In a possible preview of their future relationships with the federal bureaucracy, Fannie Mae and Freddie Mac were turned down on most objections they raised to new affordable housing regulations released Oct. 12.

The Department of Housing and Urban Development, instead, clarified only a few of the many provisions the GSES identified as problems.

And while Fannie and Freddie lost in the first round of the 30/30 regulation battle, it is just the first step in what Freddie calls a "learning process" with HUD, a process that will see the second lesson played out next spring when permanent rules are composed.

Many mortgage bankers look forward to stronger affordable housing goals for the GSEs. The bankers believe that, while the intent to increase that business is there, the GSEs' efforts have fallen short of providing a real business base and, among other things, would like to see underwriting guidelines loosened further.

Some lenders, like BancFirst Corp. of Oklahoma City, Okla., believe that encouraging mortgage insurance companies to underwrite their insurance guidelines so they are in line with the affordable housing programs offered by Fannie and Freddie would go a long way toward increasing that business. (See story, Page 4.) The American Mortgage Corp. of the South said that, although Fannie has relaxed some underwriting guidelines, more could be done.

"We could probably do more of that business if [the GSEs] offered a little more latitude with things like income-to-debt ratios and credit histories," said Susan Haid, senior vice president of the Merritt Island, Fla., institution.

Whether that will happen remains to be seen. The GSEs, still smarting from HUD's negative view of their proposed changes, are concentrating on implementing new changes for the 1995 goals.

Fannie and Freddie had each sent comment letters with suggested regulation changes after HUD set interim goals for 1993-94 outlining the GSEs' low- to moderate-income and central city lending requirements.

And although the interim goal regulations took effect when published in the Federal Register Oct. 13, the permanent regulations are scheduled to be drawn up next spring and "any improvements can be made then," said Frank Notaft, deputy chief economist at Freddie Mac.

The GSEs also objected to the regulation's requirement that, to achieve the low-income portion of the multifamily special affordable housing goal, each dwelling unit must be affordable to low-income families.

Fannie argued that a proportional approach. which would count units meeting the goal as applicable to the very low-, especially low-income, portion of the multifamily goal, should also apply to the low-income portion of the goal.

The regulation specifies proportionality for the very low-, especially low-income, portion of the goal but omits this requirement for the low-income portion, HUD said.

HUD explained that although this' can be interpreted as not permitting proportionality for the low-income portion, it may also be read as not precluding as well. HUD changed the regulation to permit proportional counting for both low-income and the very low-, especially low-income, proportions of the multifamily goal.

The 30/30 goals, which will be enforced by the Office of Federal Housing Enterprise Oversight, call for Fannie to ensure that 30% of its business is directed toward low- to moderate-income housing, while 28% of its business would go toward lending in HUD-designated central city areas.

Freddie has similar goals, having to meet 28% and 26%, respectively. 1994 goals will each be set at 30%.

In addition to those goals, both GSEs are required to reach special affordable housing goals aimed at meeting what HUD considers "the unaddressed housing needs of lower-income families." In these areas, Fannie and Freddie must exceed their 1992 performances by $2 billion and $1.5 billion respectively.

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