2024-30793. 2025-2027 Enterprise Housing Goals

Goal or subgoal	Criteria	Final benchmark level for 2025-2027 (percent)
Low-Income Home Purchase Goal	Home purchase mortgages on single-family, owner-occupied properties, to borrowers with incomes no greater than 80 percent of area median income (AMI)	25
Very Low-Income Home Purchase Goal	Home purchase mortgages on single-family, owner-occupied properties, to borrowers with incomes no greater than 50 percent of AMI	6
Low-Income Refinance Goal	Refinance mortgages on single-family, owner-occupied properties, to borrowers with incomes no greater than 80 percent of AMI	26
Minority Census Tracts Home Purchase Subgoal	Home purchase mortgages on single-family, owner-occupied properties to borrowers with incomes no greater than 100 percent of AMI in minority census tracts.1	12
Low-Income Census Tracts Home Purchase Subgoal	(i) Home purchase mortgages on single-family, owner-occupied properties to borrowers (regardless of income) in low-income census tracts 2 that are not minority census tracts, and (ii) home purchase mortgages on single-family, owner-occupied properties to borrowers with incomes greater than 100 percent of AMI in low-income census tracts that are also minority census tracts.	4
1  Census tracts that have a minority population of at least 30 percent and a median income of less than 100 percent of AMI.
2  Census tracts where the median income is no greater than 80 percent of AMI.

As in previous rulemakings, the low-income areas housing goal benchmark level is not included in this final rule. Under the existing regulation, the benchmark level will be the sum of the benchmark levels for the minority census tracts home purchase subgoal and the low-income census tracts home purchase subgoal established in this final rule, plus an additional amount that will be determined separately by FHFA by notice that considers families in disaster areas with incomes no greater than 100 percent of AMI.^[24]

B. Benchmark Levels for the Multifamily Housing Goals and Subgoal—§ 1282.13

The final rule establishes the benchmark levels for the multifamily housing goals and subgoal for 2025-2027 as follows: ( print page 106261)

Goals and subgoal	Criteria	Final benchmark level for 2025-2027 (percent)
Low-Income Goal	Percentage share of all goal-eligible units in multifamily properties financed by mortgages purchased by the Enterprise in the year that are affordable to low-income families, defined as families with incomes less than or equal to 80 percent of AMI	61
Very Low-Income Goal	Percentage share of all goal-eligible units in multifamily properties financed by mortgages purchased by the Enterprise in the year that are affordable to very low-income families, defined as families with incomes less than or equal to 50 percent of AMI	14
Small Multifamily Low-Income Subgoal	Percentage share of all goal-eligible units in all multifamily properties financed by mortgages purchased by the Enterprise in the year that are units in small multifamily properties affordable to low-income families, defined as families with incomes less than or equal to 80 percent of AMI	2

C. Measurement Buffers (Referred to as “Enforcement Factors” in the Proposed Rule)—§ 1282.22(b)

Consistent with the proposed rule, the final rule establishes new factors for the 2025-2027 housing goals period that FHFA will apply in determining whether to require a housing plan if an Enterprise fails to meet certain single-family housing goals in 2025-2027. The final rule establishes the numerical factors as proposed but changes the name to “measurement buffers.” Specifically, for 2025-2027, if the benchmark level for the single-family low-income home purchase, very low-income home purchase, or low-income refinance housing goal is higher than the market level for the goal, an Enterprise that fails to meet the goal will not be required to submit a housing plan if the Enterprise's performance meets or exceeds: (i) the market level minus 1.3 percentage points for the low-income home purchase goal; (ii) the market level minus 0.5 percentage points for the very low-income home purchase goal; or (iii) the market level minus 1.3 percentage points for the low-income refinance goal. To ensure that an Enterprise does not rely entirely on these measurement buffers, if an Enterprise fails to meet one of the applicable goals in both 2025 and 2026, the measurement buffer will not apply to that goal in 2027.

D. Multifamily Very Low-Income Housing Goal—§§ 1282.11(a)(1); 1282.13(a) and (c); 1282.15(c) and (e)

The final rule revises the housing goals regulation to refer to the multifamily very low-income housing subgoal as a goal instead of a subgoal. This change is consistent with the Safety and Soundness Act, the reference to the single-family very low-income home purchase goal in 12 CFR 1282.12(d) as a goal and not a subgoal, and FHFA's practice of referring to “multifamily housing goals.” ^[25] FHFA received one comment (NDI) supporting this proposed change.

E. Technical Changes—§§ 1282.1; 1282.11(a)(1); 1282.13 (Header); 1282.20; 1282.21; 1282.22

Consistent with the proposed rule, the final rule makes minor technical changes to the housing goals regulation that are intended to better conform the regulation to statutory text and existing FHFA practices and procedures. Except as discussed in this preamble regarding proposed changes to § 1282.22(g), FHFA received no comments on the proposed technical changes.

The final rule modifies the definition of “designated disaster area” in § 1282.1 as proposed, to reflect that major disasters are designated (declared) by the President under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.). FHFA modified the definition to add the reference to the designation by the President and deleted the reference to “declared by the Federal Government.” This change eliminates potential confusion about which disasters are associated with designated disaster areas.

Consistent with the proposed rule, the final rule modifies § 1282.11(a)(1) to correctly reference the various housing goals. That paragraph previously referred to one single-family housing subgoal and is modified in the final rule to reference the two single-family, owner-occupied, purchase money mortgage housing subgoals. The final rule also removes the words “special affordable” that until now described the multifamily goals and subgoals in § 1282.11(a)(1) and the header in § 1282.13 for simplicity and to consistently reference single-family and multifamily goals and subgoals. Affordability remains a criterion for units to count towards meeting the goals and subgoal, however.

In addition, consistent with the proposed rule, the final rule makes non-substantive changes to the enforcement provisions in § 1282.20 and redesignates housing plan provisions in § 1282.21 as a new § 1282.22. Specifically, the final rule modifies § 1282.20 to separate and more fully describe the preliminary and final determinations of housing goals compliance. As modified, § 1282.20 addresses preliminary determinations of housing goals compliance; § 1282.21 addresses final determinations of housing goals compliance. These sections also include revised wording that conforms to FHFA's established practices.

The final rule revises and republishes newly redesignated § 1282.22 to include the measurement buffers for the 2025-2027 single-family housing goals in paragraph (b). The final rule relocates provisions in § 1282.21(b) through (e) to § 1282.22(c) through (f). Paragraph (c)(3) includes an additional technical change inadvertently omitted in the proposed rule to add “or subgoal” for consistency with the changes to § 1282.22(a) in the proposed and final rules. Paragraph (f) includes technical changes to clarify that if a proposed amended housing plan is not acceptable to the Director, the Director may afford the Enterprise 15 days to submit additional amendments to its proposed plan for approval or disapproval, rather than requiring a “new” proposed plan. Except as noted, these changes are included in the final rule as proposed in the NPRM.

The final also rule includes the new proposed provision at § 1282.22(g) that incorporates the housing plan enforcement provisions contained in the ( print page 106262) Safety and Soundness Act.^[26] That paragraph provides that if the Director requires an Enterprise to submit a housing plan and the Enterprise refuses to submit such a plan, submits an unacceptable plan, or fails to comply with the plan, the Director may issue a cease and desist order in accordance with 12 U.S.C. 4581, impose civil money penalties in accordance with 12 U.S.C. 4585, or take any other action that the Director determines to be appropriate. The Safety and Soundness Act provides authority to enforce the housing plans, but this authority was not previously described in the Enterprise housing goals regulation. Including these provisions in the final rule supports transparency by providing a more complete description of FHFA's enforcement authority. This change makes it easier for anyone unfamiliar with the Safety and Soundness Act to understand the potential consequences if an Enterprise fails to submit an acceptable housing plan or fails to comply with the plan as required. This is the only technical change addressed by a comment on the proposed rule. In response to a comment from Fannie Mae suggesting that FHFA modify the proposed rule language to provide clarity about the enforcement options available for the housing goals, FHFA is including language in § 1282.22(g) to indicate that enforcement of housing plans will be consistent with 12 U.S.C. 4566 and any other applicable requirements of the Safety and Soundness Act.

