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Housing Price Index Frequently Asked Questions11119<h2 style="text-align&#58;left;">​​&#160;</h2><table width="75%" class="ms-rteTable-4" bgcolor="#f1f1f1" cellspacing="0"><tbody><tr class="ms-rteTableEvenRow-4"><td class="ms-rteTableEvenCol-4" style="width&#58;100%;"><h2 style="text-align&#58;center;">Table of Contents​</h2><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest1"><font color="#276598"><strong>1. What is the value of the HPI?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest2"><font color="#276598"><strong>2. What transactions are covered in the HPI?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest3"><font color="#276598"><strong>3. How is the HPI computed?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest4"><font color="#276598"><strong>4. How often is the HPI published?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest5"><font color="#276598"><strong>5. How is the HPI updated?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest6"><font color="#276598"><strong>6. How do I interpret “four-quarter,” “one-year,” “annual,” and “one-quarter” price changes?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest7"><font color="#276598"><strong>7. How are Metropolitan Statistical Areas (MSAs) and Metropolitan Divisions defined and what criteria are used to determine whether an MSA index is published?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest8"><font color="#276598"><strong>8. Does FHFA use the February 2013 revised Metropolitan Statistical Areas (MSAs) and Divisions?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest9"><font color="#276598"><strong>9. What geographic areas are covered by the House Price Index? (revised)</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest10"><font color="#276598"><strong>10. What is the methodology used by FHFA in computing the Index?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest11"><font color="#276598"><strong>11. How does the HPI differ from the S&amp;P/Case-Shiller® Home Price indexes?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest12"><font color="#276598"><strong>12. How does the House Price Index differ from the Census Bureau’s Constant Quality House Price Index (CQHPI)?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest13"><font color="#276598"><strong>13. Where can I access MSA index numbers and standard errors for each year and quarter?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest14"><font color="#276598"><strong>14. What role do Fannie Mae and Freddie Mac play in the House Price Index?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest15"><font color="#276598"><strong>15. Why is the HPI based on Fannie Mae or Freddie Mac mortgages?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest16"><font color="#276598"><strong>16. When are the indexes normalized in the downloadable ASCII data?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest17"><font color="#276598"><strong>17. Is the HPI adjusted for inflation?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest18"><font color="#276598"><strong>18. How do I use the manipulatable data (in TXT files) on the Web site to calculate appreciation rates?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest19"><font color="#276598"><strong>19. How is FHFA’s House Price Index constructed for MSAs?...</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest20"><font color="#276598"><strong>20. How can the House Price Index for an MSA be linked to ZIP codes within that MSA?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest21"><font color="#276598"><strong>21. How and why is the HPI revised each quarter?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest22"><font color="#276598"><strong>22. What transaction dates are used in estimating the index?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest23"><font color="#276598"><strong>23. Are foreclosure sales included in the HPI?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest24"><font color="#276598"><strong>24. How are the monthly House Price Indexes calculated?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest25"><font color="#276598"><strong>25. How are the Census Division and United States House Price Indexes formed?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest26"><font color="#276598"><strong>26. What weights are used in forming the Census Division and United States Indexes?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest27"><font color="#276598"><strong>27. For those house price indexes that are seasonally-adjusted, what approach is used in performing the seasonal adjustment?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest28"><font color="#276598"><strong>28. How is the Expanded-Data HPI calculated?</strong></font></a></p><p> <a href="/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx#quest29"><strong><font color="#276598">29. What is the “distress-free” index?</font></strong></a></p></td></tr></tbody></table><p> <span style="font-family&#58;'lucida bright', serif;font-size&#58;11pt;"><font color="#000000">&#160;</font></span></p><ol><li> <strong><a name="quest1">What is the value of the House Price Index (HPI)?</a></strong><br><br>The HPI is a broad measure of the movement of single-family house prices. It serves as a timely, accurate indicator of house price trends at various geographic levels. It also provides housing economists with an analytical tool that is useful for estimating changes in the rates of mortgage defaults, prepayments and housing affordability in specific geographic areas. The HPI is a measure designed to capture changes in the value of single-family houses in the U.S. as a whole, in various regions and in smaller areas.<br><br>The HPI is published by the Federal Housing Finance Agency (FHFA) using data provided by Fannie Mae and Freddie Mac. The Office of Federal Housing Enterprise Oversight (OFHEO), one of FHFA's predecessor agencies, began publishing the HPI in the fourth quarter of 1995.<br><br>&#160;</li><li> <strong><a name="quest2">What transactions are covered in the HPI?</a></strong><br><br>The House Price Index is based on transactions involving conforming, conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. Only mortgage transactions on single-family properties are included. Conforming refers to a mortgage that both meets the underwriting guidelines of Fannie Mae or Freddie Mac and that does not exceed the conforming loan limit. For loans originated in the first nine months of 2011, the loan limit was set by Public Law 111-242. That law, in conjunction with prior legislation, provided for loan limits up to $729,750 for one-unit properties in certain high-cost areas in the contiguous U.S. Mortgages originated after September 30, 2011 were no longer subject to the terms of prior initiatives and, under the formula established under the Housing and Economic Recovery Act of 2008, the &quot;ceiling&quot; limit for one-unit properties in the contiguous U.S. fell to $625,500. The current conforming loan limit is $417,000 in most of the U.S.<br><br>Conventional mortgages are those that are neither insured nor guaranteed by the FHA, VA, or other federal government entities. Mortgages on properties financed by government-insured loans, such as FHA or VA mortgages, are excluded from the HPI, as are properties with mortgages whose principal amount exceeds the conforming loan limit. Mortgage transactions on condominiums, cooperatives, multi-unit properties, and planned unit developments are also excluded.<br><br>&#160;</li><li> <strong><a name="quest3">How is the HPI computed?