Issue Brief: HUD's Affordable Lending Goals for Fannie Mae and Freddie Mac

Authors: U.S. Department of Housing and Urban Development    

Fannie Mae and Freddie Mac, government-sponsored enterprises (GSEs) in the secondary mortgage market, are the two largest sources of housing finance in the United States. They fund these mortgages by purchasing loans directly from primary market mortgage originators and holding these loans in portfolio, or by acting as a conduit and issuing mortgage-backed securities, which are then sold in the capital markets. HUD is the mission regulator for the GSEs, and a major aspect of this regulation involves setting minimum percentage-of-business goals for their mortgage purchases. These goals deal with the enterprises' support for low-income lending and lending in underserved geographic areas, and they have played an important role in encouraging mortgage originators to undertake more affordable lending for lower-income and minority families in recent years. This issue brief discusses the significant increases in these lending goals for the years 2001-03, which should encourage the GSEs to further step up their support for affordable lending.

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