Fannie/Freddie Announce Update to Equitable Housing Finance Plans

by | Apr 6, 2023

Fannie Mae and Freddie Mac, the two government-sponsored enterprises that back the majority of U.S. mortgages, announced on Wednesday new updates to their equitable housing finance plans. The updates include a number of new initiatives, such as expanding special purpose credit programs (SPCPs) to make homeownership possible for underserved communities, increasing the availability of accessory dwelling units (ADUs) and manufactured homes, and launching a correspondent lending program to assist smaller financial institutions with access to Freddie Mac’s multifamily financing. The updates also include a number of new research initiatives, such as a study on the impact of zoning regulations on housing affordability and a study on the role of financial education in homeownership. The updates are designed to help Fannie Mae and Freddie Mac achieve their goal of making housing more accessible and affordable for all Americans.

What are the updates to the equitable housing finance plans?

The updates to the equitable housing finance plans include a number of new initiatives, such as:

  • Expanding special purpose credit programs (SPCPs) to make homeownership possible for underserved communities. SPCPs are designed to provide mortgage financing to borrowers who would not otherwise qualify for a traditional mortgage. Fannie Mae and Freddie Mac are expanding the availability of SPCPs by increasing the maximum loan amount that can be financed through a SPCP and by making it easier for lenders to qualify borrowers for SPCPs.
  • Increasing the availability of accessory dwelling units (ADUs) and manufactured homes. ADUs are small, secondary units that can be built on the same lot as a single-family home. Manufactured homes are factory-built homes that can be moved to a permanent location. Fannie Mae and Freddie Mac are increasing the availability of ADUs and manufactured homes by making it easier for lenders to finance these types of homes.
  • Launching a correspondent lending program to assist smaller financial institutions with access to Freddie Mac’s multifamily financing. The correspondent lending program will provide smaller financial institutions with access to Freddie Mac’s multifamily financing, which will help them to finance affordable housing projects.
  • Conducting a study on the impact of zoning regulations on housing affordability. Zoning regulations can make it difficult to build new housing, which can lead to higher housing prices. Fannie Mae and Freddie Mac are conducting the study to better understand the impact of zoning regulations on housing affordability and to identify ways to make zoning regulations more flexible.
  • Conducting a study on the role of financial education in homeownership. Financial education can help people understand the costs of homeownership and the steps they need to take to become homeowners. Fannie Mae and Freddie Mac are conducting the study to better understand the impact of financial education on homeownership and to identify ways to make financial education more accessible.

Why are the updates to the equitable housing finance plans important?

The updates to the equitable housing finance plans are important because they will help to make housing more accessible and affordable for all Americans. The updates will help more people become homeowners and will increase the supply of affordable housing.

How will the updates to the equitable housing finance plans impact the housing market?

The updates to the equitable housing finance plans are expected to have a positive impact on the housing market. The updates will help to make housing more accessible and affordable, which will likely lead to an increase in demand for housing. This could lead to higher home prices, but it could also lead to more construction of new housing, which would help to increase the supply of housing and keep prices in check.

What are the risks associated with the updates to the equitable housing finance plans?

There are some risks associated with the updates to the equitable housing finance plans. One risk is that the updates could lead to higher home prices. Another risk is that the updates could lead to a decrease in the supply of housing, as developers may be less likely to build new housing if they believe that the government will provide subsidies for affordable housing.

Overall, the updates to the equitable housing finance plans are a positive step towards making housing more accessible and affordable for all Americans. The updates will help more people become homeowners and will increase the supply of affordable housing. However, there are some risks associated with the updates, such as the potential for higher home prices and a decrease in the supply of housing.

According to Freddie Mac, the average 30-year fixed-rate mortgage declined to 6.28% as of April 4, down from 6.32% the previous week. The decline was driven by expectations of an economic slowdown.

This happened in spite of The Federal Reserve being expected to continue raising interest rates in an effort to combat inflation. The housing market is likely to remain volatile in the coming months.

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