</a></strong><br><br>The HPI is a weighted, repeat-sales index, meaning that it measures average price changes in repeat sales or refinancings on the same properties. This information is obtained by reviewing repeat mortgage transactions on single-family properties whose mortgages have been purchased or securitized by Fannie Mae or Freddie Mac since January 1975. The HPI is updated each quarter as additional mortgages are purchased or securitized by Fannie Mae and Freddie Mac. The new mortgage acquisitions are used to identify repeat transactions for the most recent quarter and for each quarter since the first quarter of 1975.<br><br>&#160;</li><li> <strong><a name="quest4">How often is the HPI published?</a></strong><br><br>A comprehensive report is published every three months, approximately two months after the end of the previous quarter. Beginning in March 2008, OFHEO (one of FHFA's predecessor agencies) began publishing monthly indexes for census divisions and the&#160;U.S. FHFA continues publishing and updating these indexes each month.<br><br>&#160;</li><li> <strong><a name="quest5">How is the HPI updated?</a></strong><br><br>Each month, Fannie Mae and Freddie Mac provide FHFA with information on their most recent mortgage transactions. These data are combined with the data from previous periods to establish price differentials on properties where more than one mortgage transaction has occurred. The data are merged, creating an updated historical database that is then used to estimate the HPI.<br><br>&#160;</li><li> <strong><a name="quest6">How do I interpret &quot;four-quarter,&quot; &quot;one-year,&quot; &quot;annual,&quot; and &quot;one-quarter&quot; price changes?</a></strong><br><br>The &quot;four-quarter&quot; percentage change in home values is simply the price change relative to the same quarter one year earlier. For example, if the HPI release is for the second quarter, then the &quot;four-quarter&quot; price change reports the percentage change in values relative to the second quarter of the prior year. It reflects the best estimate for how much the value of a typical property increased over the four-quarter period (FAQ #2 reports the types of properties included in this estimate). &quot;One-year&quot; and &quot;annual&quot; appreciation are used synonymously with &quot;four-quarter&quot; appreciation in the full quarterly HPI releases.<br><br>Similar to the &quot;four-quarter&quot; price changes, the &quot;one-quarter&quot; percentage change estimates the percentage change in home values relative to the prior quarter. Please note that, in estimating the quarterly price index, all observations within a given quarter are pooled together; no distinction is made between transactions occurring in different months. As such, the &quot;four-quarter&quot; and &quot;one-quarter&quot; changes compare typical values throughout a quarter against valuations during a prior quarter. The appreciation rates do not compare values at the end of a quarter against values at the end of a prior quarter.<br><br>&#160;</li><li> <strong><a name="quest7">How are Metropolitan Statistical Areas (MSAs) and Metropolitan Divisions defined and what criteria are used to determine whether an MSA index is published?</a></strong><br><br>MSAs are defined by the Office of Management and Budget (OMB). If specified criteria are met and an MSA contains a single core population greater than 2.5 million, the MSA is divided into Metropolitan Divisions. The following MSAs have been divided into Metropolitan Divisions&#58; Boston-Cambridge-Newton, MA-NH; Chicago-Naperville-Elgin, IL-IN-WI; Dallas-Fort Worth-Arlington, TX; Detroit-Warren-Dearborn, MI; Los Angeles- Long Beach-Anaheim, CA; Miami-Fort Lauderdale-West Palm Beach, FL; New York- Newark-Jersey City, NY-NJ-PA; Philadelphia-Camden-Wilmington, PA-NJ-DE-MD; San Francisco-Oakland-Hayward, CA; Seattle-Tacoma-Bellevue, WA; Washington-Arlington-Alexandria, DC-VA-MD-WV. For these MSAs, FHFA reports data for each Division, rather than the MSA as a whole.<br><br>FHFA requires that an MSA (or Metropolitan Division) must have at least 1,000 total transactions before it may be published. Additionally, an MSA or Division must have had at least 10 transactions in any given quarter for that quarterly value to be published.&#160;Blanks are displayed where this criterion is not met.<br><br>&#160;</li><li> <strong><a name="quest8">Does FHFA use the February 2013 revised Metropolitan Statistical Areas (MSAs) and Divisions?</a></strong><br><br>Yes, FHFA uses the revised Metropolitan Statistical Areas (MSAs) and Divisions as defined by the Office of Management and Budget (OMB) in February 2013 (and revised in July 2015). These MSAs and Divisions are based on Census data. According to OMB, an MSA comprises the central county or counties containing the core, plus adjacent outlying counties having a high degree of social and economic integration with the central county as measured through commuting. For information about the current MSAs, please visit&#58; <a href="http&#58;//www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf"> <span style="text-decoration&#58;underline;">http&#58;//www.whitehouse.gov/sites/default/files/omb/bulletins/2015/15-01.pdf</span></a>.<br><br>Prior to the second quarterly release in 2013, FHFA produced metropolitan area indexes based on the December 2009 delineations provided by the OMB at <a href="http&#58;//www.whitehouse.gov/omb/assets/bulletins/b10-02.pdf"> <span style="text-decoration&#58;underline;">http&#58;//www.whitehouse.gov/omb/assets/bulletins/b10-02.pdf</span></a>. That quarter's Highlights piece explains the transition from the December 2009 to the February 2013 definitions. HPIs constructed from both the 2009 and 2013 delineations are available on the Downloadable Data page under the &quot;Additional Data&quot; section then the &quot;Utility Files and Background Information for Index Construction&quot; subsection.<br><br>&#160;</li><li> <strong><a name="quest9">What geographic areas are covered by the House Price Index?</a></strong><br><br>The HPI includes indexes for all nine census divisions, the 50 states and the District of Columbia, and every Metropolitan Statistical Area (MSA) in the U.S., excluding Puerto Rico. OMB recognizes 382 MSAs, 11 of which are subdivided into a total of 31 Metropolitan Divisions. As noted earlier, FHFA produces indexes for the divisions where they are available, in lieu of producing a single index for the MSA. In total, 402 indexes are released&#58; 371 for the MSAs that do not have Metropolitan Divisions and 31 Division indexes. The starting dates for indexes differ and are determined by a minimum transaction threshold; index values are not provided for periods before at least 1,000 transactions have been accumulated.<br><br>In each release, FHFA publishes rankings and quarterly, annual, and five-year rates of changes for the MSAs and Metropolitan Divisions that have at least 15,000 transactions over the prior 10 years. In this release, 266 MSAs and Metropolitan Divisions satisfy this criterion. For the remaining areas, MSAs and Divisions, one-year and five-year rates of change are provided.<br><br>&#160;</li><li> <strong><a name="quest10">What is the methodology used by FHFA in computing the Index?</a></strong><br><br>The methodology is a modified version of the Case-Shiller® geometric weighted repeat- sales procedure. A detailed description of the HPI methodology is available upon request from FHFA at (202) 649-3195 or online at&#58; <a href="http&#58;//go.usa.gov/8BBT"> <span style="text-decoration&#58;underline;">http&#58;//go.usa.gov/8BBT</span></a>.<br><br>&#160;</li><li> <strong><a name="quest11">How does the HPI differ from the S&amp;P/Case-Shiller® Home Price indexes?</a></strong><br><br>Although both indexes employ the same fundamental repeat-valuations approach, there are a number of data and methodology differences. Among the dissimilarities&#58;</li><ol><li>The S&amp;P/Case-Shiller indexes only use purchase prices in index calibration, while the all-transactions HPI also includes refinance appraisals. FHFA's purchase-only series is restricted to purchase prices.