IV. Single-Family Housing Goals and Subgoals

A. Factors Considered in Setting the Single-Family Housing Goal Benchmark Levels

The Safety and Soundness Act requires FHFA to consider the following seven factors in setting the single-family housing goals:

1. National housing needs;

2. Economic, housing, and demographic conditions, including expected market developments;

3. The performance and effort of the Enterprises toward achieving the housing goals in previous years;

4. The ability of the Enterprises to lead the industry in making mortgage credit available;

5. Such other reliable mortgage data as may be available;

6. The size of the purchase money conventional mortgage market, or refinance conventional mortgage market, as applicable, serving each of the types of families described, relative to the size of the overall purchase money mortgage market or the overall refinance mortgage market, respectively; and

7. The need to maintain the sound financial condition of the Enterprises.^[27]

FHFA has considered each of these seven statutory factors in setting the benchmark levels for each of the single-family housing goals and subgoals in the final rule.

In setting the benchmark levels for the single-family housing goals and subgoals, FHFA relied on statistical market models developed by FHFA to evaluate four of the seven factors (national housing needs; economic, housing, and demographic conditions; other reliable mortgage data; and the size of the conventional purchase money or refinance mortgage segment). These market models generate a point forecast for each goal as well as a confidence interval for the point forecast. FHFA also monitors information on market developments that are not reflected in the model. FHFA then considers the other statutory factors (performance and effort of the Enterprises to lead the industry in making mortgage credit available; the ability of the Enterprises to do so; and the need to maintain sound financial condition of the Enterprises). These factors are not explicitly modeled in the statistical forecast models. Therefore, FHFA considered these factors when setting the benchmark levels within the model generated confidence intervals for the 2025-2027 single-family housing goals.

Market forecast models. The purpose of FHFA's market forecast models is to forecast the market share of the goal-qualifying mortgage originations for the 2025-2027 period. The models are intended to generate reliable forecasts rather than to test various economic hypotheses about the housing market or to explain the relationship between variables. Therefore, following standard practice among forecasters and economists at other federal agencies, FHFA estimates a reduced-form equation for each of the housing goals and fits an Autoregressive Integrated Moving Average (or ARIMA) model to each goal share. The models look at the statistical relationship between (a) the historical market share for each single-family housing goal or subgoal, as calculated from monthly HMDA data, and (b) the historical values for various factors that may influence the market shares, such as interest rates, inflation, home prices, home sales, the unemployment rate, and other factors. The models then project the future value of the affordable market share using forecast values of the model inputs. Separate models are developed for each of the single-family housing goals and subgoals.

FHFA has employed similar models in past Enterprise housing goals rulemaking cycles to generate market forecasts. The models are developed using monthly series generated from HMDA and other data sources, and the resulting monthly forecasts are then averaged into an annual forecast for each of the three years in the goal period. The models rely on 20 years of HMDA data, from 2004 to 2023, the latest year for which public HMDA data was available at the time of model construction. Additional discussion of the market forecast models can be found in a technical report on FHFA's official website.^[28]

Current market outlook. There are many factors that impact the affordable housing market, and changes to any of them could significantly impact the ability of the Enterprises to meet the goals. In developing the market models, FHFA used Moody's forecasts as the source for macroeconomic variables where available.^[29] In cases where Moody's forecasts were not available (for example, the share of government-insured/guaranteed home purchases and the share of government-insured/guaranteed refinances), FHFA generated and tested its own forecasts as in past rulemakings.^[30] Variables that impact the models and the determinations of benchmark levels, including interest rates, home prices, and the supply of affordable housing, are discussed below.

The Federal Open Market Committee (FOMC) of the Federal Reserve, at its September 2024 meeting, reiterated its commitment to seeking maximum employment and inflation at the rate of 2 percent in the long run, by lowering its target range for the federal funds rate by 0.5 percentage points to 4.75 percent to 5.0 percent.^[31] In its November 2024 meeting, the FOMC lowered the target range by an additional 0.25 percentage ( print page 106263) points to 4.5 percent to 4.75 percent.^[32] Moody's August 2024 Baseline forecast does not include these cuts but assumes that the FOMC will cut rates by 0.25 percentage points in September 2024 and December 2024, with further cuts to the federal funds rate to 4 percent by the fourth quarter of 2025.

The forecast projects that the 30-year fixed mortgage rate will remain elevated, and only decline 0.3 percentage points from 6.4 percent in 2025 to 6.1 percent in 2026, and then decline to 6.0 percent in 2027. Home prices increased rapidly in 2021 and 2022 as indicated by FHFA's purchase-only House Price Index (HPI), due to a combination of high demand for housing resulting from demographic trends and limited supply of homes for sale.^[33] The rapid rise in mortgage rates through 2022 and their stabilization at new elevated levels in 2023 slowed down the pace of house price growth. Although slower, house price growth was still significant, rising 4.2 percent from August 2023 to August 2024.^[34] FHFA noted in its monthly HPI report that it was the sixth consecutive month of modest house price growth.^[35] Moody's predicts that home price appreciation will slow down even more in 2025. Moody's August 2024 forecast of the same HPI index expects the annual rates of house price growth to be 1.0, 1.5, and 2.1 percent in 2025, 2026, and 2027, respectively.

Even though mortgage interest rates are forecast to decline modestly, many households maintain low mortgage rates that are likely to remain below the prevailing mortgage rates, and therefore they are less likely to refinance. The refinance share of overall mortgage originations declined from 62.4 percent in 2020 to 19.2 percent in 2023. Moody's forecasts this share to decline further to 18.0 percent in 2024, but rise to 19.2, 25.7, and 33.8 percent in 2025, 2026, and 2027, respectively.

Taken together, the elevated mortgage interest rates and high home price levels will likely continue to impact the ability of low- and very low-income households to purchase homes. The median sales price for existing single-family homes to median household income ratio, which is often used to measure affordability, rose to 5.1 in 2022, up from 4.1 in 2019.^[36] As a result, between 2019 and 2022, the number of cost-burdened homeowners increased by 3 million households.^[37] Housing affordability in 2023, as measured by Moody's forecast of the Housing Affordability Index (HAI) provided by the National Association of Realtors (NAR), was at its lowest level since 1989. This factor is projected to rise even more modestly in the August 2024 forecast used to support the final rule than was projected in the February 2024 forecast (used to support the proposed rule).^[38 39]

The supply of affordable housing has not kept pace with the growth of demand. This has led to a shortage of homes, which became more acute during the COVID-19 pandemic. Although, for example, the October 2024 active listing count is 29.2 percent higher that it was in October 2023, it is still 21.1 percent lower than it was at the same time in 2019.^[40] Single-family housing starts, or the measure of new one-to-four-unit residential construction, dropped 10.8 percent from 2021 to 2022, and continued to decline in 2023.^[41] For example, the Mortgage Bankers Association (MBA) estimates housing starts to have decreased about 8.8 percent from 1.55 million in 2022 to 1.42 million in 2023. MBA forecasts housing starts to decline about 4.6 percent in 2024, before rising about 3.4 percent in 2025.^[42]

The combination of high home prices and elevated mortgage rates along with continued limited housing supply has also contributed to a sharp decline in purchase loan origination volumes, as new homes are less affordable and existing homeowners are less likely to move and relinquish their low interest rate mortgages. For example, in 2022, lenders reported a 51 percent decrease in originated closed-end home loans from 2021 volumes.^[43] In 2023, there were further declines, with lenders reporting a 34.5 percent decrease in originated closed-end home loans from 2022 volumes.^[44] Moody's Baseline scenario for August 2024 shows single-family purchase mortgage originations similarly down in 2023, when originations totaled $1.33 trillion, compared to 2021, when originations totaled $1.86 trillion.^[45]

Furthermore, this observation from Moody's February 2024 forecast is still applicable: “Life events such as divorces, deaths, and the birth of children along with moderating interest rates will prompt more homeowners to list their homes in 2024 than in 2023, but the rise in existing home sales is expected to be limited.” ^[46]

FHFA continues to monitor how these changes in the housing market, as well as other market conditions, may impact various segments of the market, including those targeted by the housing goals.

