FHFA Proposes Relaxing Fannie, Freddie Housing Goals

The regulator for Fannie Mae (FNM) and Freddie Mac (FRE) has proposed relaxing the affordable housing goals for the two mortgage finance companies, according to a press release Tuesday.

Citing market conditions, the Federal Housing Finance Agency issued a proposed rule that would return the 2009 goals to levels that prevailed during 2004 and 2006.

In addition, the regulator wants the companies to receive credit toward the goals for loan modifications they complete under the administration's program to help troubled borrowers.

"By giving them goals credit for loan modifications, FHFA further encourages this important activity, which is essential to preventing foreclosures and keeping people in their homes," FHFA Director James B. Lockhart said in a statement.

Fannie and Freddie, which racked up combined losses of about $108 billion in 2008, were seized by the government last September. The companies missed their affordable housing targets for 2008.

A housing law passed last year required that the companies' 2008 housing goals be continued in 2009. But the law gave the regulator flexibility to adjust the goals to reflect market conditions.

For 2009, FHFA has proposed notching down the companies' benchmark for buying or guaranteeing mortgages of low- to moderate- income buyers to 51% from 56% in 2009. Meanwhile, the agency has proposed lowering the goal for underserved areas to 37% from 39%.

The regulator has allowed for 21 days of public comment before it finalizes the rule.

- Jessica Holzer, Dow Jones Newswires; 202-862-9228; [e-mail]