</li><li>FHFA's valuation data are derived from conforming mortgages provided by Fannie Mae and Freddie Mac. The S&amp;P/Case-Shiller indexes use information obtained from county assessor and recorder offices.</li><li>The S&amp;P/Case-Shiller indexes are value-weighted, meaning that price trends for more expensive homes have greater influence on estimated price changes than other homes. FHFA's index weights price trends equally for all properties.</li><li>The geographic coverage of the indexes differs. The S&amp;P/Case-Shiller National Home Price Index, for example, does not have valuation data from 13 states. FHFA's U.S. index is calculated using data from all states.<br><br>For details on these and other differences, consult the HPI Technical Description (see <a href="http&#58;//go.usa.gov/8BBT"> <span style="text-decoration&#58;underline;">http&#58;//go.usa.gov/8BBT</span></a>) and the S&amp;P/Case-Shiller methodology materials (see <a href="http&#58;//us.spindices.com/documents/methodologies/methodology-sp-cs-home-price-indices.pdf"> <span style="text-decoration&#58;underline;">http&#58;//us.spindices.com/documents/methodologies/methodology-sp-cs-home-price-indices.pdf</span></a>).<br><br>A paper that analyzes in detail the methodological and data differences between the two price metrics can be accessed at <a href="http&#58;//go.usa.gov/8BBJ"> <span style="text-decoration&#58;underline;">http&#58;//go.usa.gov/8BBJ</span></a>.<br><br>&#160;</li></ol><li> <strong><a name="quest12">How does the House Price Index differ from the Census Bureau's Constant Quality House Price Index (CQHPI)?</a></strong><br><br>The HPI published by FHFA covers far more transactions than the Commerce Department survey. The CQHPI covers sales of new homes and homes for sale, based on a sample of about 14,000 transactions annually, gathered through monthly surveys.<br><br>The quarterly all-transactions HPI is based on more than 52&#160;million repeat transaction pairs over 41 years. This gives a more accurate reflection of current property values than the Commerce Department index. The HPI also can be updated efficiently using data collected by Fannie Mae and Freddie Mac in the normal course of their business activity.<br><br>&#160;</li><li> <strong><a name="quest13">Where can I access MSA index numbers and standard errors for each year and quarter?</a></strong><br><br>In addition to the information displayed in the MSA tables, FHFA makes available MSA indexes and standard errors. The data are available in ASCII format and may be accessed at <a href="http&#58;//go.usa.gov/8kXz"> <span style="text-decoration&#58;underline;">http&#58;//go.usa.gov/8kXz</span></a>.<br><br>&#160;</li><li> <strong><a name="quest14">What role do Fannie Mae and Freddie Mac play in the House Price Index?</a></strong><br><br>FHFA uses data supplied by Fannie Mae and Freddie Mac in compiling the HPI. Each of the Enterprises had previously created a weighted repeat-transactions index based on property matches within its own database. In the first quarter of 1994, Freddie Mac began publishing the Conventional Mortgage Home Price Index (CMHPI). The CMHPI was jointly developed by Fannie Mae and Freddie Mac. The CMHPI series covers the period 1970 to the present.<br><br>&#160;</li><li> <strong><a name="quest15">Why is the HPI based on Fannie Mae or Freddie Mac mortgages?</a></strong><br><br>FHFA has access to this information by virtue of its role as the federal regulator responsible for these government-sponsored enterprises. Chartered by Congress for the purpose of creating a reliable supply of mortgage funds for homebuyers, Fannie Mae and Freddie Mac are the largest mortgage finance institutions in the U.S. representing a significant share of total outstanding mortgages.<br><br>&#160;</li><li> <strong><a name="quest16">When are the indexes normalized in the downloadable ASCII data?</a></strong><br><br>The ASCII data for metropolitan areas are normalized to the first quarter of 1995. That is, the HPI equals 100 for all MSAs in the first quarter of 1995. States and divisions are normalized to 100 in the first quarter of 1980. The purchase-only indexes are normalized to 100 in the first quarter of 1991. Note that normalization dates do not affect measured appreciation rates.<br><br>&#160;</li><li> <strong><a name="quest17">Is the HPI adjusted for inflation?</a></strong><br><br>No, the HPI is not adjusted for inflation. For inflation adjustments, one can use the Consumer Price Index &quot;All Items Less Shelter&quot; series. The Bureau of Labor Statistics' price index series ID# CUUR0000SA0L2, for example, has tracked non-shelter consumer prices since the 1930s. That series and others can be downloaded at&#58; <a href="http&#58;//data.bls.gov/cgi-bin/srgate"> <span style="text-decoration&#58;underline;">http&#58;//data.bls.gov/cgi-bin/srgate</span></a>.<br><br>&#160;</li><li> <strong><a name="quest18">How do I use the manipulatable data (in TXT files) on the website to calculate appreciation rates?</a></strong><br><br>The index numbers alone (for census divisions and U.S., individual states, and MSAs) do not have significance. They have meaning in relation to previous or future index numbers, because you can use them to calculate appreciation rates using the formula below.<br><br>To calculate appreciation between any 2 quarters, use the formula&#58;<br><br>(QUARTER 2 INDEX NUMBER - QUARTER 1 INDEX NUMBER) / QUARTER 1 INDEX NUMBER<br><br>You can generate annual numbers by taking the four quarter average for each year or monthly numbers by finding the difference between two months.<br><br>&#160;</li><li> <strong><a name="quest19">How is FHFA's House Price Index constructed for MSAs? The website says that FHFA uses the 2015&#160;definitions based on the 2010 Census to define each MSA. Is this true for all time periods covered by each index? Or do the definitions change over time as the Census expanded its MSA definitions? For example, if the definition of an MSA added three counties between 1980 and 2000, would the value of the index in 1980 cover the three counties that were not included in the 1980 SMSA definition?</a></strong><br><br>The HPI is recomputed historically each quarter. The MSA definition used to compute the 1982 (for example) index value in Anchorage, AK would be the most recent definition. The series is comparable backwards.<br><br>&#160;</li><li> <strong><a name="quest20">How can the House Price Index for an MSA be linked to zip codes within that MSA?</a></strong><br><br>Although&#160;FHFA has&#160;published experimental house price indexes for some&#160;ZIP codes, those indexes are annual (i.e. quarterly index values are not provided). Researchers needing quarterly values for ZIP codes may be interested in using index values for the applicable metropolitan&#160;area.<br>&#160;<br>Because ZIP codes sometimes overlap county boundaries, a single ZIP code can be located partially inside and outside of a Metropolitan Area. Thus, the development of a crosswalk between ZIP codes and Metropolitan Areas is not a straightforward exercise. The Department of Housing and Urban Development has released a lookup table that maps ZIP codes to the Metropolitan Area(s) that they fall within. That lookup file, as well as a discussion of the underlying technical issues, can be found here&#58; <a href="http&#58;//www.huduser.org/portal/datasets/usps_crosswalk.html"> <span style="text-decoration&#58;underline;">http&#58;//www.huduser.org/portal/datasets/usps_crosswalk.html</span></a>.<br><br>&#160;</li><li> <strong><a name="quest21">How and why is the HPI revised each quarter?