Freddie Mac 2010 Annual Report Download - page 35

If the Director of FHFA finds that we failed to meet a housing goal and that achievement of the housing goal was
feasible, the GSE Act states that the Director may require the submission of a housing plan with respect to the housing goal
for approval by the Director. The housing plan must describe the actions we would take to achieve the unmet goal in the
future. FHFA has the authority to take actions against us, including issuing a cease and desist order or assessing civil money
penalties, if we: (a) fail to submit a required housing plan or fail to make a good faith effort to comply with a plan approved
by FHFA; or (b) fail to submit certain data relating to our mortgage purchases, information or reports as required by law. See
“RISK FACTORS — Legal and Regulatory Risks.”
Affordable Housing Goals for 2010 and 2011
Effective beginning calendar year 2010, the Reform Act requires that FHFA establish, by regulation, four single-family
housing goals, one multifamily special affordable housing goal and requirements relating to multifamily housing for very
low-income families.
On September 14, 2010, FHFA published in the Federal Register a final rule establishing new affordable housing goals
for Freddie Mac and Fannie Mae for 2010 and 2011. The final rule was effective on October 14, 2010. The rule establishes
four goals and one subgoal for single-family owner-occupied housing, one multifamily special affordable housing goal, and
one multifamily special affordable housing subgoal. Three of the single-family housing goals and the subgoal target purchase
money mortgages for: (a) low-income families; (b) very low-income families; and/or (c) families that reside in low-income
areas. The single-family housing goals also include one that targets refinancing mortgages for low-income families. The
multifamily special affordable housing goal targets multifamily rental housing affordable to low-income families. The
multifamily special affordable housing subgoal targets multifamily rental housing affordable to very low-income families. In
addition, the rule states that Freddie Mac and Fannie Mae must continue to report on their acquisition of mortgages involving
low-income units in small (5- to 50-unit) multifamily properties.
Our housing goals for 2010 and 2011 are set forth in Table 5 below.
Table 5 — Affordable Housing Goals for 2010 and 2011
Goals for 2010 and 2011
Single-family purchase money goals (benchmark levels):
Low-income . ......................................................................... 27%
Very low-income . . . . . .................................................................. 8%
Low-income areas
(1)
.................................................................... 24%
Low-income areas subgoal ................................................................ 13%
Single-family refinance low-income goal (benchmark level) . . ......................................... 21%
Multifamily low-income goal ................................................................ 161,250 units
Multifamily very low-income subgoal . ......................................................... 21,000 units
(1) FHFA will annually set the benchmark level for the low-income areas goal based on the benchmark level for the low-income areas subgoal, plus an
adjustment factor reflecting the additional incremental share of mortgages for moderate-income families in designated disaster areas in the most recent
year for which such data is available. For 2010, FHFA set the benchmark level for the low-income areas goal at 24%.
The single-family goals are expressed as a percentage of the total number of eligible mortgages underlying our total
single-family mortgage purchases. The multifamily goals are expressed in terms of minimum numbers of units financed.
With respect to the single-family goals, the rule includes: (a) an assessment of performance as compared to the actual
share of the market that meets the criteria for each goal; and (b) a benchmark level to measure performance. Where our
performance on a single-family goal falls short of the benchmark for a goal, we still could achieve the goal if our
performance meets or exceeds the actual share of the market that meets the criteria for the goal for that year. For example, if
the actual market share of mortgages to low-income families relative to all mortgages originated to finance owner-occupied
single-family properties is lower than the 27% benchmark rate, we would still satisfy this goal if we achieve that actual
market percentage.
The rule makes a number of changes to the previous counting methods for goals credit, including prohibiting housing
goals credit for purchases of private-label securities. However, the rule allows credit under the low-income refinance goal for
permanent MHA Program loan modifications. The rule also states that FHFA does not intend for the enterprises to undertake
economically adverse or high-risk activities in support of the goals, nor does it intend for the enterprises’ state of
conservatorship to be a justification for withdrawing support from these important market segments.
In addition, as noted in the rule, FHFA expects to take future regulatory action to address the housing goals treatment of
purchases of multifamily loans that aid the conversion of properties that have affordable rents to properties that have less
affordable, market rate rents. FHFA also may solicit further comments on how the housing goals can further promote
sustainable homeownership and how multifamily subordinate liens can be structured to benefit low-income residents.
We expect to report our performance with respect to the 2010 affordable housing goals in March 2011. At this time,
based on preliminary information, we believe we did not achieve certain of the goals for 2010. We and FHFA are in
discussions concerning whether achievement of such goals was infeasible under the terms of the GSE Act, due to market and
32 Freddie Mac