The regulator for Fannie Mae and Freddie Mac on Wednesday proposed affordable-housing goals for the two mortgage finance companies, changing the way it judges their performance to better reflect market conditions.
The Federal Housing Finance Agency said in its proposed rule that it expects Fannie and Freddie "to continue to fulfill their core statutory purposes, including their support for affordable housing." The fact that the companies have been under government control since September 2008 does not justify the companies' pulling out of low-income market segments, the regulator said, though officials warned that they expect the companies to assess risk carefully.
"FHFA does not intend for the enterprises to undertake uneconomic or high-risk activities in support of the goals," the agency said.
It is changing the way it measures whether each company has met its goals. In recent years the companies were given a prospective benchmark that would serve as their goal. FHFA said that this process was complicated by the difficulty of projecting mortgage market conditions.
Instead, regulators will now measure Fannie and Freddie's performance based on a benchmark rate set at the beginning of the year, as well as by market conditions. As long as the mortgages purchased by the two government-sponsored enterprises meet one of the two goals the companies will have satisfied regulators' expectations.
"This approach is appropriate in light of the difficulties of predicting the market, especially in light of recent market turmoil but also in view of the difficulty in making those projections accurately even in more stable economic environments," the agency said.