</a></strong><br><br>Historical estimates of the HPI revise for three primary reasons&#58;</li><ol><li>The HPI is based on repeat transactions. That is, the estimates of appreciation are based on repeated valuations of the same property over time. Therefore, each time a property &quot;repeats&quot; in the form of a sale or refinance, average appreciation since the prior sale/refinance period is influenced.<br><br></li><li>Fannie Mae and Freddie Mac (the Enterprises) purchase seasoned loans, providing new information about prior quarters.<br><br></li><li>Due to a 30- to 45-day lag time from loan origination to Enterprise funding, FHFA receives data on new fundings for one additional month following the last month of the quarter. These fundings contain many loans originating in that most recent quarter, and especially the last month of the quarter. This will reduce with subsequent revisions, however data on loans purchased with a longer lag, including seasoned loans, will continue to generate revisions, especially for the most recent quarters.<br><br>In connection with the release of the 2012Q2 HPI results, a special revision was made to two historical HPI values. In prior releases, the all-transactions index values for Vermont-1976Q1 and West Virginia-1982Q1 were both reported to be 100.01. Those values were not correct; index values for those respective periods should have been set to missing because no modeling data were available in the underlying sample. The HPI releases for 2012Q2 and later periods reflect the change.<br><br>&#160;</li></ol><li> <strong><a name="quest22">What transaction dates are used in estimating the index?</a></strong><br><br>For model estimation, the loan origination date is used as the relevant transaction date.<br><br>&#160;</li><li> <strong><a name="quest23">Are foreclosure sales included in the HPI?</a></strong><br><br>Transactions that merely represent title transfers to lenders will not appear in the data. Once lenders take possession of foreclosed properties, however, the subsequent sale to the public can appear in the data. As with any other property sale, the sales information will be in FHFA's data if the buyer purchases the property with a loan that is bought or guaranteed by Fannie Mae or Freddie Mac.<br><br>&#160;</li><li> <strong><a name="quest24">How are the monthly House Price Indexes calculated?</a></strong><br><br>The monthly indexes are calculated in the same way the quarterly indexes are constructed, except transactions from the same quarter are no longer aggregated. To construct the quarterly index, all transactions from the same quarter are aggregated and index values are estimated using the assigned quarters. In the monthly indexing model, all transactions for the same month are aggregated and separate index values are estimated for each month.<br><br>&#160;</li><li> <strong><a name="quest25">How are the Census Division and U.S. House Price Indexes formed?</a></strong><br><br>As discussed in the Highlights article accompanying the 2011Q1 HPI Release (available for download at <a href="http&#58;//go.usa.gov/8k5d"> <span style="text-decoration&#58;underline;">http&#58;//go.usa.gov/8k5d</span></a>), the census division indexes are constructed from statistics for the component states. For the quarterly all-transactions and purchase-only indexes, the census division indexes are constructed from quarterly growth rate estimates for the underlying state indexes. Census division index estimates are &quot;built-up&quot; from quarterly growth rate estimates (monthly growth rates for the monthly index) for the component states.<br><br>The census division indexes are set equal to 100 in the relevant base periods. Then, the index values for subsequent periods are increased (or decreased) by the weighted average quarterly (or monthly) price change for the underlying states. Index values for periods before the base period are calculated in a similar fashion; beginning with the base period value, the preceding index values are sequentially determined so that the growth rate in each period always reflects the weighted average growth rate for the component states.<br><br>The national HPI is constructed in an analogous fashion, except that the weighted components are census divisions. Because the census divisions measures are themselves weighted averages of state metrics, the U.S. index is equivalent to a state-weighted metric.<br><br>&#160;</li><li> <strong><a name="quest26">What weights are used in forming the Census Division and U.S. Indexes?</a></strong><br><br>The weights used in constructing the indexes are estimates for the shares of one-unit detached properties in each state. For years in which decennial census data are available, the share from the relevant census is used. For intervening years, a state's share is the weighted average of the relevant shares in the prior and subsequent censuses, where the weights are changed by ten percentage points each year. For example, California's share of the housing stock for 1982 is calculated as 0.8 times its share in the 1980 census plus 0.2 times its share in the 1990 census. For 1983, the Pacific Division's share is 0.7 times its 1980 share plus 0.3 times its 1990 share.<br><br>For years since 2000, state shares are calculated as follows&#58;</li><ul><li>For the 2001-2005 interval, shares are straight-line interpolated based on the state shares in the 2000 decennial Census and the 2005 values from the American Community Survey (ACS).</li><li>For 2006-2014, the estimates are from the annual ACS.</li><li>Until 2015 ACS estimates become available, shares from the 2012 ACS are used for subsequent periods.<br><br>The year-specific estimates of the state shares of U.S. detached housing stock can be accessed at <a href="http&#58;//go.usa.gov/8k5F"> <span style="text-decoration&#58;underline;">http&#58;//go.usa.gov/8k5F</span></a>.<br><br><strong></strong></li></ul><li> <strong><a name="quest27">For those house price indexes that are seasonally adjusted, what approach is used in performing the seasonal adjustment?</a></strong><br><br>The Census Bureau's X-12 ARIMA procedure is used, as implemented in the SAS software package. The automated ARIMA model-selection algorithm in X-12 is employed, which searches through a series of seasonality structures and selects the first that satisfies the Ljung-Box test for serial correlation.<br>&#160;<br><br>To obtain more information on the HPI contact us via the Data and Research Contact page at <a href="http&#58;//go.usa.gov/8kN3"> <span style="text-decoration&#58;underline;">http&#58;//go.usa.gov/8kN3</span></a>.<br><br>&#160;</li><li> <strong><a name="quest28">How is the Expanded-Data HPI calculated?</a></strong><br><br>The approach to estimating the expanded-data HPI is detailed in the Highlights article published with the 2011Q2 HPI at <a href="http&#58;//go.usa.gov/8kNm"> <span style="text-decoration&#58;underline;">http&#58;//go.usa.gov/8kNm</span></a>. In general, the methodology is the same as is used in the construction of the standard purchase-only HPI, except a supplemented dataset is used for estimation. The augmented data include sales price information from Fannie Mae and Freddie Mac mortgages as well as two new information sources&#58; (1) transactions records for houses with mortgages endorsed by FHA and (2) county recorder data licensed from CoreLogic. The licensed county recorder data do not include records in many U.S. counties—particularly rural ones. To ensure that the addition of the CoreLogic data to the estimation sample does not unduly bias index estimates toward price trends in urban areas, the expanded-data index for certain states is estimated by weighting price trends in areas with CoreLogic coverage and other areas. Details on this sub-area weighting can be found in the text of the Highlights piece referenced above.<br><br>&#160;</li><li> <strong><a name="quest29">What is the &quot;distress-free&quot; index?</a></strong><br><br>FHFA released a &quot;distress-free&quot; HPI in 2012Q2 along with the Highlights article at <a href="http&#58;//go.usa.gov/8kNJ"> <span style="text-decoration&#58;underline;">http&#58;//go.usa.gov/8kNJ</span></a>. The index is a version of the purchase-only index that removes short sales and sales of bank-owned properties from the transactions data used to compute that traditional index. The index is still in a developmental stage. An analysis of how distressed sales affect the FHFA HPI is provided in an FHFA Working Paper released August 2013 at <a href="http&#58;//go.usa.gov/8kRB"> <span style="text-decoration&#58;underline;">http&#58;//go.usa.gov/8kRB</span></a>.&#160;<span style="line-height&#58;16px;font-family&#58;inherit;font-size&#58;inherit;font-weight&#58;inherit;"></span></li></ol><p><span style="line-height&#58;22px;"><a href="/Media/PublicAffairs/Documents/HPI2016Q1_FAQsExcerpt.pdf">HPI FAQs as of 5/25/2016 (PDF)</a>​</span></p><p></p>5/25/2016 1:02:24 PM28446http://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
