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Quick Read

The Trump administration is lowering Fannie Mae and Freddie Mac’s 2026-2028 housing goals for low-income borrowers from 25% to 21%, and very-low-income from 6% to 3.5% of loans purchased.
The Federal Housing Finance Agency (FHFA) eliminated the minority census tract subgoal, merging it with low-income tract goals to simplify regulation and promote race-neutral policies.
Advocacy groups warn the changes will exclude hundreds of thousands of low-income and minority borrowers and reduce Fannie and Freddie’s support for middle-class and underserved communities.
Industry groups have mixed reactions: some praise goal adjustments to avoid market distortions, while others criticize the lack of rigorous analysis and warn of reduced affordable housing access.

An AI tool created this summary, which was based on the text of the article and checked by an editor.

Trump administration claims quotas for low-income borrowers hurt the middle class. NAR says where is the data? Consumer and civil rights groups say hundreds of thousands of working class and minority homebuyers will be sent packing.

Saying it wants to serve more middle class borrowers, the Trump administration is scaling back housing goals for Fannie Mae and Freddie Mac that are aimed at helping provide mortgages to low-income and very-low-income homebuyers.

The new 2026-2028 housing goals for Fannie and Freddie — which also do away with a subgoal for supporting lending in minority census tracts — will exclude 177,000 working families over the next three years and as many as 88,000 borrowers in minority communities, consumer and civil rights advocacy groups said.

“The United States is in the middle of a fair and affordable housing crisis,” a coalition of 28 national and state organizations including the Consumer Federation of America and the National Fair Housing Alliance wrote Fannie and Freddie’s federal regulator in November. “Yet, at this critical time, FHFA seeks to make it even harder for working families to get a mortgage.”

Setting overly aggressive housing goals for Fannie and Freddie creates market distortions and drives up home prices, the Federal Housing Finance Agency (FHFA) said in setting out the rationale for the move in a Dec. 23 Federal Register notice.

The FHFA is paring back Fannie and Freddie’s goals for serving low-income homebuyers earning no more than 80 percent of median income from 25 percent of loans purchased to 21 percent. The goal for very-low homebuyers earning no more than 50 percent of median income is being dialed back from 6 percent to 3.5 percent.

The new benchmarks will enable Fannie and Freddie “to focus their efforts on developing products and resources that better support first-time homeownership and enhance affordability, rather than competing in a bidding war over a limited supply of goal-qualifying loans,” their regulator said.

The FHFA claims the new goals for the next three years are likely to expand access to mortgage credit for approximately 201,000 borrowers “who otherwise might not obtain mortgage financing,” the agency claimed.

“For too long, Biden distorted the housing market with harmful mandates that prioritized government quotas at the expense of middle-class families,” FHFA Director Bill Pulte said in a press release. “Thanks to President Trump, Fannie Mae and Freddie Mac will now focus on supporting affordable homeownership for all Americans while fulfilling their statutory duties.”

But the FHFA’s claim that middle-class borrowers may be turned away or receive higher prices if Fannie and Freddie are chasing overly aggressive housing goals hints at “a fundamental misunderstanding of both the goals and who they serve,” the Center for Responsible Lending said in commenting on the changes when they were proposed.

A “middle class” American household is usually defined as earning 66 percent to 200 percent of the median income, the CRL said.

Under that definition, “it’s clear that in shrinking the Enterprises’ single-family, affordable housing goals, FHFA is sharply reducing the Enterprises’ obligations to help the very same middle class communities and households the proposal purports to protect,” the group said. “The decision to do so could not come at a worse time.”

Lenders supportive of goals

Several mortgage and real estate industry trade groups were generally supportive of the goals when they were proposed in October. The Mortgage Bankers Association said lowering some targets for the housing goals to “more attainable levels should have the intended benefit of reducing the risk of market distortions.”

The Housing Policy Council, a trade association representing mortgage originators, servicers, insurers and settlement service providers, said it welcomed FHFA’s “recognition that elevated target levels can result in unintended consequences that harm borrowers, distort markets, and decrease overall housing affordability.”

But other industry groups, including the National Association of Realtors, said Fannie and Freddie’s federal regulator hadn’t conducted a rigorous analysis to support the new goals, and questioned the FHFA’s assertion that some low-income borrowers would be better served by FHA, VA and USDA lenders or loans funded by the private-label securities market.

