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HUD Ends Loan Incentives For Fannie Mae, Freddie Mac

WASHINGTON - A recent decision by the Department of Housing and Urban Development to end its bonus point incentive system for Fannie Mae and Freddie Mac that encouraged the housing Government Sponsored Enterprises to buy mortgages on small apartment buildings, may cause the GSEs problems in meeting their affordable housing...

By Staff Writer | Updated on January 13, 2004

WASHINGTON – A recent decision by the Department of Housing and Urban Development to end its bonus point incentive system for Fannie Mae and Freddie Mac that encouraged the housing Government Sponsored Enterprises to buy mortgages on small apartment buildings, may cause the GSEs problems in meeting their affordable housing goals. HUD said it decided to end the system because it could wind up overstating how well Fannie and Freddie are meeting their affordable housing goals. According to HUD, the two GSEs would not have met most of their affordable housing goals in 2001 and 2002 if there were no incentives. In a statement released by HUD, the agency said, “Over time, the GSEs’ use of bonus points can cause meaningful distortions in the housing goals, and can contribute to an inaccurate picture of the extent to which the GSEs are meeting the needs of the markets they are chartered by Congress to serve.” The bonus program ended Dec. 31.

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