U.S. House Price Index Report - 1Q2016 / March19722<p>U.S. house prices rose&#160;1.3 percent&#160;in the first quarter of 2016&#160;according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI).&#160; This is the nineteenth consecutive quarterly price increase in the purchase-only, seasonally adjusted index.&#160; FHFA's seasonally adjusted monthly index for March was up&#160;0.7&#160;percent&#160;from February.&#160; The HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. FHFA has produced a <a href="https&#58;//youtu.be/wKe9YgGVALs">video of highlights</a> for this quarter.</p><p style="border&#58;0px;font-stretch&#58;inherit;font-size&#58;14px;line-height&#58;22px;font-family&#58;'source sans pro', sans-serif;vertical-align&#58;baseline;padding&#58;0px;color&#58;#404040 !important;background-color&#58;#ffffff;"></p><p>​While the&#160;purchase-only HPI rose&#160;5.7&#160;percent&#160;from the first quarter of 2015 to the first quarter of 2016,&#160;prices of other goods and services were nearly unchanged.&#160; The inflation-adjusted price of homes thus rose approximately 5.6&#160;percent over the latest year.</p><p><strong>Significant Findings</strong></p><div><ul><li><p>Home prices rose in every state between the first quarter of 2015 and the first quarter of 2016. &#160;The top five states in annual appreciation were&#58; &#160;1) Oregon 11.8 percent; 2) Florida 11.2 percent; 3) Washington 10.9 percent; 4) Nevada 9.4 percent; and 5) Colorado 9.0 percent.</p></li><li><p>Among the 100 most populated metropolitan areas in the U.S., annual price increases were greatest in the West Palm Beach-Boca Raton-Delray Beach, FL (MSAD), where prices increased by 16.7 percent. &#160;Prices were weakest in El Paso, TX, where they fell 2.8 percent.</p></li><li><p>Of the nine census divisions, the Pacific division experienced the strongest increase in the first quarter, posting a 1.9 percent quarterly increase and an 8.1 percent increase since the first quarter of last year. &#160;House price appreciation was weakest in the Middle Atlantic division, where prices rose 0.6 percent from the last quarter.&#160;</p></li></ul></div><p style="border&#58;0px;font-stretch&#58;inherit;font-size&#58;14px;line-height&#58;22px;font-family&#58;'source sans pro', sans-serif;vertical-align&#58;baseline;padding&#58;0px;color&#58;#404040 !important;background-color&#58;#ffffff;"><span style="font-family&#58;inherit;font-size&#58;inherit;font-style&#58;inherit;font-variant&#58;inherit;line-height&#58;inherit;"><a href="/Media/PublicAffairs/Pages/US-House-Prices-Rise-1pt3-Percent-in-First-Quarter-2016.aspx">Related News Release</a>​</span><br></p><p></p>5/25/2016 1:00:53 PM449http://www.fhfa.gov/AboutUs/Reports/Pages/Forms/AllItems.aspxhtmlFalseaspx
U.S. House Prices Rise 1.3 Percent in First Quarter; 19 Consecutive Quarterly Increases20606<p><strong>Washington, D.C. </strong>– U.S. house prices rose <strong>1.3 percent</strong> in the first quarter of 2016 according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI).&#160; This is the nineteenth consecutive quarterly price increase in the purchase-only, seasonally adjusted index.&#160; House prices rose <strong>5.7 percent</strong> from the first quarter of 2015 to the first quarter of 2016. &#160;This is the fourth consecutive year in which prices grew more than 5 percent. FHFA's seasonally adjusted monthly index for March was up <strong>0.7 percent </strong>from February.&#160; The HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. &#160;FHFA has produced a <a href="https&#58;//youtu.be/wKe9YgGVALs">video of highlights</a> for this quarter.&#160; </p><p>&quot;While the overall appreciation rate was robust in the first quarter, home price appreciation was somewhat less widespread than in recent quarters,&quot; said FHFA Supervisory Economist Andrew Leventis.&#160;&#160; &quot;Twelve states and the District of Columbia saw price declines in the quarter—the most areas to see price depreciation since the fourth quarter of 2013.&#160; Although most declines were modest, such declines are notable given the pervasive and extraordinary appreciation we have been observing for many years.&quot;</p><p>While the purchase-only HPI rose 5.7 percent from the first quarter of 2015 to the first quarter of 2016, prices of other goods and services were nearly unchanged.&#160; The inflation-adjusted price of homes rose approximately 5.6 percent over the latest year.</p><p><span style="text-decoration&#58;underline;"><strong>Significant Findings</strong></span></p><ul><li><span style="line-height&#58;22px;">Home prices rose in every state between the first quarter of 2015 and the first quarter of 2016.&#160; The top five states in annual appreciation were&#58; &#160;1) Oregon 11.8 percent; 2) Florida 11.2 percent; 3) Washington 10.9 percent; 4) Nevada 9.4 percent; and 5) Colorado 9.0 percent.</span><br></li><li><span style="line-height&#58;16px;">Among the 100 most populated metropolitan areas in the U.S., annual price increases were greatest in the West Palm Beach-Boca Raton-Delray Beach, FL (MSAD), where prices increased by 16.7 percent.</span><span style="line-height&#58;16px;">&#160; </span><span style="line-height&#58;16px;">Prices were weakest in El Paso, TX, where they fell 2.8 percent.</span><span style="line-height&#58;16px;">&#160;</span><br></li><li><span style="line-height&#58;22px;">Of the nine census divisions, the Pacific division experienced the strongest increase in the first quarter, posting a 1.9 percent quarterly increase and an 8.1 percent increase since the first quarter of last year. &#160;House price appreciation was weakest in the Middle Atlantic division, where prices rose 0.6 percent from the last quarter.&#160;</span><br></li></ul><p><span style="line-height&#58;16px;">Tables and graphs showing home price statistics for metropolitan areas, states, census divisions, and the U.S. as a whole are included <a href="/AboutUs/Reports/ReportDocuments/HPI2016Q1Final.pdf">on the following pages</a>.</span><span style="line-height&#58;16px;">&#160;</span></p><p><span style="text-decoration&#58;underline;"><strong>Other Price Indexes</strong></span><br>Most statistics in the quarterly house price index report reference price changes computed by FHFA's basic &quot;purchase-only&quot; HPI.&#160; In some cases, however, the reported statistics reference alternative price measures.&#160; FHFA publishes – and makes <a href="/DataTools/Downloads/Pages/House-Price-Index.aspx">available for download</a> – three additional home price indexes beyond the basic &quot;purchase-only&quot; series.&#160; Although they use the same general methodology, the three alternatives rely on slightly different datasets as follows&#58;&#160;</p><ul><li><strong style="line-height&#58;22px;font-family&#58;&quot;source sans pro&quot;, sans-serif;font-size&#58;14px;">&quot;Distress-Free&quot;</strong><span style="line-height&#58;22px;"> house price indexes.