 (12 U.S.C. 4585). Similarly, FHFA's annual final rules for adjusting civil money penalties for inflation in 12 CFR part 1209 do not explicitly reference the civil money penalties described in section 1345 of the Safety and Soundness Act. In a recent review of its regulations, FHFA determined that 12 CFR part 1209 should be revised to explicitly state the maximum civil money penalty amounts for violations related to housing goals that reflect the catch-up adjustment and annual adjustments required by the Adjustment Improvements Act. It is also prudent to amend the Bank Housing Goals regulation in 12 CFR part 1281 and the Enterprise Housing Goals regulation in 12 CFR part 1282 to cross reference the procedural requirements for housing goals enforcement in 12 CFR part 1209.

The proposed rule describes increases in maximum penalty amounts that would not dictate the amount of any penalty that FHFA may seek under section 1345. FHFA would calculate penalty amounts on a case-by-case basis based on its consideration of the statutory factors described in section 1345(c)(2). FHFA's final rules implementing Adjustment Improvements Act revisions of the maximum civil money penalty amounts that FHFA may assess in accordance with section 1376 have applied those required adjustments prospectively from the date of the final rule

5. FHFA would calculate penalty amounts on a case-by-case basis based on its consideration of the statutory factors described in section 1345(c)(2). FHFA's final rules implementing Adjustment Improvements Act revisions of the maximum civil money penalty amounts that FHFA may assess in accordance with section 1376 have applied those required adjustments prospectively from the date of the final rule. 148 FHFA similarly proposes to apply the inflation adjusted maximum penalties prospectively to penalties sought after the effective date of a final rule implementing this proposed change. Prospective application is consistent with policy goals of fairness and transparency, since this is the first time that 12 CFR part 1209 would explicitly state the maximum civil money penalty amounts for section 1345.

148 See, e.g., “Rules of Practice and Procedure; Civil Money Penalty Inflation Adjustment,” (Final Rule), 90 FR 4607 (Jan. 16, 2025), available at https://www.federalregister.gov/documents/2025/01/16/2025-00775/rules-of-practice-and-procedure-civil-money-penalty-inflation-adjustment.

The Adjustment Improvements Act provides that the mandatory initial catch-up adjustment must be implemented by an interim final rule. The changes described in this proposed rule are consistent with the statutory directive set forth in the Adjustment Improvements Act. As a result, FHFA could implement these changes by interim final rule as there are no issues of policy discretion about which to seek public comment. However, FHFA is proposing the amendments in a notice and comment rulemaking in this case because it is administratively expedient to include the changes in this proposed rule on related topics.

D. Calculation of Inflation Adjustments

To calculate inflation adjustments, FHFA follows the requirements of the Adjustment Improvements Act 149 and guidance provided by the Office of Management and Budget (OMB)

on 1345 of the Safety and Soundness Act in calendar year 2008. Because FHFA has not published explicitly adjusted maximum civil money penalty amounts for section 1345 since it was amended, this proposed rule treats 2008 as the year that the maximum civil money penalty amounts were last set.

OMB established a multiplier of 1.09819 for catch-up adjustments to civil money penalties last set in 2008. For each maximum civil money penalty calculation, FHFA determined the catch-up adjusted maximum penalty amount by calculating the product of the inflation multiplier and the previous maximum penalty amount, and then rounded the product to the nearest whole dollar as required by the Adjustment Improvements Act.

The table below sets out the initial catch-up adjustments through 2016 accordingly.

