Federal National Mortgage Association (Fannie Mae)

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Yale University EliScholar – A Digital Platform for Scholarly Publishing at Yale YPFS Documents Browse by Media Type 6-22-2007 Fannie Mae Housing Goals Forecast Federal National Mortgage Association (Fannie Mae) Follow this and additional works at: https://elischolar.library.yale.edu/ypfs-documents Recommended Citation Federal National Mortgage Association (Fannie Mae), "Fannie Mae Housing Goals Forecast" (2007). YPFS Documents. 4415. https://elischolar.library.yale.edu/ypfs-documents/4415 This Document is brought to you for free and open access by the Browse by Media Type at EliScholar – A Digital Platform for Scholarly Publishing at Yale. It has been accepted for inclusion in YPFS Documents by an authorized administrator of EliScholar – A Digital Platform for Scholarly Publishing at Yale. For more information, please contact elischolar@yale.edu. Housing Goals Forecast Confidential - Highly Restricted Alignment Meeting June 22, 2007 • Update the 2007 housing goals forecast with April performance numbers • Present Plans A, B, and C • Plan A is what it would take to make all the goals and subgoals • Plan B is a plan based on the legislation that passed the House of Representatives last week, using a 3-yr rolling average to define the market • Plan C is a proposal that we developed to focus on meeting only the enforceable goals and subgoals • Objective is to go through all three options and then summarize the pros and cons of each at the end CONFIDENTIAL AND PROPRIETARY BUSINESS INFORMATION CONFIDENTIAL TREATMENT REQUESTED o FM-FCIC 00172456 2007 Housing Goals Forecast YTO Actual May Total Estimated YTO May Year End HUO Goals/Subgoals 2007 Goal 2007 2007 Overage/Shortage Overage/ Shortage = ~ Low-Mod 55.0% 53.07% -28,137 -71,000 00 ~ Special Affordable 25.0% 24.09% -13,300 -34,000 ~ c ~ Underserved 38.0% 42.56% 71,008 138,000 -00 rFl Low-Mod 47.0% 42.14% -21,489 -60,000 = 0'" Special Affordable 18.0% 15.53% -10,930 -30,000 IJQ ~ C -[f] Underserved 33.0% 34.03% 4,564 10,000 Key Assumptions (Confirmed with Key Stakeholders) Single-Family $611 B Single-Family PMM Richness 6-month average (Dec to May) for non-initiative business MCM $20.6 B PLS $20 B Multifamily (2007 Richness) $26.7 B HFAVolume PMM LMI/SA = 10,000/7,000 CMBS $15.0B Investor Channel PMM LMI/SA = 13,000/8,000 Continued weakness in the SF goals richness, the fall off in the PLS market, and fewer MF units per billion in deliveries have eroded our base goals performance. Confidential - Highly Restricted 1 ~FannieMae • New forecast is depressing. As SF volumes rise, gaps between our performance and subgoals are also rising. Forecast assumes $21 billion in MCM production, $24.9 billion in MF production, and $15 billion in CMBS purchases • Most notably, we are now also projecting a small 3,000 unit deficit on the base goals 1 CONFIDENTIAL AND PROPRIETARY BUSINESS INFORMATION CONFIDENTIAL TREATMENT REQUESTED FM-FCIC 00172457 Plan A - Meet Base Goals Volume Opportunity Incremental Incremental Category ($B) Cost Affordable Special ($MM)* Affordable ." SF Business Non-SI $586.0 $14.8 (368,000) (237,000) >< (includes deferrals) (I) MCM (net of MCM overlap) $18.0 $560.0 42,000 22,000 c. 0 0 HFA $3.1 $70.6 10,000 6,000 tn ,.... tn DU Boost (net of MCM overlap) $4.0 $53.6 14,000 7,000 Fixed Total $611.0 $699.0 (302,000) (202,000) Multifamilyl CBMS $41.7 NA 211,000 158,000 o~ Investor Channel $4.5 $92.8 11,000 7,000 o ::::!. tn Q) Private Label Securities $20.0 NA 2,000 (5,000) ""'c-tn _ (I) Manufactured Housing $0.8 $25.3 7,000 9,000 Total $678.0 $817.1 (71,000) (34,000) Shortfalls in the base goals exist despite significant opportunity costs already incurred year to date and projected costs under the current plan. * - Based on 4.5 present value. New model coming from CW 2.10 will change cost estimates Confidential - Highly Restricted 2 ~FannieMae 2 CONFIDENTIAL AND PROPRIETARY BUSINESS INFORMATION CONFIDENTIAL TREATMENT REQUESTED FM-FCIC 00172458 Options for Meeting Base Goals • CMBS: Production above $15 billion and greater unit yields per transaction • Multifamily: Production above $27 billion and greater yields per