HUD Issues Final GSE 2004 Housing Goal Results

December 12, 2005

Freddie Mac penalized for failure to obtain HUD approval prior to counting certain mortgage purchases

The Department of Housing and Urban Development today announced its official 2004 housing goals performance figures for Fannie Mae and Freddie Mac, two housing Government Sponsored Enterprises or GSEs. Both GSEs exceeded the housing goals in 2004, but the Department penalized Freddie Mac's 2004 performance for Freddie Mac's failure to obtain HUD's approval during the 2004 performance year before counting certain mortgage purchases.

HUD's official 2004 performance figures for Fannie Mae are:

Housing Goal
Goal Target - 2004
Official Performance Results - 2004

Low- and Moderate-Income

50%

53.4%

Underserved Areas

31%

33.5%

Special Affordable

20%

23.6%

Special Affordable Multifamily Subgoal

$2.85 Billion

$7.3 Billion



In verifying Freddie Mac's official 2004 goals performance, HUD determined that Freddie Mac had counted for housing goals credit dwelling units derived from purchases of certain securities that HUD had not pre-approved as eligible to count toward the housing goals. Freddie Mac had also established its own counting formula for the transactions without HUD's prior approval.

As a penalty for Freddie Mac's failure to obtain, during the 2004 performance year, HUD's prior approval of these purchases, including the appropriate counting formula, HUD applied a 50 percent partial credit to the mortgages from these transactions under all three housing goals. This action resulted in reductions to Freddie Mac's reported performance as follows: 1.6 percentage points under the Low-and Moderate-Income Housing Goal; 1.2 percentage points under the Special Affordable Housing Goal; and 2.1 percentage points under the Underserved Areas Goal. HUD's application of the 50 percent partial credit also reduced Freddie Mac's reported Special Affordable Multifamily Subgoal performance by $1.99 billion, from $9.76 billion to $7.77 billion.

HUD also adjusted Freddie Mac's performance figures to take account of errors in previously reported data that Freddie Mac recently discovered and reported to the Department. The errors related to the scoring toward the housing goals of rental housing units in one-to-four-family properties where data on the rents were missing. Freddie Mac had initially reported rents for these units based on an estimation methodology as though the rents were actual numbers from the loan sellers. This miscoding made the errors undetectable by HUD. These adjustments further reduced Freddie Mac's reported performance figures by 0.9 percentage points for the Low-and Moderate-Income Housing Goal and 0.3 percentage points for the Special Affordable Housing Goal.

HUD's official 2004 performance figures for Freddie Mac, including the penalty reductions and missing data adjustments, are as follows:
Housing Goal
Goal Target - 2004
Official Performance Results - 2004

Low- and Moderate-Income

50%

51.6%

Underserved Areas

31%

32.3%

Special Affordable

20%

22.7%

Special Affordable Multifamily Subgoal

$2.11 Billion

$7.77 Billion

Source: HUD


Contact ALTA at 202-296-3671 or communications@alta.org.

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