Officers
Chair
Judith L. Lichtman
National Partnership for
Women & Families
Vice Chairs
Jacqueline Pata
National Congress of American Indians
Thomas A. Saenz
Mexican American Legal
Defense and Educational Fund
Hilary Shelton
NAACP
Treasurer
Lee A. Saunders
American Federation of State,
County & Municipal Employees
Board of Directors
Barbara Arnwine
Lawyers’ Committee for
Civil Rights Under Law
Cornell William Brooks
NAACP
Lily Eskelsen García
National Education Association
Marcia D. Greenberger
National Women’s Law Center
Chad Griffin
Human Rights Campaign
Linda D. Hallman
AAUW
Mary Kay Henry
Service Employees International Union
Sherrilyn Ifill
NAACP Legal Defense and
Educational Fund, Inc.
Jo Ann Jenkins
AARP
Michael B. Keegan
People for the American Way
Elisabeth MacNamara
League of Women Voters of the
United States
Marc Morial
National Urban League
Mee Moua
Asian Americans Advancing Justice |
AAJC
Janet Murguía
National Council of La Raza
Debra Ness
National Partnership for
Women & Families
Mary Rose Oakar
American-Arab
Anti-Discrimination Committee
Terry O’Neill
National Organization for Women
Priscilla Ouchida
Japanese American Citizens League
Mark Perriello
American Association of
People with Disabilities
Anthony Romero
American Civil Liberties Union
David Saperstein
Religious Action Center
of Reform Judaism
Shanna Smith
National Fair Housing Alliance
Richard L. Trumka
AFL-CIO
Randi Weingarten
American Federation of Teachers
Dennis Williams
International Union, UAW
Policy and Enforcement
Committee Chair
Michael Lieberman
Anti-Defamation League
President & CEO
Wade J. Henderson
Executive Vice President & COO
Karen McGill Lawson
October 28, 2014
The Honorable Melvin L. Watt, Director
Federal Housing Finance Agency
400 7th Street SW, Ninth Floor
Washington, DC 20024
Re: RIN 2590-AA65: 2015-2017 Enterprise Housing Goals
Dear Director Watt:
On behalf of The Leadership Conference on Civil and Human Rights, we write in response
to the Federal Housing Finance Agency’s (FHFA) request for comment regarding the 2015-
2017 Enterprise Housing goals’ proposed rule. We greatly appreciate the leadership you
have shown to date at FHFA to ensure the financial safety and soundness of the government
sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, and for policies that will help
to secure a fair and affordable housing market.
Homeownership is a critical means for building financial security and for moving more
Americans into the middle class. While our national economy has significantly improved
since the financial crisis of 2008, we remain concerned about the mobility of the middle
class. Since the 2008 housing crisis, communities of color have moved farther away from
being able to achieve equity and prosperity through homeownership. More specifically, the
black-white homeownership gap over the past decade has widened significantly, from 26.1
percent to 30.4 percent. Similarly, young people are less likely to become homeowners in
this new economy. The perception that homeownership is unavailable is also higher in
communities of color. Sixty-three percent of Hispanic homeowners believe it would be
difficult to get a home mortgage today, compared to 40 percent of the general population of
owners. We must do all that we can to enact policies that will help spur economic growth
and ensure that more low- and moderate-income Americans can achieve the American dream
of homeownership. FHFA can lead on this, do it responsibly, and do it without putting
taxpayers at risk.
We believe there are two pieces to meeting these goals. First, particularly given the likely
demise of GSE “overhaul” legislation on Capitol Hill, it is clear that any successful policy to
promote affordable homeownership must involve strong leadership by Fannie Mae and
Freddie Mac. These agencies are vitally important to the continued growth of our nation’s
housing market, and to the ability of consumers to continue obtaining affordable, 30-year,
fixed-rate mortgages. In its current form, pending legislation to eliminate the GSEs would be
counterproductive; it would negatively impact communities of color and young people, and
it would impede our ability to grow our nation’s middle class.
Second, the GSEs require capital if they are to serve their historic mission. As your agency
embarks upon decision-making on affordable housing policy, it naturally must be balanced
with FHFA’s statutory obligation as conservator to the safety and soundness of these
enterprises. We applaud FHFA for its announcement this week on the expansion of lending
Page 2 of 2
to middle class borrowers, but this expansion will require capital. We note that some of the current
proposals to raise g-fees and to impose new requirements on private mortgage insurers will increase the
costs of borrowing, and would still fall short of building the capital needed to grow a robust and healthy
housing market. This is especially true given the GSE’s status in, what Congresswoman Maxine Waters
(D-CA) describes as seemingly “permanent conservatorship,” where they are unable to rebuild capital.
