Written by: Internal Analysis & Opinion Writers
The Federal Housing Finance Agency (FHFA) has unveiled its proposed housing goals for the 2026–2028 cycle, revealing a shift toward easing affordable housing mandates on Fannie Mae and Freddie Mac. The changes reflect growing concerns that current benchmarks may be distorting market behavior and placing undue strain on lenders.
One of the key proposals includes merging the low-income and minority census tract home purchase goals into a single streamlined low-income areas goal. Additionally, FHFA recommends reducing the benchmark for loans in low-income census tracts from 25% to 21% and cutting the very low-income purchase target—defined as borrowers earning no more than 50% of area median income—from 6.5% to 3%.
The plan also eliminates longstanding “measurement buffers,” which previously allowed the GSEs some margin for error before being flagged for non-compliance. Removing these cushions signals a tightening of accountability while simultaneously acknowledging that previous targets may have pushed the enterprises into risky territory.
FHFA said it crafted the new rules in response to feedback from mortgage lenders who reported operational challenges tied to the current structure. Several lenders stated that they felt pressured to purchase goal-qualified loans from third-party aggregators—often at a premium—and could not pass those additional costs along to borrowers. Others noted they had to forgo non-goal business to stay within target ratios, distorting their lending practices.
Behind these proposals lies a growing concern that overly aggressive affordability targets may exacerbate existing housing problems. Pushing Fannie and Freddie to chase high volumes of goal-qualified loans in limited markets may be driving up prices, limiting inventory, and ultimately making housing less accessible for many buyers.
While the FHFA maintains current benchmarks for multifamily lending—61% for low-income, 14% for very low-income, and 2% for small low-income multifamily properties—critics worry that lowering single-family goals could stall progress in expanding homeownership for underserved communities.
The proposal underscores a broader philosophical debate: Should government-sponsored enterprises continue serving as engines for affordable housing expansion, or should their mission pivot toward financial soundness and market neutrality? FHFA’s latest direction suggests a tilt toward the latter, even as housing affordability remains a national concern.
Stakeholders now have until November 3, 2025, to weigh in during the public comment period. With affordable housing squarely in the political spotlight, the proposal is expected to draw input from advocacy groups, lenders, and policymakers across the spectrum. Whether the final rule will soften or sharpen its current tone remains to be seen.
