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Related Information

AB 2023-05: Enterprise Fair Lending and Fair Housing Rating System

41332

<table width="100%" class="ms-rteTable-default" cellspacing="0" style="margin:0px;padding:0px;line-height:inherit;font-family:"source sans pro", sans-serif;font-size:14px;vertical-align:baseline;table-layout:fixed;border-spacing:0px;font-stretch:inherit;background-color:#ffffff;"><tbody style="font:inherit;margin:0px;padding:0px;border:0px currentcolor;vertical-align:baseline;"><tr style="font:inherit;margin:0px;padding:0px;border:0px currentcolor;vertical-align:baseline;"><td class="ms-rteTable-default" style="font:inherit;margin:0px;width:776px;"> <span style="margin:0px;padding:0px;border:0px currentcolor;line-height:inherit;font-family:inherit;font-size:inherit;font-style:inherit;font-variant:inherit;vertical-align:baseline;font-stretch:inherit;font-weight:700 !important;">ADVISORY BULLETIN <span style="margin:0px;padding:0px;border:0px currentcolor;line-height:inherit;font-family:inherit;font-size:inherit;font-style:inherit;font-variant:inherit;vertical-align:baseline;font-stretch:inherit;font-weight:700 !important;">AB 2023-05:  Enterprise Fair Lending and Fair Housing Rating System <span style="margin:0px;padding:0px;border:0px currentcolor;line-height:inherit;font-family:inherit;font-size:inherit;font-style:inherit;font-variant:inherit;vertical-align:baseline;font-stretch:inherit;font-weight:700 !important;"><a href="/SupervisionRegulation/AdvisoryBulletins/AdvisoryBulletinDocuments/AB-2023-05_Enterprise-Fair-Lending-and-Fair-Housing-Rating-System.pdf">[view PDF of Advisory Bulletin 2023-05]</a>    </td></tr></tbody></table> <h1 style="padding-top:0px;"> Purpose</h1>This Advisory Bulletin communicates the rating system to be used when assessing the Enterprises for fair lending, fair housing, and equitable housing compliance. <h1> Background</h1> This Enterprise Fair Lending and Fair Housing Rating System is a risk-focused rating system under which each Enterprise is assigned a composite rating based on an evaluation of its fair lending compliance practices and outcomes. The rating system is a framework for annually assessing an Enterprise’s compliance with fair lending and fair housing standards and furtherance of equity in the public interest. Specifically, the composite rating of an Enterprise is based on an evaluation and rating of four components: Enterprise Operations and Efficacy, Fair Lending Oversight Program, Supervision Process and Legal Compliance, and Equitable Housing Finance. FHFA considers ensuring Enterprise compliance with fair lending laws part of FHFA’s obligation to affirmatively further the purposes of the Fair Housing Act in its program of regulatory and supervisory oversight over the Enterprises and its responsibility to ensure the Enterprises comply with all applicable laws.<a href="#Ftn1" class="super-script">1</a> Aspects of this rating system also relate to FHFA’s responsibility to ensure the Enterprises operate consistent with the public interest, in addition to other authorities.<a href="#Ftn2" class="super-script">2</a> FHFA’s fair lending policy statement generally articulates its policy on fair lending and how it uses its authorities to ensure compliance with fair lending laws.<a href="#Ftn3" class="super-script">3</a> FHFA has issued supervisory guidance to the Enterprises concerning compliance with fair lending and fair housing laws.<a href="/SupervisionRegulation/AdvisoryBulletins/Pages/Ftn4" class="super-script">4</a><h1> Guidance</h1>I. Effective Date and Phased ImplementationFHFA will issue the first ratings pursuant to this system in 2024 based on calendar year 2023. These ratings will provide notice to the Enterprises of the current status of their fair lending compliance management and form the basis of any identification of areas for improvement. When applicable, FHFA can assess ratings-based remedial supervisory measures beginning with calendar year 2024 ratings issued in calendar year 2025.II. Remedial Supervisory MeasuresRemedial supervisory measures may include a diagnostic review, improvement action plan, or remediation plan in response where a composite rating warrants improvement. When an Enterprise is under conservatorship, composite ratings may be considered as part of FHFA’s executive compensation decisions through the FHFA Scorecard. Composite ratings may also impact consideration by FHFA of an informal or formal enforcement action related to fair lending.