U.S. lawmakers seek to reform the government-sponsored enterprises' relationship to the mortgage market. However, disagreement on proposed changes may damage the legislative overhaul altogether.
Part of Fannie and Freddie's affordable housing efforts are to encourage lending to low-income borrowers and communities with more limited access to financing on favorable terms, such as rural communities. According to Zillow, "rural and heartland communities are likely affected the most by affordable housing goals and could see the biggest impacts if the goals are eliminated in any reform legislation."
At the heart of the debate, however, are the affordable housing goals: Each year a percentage of the loans purchased by Fannie and Freddie must come from low-income households, very low-income households, or households in low-income areas. The GSEs are deemed successful if they either exceed the benchmark goal set for them or purchase a higher share of low-income mortgages than the share represented in the market overall.
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