&#160; Sales of bank-owned properties and short sales are removed from the purchase-only dataset prior to estimation of the indexes.</span><br></li><li><strong style="line-height&#58;16px;font-family&#58;&quot;source sans pro&quot;, sans-serif;font-size&#58;14px;">&quot;Expanded-Data&quot;</strong><span style="line-height&#58;16px;"> house price indexes.</span><span style="line-height&#58;16px;">&#160; </span><span style="line-height&#58;16px;">Sales price information sourced from county recorder offices and from FHA-backed mortgages are added to the purchase-only data sample. </span><span style="line-height&#58;16px;">&#160;</span><span style="line-height&#58;16px;">This index is used annually to adjust the maximum conforming loan limits, which constrain the size of loans that can be acquired by Fannie Mae and Freddie Mac.</span><br></li><li><strong style="line-height&#58;16px;font-family&#58;&quot;source sans pro&quot;, sans-serif;font-size&#58;14px;">&quot;All-Transactions&quot;</strong><span style="line-height&#58;16px;"> house price indexes.</span><span style="line-height&#58;16px;">&#160; </span><span style="line-height&#58;16px;">Appraisal values from refinance mortgages are added to the purchase-only data sample.</span><br></li></ul><p><span style="line-height&#58;16px;"></span></p><p>Data constraints preclude the production of all types of indexes for every geographic area, but multiple index types are generally available.&#160; For individual states, for instance, three types of indexes are available.&#160; The various indexes tend to correlate closely over the long-term, but short-term differences can be significant.&#160; </p><p><span style="text-decoration&#58;underline;"><strong>Release of New Experimental Indexes</strong></span></p><p>With this quarter's release, FHFA is publishing a set of experimental annual house price indexes for five-digit ZIP codes across the country from <span style="font-family&#58;georgia, serif;font-size&#58;11pt;">1975―2015.</span>​&#160;The indexes are constructed using the typical &quot;repeat-transactions&quot; methodology. Unlike FHFA's other price indexes, however, the five-digit ZIP code measures are annual price measures, meaning that a single index value is produced for each year.&#160; As discussed in <a href="/PolicyProgramsResearch/Research/Pages/wp1601.aspx">FHFA Working Paper 16-01</a>, the new indexes may be valuable to analysts seeking data on localized home price movements. &#160;More information about these measures is provided in a &quot;Technical Note&quot; in this report on page 23. </p><p><span style="text-decoration&#58;underline;"><strong>Background</strong></span></p><p>FHFA's HPI tracks changes in average home prices by analyzing changes in home values for the individual properties.&#160; The underlying &quot;repeat-transactions&quot; methodology constructs index estimates by statistically evaluating price appreciation (or depreciation) for homes with multiple values over time.&#160; The purchase-only HPI uses sales price information from Fannie Mae- and Freddie Mac-purchased and Enterprise-guaranteed mortgages originated over the past 41 years.&#160; The purchase-only HPI is estimated with over seven million repeat-transactions.</p><p><span style="text-decoration&#58;underline;"><strong>Note</strong></span></p><ul style="list-style-type&#58;square;"><li>The next monthly index (including data through April 2016) will be released&#160;<span style="line-height&#58;1.6;">June 2</span><span style="line-height&#58;1.6;">2, 2016.&#160;</span></li><li>The next quarterly HPI report, which will include data for the second quarter of 2016, will be released August 24, 2016.&#160; </li><li>Future HPI release dates for 2016 are available at <a href="/hpi">http&#58;//www.fhfa.gov/hpi</a>. </li><li>Follow @FHFA on <a href="https&#58;//twitter.com/FHFA">Twitter</a> and <a href="https&#58;//www.youtube.com/channel/UCoKP7Om6nsRkEav9yInFekw" target="_blank">YouTube​</a> for more HPI news.</li></ul>5/25/2016 1:05:06 PM1137http://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Prepared Remarks of Melvin L. Watt Director of FHFA at 2016 Federal Home Loan Bank Directors' Conference20600<p style="text-align&#58;center;"><strong>Remarks as Prepared for Delivery</strong></p><p style="text-align&#58;center;"><strong>Melvin L. Watt, Director</strong></p><p style="text-align&#58;center;"><strong>Federal Housing Finance Agency</strong></p><p style="text-align&#58;center;">2016 Federal Home Loan Bank Directors' Conference</p><p style="text-align&#58;center;">Washington, D.C.</p><p style="text-align&#58;center;">May 24, 2016</p><p>&#160;</p><p>Good afternoon and thank you for inviting me again to join you at the Federal Home Loan Bank annual Directors' Conference.</p><p>The Federal Housing Finance Agency (FHFA) shares your commitment to ensuring that the Federal Home Loan Banks (FHLBanks) remain a reliable source of liquidity, provide access to the secondary mortgage market, and offer other services for their members, especially smaller institutions.&#160; And we remain committed to ensuring that the FHLBanks accomplish these goals in a safe and sound manner while fulfilling their affordable housing obligations.&#160; &#160;&#160;</p><p>These Annual Directors' Conferences are always a good time for me to talk to you collectively about the current status of our efforts to create a stronger FHLBank System, as well as to discuss issues and challenges that may be on the horizon and ideas we are thinking about to make the system even better.&#160; Our examination teams often discuss our priorities with each FHLBank individually, but this is a good opportunity to address these matters for the system as a whole. &#160;&#160;</p><p><strong>Federal Home Loan Bank Supervision</strong></p><p>Throughout 2015, we continued to see strong financial performance across the FHLBank System.&#160; </p><ul><li>All eleven FHLBanks were profitable in 2015, which is always a great thing to be able to say.&#160; Net income was strong at $2.9 billion.&#160; </li><li>In fact, 2015 marked the most profitable year in the history of the FHLBank System, although some of this resulted from unique events, including $688 million in gains from litigation settlements. </li><li>Strong profitability allowed the FHLBanks to continue building their retained earnings in 2015.&#160; This continued the improvement we have seen since the financial crisis.</li><li>In 2015, total FHLBank assets increased 6.1 percent to $969.6 billion, driven primarily by increases in advances to members.</li></ul><p>FHFA continues to pay close attention to whether the FHLBanks are sufficiently focused on their core mission of providing advances and supporting secondary mortgage market access for member institutions. &#160;Following the collaborative work of the Joint Core Mission Working Group to agree upon appropriate core mission criteria and standards and publication by FHFA of the standards in the Core Mission Achievement Advisory Bulletin last July, the FHLBanks overall have done very well in meeting the preferred standard that was set.&#160; In 2015, the overall percentage of FHLBank consolidated obligations that met the core mission criteria was 74 percent, an increase from the 71 percent at year-end 2014 and, notably, above the 70 percent preferred standard. &#160;While a couple of the FHLBanks are still working their way through the evolving standard toward the preferred standard, they are making progress and have well-considered plans to reach the goal.&#160; </p><p>We remain concerned about the extent to which some FHLBanks continue to rely on non-core mission assets to support their earnings. &#160;Again, however, we are making progress.&#160; This is demonstrated by the decline in the overall level of FHLBank assets held in investments from 30 percent at the end of 2014 to 28 percent at the end of 2015.