<a href="#Ftn5" class="super-script">5</a>III. ScopeThe Enterprises will be rated according to four factors: (i) Enterprise Operations and Efficacy, which measures contributions and dedication to fair lending compliance by Enterprise business units and sufficiency of Board and management oversight; (ii) Fair Lending Oversight Program, which measures performance of the Enterprise’s fair lending oversight program; (iii) Supervision Process and Legal Compliance, which measures the duration and severity of Matters Requiring Attention (MRAs), violations, and any other adverse findings as well as conduct and cooperation during supervision activities; and (iv) Equitable Housing Finance, which measures the performance of each Enterprise under its Equitable Housing Finance Plan activities.In evaluating compliance, the ratings generally incorporate but are not limited to: FHFA Scorecard activities related to fair lending and equity; fair lending supervisory examinations; reports provided pursuant to FHFA Orders on Fair Lending Compliance and Report Submission;<a href="#Ftn6" class="super-script">6</a> compliance with fair lending and fair housing laws; compliance with FHFA regulations pertaining to fair lending or fair housing; fair housing examinations or engagements with HUD; Equitable Housing Finance Plans; fair lending issues related to conservatorship policy submissions; and, related activities, meetings, and other communications with FHFA.IV. Summary of Rating Scale Under the rating system, each Enterprise is assigned a composite rating from “1” to “5.” A “1” rating indicates the lowest degree of supervisory concern, while a “5” rating indicates the highest level of supervisory concern. The composite rating of each Enterprise reflects the ratings of the underlying components, which are also rated on a scale of “1” to “5.” The composite rating is not an arithmetical average of the component ratings. Instead, the relative importance of each component is determined on a case-by-case basis, within the parameters established by this rating system. The evaluative factors listed under each component are not exhaustive and do not indicate level of importance. <table class="AB-Table"><tbody><tr><th style="width:8% !important;">Rating </th><th style="width:23% !important;">Enterprise Operations and Efficacy</th><th style="width:23% !important;">Fair Lending Oversight Program</th><th style="width:23% !important;">Supervision Process and Legal Compliance<a href="#Ftn7" class="super-script">7</a></th><th style="width:23% !important;">Equitable Housing Finance</th></tr><tr><td style="text-align:center !important;">1</td><td><ul class="FHFA-List"><li>All business units prioritize fair lending risk mitigation, adoption of controls and less discriminatory alternatives, and collaboration with fair lending oversight program to ensure risks are mitigated and violations do not occur</li><li>Fair lending, prioritized across the Enterprise</li><li>Board and management are engaged in and proactive about fair lending risk mitigation</li><li>All business units regularly and thoroughly review all policies for fair lending risk</li><li>Positive trends or meaningful efforts in key disparity metrics</li></ul></td><td><ul class="FHFA-List"><li>Enterprise business units regularly receive fair lending compliance training</li><li>Strong monitoring of all consumer-impact underwriting, pricing, and automated valuation models and policies</li><li>High fair lending risk activities limited and subject to heightened review</li><li>Goals and outcomes of compliance measures exceed minimum legal standards</li><li>Quality of fair lending analysis conducted is strong</li></ul></td><td><ul class="FHFA-List"><li>No violations of fair lending law identified in rating year and any minimal MRAs are Deficiencies</li><li>Enterprise works diligently and efficiently to resolve outstanding MRAs and conduct any remedial activities</li><li>Enterprise is cooperative and candid as part of oversight</li></ul></td><td><ul class="FHFA-List"><li>Equity prioritized across the Enterprise including actions building upon current and prior Equitable Housing Finance Plans (EHFPs)</li><li>Enterprise sets ambitious and impactful goals as part of EHFP and pursues changes mid-cycle to further improve equity</li><li>Enterprise works diligently towards goals as part of EHFP and any goal unmet has strong justifications</li><li>EHFP reflects strong, respectful engagement with individual and community stakeholders and responsiveness to outside feedback</li><li>EHFP objectives and actions are innovative, designed to catalyze meaningful impact, and clearly relate to identified barriers </li></ul></td></tr><tr><td style="text-align:center !important;">2</td><td><ul class="FHFA-List"><li>All business units generally consider less discriminatory alternatives, controls, and collaboration with fair lending oversight program to mitigate