In light of this, in order to ensure the best path forward for increasing homeownership in the communities
we represent, we believe it is vital to initiate serious discussions about unwinding the conservatorship and
allowing Fannie and Freddie to begin rebuilding their capital. Both agencies have become profitable, and
could remain so while still giving the taxpayers a large return on the government’s investment. We are not
suggesting this be done without significant reforms to ensure that all markets are being served fairly, and
without important safeguards for the taxpayer. Fannie and Freddie can be fixed; discarding them in
entirety would be a colossal mistake. Under the proposed replacements for Fannie Mae and Freddie Mac,
such as the committee-passed versions of the Johnson-Crapo or Hensarling bills, it is clear to us that the
current affordable housing benefits provided by the GSEs (see attachment “GSE Affordable Housing
Activities”) simply cannot be replicated in a new untested system.
We look forward to working with FHFA to formulate a plan that increases homeownership for more
Americans, while further reducing the liability as a result of another catastrophic event on the backs of
taxpayers. Exploring an end to the conservatorship and allowing the enterprises to build capital should be
an important component of this effort.
Thank you for your consideration of our views. If you have any questions, please contact either of us, or
Senior Counsel Rob Randhava, at (202) 466-3311.
Sincerely,
Wade Henderson Nancy Zirkin
President & CEO Executive Vice President
GSE Affordable Housing Activities
Overview.
Fannie Mae and Freddie Mac (each an “enterprise”) are subject to three statutory
requirements relating to affordable housing.
Each enterprise must make contributions to two affordable housing trust funds that
make grants to the states and certain lenders and non-profits to finance affordable
housing activities.1
Each enterprise also must seek to achieve certain affordable housing goals in its
purchases of single-family and multi-family mortgages.2
Each enterprise is also subject to a separate duty to serve certain underserved markets,
which may be satisfied in part through assistance to existing federal and state
affordable housing programs.3
These activities are in furtherance of each enterprise’s mandate, as established by its
federal charter, to engage in secondary mortgage market “activities relating to mortgages
on housing for low- and moderate-income families involving a reasonable economic
return that may be less than the return earned on other activities” and “promote access to
mortgage credit throughout the Nation (including central cities, rural areas, and
underserved areas).”4
The enterprises’ conservatorship has impacted these affordable housing activities. FHFA
has suspended contributions to the two housing trusts. FHFA is required by statute to
establish a method for rating each enterprise’s compliance with its duty to serve
underserved markets,5 but has not finalized its proposed rule,6 perhaps in part due to the
conservatorships.
Affordable housing trust funds.
Each enterprise is supposed to contribute 4.2 basis points of its “total new business
purchases” to two trust funds that finance affordable housing activities.7
1 12 U.S.C. § 4567.
2 Id. §§ 4562, 4563.
3 Id. § 4565.
4 Id. §§ 1451, 1716.
5 Id. § 4565(d).
6 Notice of Proposed Rulemaking, Enterprise Duty To Serve Underserved Markets, 75 Fed. Reg. 32,099
(June 7, 2010).
7 12 U.S.C. § 4567.
2
The Housing Trust Fund, which is administered by HUD, receives 65% of these
contributions, which HUD uses to make formula-based grants to the states to increase
the supply of affordable housing, especially rental housing.8
The Capital Magnet Fund, which is administered by the Treasury Department’s
Community Development Financial Institutions (“CDFI”) Fund, receives the other
35% and awards grants to Treasury-certified CDFIs and qualified non-profits to
support affordable housing and economic development activities.9
FHFA is authorized to suspend these contributions in certain circumstances.10 It
exercised that authority shortly after the enterprises were placed into conservatorship in
2008.11 According to the CBO, roughly $600 million would have been contributed to
these two funds in 2014 if contributions had not been suspended.12
Affordable housing goals.
In addition to contributing to these trust funds, each enterprise is subject to goals for
purchases of mortgages from low-income borrowers and low-income areas.13 These
goals have remained in effect during the enterprises’ conservatorships.
These goals indirectly increase the supply of credit, and thereby lower the cost of credit,
for the targeted borrower populations.
FHFA has established three single-family housing goals for home purchase mortgages.
