HUD Eases Affordable-Housing Goals
|November 2, 2004|
In Surprise Move, Government Eases Affordable-Housing Goals for Fannie Mae and Freddie Mac
HUD's Regulation of Government-Sponsored Enterprises|
WASHINGTON (AP) -- New government-set goals for mortgage giants Fannie Mae and Freddie Mac to make home ownership affordable have been eased slightly from the targets proposed earlier this year, the Housing and Urban Development Department said Monday.
HUD's announcement was somewhat surprising because the Bush administration's housing chief said last month that the government-chartered companies "must do more" to help low- and moderate-income and minority families become homeowners. Fannie Mae and Freddie Mac met the goals last year, but only because three unusual multibillion-dollar deals at year's end were counted toward them, HUD officials said.
Meanwhile Freddie Mac, emerging from an accounting scandal, said that it will make significant changes in its accounting for some derivatives, complex financial instruments that Freddie Mac and Fannie Mae use to hedge against interest-rate swings. Freddie Mac, which restated $4.5 billion in earnings last year, ousted top executives and was fined a record $125 million in a settlement with HUD regulators, also said its financial reporting will be brought up to date by the second quarter of next year.
The new HUD goals for the two companies will take effect on Jan. 1, setting annual targets for the next four years.
Slightly more stringent goals proposed by HUD in April and opened to public comment brought intense lobbying and opposition by several housing industry groups.
Fannie Mae and Freddie Mac buy and guarantee repayment of billions of dollars of home loans each year from banks and other lenders, then bundle them into securities that are resold to investors.
Together, the two companies stand behind some $4 trillion of home mortgages -- more than three-fourths of the single-family mortgages in the country. They are among the largest U.S. financial institutions, and their stock and debt are widely held by investors in the United States and around the globe.
Copyright Associated Press