</p><p>There are three other areas that I will mention that FHFA continues to monitor closely, the first two of which will be familiar to you since I mentioned them in my comments last year.</p><p>First, for those FHLBanks that have large exposures to insurance company members, we continue to encourage you to exercise due diligence to establish conservative haircuts and controls over collateral pledged by them in support of their advances.&#160; While lending to insurance companies remains an important FHLBank activity, the FHLBanks face different risks when lending to these companies compared to other members.</p><p>Second, the system as a whole, and some FHLBanks in particular, have advances concentrated to a few large members.&#160; Across the System, the top four borrowers accounted for 24 percent of aggregate advances at the end of 2015.&#160; Business concentration with a small number of borrowers can threaten profitability if one or more of these borrowers suddenly decrease their demand for advances.&#160; Consequently, FHFA will continue to evaluate contingency planning for possible rapid decreases in advance demand at FHLBanks with heavy advance concentrations. &#160;</p><p>Third, concerns have recently arisen about and FHFA has started a review of the System's increased usage of short-term funding in the form of discount notes. &#160;At year-end 2015, discount notes constituted 54 percent of outstanding FHLBank debt, compared to 43 percent at year-end 2014 and 39 percent at year-end 2013.&#160; Short-term funding requires more frequent debt rollover than longer-term funding and this could become a safety and soundness issue if liquidity dries up unexpectedly.&#160;&#160; </p><p>We are aware that the FHLBanks and the Office of Finance are having ongoing discussions about how to address this issue. &#160;FHFA has been engaging in conversations with the Office of Finance and market participants to gather more information about recent changes in debt issuances.&#160; We hope that constructive dialogue among FHFA, the Office of Finance and the FHLBanks will address the concerns and make it unnecessary for FHFA to issue guidance on the topic.&#160; Even with this trend of greater short-term funding, it is important to note that all FHLBanks met their liquidity requirements in 2015 and continue to maintain ready access to the agency debt markets.</p><p><strong>Membership Rule and Affordable Housing Oversight</strong></p><p>Since I last spoke with you, FHFA finalized the amended membership rule.&#160; We carefully considered the more than 1,300 comment letters that we received from members of the public, including a number from the FHLBanks.&#160; Ultimately, we decided to eliminate the proposed on-going asset test because we concluded that the burdens of implementing the changes proposed on this issue would have outweighed the benefits of the proposed changes.</p><p>As you know, however, we decided to finalize our proposed definition of an insurance company to exclude captive insurers.&#160; While this decision may adversely impact some FHLBanks, and certainly some of their members, we continue to believe that the decision we made was the right one and that Congress is the appropriate body to make changes to the statutory membership requirements for FHLBanks.&#160; To date, Congress has not taken any action in response to our final rule.&#160; &#160;&#160;&#160;&#160;</p><p>For those of you who may be wondering about the status of our ongoing efforts on the FHLBank affordable housing goals and modernization of the Affordable Housing Program (AHP), let me assure you that we continue to make progress.&#160; Our work with the FHLBank Presidents' Housing Goals Working Group has been collaborative and helpful as we consider how best to implement the housing goal requirements in the future.&#160; I got an update from my staff recently and sent them back to think more creatively and &quot;outside the box&quot; about how to make sure the housing goals meet their intended purpose of ensuring that the FHLBanks are incentivized to do their very best to make sure that affordable housing is provided for those who need it most. &#160;We encourage you to help us think creatively about this issue. &#160;I think it's better for us to get this right than to rush the process, but I'm still hopeful that we can announce more details on our plans for overseeing these housing goals later in the year. </p><p>Over a number of months, FHFA staff has also held many meetings to listen to and exchange information about how to improve the Affordable Housing Program.&#160; The FHLBank Presidents, the Community Investment Officers (CIOs), the Affordable Housing Advisory Councils, and stakeholders made a number of very thoughtful recommendations to FHFA about how to revise the AHP, and FHFA staff has discussed these suggestions in a number of settings.&#160; My staff has advised me that these have been very productive dialogues, and I want to thank you for this constructive engagement.&#160; </p><p>The recommendations we received fall generally into four categories&#58;</p><ul><li>First, there are some that we unfortunately will not be able to accept because they are inconsistent with the current statute and would require legislative action for us to implement.&#160; </li><li>Second, there are some that we will be able to implement relatively quickly by issuing a letter clarifying that they are already permissible under our current regulation.&#160; </li><li>Third, there may be some that we can authorize by issuing revised guidance rather than going through the process of amending our current regulation.&#160; </li><li>Finally, some of the recommendations will require the more protracted process of developing, proposing and finalizing amendments to our Affordable Housing Program regulation. </li></ul><p>Our methodical process of obtaining feedback from the FHLBanks, the Affordable Housing Advisory Councils, and other stakeholders has left us with a number of options to consider, and we are reviewing each recommendation carefully.&#160; Our objective as we attempt to figure out the best way to proceed on each recommendation will be to ensure that AHP remains a successful source of affordable housing funding while removing operational barriers and making necessary updates that reflect today's housing market.&#160; As we do this, we of course must balance our desire to get the changes implemented as quickly as possible with our obligation to get the changes implemented effectively. &#160;&#160;</p><p><strong>FHFA's Oversight of Diversity and Inclusion at Our Regulated Entities</strong></p><p>Let me spend the balance of my time talking in some greater detail about a subject that I have mentioned just briefly each time I have spoken here at your Annual Conference -- diversity and inclusion.&#160; As you are all aware, the Housing and Economic Recovery Act of 2008 places diversity and inclusion responsibilities on all of our regulated entities – the FHLBanks, Office of Finance, Fannie Mae, and Freddie Mac.&#160; Each of these entities is directed to establish an Office of Minority and Women Inclusion and, to the maximum extent possible, utilize minorities, women and minority- and women-owned businesses across all lines and activities of the entities.&#160; Since I became the Director of FHFA, we have been working methodically to develop, and then to start implementing, a roadmap for how we will oversee our regulated entities' fulfillment of their diversity and inclusion obligations.&#160; </p><p>I view this as more than a compliance exercise geared toward meeting some kind of minimum standard. &#160;I have mentioned diversity and inclusion in each of my speeches to this group because I want to communicate the importance of seeing diversity and inclusion as integral parts of your efforts to meet your mission, not as an isolated endeavor.