Fannie Mae and Freddie Mac partner with FHLBanks to expand housing opportunities for Native communities

The Federal Housing Finance Agency (FHFA) announced a new combined initiative to expand housing access for tribal communities through programs administered by Fannie Mae and Freddie Mac (the Enterprises) and the Federal Home Loan Banks (FHLBanks). The initiative streamlines efforts to boost awareness, credit access, and liquidity for programs for tribal communities through partnerships between the Enterprises and the FHLBanks. Fannie Mae will purchase loans originated through the FHLBank Mortgage Partnership Finance (MPF) program, administered by the FHLBank of Chicago on behalf of six Federal Home Loan Banks, to increase liquidity for tribal communities. Under Fannie Mae’s Native American Conventional Lending Initiative, loans will provide an additional financing option for Native American borrowers to purchase homes on tribal trust lands.

"We appreciate our partnership with the Federal Home Loan Bank of Chicago's MPF Program as we expand opportunities for conventional mortgage lending and sustainable access to homeownership for Native American consumers on tribal trust lands," said Laurel Davis, Senior Vice President of Environmental, Social, Governance & Mission, Fannie Mae.

Freddie Mac will partner with the Federal Home Loan Bank of Des Moines through an awareness campaign to inform the Bank’s network of financial institution members about Freddie Mac's mortgage offering. The campaign will highlight Freddie Mac's HeritageOne mortgage offering, as well as financial counseling and other resources for Tribal members with a focus on first-time homebuyers.

"FHLB Des Moines recognizes and celebrates the strength and self-determined spirit of Native communities throughout our district," said Kris Williams, President & CEO of FHLB Des Moines. "We are pleased to support Freddie Mac in its efforts to showcase ways its HeritageOne product may be leveraged by our financial institution members to create pathways of opportunity for informed and sustainable homeownership for tribal members.”

CDFI Fund and FHFA partner to support housing investment

The U.S. Department of the Treasury's Community Development Financial Institutions Fund (CDFI Fund) and the Federal Housing Finance Agency (FHFA) announced the formation of a new working group to increase capital for affordable housing lending through the Federal Home Loan Banks (FHLBanks). This initiative focuses on Community Development Financial Institutions (CDFIs) that serve distressed communities. CDFIs have been a frequent and prominent topic in the FHFA’s review of the FHLBank system, featuring ways the FHLBanks can work more effectively with CDFIs through their Affordable Housing Programs. The working group will focus on developing innovative programs that enable non-depository CDFIs to tap into affordable capital sources, enhancing their ability to finance housing projects. Key priorities for 2024-2025 include improving property appraisal processes, refining collateral mechanisms, and data-sharing on CDFI activities and performance.

“The Biden-Harris Administration is focused on using every tool at its disposal to increase the supply of housing and lower costs for American families,” said U.S. Deputy Secretary of the Treasury Wally Adeyemo. “Critical to our efforts is working to ensure that the Federal Home Loan Banks fulfill their statutory mission of supporting affordable housing. Helping lenders expand their sources of financing and access capital from the Federal Home Loan Banks will help these community banks support a range of projects that can lower housing costs in communities across the country for years to come.”

The CDFI fund also recently released new Frequently Asked Questions (FAQs) and recorded webinars. 

Fed cuts rates by quarter point

The Federal Reserve Board of Governors Federal Open Market Committee (FOMC) announced a cut to the target federal funds rate by 0.25 points to 4.5%-4.75%, the second time the rate has been cut since March 2020. In September, the FOMC cut rates by half a point. During a press conference, Federal Reserve Chair Jerome Powell noted the continuous goal to return inflation to 2%, and that the labor market has cooled with notably higher unemployment but also easing inflation. He also discussed how rent prices, although still showing high inflation, are decreasing in pressure as newly signed leases are not reflected in the data being analyzed. Despite this, mortgage interest rates have not decreased as many groups and prospective homeowners have hoped to see.

“We know that reducing policy strength—restraint too quickly could hinder progress on inflation. At the same time, reducing policy restraint too slowly could unduly weaken economic activity and employment,” said Powell. 

FDIC launches new tool for minority banking opportunities

The Federal Deposit Insurance Corporation (FDIC) is launching an online tool designed to assist financial institutions and investors in identifying neighborhoods that could benefit from enhanced banking services. The tool, called the Minority Banking Opportunity Explorer, supports the FDIC's mission to encourage the establishment of new minority depository institutions (MDIs) by helping organizing groups explore potential business opportunities in areas that may qualify for MDI designation. Additionally, it can aid existing MDIs in their growth efforts by pinpointing new branch locations or advertising opportunities.

“As part of the FDIC’s ongoing commitment to support mission-driven banks, we are pleased to share a tool designed to assist those interested in creating new mission-driven banks or expanding the reach of other institutions,” said Betty Rudolph, the FDIC’s Director, Office of Minority and Community Development Banking. “The insights from leaders in the mission-driven banking community remain invaluable and we look forward to working to ensure that the tool remains effective and responsive to their priorities and needs.”

Ginnie Mae allows risk-based capital relief for issuers hedging MSRs

Ginnie Mae announced that it will allow issuers who have a track record of managing their interest rate exposure through Mortgage Servicing Rights (MSR) hedging can potentially qualify for Risk-Based Capital Ratio (RBCR). According to the announcement, MSRs are generally a large portion of issuer assets with fluctuating values due to changes in interest rates. Issuers can consequently reduce their interest rate exposure by hedging MSRs on their books and reducing fluctuation in MSR values. The announcement came in an All Participants Memorandum that outlined requirements for eligibility, with at minimum an issuer hedging at least one of the most recent four quarters, and at least four of the most recent 12 quarters. The changes come into effect on December 31.

“As we have said previously, Ginnie Mae will continue to look for ways to adjust our RBCR, where industry practice reflects demonstrable risk mitigation,” said Acting Ginnie Mae President Sam Valverde. “With RBCR set to go into effect at the end of the year, we are pleased to provide this relief for proven hedging strategies.”

“CHLA commends Ginnie Mae for allowing eligible issuers to qualify for RBCR and creating more flexibility for IMBs in the face of Risk-based Capital requirements,” said Community Home Lenders of America executive director Scott Olson. “This initiative will not only increase access to Ginnie Mae for nonbanks, but will also increase access to credit for first-time, minority, and other underserved borrowers.”