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Federal Register / Vol. 86, No. 246 / Tuesday, December 28, 2021 / Rules and Regulations
commenters recommended an increase in the benchmark level for the proposed low-income census tracts subgoal above the proposed 4 percent. Two commenters suggested that restructuring the low-income areas subgoal as proposed might provide FHFA with data to determine whether the enterprise housing goals are unintentionally contributing to the displacement of low-income families.
While no commenters objected to the proposed area-based subgoals structure, one commenter expressed concern that the proposed low-income census tracts subgoal would deter the Enterprises from purchasing loans in minority census tracts for moderateto highincome minority borrowers who opt to live in minority census tracts. FHFA
notes that the new subgoals would permit housing goals credit under at least one of the subgoals for many moderateand high-income borrowers in minority census tracts. All loans to moderate-income borrowers defined as having incomes no greater than 100
percent of area median income AMI
in minority census tracts would be eligible for credit under the minority census tracts subgoal, and in minority census tracts that are also low-income census tracts, loans to borrowers with incomes above 100 percent of AMI
would be eligible for credit under the low-income census tracts subgoal.
While it is true that loans to higher income borrowers in minority census tracts that are not low-income census tracts would not be eligible for credit under either subgoal, FHFA does not expect this to create a significant disincentive for Enterprise purchases of such loans.
Another commenter recommended future inclusion of race and ethnicity of borrowers into housing goal formulation and modification. FHFA will continue to monitor Enterprise performance on the housing goals and the demographics of borrowers with goals-qualifying loans. FHFA may explore avenues that may be permitted under applicable law in future housing goals rulemakings.
Single-family low-income refinancing goal. In addition to their support for the proposed increases in the benchmark levels for the single-family home purchase goals, a number of commenters specifically expressed support for the proposed benchmark level for the single-family low-income refinancing goal. Several of these commenters emphasized the crucial role that responsible and affordable refinance loans play in preserving homeownership and the important role the Enterprises play in ensuring that more borrowers can benefit from the
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current refinance boom to save money on mortgage payments. They expressed concern that, during the COVID19
pandemic and a period of historically low interest rates, the current surge in refinancing is not adequately reaching lower-income families, lower-wealth families, and borrowers with smaller loan balances. To address these concerns, these commenters recommended that FHFA and the Enterprises help reduce the cost of refinancing by ensuring that rate-term refinances are more available, but not more costly, for lower-income families who would save greatly on mortgage payments. They also urged FHFA and the Enterprises to create a streamlined refinance program for low-balance mortgages to ensure that affordable refinances are more accessible to borrowers, and particularly those of color. One commenter that supported the proposed benchmark level for the single-family low-income refinancing goal expressed optimism that the proposed higher benchmark level would encourage the Enterprises to purchase refinance mortgages from credit unions and other financial institutions whose mission is to serve their local communities. Another commenter urged FHFA to increase the benchmark level for the low-income refinancing goal from the proposed 26 percent to 28
percent to help ensure that the Enterprises can respond to current market conditions and promote fair access to affordable housing effectively.
One commenter recommended that FHFA increase the income level for mortgages eligible for the low-income refinance goal from 80 percent of AMI
to 100 percent of AMI and provide more support to more low-income homeowners looking to refinance. FHFA
notes that while this proposal would be beyond the scope of the current rule, FHFA will continue to consider the needs of moderate-income households that are seeking to refinance loans.
Several commenters expressed support for the higher proposed benchmark level while acknowledging that interest rates are forecast to increase in the years 20222024. Two of these commenters described the proposal, which set the low-income refinancing goal slightly below the midpoint of the confidence interval in the market forecast, as appropriate given the greater volatility in refinance projections and the sizable increase over the current benchmark level of 21 percent. One of these commenters endorsed FHFAs proposal to set the benchmark level lower than the projected market level due to fluctuations in interest rates.

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Fannie Mae expressed concern over the proposed low-income refinance benchmark level, characterizing the proposed increase over the current benchmark level as significant. Fannie Mae stated that the unpredictability of future interest rates and refinancing volumes could have a significant impact on the low-income refinance share of the market. Fannie Mae further stated that this volatility makes it difficult to determine the likelihood of the Enterprises ability to meet the proposed benchmark level, particularly in 2023
and 2024. Fannie Mae also stated that meeting the proposed benchmark level may be challenging if future refinance volume stalls because homeowners who have taken advantage of historically low interest rates will have less incentive to refinance their loans, especially those lower income borrowers with low loan balances. FHFA emphasizes that the Enterprises are required to meet the lower of the benchmark level or the market level for each single-family goal.
Therefore, if the benchmark level that FHFA set is higher than the market level, then the Enterprise can still meet this goal by exceeding the market level, even if it falls short of the benchmark.
However, if FHFA sets a low benchmark level in the context of an expected strong or high market level, then FHFA
would be not be meeting its statutory obligation to set meaningful and robust goals to ensure that an appropriate share of Enterprise refinance acquisitions are loans made to low-income borrowers.
Multifamily benchmark levels. The NPRM proposed increases in the benchmark levels for all three multifamily goals. A significant number of commenters supported these proposed increases in the benchmark levels. The commenters characterized the proposed benchmark levels as reasonable and attainable, notwithstanding known market challenges, like the cost of materials, labor shortages and supply chain issues.
Several of the commenters stated that the significant and growing need for affordable rental housing across the country aligns with the missions of the Enterprises and should be a priority in the near future. One commenter stated that while the proposed increases in the benchmark levels would be an improvement, FHFA should set the multifamily benchmark levels even higher, citing both the need for more affordable rental housing and the Enterprises recent performance on these goals. Two commenters expressed concern that the proposed benchmark levels would be too high relative to previous levels.

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