New GSE housing goals kick in as Congress advances legislation

The FHFA’s updated housing goals framework for Fannie Mae and Freddie Mac has now officially kicked in, replacing prior area-based affordability benchmarks with a consolidated low-income target structure. The rule also introduces technical changes around inflation-adjusted civil penalties tied to housing-goal compliance. In practice, this reshapes how the GSEs balance affordable lending targets across single-family originations through 2028, directly influencing secondary-market purchase strategy and loan eligibility focus areas.

The U.S. House passed the Housing for the 21st Century Act earlier this month, which includes provisions to raise the public welfare investment (PWI) cap from 15% to 20%, effectively allowing banks to allocate more capital toward community development initiatives such as Low-Income Housing Tax Credit (LIHTC) equity investments. By expanding institutional capacity to fund affordable housing projects, the move could unlock additional financing for multifamily development pipelines in supply-constrained workforce housing markets.

Fannie Mae and Freddie Mac have already allowed positive rent payment history to factor into underwriting decisions since 2021, primarily through automated bank-statement, cash-flow reviews.

However, recent FHFA housing goal updates for 2026 – 2028 are encouraging broader use of cash-flow underwriting tools, such as verified rental payments to expand affordable lending populations. This expansion is also being supported by the adoption of newer credit scoring models like VantageScore 4.0, which can incorporate consistent housing payment data, enabling millions of previously “credit invisible” renters to become mortgage-eligible based on rent payment behavior rather than traditional revolving credit history.

In short, this helps move rent history from a supplemental data point toward a more formalized underwriting input across agency-backed loans.

In a previous Rocket Fuel update, we touched on President Trump’s proposal to limit the influence that institutional investors have on the housing market. An executive order was put forward on January 20, directing federal agencies to severely limit large institutional investors buying single-family homes.

In response, the American Homeownership Act was introduced by Senators Elizabeth Warren and Jeff Merkley last week as a potential long-term solution. This bill aims to remove federal tax deductions and housing benefits, which large corporations have utilized for years to gobble up thousands of homes. According to Merkley, “Hedge funds are driving up home prices and rents across America as they gobble up single-family homes.” The end result would be an increase in housing supply for prospective first-time and middle-income home buyers. The American Homeownership Act would also aim to increase the supply of affordable housing by reinvesting the savings from ending corporate tax breaks.

That being said, the Trump administration is also in the midst of creating its own housing proposal. While their proposal includes banning institutional investors who own more than 100 single-family homes, the Warren- and Merkley-backed bill proposes a cutoff at 50 single-family homes. There are additional differences between the two bills that both sides will need to reconcile before working together to combine each proposal into a singular package. We will continue to monitor as more details emerge in the coming weeks.