Fannie Mae and Freddie Mac’s Housing Goals

CBO analyzes how Fannie Mae and Freddie Mac achieve their housing goals by offering discounts on their standard fees for mortgages that meet the goals' requirements and charging higher fees for mortgages that do not meet the requirements.

Fannie Mae and Freddie Mac are government-sponsored enterprises (GSEs) that purchase mortgages from lenders, package them into securities to be sold to investors, and guarantee the timely payment of those securities, charging fees in exchange for that guarantee. By law, the GSEs must allocate a share of their purchases to mortgages made to low-income families and certain underserved populations. The details of that allocation are described in directives known as housing goals.

In this report, the Congressional Budget Office analyzes how the GSEs achieve their housing goals by offering discounts on their standard fees for mortgages that meet the goals' requirements and charging higher fees for mortgages that do not meet the requirements-a practice that is economically equivalent to a subsidy and tax policy.

CBO estimates that in fiscal year 2025, that policy will result in the following:

• Nearly 750,000 households that purchase a single-family home with a mortgage that meets the goals' requirements will each receive an implicit subsidy averaging nearly $2,300.
• About 1.4 million households that purchase a single-family home with a mortgage that does not meet the goals' requirements will pay an implicit tax; roughly 230,000 of them will pay an average of nearly $8,000 apiece, and the rest will each pay an average of about $160.
• The GSEs will purchase about 37,000 more single-family mortgages that meet the goals' requirements than they otherwise would. And they will purchase about 29,000 fewer single-family mortgages that do not meet the requirements than they otherwise would.

• Data Underlying Tables

• How the Housing Trust Fund and Capital Magnet Fund Support Affordable Housing
  November 21, 2022
• Effects of Recapitalizing Fannie Mae and Freddie Mac Through Administrative Actions
  August 18, 2020
• Accounting for Fannie Mae and Freddie Mac in the Federal Budget
  September 18, 2018
• Modeling the Subsidy Rate for Federal Single-Family Mortgage Insurance Programs
  January 5, 2018