WASHINGTON -- The Department of Housing and Urban Development has temporarily extended this year's housing goals for Fannie Mae and Freddie Mac into 1995.
A HUD regulation setting higher goals is under review by the Office of Management and Budget, and is expected to be issued for public comment early next year.
In a press release Wednesday, Nicolas P. Retsinas, assistant secretary of housing, said the extension of this year's goals would ensure "that there is no disruption in the enterprises' efforts to work with low- and moderate-income borrowers."
In 1994, each agency was required to target 30% of its purchases to finance low- and moderate-income housing, and the same proportion to finance housing in central cities.
Fannie and Freddie will meet the same goals in 1995, until higher final goals are announced in the summer.
According to a draft of the new rule, HUD will require the agencies to increase their purchases of low- and moderate-income loans each year, starting in 1995. By 1998, such purchases will have to comprise 44% of all units in 1998.
The same draft rule replaced the central-city goal with a new "underserved areas" target.
Such areas were defined as census tracts where 30% or more of the residents are minority and the median income is less than 120% of the area median income. Also included are tracts where the median income is less than 80% of the area median income, regardless of minority population.
Fannie Mae has lobbied hard against the new definitions.
In an August letter to HUD Secretary Henry Cisneros, Fannie chairman James A. Johnson argued that the central city goal, which includes all census tracts regardless of income or minority populations, allows Fannie Mae to help cities retain middle-class residents.
According to the draft rule, mortgage purchases in the newly defined central cities areas would have to make up 18% of each secondary market agency's purchases in 1995, and go up each year to hit 23% in 1998.
A third goal -- the so-called special affordable housing goal -- will be modified slightly when it is extended next year.
Citing the large reduction in the mortgage market, HUD has cut back the goal for 1995. It will now require Fannie Mae to purchase mortgages of $4.6 billion for rental and owner-occupied low-income housing in 1995.
Freddie Mac will be required to purchase $3.36 billion in such mortgages.
According to the draft rule, the special affordable housing goal will be expressed as a percentage of mortgage purchases in the future. HUD proposed in August that the agencies increase such purchases each year, beginning with 11% of total units financed in 1995 and climbing to 14% in 1998.