Post-model adjustments. While FHFA's models can address and forecast many of the factors referenced in the statute, including increasing interest rates and rising property values, some factors are not captured in the models. FHFA, therefore, considers additional factors when selecting the benchmark level within the model-generated confidence interval for each of the single-family housing goals.

Demographic trends. Although the model considers some demographic factors, specific demographic changes, ( print page 106264) such as the housing demand patterns of Millennials or the growth of minority households, are not included explicitly in the market forecast models. FHFA considers those demographic changes that are not captured by the model, along with the other factors listed in this section, as post-model adjustments when setting the housing goals benchmark levels. According to NAR, Millennials had represented the largest share of homebuyers for almost a decade until 2022.^[47] Although they lost that spot to Baby Boomers in 2022, Millennials once again represented the largest share of homebuyers in 2023, increasing from 28 percent to 38 percent.^[48 49] Furthermore, the number of minority households is projected to grow by 22 percent, or 9.3 million, from 2018 to 2028.^[50]

Ability of the Enterprises to lead the mortgage market. The Enterprises' overall share of the mortgage market is subject to fluctuation, as well. In the years preceding the 2008 financial crisis, the Enterprises' share of the market dropped to about 44 percent. As shown in Graph 1, that share rose to about 65 percent in 2012, but declined to about 55 percent in 2015. The Enterprises' share remained relatively stable until 2019, then jumped to 67 percent in 2020 as the Enterprises continued to acquire mortgages even as others in the market stepped back during the COVID-19 pandemic. Since then, the Enterprises' share has declined as the shares of government-guaranteed and government-insured loans, as well as the shares of other market participants, have grown. Government-guaranteed and government-insured loans are not eligible for housing goals credit.

Graph 1 also shows that the Enterprises' share of the conforming mortgage market returned to pre-pandemic levels in 2022 but declined significantly in 2023. Preliminary data shows further declines in 2024. Over the same period, the total Government share of the mortgage market (including the Federal Housing Administration, Department of Veterans Affairs, and Rural Housing Service) and the Other share (such as retained bank portfolios) expanded.

Need to maintain the sound financial condition of the Enterprises. During a period of affordability challenges and increased uncertainty around market conditions, setting the single-family housing goals benchmark levels too high could compromise safe and sound lending standards. FHFA carefully considered benchmark levels that would support access to mortgage lending for low-income families, families that reside in low-income areas, and very low-income families, while still allowing the Enterprises to adequately support all other segments of the market.

Past performance and effort of the Enterprises to achieve the housing goals. Table 1 provides the annual performance of both Enterprises on the single-family housing goals between 2010 and 2023. ( print page 106265)

Table 1—Enterprise Single-Family Housing Goals Performance

[2010-2023]

	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023
Low-Income Home Purchase Goal
Actual Market	27.2	26.5	26.6	24.0	22.8	23.6	22.9	24.3	25.5	26.6	27.6	26.7	26.8	26.3
Benchmark	27.0	27.0	23.0	23.0	23.0	24.0	24.0	24.0	24.0	24.0	24.0	24.0	28.0	28.0
Fannie Mae Performance	* 25.1	* 25.8	25.6	23.8	23.5	* 23.5	22.9	25.5	28.2	27.8	29.0	28.7	27.4	+ 26.1
Freddie Mac Performance	27.8	* 23.3	24.4	* 21.8	* 21.0	* 22.3	23.8	* 23.2	25.8	27.4	28.5	27.4	29.0	28.5
Very Low-Income Home Purchase Goal
Actual Market	8.1	8.0	7.7	6.3	5.7	5.8	5.4	5.9	6.5	6.6	7.0	6.8	6.8	6.5
Benchmark	8.0	8.0	7.0	7.0	7.0	6.0	6.0	6.0	6.0	6.0	6.0	6.0	7.0	7.0
Fannie Mae Performance	* 7.2	* 7.6	7.3	* 6.0	5.7	* 5.6	* 5.2	5.9	6.7	6.5	7.3	7.4	6.9	+ 6.0
Freddie Mac Performance	8.4	* 6.6	7.1	* 5.5	* 4.9	* 5.4	5.7	* 5.7	6.3	6.8	6.9	6.3	7.1	6.8
Low-Income Areas Home Purchase Goal
Actual Market	24.0	22.0	23.2	22.1	22.1	19.8	19.7	21.5	22.6	22.9	22.4	19.1	28.0	28.1
Benchmark	24.0	24.0	20.0	21.0	18.0	19.0	17.0	18.0	18.0	19.0	18.0	14.0	20.0	20.0
Fannie Mae Performance	24.1	22.4	22.3	21.6	22.7	20.4	20.2	22.9	25.1	24.5	23.6	20.3	29.6	28.1
Freddie Mac Performance	* 23.8	* 19.2	20.6	* 20	20.1	19.0	19.9	20.9	22.6	22.9	21.8	18.0	28.7	29.5
Low-Income Census Tracts Home Purchase Subgoal
Actual Market													9.7	9.8
Benchmark													4.0	4.0
Fannie Mae Performance													9.3	9.3
Freddie Mac Performance													9.1	9.4
Minority Census Tracts Home Purchase Subgoal
Actual Market													12.1	12.5
Benchmark													10.0	10.0
Fannie Mae Performance													13.5	12.6
Freddie Mac Performance													12.8	13.2
Low-Income Refinance Goal
Actual Market	20.2	21.5	22.3	24.3	25.0	22.5	19.8	25.4	30.7	24.0	21.0	26.1	37.3	40.3
Benchmark	21.0	21.0	20.0	20.0	20.0	21.0	21.0	21.0	21.0	21.0	21.0	21.0	26.0	26.0
Fannie Mae Performance	20.9	23.1	21.8	24.3	26.5	22.1	* 19.5	24.8	31.2	23.8	21.2	26.2	34.7	38.4
Freddie Mac Performance	22.0	23.4	22.4	24.1	26.4	22.8	21.0	24.8	27.3	22.4	* 19.7	24.8	37.1	43.2
* Numbers marked with an asterisk indicate that the Enterprise failed to meet the goal.
+ Numbers marked with a plus sign indicate that FHFA determined the goal to be infeasible.

B. Benchmark Levels for the Single-Family Housing Goals for 2025-2027 in the Final Rule

The final rule establishes the following benchmark levels for the single-family housing goals and subgoals for 2025-2027:

1. Low-Income Home Purchase Goal

The low-income home purchase goal is based on the percentage share of all conventional, conforming, single-family, owner-occupied home purchase mortgages purchased by an Enterprise that are made to low-income families, defined as families with incomes less than or equal to 80 percent of AMI. Consistent with the proposed rule and FHFA's market model, the final rule sets the annual low-income home purchase housing goal benchmark level for 2025-2027 at 25 percent. While this benchmark level is below the current benchmark level of 28 percent for 2022-2024, it is above the 24 percent benchmark level that was in place from 2015 through 2021 and is consistent with the updated forecast using Moody's August 2024 baseline forecast and 2023 HMDA data. As explained further below, FHFA believes that this benchmark level is appropriate to enable the Enterprises to fulfill their statutory duty to facilitate the financing of affordable housing for all low-income families without compromising safe and sound lending standards during a period of affordability challenges and increased uncertainty around market conditions.

