The Federal Housing Finance Agency reported that it won’t force Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) along with its sister concern to direct added lending assets to less well-off borrowers. It comes as a shock to affordable housing supporters.
The details
The regulator revealed new target objectives for the percentage of the mortgage firms’ business that must move to low-income borrowers. Under the announced plan, which is effective from 2015 to 2017, 24% of Federal National and Federal Home mortgages to purchase homes will likely go to families with their income not higher than 80% of respective area’s median income. Freddie and Fannie will have the objective of directing six percentages of their house purchase loans to those families that have incomes not more than half of respective areas’ median.
The highlights
Overall, the new objectives are little changed from last year, apart from adjustments highlighting changes in the mortgage market. The regulator dropped the percentage of refinance loans that Freddie and Federal National must offer to less well-off borrowers from 2014’s proposal. These new announced goals are closely monitored by affordable housing supporters, who consider them as a way of guaranteeing that Freddie and Fannie Mae further allow mortgage for less well-off borrowers.
The disappointment
There are critics who account the objectives as moderately responsible for resulting in the risky lending measures that hurried the financial crisis. Also, some of the housing supporters were disappointed with the new rule. In a statement this week, FHFA Director Mr. Mel Watt stated that these new goals will develop a strong base for sustainable and affordable rental and homeownership opportunities in the U.S. However, Julia Gordon stated that on first impression it looks that the regulator have lost a chance to push Federal Home and Federal National to work more in underserved regions.
In last trading session, the stock price of Federal National declined more than 2% to close the trading session at $2.28. The decline came at a share volume of 2.85 million compared to average share volume of 3.72 million.