Initial Catch-Up Adjustments Required by the Adjustment Improvements Act U.S. Code citation Description Previous maximum penalty amount Rounded catch-up inflation increase Catch-up adjusted maximum penalty amount 12 U.S.C. 4585(b)(1) Maximum penalty for failure described in 1345(a)(1), for each day that the failure occurs $100,000 $9,819 $109,819 12 U.S.C. 4585(b)(2) Maximum penalty for failure described in 1345(a)(2), (3), or (4), for each day that the failure occurs 50,000 4,910 54,910 The Adjustment Improvements Act directs federal agencies to calculate each annual civil money penalty adjustment as the percent change between the CPI-U for the previous October and the CPI-U for October of the calendar year before. 150 Each year, OMB establishes a multiplier that agencies can use to calculate the annual inflation adjustment. The table below shows the maximum civil money penalty amounts annually adjusted for each year from 2017 to 2025. The annual adjustments were calculated using inflation multipliers identified in OMB guidance based on the percent change between the CPI-U for the previous October and the CPI-U for October of the calendar year before

that agencies can use to calculate the annual inflation adjustment. The table below shows the maximum civil money penalty amounts annually adjusted for each year from 2017 to 2025. The annual adjustments were calculated using inflation multipliers identified in OMB guidance based on the percent change between the CPI-U for the previous October and the CPI-U for October of the calendar year before. For each maximum civil money penalty calculation, FHFA determined the annual adjusted maximum penalty amount by calculating the product of the inflation multiplier and the previous maximum penalty amount, and then rounded the product to the nearest whole dollar as required by the Adjustment Improvements Act.

150 28 U.S.C. 2461 note.

Although the table below shows the maximum penalty amount in each year that the Adjustment Improvements Act required an adjustment, FHFA proposes to apply adjusted civil money penalty amounts prospectively from the effective date of a final rule. In the final rule, FHFA may include annual adjustments for 2026 when OMB issues guidance on the inflation multiplier to calculate the applicable adjustment required by January 15, 2026.

U.S. Code citation Description Year and OMB inflation multiplier Previous maximum penalty amount Rounded catch-up inflation increase Adjusted maximum penalty amount 12 U.S.C. 4585(b)(1) Maximum penalty for failure described in 1345(a)(1), for each day that the failure occurs 2017; 1.01636 2018; 1.02041 $109,819 111,616 $1,797 2,278 $111,616 113,894 2019; 1.02522 113,894 2,872 116,766 2020; 1.01764 116,766 2,060 118,826 2021; 1.01182 118,826 1,405 120,231 2022; 1.06222 120,231 7,481 127,712 2023; 1.07745 127,712 10,431 137,603 2024; 1.03241 137,603 4,460 142,063 2025; 1.02598 142,063 3,691 145,754 12 U.S.C

e described in 1345(a)(1), for each day that the failure occurs 2017; 1.01636 2018; 1.02041 $109,819 111,616 $1,797 2,278 $111,616 113,894 2019; 1.02522 113,894 2,872 116,766 2020; 1.01764 116,766 2,060 118,826 2021; 1.01182 118,826 1,405 120,231 2022; 1.06222 120,231 7,481 127,712 2023; 1.07745 127,712 10,431 137,603 2024; 1.03241 137,603 4,460 142,063 2025; 1.02598 142,063 3,691 145,754 12 U.S.C. 4585(b)(2) Maximum penalty for failure described in 1345(a)(2), (3), or (4), for each day that the failure occurs 2017; 1.01636 2018; 1.02041 2019; 1.02522 $54,910 55,808 56,947 898 1,139 1,436 55,808 56,947 58,383 2020; 1.01764 58,383 1,030 59,413 2021; 1.01182 59,413 702 60,115 2022; 1.06222 60,115 3,740 63,855 2023; 1.07745 63,855 4,946 68,801 2024; 1.03241 68,801 2,230 71,031 2025; 1.02598 71,031 1,845 72,876 IX. Technical Changes

A. Consistent Housing Goal and Subgoal Terminology

The current regulation refers to the single-family housing goals in 12 CFR 1282.12 as the “low-income families housing goal,” “very low-income families housing goal,” “low-income areas housing goal,” “low-income census tracts housing subgoal,” “minority census tracts housing subgoal,” and “refinancing housing goal.”