Table 2—Single-Family Low-Income Home Purchase Goal

Year	Historical performance				Projected forecast
	2020	2021	2022	2023	2024	2025	2026	2027
Actual Market Level	27.6%	26.7%	26.8%	26.3%
Benchmark Level	24.0%	24.0%	28.0%	28.0%	28.0%	25.0%	25.0%	25.0%
Current Market Forecast					26.3% +/− 2.6%	26.2% +/− 4.4%	25.9% +/− 5.7%	25.7% +/− 6.7%
Fannie Mae Performance
Low-Income Home Purchase Mortgages	374,376	375,569	278,799	189,439
Total Home Purchase Mortgages	1,288,806	1,306,459	1,016,371	726,139
( print page 106266)
Low-Income % of Home Purchase Mortgages	29.0%	28.7%	27.4%	26.1%
Freddie Mac Performance
Low-Income Home Purchase Mortgages	280,561	329,426	264,118	209,432
Total Home Purchase Mortgages	982,888	1,201,540	911,037	735,932
Low-Income % of Home Purchase Mortgages	28.5%	27.4%	29.0%	28.5%

Recent performance and forecasts. As shown in Table 2, between 2020 and 2023, the low-income purchase market level, as measured by HMDA data, declined from 27.6 percent to 26.3 percent. FHFA's current model forecasts that market level to continue declining and end below 26 percent in 2027 with an average forecast midpoint value of 25.9 percent. Freddie Mac's performance on this goal was 29.0 percent in 2022 and 28.5 percent in 2023, which was above both the benchmark and the market levels in those two years. Fannie Mae's performance in 2022 was 27.4 percent, which was below the benchmark level but above the market level. However, in 2023, Fannie Mae's performance was 26.1 percent, which was below both the benchmark and the market levels. FHFA determined that while Fannie Mae had missed the goal, the goal itself was not feasible for the Enterprise in 2023.^[51]

FHFA rationale. As FHFA noted in the proposed rule preamble, “[t]he combination of high home prices and elevated mortgage rates along with continued limited housing supply has also contributed to a sharp decline in purchase loan origination volumes, as new homes are less affordable and existing homeowners are less likely to give up their low interest rate mortgage. For example, in 2022, lenders reported a 51 percent decrease in closed-end, site-built, single-family mortgage originations from 2021 volumes. Home prices grew by 43 percent between 2019 and 2022, while incomes grew by just 7 percent over the same time.” ^[52] These trends are reflected in the declining market share for the low-income home purchase goal segment as measured by HMDA data. Table 2 shows the decline from 26.8 percent in 2022 to 26.3 percent in 2023 amidst a sharp contraction in mortgage origination volume. Taking the market forecast average and current and forecast market conditions into consideration, the benchmark level in the final rule is set at 25 percent to encourage the Enterprises to continue to find ways to support low-income borrowers under current and forecast market conditions while not compromising safe and sound lending standards. Some commenters on the proposed rule supported the proposal to lower the benchmark level for this goal from the current 28 percent to 25 percent, recognizing the impact of a variety of market challenges and describing the proposed benchmark level as appropriate. Other commenters disagreed with the proposed lowered benchmark level, arguing that the Enterprises should be leading the market. Both Enterprises were supportive of the proposed benchmark level of 25 percent, describing it as meaningful, prudent, and consistent with the Safety and Soundness Act. After considering the comments and updated economic data that became available after FHFA issued the proposed rule, FHFA is adopting the proposed benchmark level of 25 percent in the final rule.

2. Very Low-Income Home Purchase Goal

The very low-income home purchase goal is based on the percentage share of all conventional, conforming, single-family, owner-occupied home purchase mortgages purchased by an Enterprise that are for very low-income families, defined as families with incomes less than or equal to 50 percent of AMI. Consistent with the proposed rule and FHFA's market model, the final rule sets the annual very low-income home purchase housing goal benchmark level for 2025-2027 at 6 percent. While this benchmark level is below the current benchmark level of 7 percent, it is in line with the benchmark level in place from 2015-2021 and the most recent market forecast midpoint average of 6.0 percent. FHFA has determined that a 6 percent benchmark level will serve as an appropriate target that will promote Enterprise efforts in this market segment.

Table 3—Single-Family Very Low-Income Home Purchase Goal

Year	Historical performance				Projected forecast
	2020	2021	2022	2023	2024	2025	2026	2027
Actual Market Level	7.0%	6.8%	6.8%	6.5%
Benchmark Level	6.0%	6.0%	7.0%	7.0%	7.0%	6.0%	6.0%	6.0%
Current Market Forecast					6.2% +/− 1.1%	6.1% +/− 2.0%	6.0% +/− 2.5%	5.9% +/− 3.0%
Fannie Mae Performance
Very Low-Income Home Purchase Mortgages	93,909	97,154	69,919	43,792
Total Home Purchase Mortgages	1,288,806	1,306,459	1,016,371	726,139
( print page 106267)
Very Low-Income % of Home Purchase Mortgages	7.3%	7.4%	6.9%	6.0%
Freddie Mac Performance
Very Low-Income Home Purchase Mortgages	68,216	75,945	64,850	50,244
Total Home Purchase Mortgages	982,888	1,201,540	911,037	735,932
Very Low-Income % of Home Purchase Mortgages	6.9%	6.3%	7.1%	6.8%

Recent performance and forecasts. As shown in Table 3, between 2020 and 2023, the very low-income purchase market level, as measured using HMDA data, declined from 7.0 percent to 6.5 percent. FHFA's current model forecasts that the market for this goal will fall from 6.1 percent to 5.9 percent for the 2025-2027 period. While Freddie Mac's performance in 2022 and 2023 was above both the benchmark and market levels, Fannie Mae's performance in 2022 was above the market level but below the benchmark level. In 2023, Fannie Mae's performance was below both the market and the benchmark levels. FHFA determined that the goal was not feasible for the Enterprise in 2023.

FHFA rationale. The 6 percent benchmark level in the final rule should encourage the Enterprises to continue their efforts to promote safe and sustainable lending to very low-income families. FHFA believes that setting the benchmark level at 6 percent is appropriate, reasonable, and supported by the current market forecast. As noted in section II, some commenters on the proposed rule supported the proposal to lower the benchmark level for this goal from the current 7 percent to 6 percent, recognizing the market challenges, and describing it as appropriate. Other commenters disagreed with the proposed lowered benchmark level, arguing that the Enterprises should be leading the market. Both Enterprises supported the proposed benchmark level of 6 percent, describing it as meaningful, prudent, and consistent with the Safety and Soundness Act, while also noting that it will be challenging to meet. After considering the comments and updated economic data that became available after FHFA issued the proposed rule, FHFA is adopting the proposed benchmark level of 6 percent in the final rule.

3. Minority Census Tracts Home Purchase Subgoal

The minority census tracts home purchase subgoal is based on the percentage share of home purchase mortgages on conventional, conforming, single-family, owner-occupied properties to borrowers with incomes no greater than 100 percent of AMI in minority census tracts. The Safety and Soundness Act defines minority census tracts as those with a minority population of 30 percent or more and median census tract income of less than 100 percent of AMI. Consistent with the proposed rule and FHFA's market model, the final rule increases the annual benchmark level for this subgoal for 2025-2027 from the current 10 percent to 12 percent. This benchmark level is slightly below the average market forecast of 12.7 percent. FHFA has determined that this benchmark level will serve as an appropriate target that will promote Enterprise efforts in this market segment.

Table 4—Single-Family Minority Census Tracts Home Purchase Subgoal

Year	Historical performance				Projected forecast
	2020	2021	2022	2023	2024	2025	2026	2027
Actual Market Level	9.2%	9.5%	12.1%	12.2%
Benchmark Level	N/A	N/A	10.0%	10.0%	10.0%	12.0%	12.0%	12.0%
Current Market Forecast					12.3% +/− 1.4%	12.5% +/− 2.3%	12.7% +/− 3.0%	13.0% +/− 3.5%
Fannie Mae Performance
Minority Census Tracts Home Purchase Mortgages	129,996	143,340	137,474	91,202
Total Home Purchase Mortgages	1,288,806	1,306,459	1,016,371	726,139
Minority Census Tracts % of Home Purchase Mortgages	10.1%	11.0%	13.5%	12.6%
Freddie Mac Performance
Minority Census Tracts Home Purchase Mortgages	89,998	111,691	116,223	97,378
Total Home Purchase Mortgages	982,888	1,201,540	911,037	735,932
Minority Census Tracts % of Home Purchase Mortgages	9.2%	9.3%	12.8%	13.2%
The numbers in italics refer to FHFA's tabulations of the market and Enterprise performance had this goal been in place before 2022.

