US FHFA to propose easier affordable housing goals

CHICAGO, April 20 (Reuters) - The federal regulator of housing finance giants Fannie Mae FNM.P and Freddie Mac FRE.P on Monday said it would soon issue a proposal to modify the companies' responsibilities to provide funding for affordable housing.

Guidelines set by the U.S. Department of Housing and Urban Development for 2008 were "infeasible" given the trauma to the markets, and under existing legislation would be the same for 2009, Edward DeMarco, chief operating officer of the Federal Housing Finance Agency, told Reuters.

DeMarco, participating earlier in a Mortgage Bankers Association panel discussion, said the goals would be modified in response to market conditions. A "proposed rule-making" will be issued within a "couple of weeks," he said.

"It's a very difficult market for meeting those housing goals," DeMarco said.

Increased pressure on Fannie Mae and Freddie Mac to boost funding for low-cost housing is often blamed by critics for the companies' forays into riskier lending at the height of the housing boom. Taking on loans considered subprime, or that were made under loose underwriting requirements, resulted in huge losses for the companies. That led to concerns of capital shortfalls and their seizure by the government in September.

Now in conservatorship under the FHFA, the companies have been seen as taking risks to promote Obama administration housing policy versus those taken by profit-driven, shareholder-owned institutions.

Tom Lund, Fannie Mae's executive vice president for single-family mortgages, said U.S. policies that are pushing interest rates to historic lows are working to promote affordable home ownership. (Reporting by Al Yoon)