To distinguish the goals related to home purchase mortgages from the goal related to refinance mortgages, FHFA often uses the terms “low-income home purchase goal” and “very low-income home purchase goal” to refer to the low-income families housing goal and the very low-income families housing goal, respectively, described in 12 CFR 1282.12(c) and (d). Similarly, FHFA uses the term “low-income areas home purchase goal” to refer to the low-income areas housing goal described in 12 CFR 1282.12(e). FHFA typically refers to the refinancing housing goal in 12 CFR 1282.12(h) as the “low-income refinance goal.”

This rule proposes to revise the current regulation to incorporate the terminology that it commonly uses for the single-family housing goals

Similarly, FHFA uses the term “low-income areas home purchase goal” to refer to the low-income areas housing goal described in 12 CFR 1282.12(e). FHFA typically refers to the refinancing housing goal in 12 CFR 1282.12(h) as the “low-income refinance goal.”

This rule proposes to revise the current regulation to incorporate the terminology that it commonly uses for the single-family housing goals. This change will promote the consistent use of terms and eliminate potential confusion by allowing the public and regulated entities to trace housing goals references to regulatory requirements.

B. Public Notice of Low-Income Areas Home Purchase Goal

Section 1282.12(e) of the Enterprise Housing Goals regulation currently provides that FHFA will set a low-income areas home purchase goal annually “by FHFA notice,” but does not specify the form of notice. Consistent with other notices provided for within the Enterprise Housing Goals

regulation, FHFA's practice has been to provide this notice to the public on FHFA's website and to the Enterprises. FHFA is clarifying that this notice will be made available on its website.

X. Considerations of Differences Between the Banks and the Enterprises

When promulgating regulations relating to the Banks, section 1313(f) of the Safety and Soundness Act requires the Director of FHFA to consider the differences between the Banks and the Enterprises with respect to the Banks' cooperative ownership structure; mission of providing liquidity to members; affordable housing and community development mission; capital structure; and joint and several liability. FHFA, in preparing this proposed rule, considered the differences between the Banks and the Enterprises as they relate to the above factors. FHFA also considered these differences in light of section 10C of the Bank Act, which requires that the Bank housing goals be consistent with the Enterprise housing goals, with consideration of the unique mission and ownership structure of the Banks

iability. FHFA, in preparing this proposed rule, considered the differences between the Banks and the Enterprises as they relate to the above factors. FHFA also considered these differences in light of section 10C of the Bank Act, which requires that the Bank housing goals be consistent with the Enterprise housing goals, with consideration of the unique mission and ownership structure of the Banks. The public may comment on whether these differences should result in any revisions to the proposed amendments to 12 CFR parts 1209 and 1281 that relate to the civil money penalties that the Director may impose against a Bank that fails to submit or follow an acceptable housing plan.

XI. Regulatory Impact

A. Paperwork Reduction Act

The proposed rule would not contain any information collection requirement that would require the approval of the OMB under the Paperwork Reduction Act (44 U.S.C. 3501 et seq. ). Therefore, FHFA has not submitted the proposed rule to OMB for review for purposes of the Paperwork Reduction Act.

B. Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires that a regulation that has a significant economic impact on a substantial number of small entities, small businesses, or small organizations must include an initial regulatory flexibility analysis describing the regulation's impact on small entities. Such an analysis need not be undertaken if the agency has certified that the regulation will not have a significant economic impact on a substantial number of small entities. 5 U.S.C. 605(b). FHFA has considered the impact of the proposed rule under the Regulatory Flexibility Act. FHFA certifies that the proposed rule, if adopted as a final rule, will not have a significant economic impact on a substantial number of small entities because the rule applies to Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, which are not small entities for purposes of the Regulatory Flexibility Act.

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considered the impact of the proposed rule under the Regulatory Flexibility Act. FHFA certifies that the proposed rule, if adopted as a final rule, will not have a significant economic impact on a substantial number of small entities because the rule applies to Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, which are not small entities for purposes of the Regulatory Flexibility Act.