Recent performance and forecasts. Table 4 shows the implied market levels and Enterprise performance in 2020 and 2021 (before FHFA established this subgoal), as well as market levels and Enterprise performance since this subgoal was established. Both Enterprises exceeded the benchmark and market levels for this subgoal in 2022 and 2023. The table also shows a pronounced increase in the market levels and in both Enterprises' performance on this subgoal beginning in 2022, which was the first year of the new subgoal as well as the first year of new census tract boundaries based on the 2020 census. The average AMI increase in 2022 was unusually high, which led to more borrowers qualifying ( print page 106268) for this subgoal.^[53] The number of census tracts rose from about 74,000 to 85,000 in the 2020 census, and the share of minority census tracts rose from 32.9 percent to 35.2 percent with this census update, leading to more loans qualifying for this subgoal.^[54 55] The imposition of the new subgoal also meant additional attention and effort at the Enterprises to meet the new subgoal's benchmark level. With changes in the census tract boundaries, unusually high AMI increases, and the imposition of the new subgoal all occurring in 2022, it is difficult to isolate and conclusively determine the specific effect of each of these factors on the higher performance of the market and the Enterprises. FHFA will continue to analyze this trend.

FHFA rationale. One commenter suggested that FHFA greatly increase the benchmark level for this subgoal given that the statutory definition of “minority census tract” is broad. As noted, the definition of “minority census tract” is statutory, and FHFA first established this subgoal in the 2022-2024 housing goals final rule.^[56] For the 2022-2024 housing goals, FHFA set the benchmark level for this subgoal at 10 percent.^[57] Given that the subgoal is still relatively new, an incremental increase over the benchmark level in the previous housing goals period will further the same purposes without being disruptive to the market. The 12 percent benchmark level is an appropriate level given the recent market and Enterprise performance, and the updated model forecast. FHFA believes that this benchmark level emphasizes the importance of providing access to mortgage credit for borrowers with incomes at or below 100 percent of AMI who reside or seek to reside in minority census tracts while taking current market conditions into consideration. Commenters strongly supported the proposed increase in the benchmark level to 12 percent. Several commenters highlighted the positive impact the proposed benchmark level would have on ensuring the Enterprises fulfill their statutory duty to facilitate the financing of affordable housing for low- and moderate-income families, including families of color. After considering the comments and updated economic data that became available after FHFA issued the proposed rule, FHFA is adopting the proposed benchmark level of 12 percent in the final rule.

4. Low-Income Census Tracts Home Purchase Subgoal

The low-income census tracts home purchase subgoal is based on the percentage share of conventional, conforming, single-family, owner-occupied home purchase mortgages that are: (1) to borrowers (regardless of income) in low-income census tracts that are not minority census tracts; and (2) to borrowers with incomes greater than 100 percent of AMI in low-income census tracts that are also minority census tracts. Consistent with the proposed rule, the final rule sets the annual benchmark level for this subgoal for 2025-2027 at 4 percent, which is the same as the benchmark level for the 2022-2024 housing goals period. FHFA recognizes that this benchmark level is significantly lower than both the midpoint of the confidence intervals of the market forecast and the recent performance of the Enterprises. However, FHFA has determined that a relatively low benchmark level for this subgoal is appropriate because the subgoal includes housing goals credit for higher-income borrowers (higher than 100 percent of AMI) that may have ready access to mortgage credit even when purchasing homes in low-income census tracts. FHFA's tabulation of 2023 HMDA data shows that 70 percent of the loans that qualified for credit under this subgoal were made to borrowers at or above 100 percent of AMI.

Table 5—Single-Family Low-Income Census Tracts Home Purchase Subgoal

Year	Historical performance				Projected forecast
	2020	2021	2022	2023	2024	2025	2026	2027
Actual Market Level	8.5%	9.6%	9.7%	9.8%
Benchmark Level	N/A	N/A	4.0%	4.0%	4.0%	4.0%	4.0%	4.0%
Current Market Forecast					10.1% +/− 0.7%	10.1% +/− 1.1%	10.1% +/− 1.5%	10.1% +/− 1.7%
Fannie Mae Performance
Low-Income Census Tracts Home Purchase Mortgages	106,362	122,177	94,864	67,844
Total Home Purchase Mortgages	1,288,806	1,306,459	1,016,371	726,139
Low-Income Census Tracts % of Home Purchase Mortgages	8.3%	9.4%	9.3%	9.3%
Freddie Mac Performance
Low-Income Census Tracts Home Purchase Mortgages	78,436	104,401	82,883	69,459
Total Home Purchase Mortgages	982,888	1,201,540	911,037	735,932
Low-Income Census Tracts % of Home Purchase Mortgages	8.0%	8.7%	9.1%	9.4%
The numbers in italics refer to FHFA's tabulations of the market and Enterprise performance had this goal been in place before 2022.

Recent performance and forecasts. Table 5 shows that both Enterprises exceeded the benchmark level for this subgoal in 2022 and 2023. FHFA's current model forecasts that the market for this subgoal will remain around 10.1 percent for 2025-2027.

FHFA rationale. The comments on this subgoal summarized in section II indicate that some commenters were unclear about the structure of this subgoal as well as FHFA's intent in setting a benchmark level well below its forecasted share. The benchmark is set at a level that balances the need for access to credit in low-income census tracts with the concern that a higher benchmark level could result in an incentive for the Enterprises to purchase loans made to higher-income borrowers in low-income census tracts, leading to displacement of low-income families in both low-income and minority census ( print page 106269) tracts. As FHFA explained when it first proposed implementing the minority census tracts home purchase subgoal in 2021, “[u]nder the proposed rule, for loans purchased from areas that meet the criteria for both minority and low-income census tracts, the borrower's AMI would determine under which subgoal the loan would be eligible. If the borrower's income is less than or equal to 100 percent of AMI, the loan would be counted towards the minority census tracts [home purchase] subgoal, and if the borrower's income is above 100 percent of AMI, the loan would be counted towards the low-income census tracts [home purchase] subgoal.” ^[58] FHFA notes that the single-family low-income census tracts home purchase subgoal is not defined to cap the borrower's income relative to AMI. For instance, as displayed in Table 6, FHFA's analysis of HMDA data shows that approximately 68.7 percent of the loans that were made in 2023 that met the criteria for the subgoal were made to borrowers at or above 100 percent of AMI.

Table 6—Low-Income Census Tracts Subgoal: Borrower Income Distribution

Borrower incomes relative to AMI (HMDA)	2019 (%)	2020 (%)	2021 (%)	2022 (%)	2023 (%)
Borrower Income ≤50% AMI	9.1	10.1	9.2	7.3	7.4
Borrower Income >50% and ≤80% AMI	16.8	17.6	16.7	14.0	15.1
Borrower Income >80% and ≤100% AMI	7.6	7.6	7.7	6.8	7.2
Borrower Income >100% and ≤120% AMI	17.5	16.9	17.4	19.2	19.1
Borrower Income >120% AMI	47.2	45.8	47.3	50.7	49.6
Income Missing	1.9	1.9	1.8	2.1	1.6
Total	100	100	100	100	100
Source: FHFA tabulation of HMDA data.

As noted in the proposed rule preamble, FHFA is selecting a benchmark level lower than its model forecast midpoint and lower than recent Enterprise performance to avoid exacerbating the displacement of low-income residents in these low-income, non-minority census tracts as well as in low-income, minority census tracts. Setting this lower benchmark level addresses concerns about incentivizing purchases of loans to higher-income borrowers in low-income census tracts. However, this benchmark level is also intended to encourage the Enterprises to continue providing critically needed access to mortgage credit in low-income census tracts. After considering the comments and updated economic data that became available after FHFA issued the proposed rule, FHFA is adopting the proposed benchmark level of 4 percent in the final rule.