The current benchmarks are:
Low-Income Families Home Purchase Benchmark: At least 23% of each enterprise’s
acquisitions of single-family owner-occupied purchase money mortgage loans must
be affordable to low-income families (defined as income equal to or less than 80% of
area median income).14
Very Low-Income Families Home Purchase Benchmark: At least 7% of acquisitions
of single-family owner-occupied purchase money mortgage loans must be affordable
8 Id. §§ 4567(a)(1)(B)(i), 4567(a)(2)(B)(i).
9 Id. §§ 4567(a)(1)(B)(ii), 4567(a)(2)(B)(ii).
10 Id. § 4567(b).
11 Housing Trust Fund, Proposed Rule, 75 Fed. Reg. 66,978, 66,978 (Oct. 29, 2010).
12 U.S. Congressional Budget Office, Cost Estimate: H.R. 3221, Housing and Economic Recovery Act of 2008
(July 23, 2008), p. 3, available at http://www.cbo.gov/ftpdocs/95xx/doc9597/hr3221.pdf; U.S. Congressional
Budget Office, Cost Estimate: Federal Housing Finance Regulatory Reform Act of 2008 (June 9, 2008), pp. 3, 5-6,
available at http://www.cbo.gov/ftpdocs/93xx/doc9366/Senate_Housing.pdf.
13 Id. §§ 4562, 4563.
14 2012-2014 Enterprise Housing Goals, 77 Fed. Reg. 67,235, 67,536 (Nov. 13, 2012).
3
to very low-income families (defined as income equal to or less than 50% of area
median income).15
Low-Income Areas Home Purchase Goal Benchmark: This benchmark is set annually
by notice from FHFA. For 2013, at least 21% of acquisitions of single-family owneroccupied
purchase money mortgage loans must have been for families who reside in
low-income census tracts and for moderate-income families (defined as families with
income no higher than 100% of the area median income) who reside in minority
census tracts or designated disaster areas.16
FHFA also established a subgoal for home purchase mortgages:
Low-Income Areas Home Purchase Subgoal Benchmark: At least 11% of acquisitions
of single-family owner-occupied purchase money mortgage loans must be affordable
to families in low-income census tracts or to moderate-income families in highminority
census tracts.17
There is also one single-family housing goal for refinance mortgages.
Low-Income Families Refinancing Benchmark: At least 20% of acquisitions of
single-family owner-occupied refinance mortgage loans must be affordable to lowincome
families.18
There are two multifamily housing goals: a goal for the total number of units affordable
to low-income families (income no greater than 80 percent of area median income) and a
subgoal for the total number of units affordable to very low-income families (income no
greater than 50 percent of area median income).
The multifamily goals for 2014 are 250,000 dwelling units for Fannie Mae and
200,000 dwelling units for Freddie Mac. The multifamily subgoals for 2014 are
60,000 dwelling units for Fannie Mae and 40,000 dwelling units for Freddie Mac.19
Duty to serve underserved markets.
The enterprises also have a separate statutory obligation to serve three underserved
markets – manufactured housing, affordable housing preservation and rural areas – by
developing loan products and flexible underwriting guidelines to facilitate the secondary
market for mortgages in these markets. 20
15 Id.
16 Id.
17 Id.
18 Id.
19 Id. at 67,537.
20 12 U.S.C. § 4565.
4
FHFA is tasked with developing a method for rating each enterprise’s performance with
respect to each underserved market.21 FHFA has not yet issued a final rule to implement
this duty to serve.
Under FHFA’s proposed rule, each enterprise would submit an underserved markets plan
that would specify benchmarks upon which its performance would be rated.22
This duty to serve may be satisfied, in part, by the enterprise’s assistance to a variety of
existing affordable housing programs,23 including:
the project-based and tenant-based rental assistance programs under Section 8 of the
United States Housing Act of 1937;24
the rental and cooperative housing for lower income families program under Section
236 of the National Housing Act;25
the below-market interest rate mortgage program under Section 221(d)(4) of the
National Housing Act26 that promotes housing for moderate-income and displaced
families;
the supportive housing for the elderly program under Section 202 of the Housing Act
of 1959;27
the supportive housing program for persons with disabilities under Section 811 of the
Cranston-Gonzalez National Affordable Housing Act;28
the programs under title IV of the McKinney-Vento Homeless Assistance Act29 (but
only permanent supportive housing projects subsidized under those programs);
the rural rental housing program under Section 515 of the Housing Act of 1949;30
21 Id. § 4565(d).
22 75 Fed. Reg. at 32,099. Those benchmarks would be required to address each of the statutory assessment
factors: (i) the enterprise’s development of loan products, more flexible underwriting guidelines and other
approaches to providing financing to each underserved market; (ii) the enterprise’s outreach to loan sellers and other
market participants in each underserved market; (iii) the volume of loans purchased by the enterprise in each
underserved market; and (iv) the enterprise’s investments and grants in projects in that underserved market. Id. at
32,100.
