Fannie Mae said this week it is approaching the halfway point in its effort to provide $1 trillion in affordable housing financing by the end of the century.

At a reception attended by big-city mayors from around the country, James A. Johnson, chairman and CEO of Fannie Mae, said that the private agency has financed $440 billion of loans to 5.6 million families through the four-year-old program, which targets low- to moderate-income families, minority members, and immigrants. Mr. Johnson said he expects to hit the $500 billion mark by May.

"You can make money in affordable housing. Once you demonstrate to the mortgage lenders that they can make money then more mortgages become available," said John L. Ware, the city manager for Dallas. "Now it helps when I go to the table with the lenders with Fannie Mae behind me."

"We use Fannie Mae as a product by which we leverage more dollars into the economy in addition to providing homeownership," Mr. Ware added.

The private agency, which buys loans that meet its criteria and securitizes about 75% of them, has earmarked more than $175 billion to the affordable housing program this year and expects to help more than two million families, Mr. Johnson said.

Last year $121 billion, or 68% of Fannie's business, was targeted to the affordable housing effort.

In 1996, Fannie directed $114 billion and 66% of its business at this program.

Almost $25 billion of the 1997 figure was spent on helping more than 255,000 minority families become homeowners.

Since 1993, Fannie's lending to minorities has increased 38%. Last year home sales to minorities increased 27% nationwide, and 18.7% of the single- family home loans Fannie financed went to minorities, up from 18.2% in 1996.

"Much of what's going on now in terms of moving homeownership is coming from minorities and new immigrants," said Mr. Johnson.

Mr. Johnson said that low interest rates have boosted refinancings enough to create record volumes for the rest of this quarter and the second quarter.

"Most importantly, it is an extension of an environment where people have a better chance to buy a home because they have a better combination of real income, interest rates, and home prices," Mr. Johnson said.

But affordable housing advocates say that homeownership is not a reality for many who live in public housing and earn under $8,000 a year.

Fannie Mae and Freddie Mac have "increased their efforts by leaps and bounds in recent years," said Allen J. Fishbein, general counsel at the Center for Community Change in Washington. But Mr. Fishbein said there is room for further gains in apartment finance.

Mr. Johnson said that Fannie is the largest investor in low-income tax credits for multifamily developments, with more than $1 billion invested. Fannie also does business with over 250 minority- and women-owned lenders, he said, a 24% increase since 1994.

Mayors Marion Barry Jr. of Washington, Bill Campbell of Atlanta, Emanuel Cleaver 2d of Kansas City, Mo., and Elizabeth G. Flores of Laredo, Tex., were among the attendees.

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