Fannie Mae & Freddie Mac Affordable Housing Allocations

The Housing and Economic Recovery Act of 2008 (HERA) requires the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), together, the Enterprises, to set aside an amount equal to 4.2 basis points of each dollar of the unpaid principal balance of Fannie Mae’s and Freddie Mac’s total new business purchases and to allocate and transfer those funds to the Housing Trust Fund and the Capital Magnet Fund; 12 USC 4567(a).

HERA authorizes the Director of the Federal Housing Finance Agency (FHFA) to temporarily suspend allocations by an Enterprise upon a finding by the Director that such allocations: 1) are contributing, or would contribute, to the financial instability of the Enterprise; 2) are causing, or would cause, the Enterprise to be classified as undercapitalized; or 3) are preventing, or would prevent, the Enterprise from successfully completing a capital restoration plan; 12 USC 4567(b).

On November 13, 2008, the Director of FHFA temporarily suspended the allocation of funds by the Enterprises pursuant to section 4567(b). On December 11, 2014, the Director of FHFA terminated the temporary suspension of these allocations and directed the Enterprises to begin making contributions pursuant to 12 USC 4567(a) in accordance with certain terms and conditions.