transaction • Private Label Securities: Structure deals to focus on base goals (refis and SF rentals) • I nvestor Channel: - Revisit prior deals for rural and refinance - Structure deals to maximize for base goals (refis and SF rentals) • Manufactured housing: Current plan is $800 million - Revisit prior deals for rural • Missing Data: Collect multifamily rental data/maximize proxy • Missing Data: Collect single-family rents or propose new single-family rental proxy • Policy: Continue to press HUD for AMI relief (10,000 units) Confidential - Highly Restricted 3 ~FannieMae 3 CONFIDENTIAL AND PROPRIETARY BUSINESS INFORMATION CONFIDENTIAL TREATMENT REQUESTED FM-FCIC 00172459 Plan B - Optimize for Special Affordable Subgoal Category Volume Opportunity Incremental Incremental ($8) Cost PMM PMM Special (MM)* Affordable Affordable Subgoal = 47% Subgoal = 18% Fixed Total $611.0 $699.0 -92,000 -50,000 (includes deferrals) Investor Channel $2.56 $52.76 6,000 10,000 o~ o ::::!. Private Label Securities $5.0 NA 4,000 6,000 tn Q) """c-tn _ (I) Manufactured Housing $0.5 $15.94 7,000 10,000 Total $619.4 $767.7 -75,000 -24,000 Richness 40.9% 16.6% Adjusting the current plan to focus on the special affordable PMM subgoal that HUD considers enforceable, would incur additional costs and still fall short. Strategy increases the challenge of meeting the base goal. * - Based on 4.5 present value. New model coming from CW 2.10 will change cost estimates Confidential - Highly Restricted 4 ~FannieMae 4 CONFIDENTIAL AND PROPRIETARY BUSINESS INFORMATION CONFIDENTIAL TREATMENT REQUESTED FM-FCIC 00172460 Plan C - Reach 3-Yr HMDA Average for Market Incremental Opportunity PMM Special Volume Affordable Category Cost ($8) (MM)* Three-year average = 15.4% Fixed Total (includes deferrals) $611.0 $ 699.0 -19,000 ~ Investor Channel $4.5 $92.8 8,000 ::::!. Q) C" - Private Label Securities $20.0 NA 3,000 (I) 0 0 tn Manufactured Housing $0.8 $25.3 10,000 ,.... tn Total $636.0 $817.1 2,000 Richness 15.58% The current plan would exceed the 3-yr HMDA average (the House-passed standard) for the special affordable subgoal but would miss the LMI and underserved subgoal. * - Based on 4.5 present value. New model coming from CW 2.10 will change cost estimates Confidential - Highly Restricted 5 ~FannieMae 5 CONFIDENTIAL AND PROPRIETARY BUSINESS INFORMATION CONFIDENTIAL TREATMENT REQUESTED FM-FCIC 00172461 Engagement with HUD on Subgoals • Subgoals misaligned with the market - 2005 HMDA: Shows significant decline in market since rule was finalized - 2006 Lender LARS reinforce view that market opportunity is still below subgoal levels (Ongoing analysis, anticipated results) - Regression against National Association of Realtors® affordability index suggests that poor market conditions persist in 2007 for meeting subgoallevels (Ongoing analysis, anticipated results) - Subgoals performance this year should lead the market • Fannie Mae has turned over every stone to identify goals opportunities - MCM volume expected to exceed two times 2006 production levels - We have pursued a robust list of special Initiatives to identify goals units • PLS market is drying up. • Number of goals-rich portfolios available for pruchase has fallen as a result of our activities to meet the subgoals over the previous two years. • Vanderbilt Mortgage portfolio opportunities that were key to 2005 and 2006 performance are not available at the same levels. • Charter sets "reasonable rate of return, but less than the return on other business" standard - Costs of targeted goals activities exceeding reasonable standard - Fannie Mae will need to identify significant costs - first day loses - as a result of goals activities in 2006 financial disclosures - Activities year to date to meet goals will likely exceed the 2006 first day loss levels - Paying up for lender portfolios has minimum impact on the value proposition for consumers Confidential - Highly Restricted 6 ~FannieMae 6 CONFIDENTIAL AND PROPRIETARY BUSINESS INFORMATION CONFIDENTIAL TREATMENT REQUESTED FM-FCIC 00172462 

Fannie Mae Housing Goals Forecast

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Fannie Mae Housing Goals Forecast

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