5. Low-Income Areas Home Purchase Goal

The benchmark level for the overall low-income areas housing goal is set annually by FHFA notice based on the sum of the benchmark levels for the low-income census tracts housing subgoal and the minority census tracts housing subgoal, plus an adjustment factor reflecting the additional incremental share of mortgages for low- and moderate-income families in designated disaster areas. FHFA will continue to set a benchmark level for the overall low-income areas housing goal that will reflect the adjustment factor for mortgages to families with incomes less than or equal to 100 percent of AMI who are located in federally declared disaster areas.^[59] Accordingly, the low-income areas home purchase goal benchmark level is not included in the final rule. During the 2025-2027 housing goals period, FHFA will continue its annual practice to notify the Enterprises by letter of the benchmark level for the overall low-income areas housing goal for each year.

6. Low-Income Refinance Goal

The low-income refinance goal is based on the percentage share of all conventional, conforming, single-family, owner-occupied refinance mortgages purchased by an Enterprise that are for low-income families, defined as families with incomes less than or equal to 80 percent of AMI. Consistent with the proposed rule and the updated FHFA market model, the final rule sets the annual benchmark level for this goal for 2025-2027 at 26 percent, which is the same as the benchmark level for the 2022-2024 housing goals period. FHFA has determined that given the market challenges and the uncertainty of future mortgage rates, a 26 percent benchmark level will serve as an appropriate target that will promote Enterprise efforts in this segment.

Table 7—Single-Family Low-Income Refinance Goal

Year	Historical performance				Projected forecast
	2020	2021	2022	2023	2024	2025	2026	2027
Actual Market Level	21.0%	26.1%	37.3%	40.3%
Benchmark Level	21.0%	21.0%	26.0%	26.0%	26.0%	26.0%	26.0%	26.0%
Current Market Forecast					38.5% +/− 3.1%	38.1% +/− 5.5%	36.4% +/− 7.0%	34.3% +/− 8.3%
Fannie Mae Performance
Low-Income Refinance Mortgages	663,667	809,452	279,020	60,682
Total Refinance Mortgages	3,133,931	3,089,529	803,634	157,984
( print page 106270)
Low-Income % of Refinance Mortgages	21.2%	26.2%	34.7%	38.4%
Freddie Mac Performance
Low-Income Refinance Mortgages	490,176	658,845	254,332	54,906
Total Refinance Mortgages	2,485,748	2,651,858	686,394	127,043
Low-Income % of Refinance Mortgages	19.7%	24.8%	37.1%	43.2%

When measured in percentage terms, annual performance in the overall market and by the Enterprises on low-income refinance mortgages tends to be inversely proportional to the volume of low-income refinance loans the market produces and the Enterprises purchase during a given year. For example, during the refinance boom of 2020, when mortgage rates were low, low-income refinance volume in the overall market soared to over 1.3 million loans, but the volume of all refinances in the market reached over 6.3 million.^[60] This equated to a low-income refinance market performance of 21.0 percent. In contrast, in 2023, with higher mortgage rates, low-income refinance volume in the overall market contracted to roughly 160,000 loans and refinance volume overall fell to about 397,000 loans.^[61] This equated to a low-income refinance market performance of 40.3 percent. The Enterprises' performance on the low-income refinance goal followed the same pattern. Low-income refinance performance for both Enterprises increased significantly during this later period, even as the volume of their purchases of low-income refinance mortgages fell.

Recent performance and forecasts. As shown in Table 7, the market for low-income refinance loans rose sharply from 2020 to 2023, as reflected in the HMDA data. For example, the market level for low-income refinance loans was 21.0 percent in 2020 with low mortgage rates and was 40.3 percent in 2023 with elevated mortgage rates. At 19.7 percent, Freddie Mac was below the 21 percent benchmark level in 2020, but has met the goal since then, with performance rising to 43.2 percent in 2023. Fannie Mae has met the goal since 2020, with performance rising from 21.2 percent to 38.4 percent during that period.

FHFA rationale. Some commenters supported the proposed benchmark level of 26 percent, noting that the refinance market is highly sensitive to fluctuations in interest rates. One commenter asked FHFA to raise the benchmark level given the recent strong performance of the market and the Enterprises. As noted above, the Enterprises' annual performance on the low-income refinance goal tends to be inversely proportional to the volume of low-income refinance loans the market produces and the Enterprises purchase during a given year. Although mortgage rates are expected to decline during the 2025-2027 housing goals period, FHFA's model cannot forecast the low-income refinance market with a high degree of confidence due to the unpredictability of future interest rates and the strong sensitivity of refinance originations to interest rates. FHFA believes that the 26 percent benchmark level in the final rule is reasonable given these forecasting challenges. Many current mortgage holders are unlikely to refinance without a substantial reduction in mortgage rates. FHFA is not aware of any long-term data series that captures this impact that can be used in the forecast model. FHFA also recognizes that if interest rates were to decline significantly, the benchmark level of 26 percent could be difficult for the Enterprises to achieve based on market conditions. It is for this reason that the final rule establishes the benchmark level of 26 percent for this goal, as proposed, and establishes measurement buffers for this goal, which are further discussed below.

V. Measurement Buffers

For the three single-family housing goals subject to the measurement buffers, FHFA proposed numerical factors to encourage each Enterprise to focus on achieving the housing goal by meeting the market level if the benchmark level is higher than the market level, despite the uncertainty regarding the final market level throughout the course of the year.^[62] Specifically, for 2025-2027, as proposed, the final rule provides that if the benchmark level for the single-family low-income home purchase, very low-income home purchase, or low-income refinance housing goal is higher than the market level for the goal, an Enterprise that fails to meet the goal will not be required to submit a housing plan if the Enterprise's performance meets or exceeds: (i) the market level minus 1.3 percentage points for the low-income home purchase goal; (ii) the market level minus 0.5 percentage points for the very low-income home purchase goal; or (iii) the market level minus 1.3 percentage points for the low-income refinance goal. To ensure that an Enterprise does not rely entirely on these measurement buffers, if an Enterprise fails to meet one of the applicable goals in both 2025 and 2026, the measurement buffer will not apply to that goal in 2027.

Fannie Mae commented that FHFA should establish similar factors for the single-family housing subgoals. The final rule does not include a measurement buffer for the single-family minority census tracts home purchase subgoal or the single-family low-income census tracts home purchase subgoal. FHFA is not adopting a measurement buffer for the minority census tracts home purchase subgoal due to the Enterprises' recent performance on this subgoal. A measurement buffer is unnecessary for the low-income census tracts home purchase subgoal because the benchmark level for the subgoal is being established below historic Enterprise performance to address potentially unintended consequences of Enterprise purchases in those areas.

FHFA considers the measurement buffers to be a transparent and fair means to encourage each Enterprise to achieve these three single-family housing goals by meeting the market level despite uncertainty about the market level during the measurement period. FHFA also notes, as it did in the NPRM, that these measurement buffers will be in place for the 2025-2027 housing goals period due to the heightened uncertainty in macroeconomic conditions and the difficult mortgage market that is ( print page 106271) currently forecast for 2025-2027. Additionally, if an Enterprise fails to meet one of the applicable single-family housing goals in both 2025 and 2026, the measurement buffer for that goal will not apply in 2027.

VI. Multifamily Housing Goals and Subgoal

A. Factors Considered in Setting the Multifamily Housing Goal Benchmark Levels

The Safety and Soundness Act requires FHFA to consider the following six factors in setting the multifamily housing goals:

1. National multifamily mortgage credit needs and the ability of the Enterprises to provide additional liquidity and stability for the multifamily mortgage market;

2. The performance and effort of the Enterprises in making mortgage credit available for multifamily housing in previous years;

3. The size of the multifamily mortgage market for housing affordable to low-income and very low-income families, including the size of the multifamily markets for housing of a smaller or limited size;

4. The ability of the Enterprises to lead the market in making multifamily mortgage credit available, especially for multifamily housing affordable to low-income and very low-income families;

5. The availability of public subsidies; and

6. The need to maintain the sound financial condition of the Enterprises.^[63]

Unlike the single-family housing goals, performance on the multifamily housing goals is measured solely against benchmark levels set by FHFA in the regulation, without any retrospective market measure. The absence of a retrospective market measure for the multifamily housing goals results, in part, from the lack of comprehensive data about the multifamily mortgage market. Unlike the single-family mortgage market, where HMDA provides a reasonably comprehensive dataset about single-family mortgage originations each year, the multifamily mortgage market (and the affordable multifamily mortgage market segment) has no comparable single, unified source with coverage extending across many years. As a result, it is difficult to correlate different datasets that rely on different reporting metrics.

