WASHINGTON -- The chief executive of Freddie Mac said his company might well fall short of at least one of its targets this year for support of affordable-housing loans.
In testimony last week before a congressional committee, Leland Brendsel said the Federal Home Loan Mortgage Corp. could fall as much as 5 percentage points below the central-city lending target this year, and termed next year's target "unrealistic and infeasible."
Congress mandated last year that Fannie Mae and Freddie Mac each direct a percentage of their business to families with low and moderate incomes, central-city residents, and to a group with even lower income. This is the first year that system has been in place.
Overstated Market Size?
Mr. Brendsel reported that 21% to 26% of the units financed by Freddie Mac in the first nine months of this year were in central cities. The Department of Housing and Urban Development requires Freddie Mac to do 26% of its lending in central cities this year, and 30% next year.
Mr. Brendsel questioned next year's target on the grounds that HUD has overstated the size of the conventional market in central cities.
There was no immediate reaction at the hearing to Mr. Brendsel's statement.
Freddie Mac tried -- and failed -- to sway HUD on next year's central-city goal with the same argument. The agency stuck to its plan and set the goal at 30%.
Mr. Brendsel also said Freddie Mac had done 27% to 29% of its business with low- and moderate-income families from January to September this year. Freddie Mac must meet a 28% target in that category this year, and 30% next year.
Mr. Brendsel did not report on Freddie Mac's performance so far on the very-low-income targets.
Fannie Mae's Situation
Federal National Mortgage Association's chairman, James A. Johnson, also testified that his company might have trouble with its target of doing 28% of its business in central cities this year.
He said his company was "very close" to meeting the goal, but could not say for sure if it would.
He attributed the uncertainty in part to the refinancing boom. "Since refinancing is less prevalent in central cities, the yearend business totals for suburban and other areas will have a large impact on the percentage," he said.
Mr. Johnson projected that 34% of Fannie Mae's loans would go to families with low and moderate incomes. That would place Fannie Mae four percentage points above the 30% mark it must reach this year in that category.