“Realtors believe that, should the housing goals negatively distort pricing in primary markets and shift [Fannie and Freddie’s] support from middle-class homebuyers to lenders or other primary market participants, [Fannie and Freddie] should check this behavior,” then NAR President Kevin Sears wrote Pulte in November. “Realtors applaud the FHFA for its commitment to a data-driven exploration of this issue in the future. However, changing the goals without such data or analysis in hand would be premature.”

The FHFA set “unrealistically low” low-income housing goals for Fannie and Freddie from 2012 to 2014, Sears maintained, resulting in “sharp growth of the FHA, and reduced private capital participation from [private mortgage insurers], as the FHA and VA expanded. Setting the goals too low threatens to repeat this mistake.”

A trade association representing private mortgage insurers, U.S. Mortgage Insurers, echoed that concern, saying FHA “should serve borrowers who cannot be served by the conventional market.”

Sears also pointed out that Congress hasn’t directed Fannie and Freddie to support the expansion of the private-label securities (PLS) market, either. The source of funding for subprime mortgages before the housing crash and Great Recession of 2007-09, the PLS channel “has not been fully reformed” and currently serves borrowers with strong credit, Sears noted.

A trade association representing credit unions said they rely “heavily” on Fannie and Freddie to access the secondary mortgage market, originating a “substantial share” of loans in low-income and minority census tracts.

“It is crucial that the FHFA ensures that credit unions and other depository institutions have continued access to the secondary mortgage market,” America’s Credit Unions attorney Tyler Maron wrote. “Diminished focus on these communities by [Fannie and Freddie] may lead to reduced liquidity for community lenders like credit unions and consequentially, lower rates of homeownership.”

Fannie and Freddie exceeded their 25 percent low-income family home purchase goal in 2024, Maron said, and lowering the benchmark to 21 percent “is far too aggressive because the market performance shows that the higher benchmarks are achievable and demand for affordable housing remains high.”

State housing finance agencies reminded the FHFA that Fannie and Freddie typically guarantee 20 percent to 30 percent of HFA program loans, which totaled $35.7 billion and financed nearly 141,000 home purchases last year.

Fannie and Freddie’s HFA-only loan products, HFA Preferred and HFA Advantage, have financed close to 350,000 home purchases over the years, the National Council of State Housing Agencies said.

“In explaining its rationale for the new proposed goals, FHFA suggests it is inappropriate for [Fannie and Freddie] to be leaders in mortgage lending to low-income homebuyers,” NCSHA’s Garth Rieman told the agency. “On this, we respectfully disagree. Fannie Mae and Freddie Mac are publicly chartered corporations with public missions.”

Minority census tract goal

FHFA is combining subgoals for minority and low-income census tracts. Instead of doing 12 percent of their business serving homebuyers in minority census tracts and 4 percent in low-income census tracts, the new goal is for 16 percent of Fannie and Freddie’s lending to serve homebuyers in either category.

The FHFA says it wants to combine the subgoals, which were separated in 2022, to “simplify the regulatory framework, improve operational clarity for [Fannie and Freddie], and better align the subgoal with existing borrower-based metrics.”

The change “also advances the [Trump administration’s] priorities for race neutral policies, and for regulatory reform by reducing compliance costs, increasing efficiency, and reducing regulatory burden,” the FHFA said.

The National Urban League “strongly opposes” merging the subgoals for minority and low-income census tracts, saying it will “erase the ability to evaluate how effectively Fannie Mae and Freddie Mac serve communities of color— particularly Black households. While simplifying reporting may appear efficient, collapsing these measures erases the ability to track performance in historically excluded communities.”

The FHFA maintains that the public will still be able to track Fannie and Freddie’s performance in minority census tracts, as the mortgage giants publish that information in annual reports on their websites. The FHFA also publishes information on borrower race and ethnicity by loan product compared to the market in its annual housing report.

The new housing goals for Fannie and Freddie come as the Trump administration proposes doing away with rules holding lenders responsible for lending practices that have a “disparate impact” on minority borrowers, even if they are not intentionally discriminatory.

The National Fair Housing Alliance and dozens of fair housing, civil rights, and consumer advocacy groups say the proposed rule by the Consumer Financial Protection Bureau would “weaken hard-won fair lending protections for women and limit affordable credit opportunities for underserved communities.”

A federal district judge in June rejected the CFPB’s request to undo a settlement it reached last year in a fair lending case involving Chicago mortgage broker Townstone Financial, which the Trump administration had maintained was targeted because of the owner’s political views. CFPB acting director Russell Vought claimed that disparate impact was used as a pretext to investigate the lender.

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