The lack of comprehensive data for the multifamily mortgage market is even more acute with respect to the segments of the market that are targeted to low-income families, defined as families with incomes at or below 80 percent of AMI, and very low-income families, defined as families with incomes at or below 50 percent of AMI.

Unlike the single-family housing goals, which set separate benchmark levels for home purchase and refinance mortgages, the multifamily housing goals include all Enterprise multifamily mortgage purchases, regardless of the purpose of the loan.

In consideration of public comments and to improve the responsiveness of the multifamily housing goals to market conditions, in 2023, FHFA revised the housing goals regulation to change the multifamily housing goals benchmark levels from a numeric benchmark level for units to a percentage of affordable units in multifamily properties financed by mortgages purchased by the Enterprise each year. This ensures that the multifamily housing goals remain meaningful in different market conditions and enables the Enterprises to respond to those conditions while continuing to serve affordable segments.^[64]

FHFA has considered each of the six statutory factors in setting the benchmark levels for each of the multifamily housing goals in the final rule. Five of the factors relate to the multifamily mortgage market and the Enterprises' role in that market. Those factors generally have similar impacts on each of the multifamily housing goals and are discussed below. The past performance of the Enterprises is discussed separately for each of the multifamily housing goals.

Multifamily mortgage market. FHFA's consideration of the multifamily mortgage market credit needs addresses the size and competitiveness of the overall multifamily mortgage market as well as the subset that is affordable to low-income and very low-income families. In August 2024, MBA forecasted that multifamily mortgage originations would increase from the $246 billion estimated in 2023 to $297 billion in 2024, then to $390 billion in 2025.^[65] MBA noted that the moderation in interest rates along with the large volume of loans maturing should result in an increase in borrowing relative to 2023 and 2024, but the timing of this borrowing is uncertain.^[66]

According to the National Multifamily Housing Council's tabulation of American Community Survey microdata, in 2023, about 47 percent of renter households (22 million households) lived in multifamily properties.^[67 68]

Affordability in the multifamily mortgage market. In its America's Rental Housing 2024 report, Harvard University's Joint Center for Housing Studies (JCHS) found that rent growth had moderated following historically high rent growth in 2021 and 2022.^[69] For instance, in the third quarter of 2023, rent growth for professionally managed apartments was 0.4 percent, compared to 15.3 percent in early 2022.^[70] Despite the recent slowdown in rent growth, the extended period of rising rents corresponds to the continued stress on renters, with the share of cost-burdened renters continuing to remain elevated.

For purposes of the Enterprise housing goals, the Safety and Soundness Act requires FHFA to determine affordability based on whether rent levels are affordable. The Safety and Soundness Act defines a rent level as affordable if a family's rent and utility expenses do not exceed 30 percent of the maximum income level for each income category, with appropriate adjustments for unit size as measured by the number of bedrooms.^[71] The JCHS report found that the share of cost-burdened renters, particularly among low-income and very low-income households, continues to grow.^[72] A household is considered cost-burdened if it spends more than 30 percent of its income on housing, and severely cost-burdened if it spends more than 50 percent of its income on housing. The JCHS report shows that the share of cost-burdened renters across all income segments rose by 3.2 percentage points to 50 percent from 2019 to 2022.^[73] The ( print page 106272) share of cost-burdened renters earning between $45,000 and $74,999 increased the most, rising by 5.4 percentage points.^[74]

In The State of the Nation's Housing 2024 report, JCHS noted the significant rise in new rental supply as 449,900 units were added in 2023, a 22 percent rise from 2022 and the highest number of completions in more than 30 years.^[75] However, the growth in new rental supply is expected to slow down as multifamily starts fell by 14 percent in 2023, and this decline has accelerated.^[76] While the addition of rental units may limit rent growth, the JCHS report found that new rental units are primarily targeted towards the upper end of the market, with a median asking rent of $1,710 in the third quarter of 2023, compared to $1,440 in 2014.^[77]

Role of the Enterprises. In adopting the multifamily housing goal benchmark levels for 2025-2027 in the final rule, FHFA has considered the ability of the Enterprises to lead the market in making multifamily mortgage credit available. The Enterprises' share of the overall multifamily mortgage market increased in the years immediately following the 2008 financial crisis but has declined more recently in response to growing private sector participation. The Enterprises' share of the multifamily market was over 70 percent in 2008 and 2009, compared to 36 percent in 2015.^[78 79] The total share was 40 percent or higher from 2016 to 2020. However, in 2021 and 2022, when multifamily origination volume was relatively robust, the combined Enterprise share was estimated to be below 30 percent before increasing to 41 percent in 2023.^[80] Through the second quarter of 2024, the combined Enterprise share is estimated to be 35 percent.^[81]

FHFA recognizes that the multifamily housing goals are just one measure of how the Enterprises contribute to and participate in the multifamily market. Other Enterprise multifamily activities include those under their Duty to Serve Underserved Markets Plans, Low-Income Housing Tax Credit (LIHTC) equity financing, and the mission-driven elements of FHFA's Conservatorship Scorecard. Together with the housing goals, these programmatic activities provide support to renter households, including low-income families spending more than 30 percent of their income on housing. FHFA will continue to monitor these initiatives and priorities to maintain appropriate focus by the Enterprises, including compliance with the Enterprises' charter acts and safety and soundness considerations.

FHFA expects the Enterprises to continue to demonstrate leadership in supporting affordable housing in the multifamily market by providing liquidity for housing for tenants at different income levels in various geographies and market segments. This support should continue throughout the economic cycle, even as the overall size of the multifamily mortgage market fluctuates.

Availability of public subsidies. Multifamily housing assistance is primarily available in two forms—demand-side public subsidies that either directly assist low-income tenants ( e.g., Section 8 vouchers) or provide project-based rental assistance ( e.g., Section 8 contracts), and supply-side public subsidies that support the creation and preservation of affordable housing ( e.g., public housing and LIHTCs). The availability of public subsidies impacts the overall affordable multifamily housing market, and significant changes to long-standing public subsidy programs could impact the ability of the Enterprises to meet the housing goals. The Enterprises also provide liquidity to facilitate the preservation of public subsidies through their purchases of mortgages that finance the preservation of existing affordable housing units (especially for restructurings of older properties that reach the end of their initial 15-year LIHTC compliance periods) and for refinancing properties with expiring Section 8 Housing Assistance Payment contracts.

The need for public subsidies persists as the number of cost-burdened renters remains high, at over 22.4 million renter households in 2022.^[82] The Center on Budget and Policy Priorities estimates that only one in four eligible households currently receive Federal housing assistance.^[83]

In 2025 and beyond, there should continue to be opportunities in the multifamily mortgage market to provide permanent financing for properties with LIHTCs and to preserve existing affordable units, as described above.

Maintaining the sound financial condition of the Enterprises. In establishing multifamily housing goals benchmark levels for 2025-2027 in the final rule, FHFA must balance the role of the Enterprises in providing liquidity and supporting various multifamily mortgage market segments with the need to maintain the Enterprises' sound and solvent financial condition. The Enterprises have served as a stabilizing force in the multifamily mortgage market across economic cycles, and their loans on affordable multifamily properties have experienced low levels of delinquency and default that are similar to those of market rate properties.

FHFA continues to monitor the activities of the Enterprises in this market. As discussed above and consistent with the authorities described in the Enterprise housing goals regulation, FHFA may take any steps it determines necessary and appropriate after adoption of this final rule to address the multifamily housing goals benchmark levels to ensure the Enterprises' continued safety and soundness.

