FM Commentary

FM Commentary

Partnering with State Housing Finance Agencies

Jennifer WhipWhile the housing finance market remains challenging, state Housing Finance Agencies (HFAs) continue to make homeownership affordable and sustainable for working families. As part of Fannie Mae’s commitment to affordable housing, we provide HFAs with products that help them do more business.

HFAs are established to address affordable housing needs through a variety of initiatives, including affordable mortgage financing for first-time and low- to moderate- income borrowers and financing affordable rental housing developments. Over the years, HFAs have helped millions of working families purchase a home or obtain rental housing.

While the agencies often work with borrowers who are new to homeownership, HFAs have a solid record of successful, sustainable lending. Their formula includes education and counseling that prepares borrowers for the responsibilities of homeownership and mortgage debt. Also important are high quality mortgage products with low fixed rates; fully documented, prudent underwriting; and proactive servicing.

As a result, delinquency and foreclosure rates of HFA loans are well below those of the conventional market, according to the National Council of State Housing Agencies (NCSHA).

Fannie Mae has provided reliable liquidity for HFA lending, including support for local HFAs. In 2010, Fannie Mae acquired more than 3,700 HFA-originated loans, with a total principal balance of $593 million.

HFAs finance their lending and the production of affordable rental apartments by issuing tax-exempt mortgage revenue bonds. When the crisis in the credit markets seriously affected the market for those bonds, NCSHA and the National Association of Local Housing Finance Agencies turned to the U.S. Treasury for assistance. At Treasury’s direction, the Federal Housing Finance Agency along with Fannie Mae and Freddie Mac worked to design and implement the New Issue Bond Program (NIBP) to provide HFAs with liquidity to support their affordable housing mission.

Under the NIBP, Fannie Mae and Freddie Mac have securitized certain HFA bonds and sold them to Treasury. Since the program began in 2009, this support has enabled HFAs to finance more than 100,000 single-family homes and more than 24,000 rental homes from October 2009 through September 2011, according to the NCSHA. The Treasury recently announced a one-year extension of the program, which will now continue through 2012.

The continuing partnership between HFAs and Fannie Mae is helping support housing in America, and it is especially beneficial for those who turn to an HFA to become homeowners.

Jennifer Whip
Vice President for Customer Engagement

January 13, 2012

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