C. Executive Order 12866, Regulatory Planning and Review

Executive Order 12866 requires agencies to submit “significant regulatory actions” to the Office of Management and Budget, Office of Information and Regulatory Affairs (OIRA) for review. OIRA has determined the proposed rule to be a significant regulatory action under section 3(f) of Executive Order 12866, and economically significant under section 3(f)(1) of Executive Order 12866. FHFA submitted a regulatory impact analysis to OIRA, which reviews the potential costs and benefits of this proposed rule. The analysis is available on FHFA's rulemaking website https://www.fhfa.gov/regulation/rulemaking and is part of the docket file for this proposed rule.

D. Executive Order 13563: Improving Regulation and Regulatory Review

Executive Order 13563 directs agencies to analyze regulations that are “outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.” Executive Order 13563 also directs that, where relevant, feasible, and consistent with regulatory objectives, and to the extent permitted by law, agencies are to identify and consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public. FHFA has developed this proposed rule in a manner consistent with these requirements.

E. Executive Order 14192: Unleashing Prosperity Through Deregulation

Executive Order 14192 requires that for each new regulation issued, at least 10 existing regulations be identified for elimination

ising paragraph (a)(1); and

b. Adding paragraph (c).

The revision and addition read as follows:

§ 1282.11 General. (a) * * *

(1) Three single-family owner-occupied purchase money mortgage housing goals, a single-family owner-occupied purchase money mortgage housing subgoal, a single-family refinancing mortgage housing goal, two multifamily housing goals, and a multifamily housing subgoal;

(c) Severability. FHFA intends the various provisions of this part to be separate and severable from one another. If any provision of this part, or any application of a provision, is stayed or determined to be invalid or unenforceable, the remaining provisions or applications will continue in effect.

9. Amend § 1282.12 by:

a. Revising the heading to paragraphs (c), (d), and (e);

b. Revising paragraphs (c)(2), (d)(2), and (e)(2);

c. Removing paragraph (g);

e. Redesignating paragraph (h) as paragraph (g);

f. Revising paragraph (f); and

g. In newly redesignated paragraph (g), revising the heading and paragraph (g)(2). The revisions read as follows:

§ 1282.12 Single-family housing goals.

(c) Low-income home purchase goal. * * *

(2) The benchmark level, which for 2026, 2027, and 2028 shall be 21 percent of the total number of purchase money mortgages purchased by that Enterprise in each year that finance owner-occupied single-family properties.

(d) Very low-income home purchase goal. * * *

(2) The benchmark level, which for 2026, 2027, and 2028 shall be 3.5 percent of the total number of purchase money mortgages purchased by that Enterprise in each year that finance owner-occupied single-family properties.

any housing goal or subgoal, the Director will provide written notice to the Enterprise of the preliminary determination of its performance under each housing goal and subgoal established by this subpart, before public disclosure of the preliminary determination. The written notice will include the reasons for such determination, and the information on which the Director based the determination.

(c) Response by Enterprise. Any notification to an Enterprise of a preliminary determination under this section will provide the Enterprise with an opportunity to respond in writing in accordance with the procedures at 12 U.S.C. 4566(b)(1) and (2). Relevant information in a timely written response from an Enterprise will be included in the information the Director considers when making a determination of housing goals compliance under § 1282.21.

13. Revise § 1282.21 to read as follows:

§ 1282.21 Determination of compliance with housing goals, notice of determination. (a) Determination. On an annual basis, the Director will make a final determination of each Enterprise's performance under each single-family housing goal and subgoal and each multifamily housing goal and subgoal. The determination will address whether an Enterprise has failed, or there is a substantial probability that an Enterprise will fail, to meet any housing goal or subgoal and whether the achievement of that housing goal or subgoal was or is feasible.