23 12 U.S.C. § 4565(a)(1)(B); 75 Fed. Reg. at 32,106.
24 42 U.S.C. § 1437f.
25 12 U.S.C. § 1715z-1.
26 Id. § 1715l.
27 Id. § 1701q.
28 42 U.S.C. § 8013.
29 Id. § 11361 et seq.
30 Id. § 1485.
5
the low-income housing tax credit (“LIHTC”) programs under Section 42 of the
Internal Revenue Code of 1986;31 and
comparable state and local affordable housing programs.
Affordable housing partnerships.
Each enterprise also undertakes a variety of affordable housing activities in partnership
with nonprofit and for-profit organizations, state and local government and housing
agencies.32
Some of the enterprises’ notable partnerships include:
Since 2009, Fannie Mae, along with Freddie Mac and State Street Global Advisors,
has served as the lead organizations managing the HFA Initiative, which assists state
and local housing and finance agencies’ (“HFAs”) lending programs.33
In 2013, Fannie Mae purchased 17,381 loans from HFAs with an unpaid principal
balance of $2,861,000,000.34
Fannie Mae invested $5 million nationwide in 2013 to support nonprofit partners
focused on foreclosure prevention, sustainable homeownership, neighborhood
stabilization, affordable housing and the prevention of homelessness.35
In 2013, Fannie Mae facilitated the sale of four multifamily properties with over 500
units to nonprofits and public entities involved in affordable housing.36
In 2013, Fannie Mae helped provide financing for almost 13,000 LIHTC units of
housing by providing $519 million for debt financing on LIHTC projects via its
lending partners, and also supported its ongoing investment in over 4,100 affordable
housing LIHTC projects.37
In 2013, Freddie Mac supported the Making Home Affordable program through
outreach initiatives, events and activities with housing professionals (including 43
31 26 U.S.C. § 42.
32 See Fannie Mae, 2013 Annual Housing Activities Report and Annual Mortgage Report (March 13, 2014),
available at http://www.fanniemae.com/resources/file/aboutus/pdf/2013ahar.pdf; Freddie Mac, Annual Housing
Activities Report for 2013 (March 12, 2014), available at
http://www.freddiemac.com/corporate/company_profile/docs/2013_Freddie_Mac_AHAR.pdf.
33 Fannie Mae, 2013 Annual Housing Activities Report and Annual Mortgage Report at 11 (March 13, 2014),
available at http://www.fanniemae.com/resources/file/aboutus/pdf/2013ahar.pdf.
34 Id. at 12.
35 Id.
36 Id.
37 Id.
6
borrower outreach events and 58 trainings and educational sessions for housing
counselors on foreclosure alternatives).38
Freddie Mac continued to maintain “Borrower Help Centers” with selected non‐profit
organizations in several metropolitan areas to provide delinquent borrowers with free,
in‐person, face‐to‐face financial reviews and counseling assistance.39
Freddie Mac also undertakes numerous outreach initiatives designed to expand
homeownership opportunities in minority and underserved communities in states and
localities across the country.40
First-time home buyers.
Each enterprise maintains several programs to facilitate homeownership opportunities for
first-time homebuyers.41
In 2013, 42.8% of the mortgage loans purchased by Fannie Mae were made to first-time
homebuyers. Fannie Mae products facilitating homeownership include MyCommunity
Mortgage, HFA Preferred, HFA Preferred Risk Sharing, Home Path and Non-HFA
Community Scorecards.42
In 2013, 37.6% of the mortgage loans purchased by Freddie Mac were made to first-time
homebuyers. Freddie Mac also supported the HFA Initiative.43
38 Freddie Mac, Annual Housing Activities Report for 2013 at 15-16 (March 12, 2014), available at
http://www.freddiemac.com/corporate/company_profile/docs/2013_Freddie_Mac_AHAR.pdf.
39 Id. at 16.
40 Id.
41 Id. at 7; Fannie Mae, 2013 Annual Housing Activities Report and Annual Mortgage Report at 5 (March 13,
2014), available at http://www fanniemae.com/resources/file/aboutus/pdf/2013ahar.pdf.
42 Fannie Mae, 2013 Annual Housing Activities Report and Annual Mortgage Report at 5 (March 13, 2014),
available at http://www.fanniemae.com/resources/file/aboutus/pdf/2013ahar.pdf.
43 Freddie Mac, Annual Housing Activities Report for 2013 at 7 (March 12, 2014), available at
http://www.freddiemac.com/corporate/company_profile/docs/2013_Freddie_Mac_AHAR.pdf.