&#160; As we see it, this forward-thinking approach is a business imperative, not just an effort to fulfill a statutory obligation.&#160; &#160;&#160;</p><p>So I welcome, and want to express my appreciation for, the open and collaborative attitude with which virtually everyone at all the FHLBanks has approached our focus on diversity and inclusion objectives thus far.&#160; As we continue to build on the success and collaboration to date, we remain aware that there are a number of moving parts in this process.&#160; We understand that the FHLBanks need to establish their plans for diversity and inclusion just as FHFA must continue to articulate and refine our expectations.&#160; In this spirit, let me highlight some of the activities that we have undertaken to date and some things that we will build into our roadmap to help drive integration of diversity and inclusion in a systematic way.</p><p>First, after reorganizing FHFA's own OMWI organization, we have devoted a considerable amount of time to gathering information about what our regulated entities are already doing in the area of diversity and inclusion.&#160; To this end, we developed a survey to ask each regulated entity about its existing practices, including its diversity and inclusion organizational framework, strategic planning efforts, supplier and workforce diversity programs, and reporting procedures.&#160; FHFA staff followed up on the responses to the survey by visiting each FHLBank and the Office of Finance to interview officials, a process we are currently finishing with Fannie Mae and Freddie Mac as well.&#160; All of that work was designed to capture information about the current state of each regulated entity's diversity and inclusion program.&#160; This information will be critically important in enabling us to establish benchmarks against which we can measure and evaluate each entity's progress going forward.</p><p>Second, consistent with our practice of supervising all aspects of our regulated entities' operations that are important to their success, we expect to examine our regulated entities' diversity and inclusion programs and activities.&#160; Consequently, we are developing diversity and inclusion examination activities that we will integrate into the Agency's supervision program. &#160;We expect to develop examiner guidance, hire and train examiners, and establish consistent examination methods and practices.&#160; Our goal is to ensure that diversity and inclusion examination activities will be part of our regular examination work conducted for all regulated entities in 2017.&#160; </p><p>Third, we plan to propose an amended minority and women inclusion regulation that would direct all of our regulated entities to undertake diversity and inclusion strategic planning, either on a stand-alone basis or as part of their overall business strategic planning process.&#160; This will ensure that each regulated entity develops and approves its own comprehensive approach to integrating diversity and inclusion systematically into its business and activities throughout its organization.&#160; Our goal is to publish the proposed amendments for public comment this year.&#160; </p><p>Fourth, FHFA is considering whether to provide guidance about incorporating diversity and inclusion in assessing FHLBank executive incentive compensation programs.&#160; We envision each FHLBank implementing diversity and inclusion goals, such as conducting outreach to minority-serving financial institutions, increasing supplier diversity, or implementing organization-wide diversity and inclusion performance management systems.&#160; I applaud the efforts already being undertaken voluntarily by the Chicago, Dallas, and Pittsburgh FHLBanks to tie their executive compensation to specific diversity and inclusion goals.</p><p>Finally, FHFA continues to work with all of you on increasing the diversity of the Boards across the FHLBank System.&#160; Last year, we amended our regulation to require each FHLBank and the Office of Finance to report annually on board diversity, including the outreach and strategies used to promote diversity in nominating or soliciting nominees for board positions.&#160; We have already seen some progress.&#160; I also recently signed off on a proposed clarification to our rules governing FHLBank Director and personnel involvement in board elections. &#160;This proposed clarification, which responds to concerns several of you had raised, makes clear that FHLBank Directors or personnel can actively seek out and encourage diverse candidates to run for election, even while Directors and personnel still face other limitations on their involvement in elections. &#160;This proposed clarification should be coming out soon for public comment.&#160; </p><p>We are also very encouraged by the Board Diversity Working Group formed by the FHLBanks and headed by Indianapolis FHLBank CEO Cindy Konich.&#160; The Working Group convened its first in-person meeting several weeks ago and, in the coming months, will be examining best practices across the System and considering what new infrastructure or policies are needed to achieve the goal of increasing board diversity.</p><p>We view each of you, as well as Fannie Mae and Freddie Mac, as critical partners in FHFA's ongoing oversight of diversity and inclusion practices. &#160;And, going forward, we will of course continue to work with each of you to achieve our shared mission.&#160; Ultimately, it is our hope that our regulated entities will provide leadership on diversity and inclusion for the housing finance industry as a whole.</p><p><strong>Conclusion</strong></p><p>Let me conclude by thanking you for having me here today and for all the work that you have done to support the nation's housing finance system by creating a stronger and more mission-focused FHLBank System.&#160; Thank you also for your leadership on making diversity and inclusion integral parts of your organizations.&#160; We look forward to regular discussions with you as we continue to make progress on all aspects of our oversight of the FHLBanks.</p>5/24/2016 4:47:48 PM1221http://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Foreclosure Prevention Report - February 201620059<h3>February 2016 Highlights </h3><p> <strong>The Enterprises' Foreclosure Prevention Actions&#58; </strong> </p><ul><li>The Enterprises completed 16,208 foreclosure prevention actions in February 2016, bringing the total to 3,674,849 since the start of the conservatorships in September 2008. Over half of these actions have been permanent loan modifications. </li><li>There were 10,095 permanent loan modifications in February, bringing the total to 1,918,846 since the conservatorships began in September 2008. </li><li>The share of modifications with principal forbearance decreased to 18 percent. Modifications with extend-term only remained at 48 percent of all permanent modifications in February due to improved house prices and a declining HAMP eligible population. </li><li>There were 2,235 short sales and deeds-in-lieu completed in February, down 4 percent compared with January. </li></ul><p> <strong>The Enterprises' Mortgage Performance&#58; </strong><br> </p><ul><li>The serious delinquency rate decreased from 1.47 percent at the end of January to 1.42 percent at the end of February. </li></ul><p> <strong>The Enterprises' Foreclosures&#58;</strong> <br> </p><ul><li>Third-party and foreclosure sales declined 15 percent from 9,062 in January to 7,716 in February. </li><li>Foreclosure starts increased 20 percent from 17,831 in January to 21,369 in February. </li></ul>5/10/2016 5:00:36 PM223http://www.fhfa.gov/AboutUs/Reports/Pages/Forms/AllItems.aspxhtmlFalseaspx

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