Past performance of the Enterprises. Before finalizing the benchmark levels for the multifamily housing goals in this final rule, FHFA reviewed any additional data (including Enterprise performance after the proposed rule was published) that became available about the performance of the Enterprises with regard to the multifamily housing goals. For each multifamily housing goals benchmark level, FHFA summarized the relevant performance of the Enterprises in the context of that goal or subgoal discussed in section B. Multifamily Housing Goals Benchmark Levels in the Final Rule—§ 1282.13.

Based on FHFA's consideration of the statutory factors described above, any developments in the multifamily mortgage market, and comments received on the proposed multifamily housing goals benchmark levels, the final rule establishes the benchmark levels for the multifamily housing goals, as further discussed below. ( print page 106273)

1. Multifamily Low-Income Housing Goal

The multifamily low-income housing goal is the percentage share of all goal-eligible units in multifamily properties financed by mortgages purchased by the Enterprises that are affordable to low-income families in any given year. Low-income families are defined as those with incomes less than or equal to 80 percent of AMI. The final rule sets the annual benchmark level for this goal for 2025-2027 at 61 percent of goal-eligible units acquired. This is the same benchmark level as in the proposed rule and that was in place for the 2023-2024 housing goals period. It is consistent with FHFA's analysis of the current and expected multifamily market, which indicates fewer affordable units to support, rising price per unit, and uncertain market conditions.

Table 8—Multifamily Low-Income Housing Goal

Year	Historical performance
	2020	2021	2022	2023	2024	2025	2026	2027
Low-Income Multifamily Benchmark Level	315,000	315,000	415,000	61%	61%	61%	61%	61%
Fannie Mae Performance
Low-Income Multifamily Units	441,773	384,488	419,361	317,032
Total Multifamily Units	637,696	557,152	542,347	415,513
Low-Income % Total Units	69.3%	69.0%	77.3%	76.3%
Freddie Mac Performance
Low-Income Multifamily Units	473,338	373,225	420,107	231,968
Total Multifamily Units	664,638	540,541	567,249	345,702
Low-Income % of Total Units	71.2%	69.0%	74.1%	67.1%

Recent performance. Table 8 shows the annual share of goal-qualifying low-income multifamily units in properties backing mortgages acquired by each Enterprise from 2020 through 2023.^[84] In addition, the historical performance share average for the pre-pandemic years of 2017-2019 would have been 65.1 percent for Fannie Mae and 67.3 percent for Freddie Mac.^[85]

FHFA rationale. FHFA has considered the statutory factors for the multifamily housing goals, including current market conditions, the Enterprises' performance, and the Enterprises' role in the market, as well as the public comments received (summarized in section II). Several commenters supported the proposed benchmark level of 61 percent for this goal, while other commenters recommended that FHFA establish a higher benchmark level. FHFA remains concerned that elevated interest rates are continuing to contribute to the increasing costs of owning low-income multifamily units. FHFA also remains concerned that expected declines in affordable originations and increases in rents are likely to cause fewer units to qualify as affordable for low-income families. These challenges are expected to persist in 2025-2027, as rent increases and insufficient supply of affordable housing are likely to result in more low-income families paying more than 30 percent of their incomes for rent.^[86] In light of FHFA's consideration of the statutory factors and the comments on the proposed goal, FHFA is adopting the proposed benchmark level of 61 percent for this goal for 2025-2027 in the final rule.

2. Multifamily Very Low-Income Housing Goal

The multifamily very low-income housing goal is the percentage share of all goal-eligible units in multifamily properties financed by mortgages purchased by the Enterprises that are affordable to very low-income families in any given year. Very low-income families are defined as those with incomes less than or equal to 50 percent of AMI. The final rule sets the annual benchmark level for this goal for 2025-2027 at 14 percent of goal-eligible units acquired, which is the same as the proposed benchmark level but higher than the current 12 percent benchmark level applicable for the 2023-2024 housing goals period.

Table 9—Multifamily Very Low-Income Housing Goal

Year	Historical performance
	2020	2021	2022	2023	2024	2025	2026	2027
Very Low-Income Multifamily Benchmark Level	60,000	60,000	88,000	12%	12%	14%	14%	14%
Fannie Mae Performance
Very Low-Income Multifamily Units	95,416	83,459	127,905	77,509
Total Multifamily Units	637,696	557,152	542,347	415,513
Very Low-Income % of Total Units	15.0%	15.0%	23.6%	18.7%
Freddie Mac Performance
Very Low-Income Multifamily Units	107,105	87,854	127,733	71,217
Total Multifamily Units	664,638	540,541	567,249	345,702
Very Low-Income % of Total Units	16.1%	16.3%	22.5%	20.6%

( print page 106274)

Recent performance. Table 9 shows the number and share of goal-qualifying very low-income multifamily units as a percentage of the total goal-eligible units in properties backing mortgages acquired by each Enterprise. In addition, the historical performance share average for the pre-pandemic years of 2017-2019 would have been 13.1 percent for Fannie Mae and 15.6 percent for Freddie Mac.^[87]

FHFA rationale. FHFA has considered the statutory factors for the multifamily housing goals, including current market conditions and the Enterprises' role in the market. FHFA has also considered the comments received in response to the proposed benchmark level for this goal that are summarized in section II. As with the multifamily low-income housing goal, several commenters thought that FHFA could slightly increase the benchmark level for the multifamily very low-income housing goal. As discussed above, FHFA remains concerned that elevated interest rates and the severe disparity between demand and supply of units affordable to very low-income renters are continuing to contribute to the increasing costs of owning very low-income multifamily units. These factors are expected to result in fewer units that qualify as affordable for very low-income families. As a result, FHFA believes that a benchmark level of 14 percent for this goal will encourage the Enterprises to continue to adequately serve very low-income families, while accounting for the challenges associated with elevated interest rates, lower volume of loan transactions, and the lack of affordable units in the multifamily market, as well as continued uncertain economic conditions.

FHFA believes that raising the benchmark level for this goal from the current 12 percent to 14 percent is appropriate and achievable considering the past performance of the Enterprises on this goal. Accordingly, FHFA is adopting the proposed benchmark level of 14 percent for this goal for 2025-2027 in the final rule.

3. Small Multifamily Low-Income Housing Subgoal

The current Enterprise housing goals regulation defines a small multifamily property as having 5 to 50 units. The small multifamily low-income housing subgoal is based on the share of units in small multifamily properties affordable to low-income families as a percentage of all goal-eligible units in all multifamily properties financed by mortgages purchased by the Enterprises in a given year. Low-income families are defined as those with incomes less than or equal to 80 percent of AMI. The final rule sets the annual benchmark level for this subgoal for 2025-2027 at 2 percent of goal-eligible units acquired, as proposed, which is slightly lower than the current 2.5 percent benchmark level for the 2023-2024 housing goals period. FHFA believes that with a 2 percent benchmark level, the Enterprises will remain positioned to support this market when needed without crowding out other sources of financing for small multifamily properties.

Table 10—Small (5-50 Units) Multifamily Low-Income Subgoal

Year	Historical performance
	2020	2021	2022	2023	2024	2025	2026	2027
Fannie Mae Small Low-Income Multifamily Benchmark Level	10,000	10,000	17,000	2.5%	2.5%	2.0%	2.0%	2.0%
Freddie Mac Small Low-Income Multifamily Benchmark Level	10,000	10,000	23,000	2.5%	2.5%	2.0%	2.0%	2.0%
Fannie Mae Performance
Small Low-Income Multifamily Units	21,797	14,409	21,436	13,241
Total Multifamily Units	637,696	557,152	542,347	415,513
Small Low-Income % of Total Units	3.4%	2.6%	4.0%	3.2%
Freddie Mac Performance
Small Low-Income Multifamily Units	28,142	31,913	27,103	14,006
Total Multifamily Units	664,638	540,541	567,249	345,702
Small Low-Income % of Total Units	4.2%	5.9%	4.8%	4.1%