risks</li><li>Policies generally reviewed for fair lending risk before adoption</li><li>Board and management engaged in fair lending risk mitigation efforts</li><li>Most key disparity metrics show positive trends, strong justification for negative trends</li></ul></td><td><ul class="FHFA-List"><li>Alternatives/ guardrails appropriately applied for high-risk activities</li><li>Satisfactory monitoring of key underwriting, pricing, and automated valuation models and policies</li><li>Goals and outcomes of compliance measures generally exceed minimum legal standards</li><li>All business units generally receive regular fair lending compliance training</li><li>Fair lending analysis is meaningful</li></ul></td><td><ul class="FHFA-List"><li>Most, if not all, risks managed such that violations of fair lending law or any fair lending MRA-Deficiency findings are isolated<a href="#Ftn8" class="super-script">8</a></li><li>Enterprise’s efforts to resolve outstanding violations or MRAs and conduct any remedial activities are significant</li><li>Enterprise is generally candid and cooperative in oversight</li></ul></td><td><ul class="FHFA-List"><li>Enterprise pursues current EHFP while continuing to build upon prior EHFPs</li><li>Enterprise sets difficult, meaningful goals and sometimes considers mid-cycle changes to improve efficacy</li><li>Enterprise makes good faith effort to meet EHFP goals and/or most goals unmet have strong justifications</li><li>EHFP reflects extensive engagement with and responsiveness to individual and community stakeholders</li><li>Nearly all EHFP objectives and actions are meaningful and logically relate to identified barriers and are linked to specific measurable goals</li></ul></td></tr><tr><td style="text-align:center !important;">3</td><td><ul class="FHFA-List"><li>Business unit policies sometimes reviewed for fair lending risk before adoption and while active</li><li>Business units may sometimes consider less discriminatory alternatives, controls, and collaboration with fair lending oversight program and are at least sometimes ineffective in mitigating fair lending risk</li><li>Board and management engagement with fair lending risk mitigation efforts needs improvement</li><li>Key disparity metrics show at least some negative trends, strong justification for most negative trends</li></ul></td><td><ul class="FHFA-List"><li>High-risk activities not always adequately limited by controls</li><li>Ongoing monitoring of key underwriting, pricing, and automated valuation models and policies may not be comprehensive</li><li>Goals and outcomes of compliance system may seek to exceed minimum legal standards but do not always do so</li><li>Not all business units receive regular fair lending training</li><li>Quality of fair lending analysis needs improvement</li></ul></td><td><ul class="FHFA-List"><li>Violations and/or MRAs have been identified<a href="#Ftn9" class="super-script">9</a></li><li>Enterprise’s efforts to resolve outstanding violations or MRAs and conduct any remedial activities need improvement</li><li>Enterprise is sometimes candid and cooperative in oversight</li></ul></td><td><ul class="FHFA-List"><li>Equity efforts limited to current EHFP</li><li>Enterprise sets moderately difficult and/or impactful goals</li><li>Efforts to meet EHFP need improvement and/or justifications for not meeting goals are weak</li><li>EHFP reflects stakeholder feedback from a range of stakeholders, and evidence of contribution exists in the plan</li><li>Enterprise does not generally consider changes for efficacy and improvement mid-cycle</li><li>Some EHFP objectives and goals logically relate to identified barriers for underserved communities </li></ul></td></tr><tr><td style="text-align:center !important;">4</td><td><ul class="FHFA-List"><li>At least some business units do not generally consider less discriminatory alternatives or controls or collaborate with fair lending oversight program</li><li>Business unit policies frequently not reviewed for fair lending risk before adoption</li><li>Board and management engagement in fair lending risk mitigation efforts is deficient</li><li>Negative trends in many key disparity metrics, justification for negative trends weak</li></ul></td><td><ul class="FHFA-List"><li>Many high-risk activities allow for discretion without appropriate guardrails</li><li>Inconsistent and deficient ongoing monitoring of key underwriting, pricing, and automated valuation models and policies</li><li>Goals and objectives of compliance system do not seek to exceed minimum legal standards and/or do not meet minimum legal standards</li><li>Most business units receive inconsistent or inadequate fair lending training</li><li>Quality of fair lending analysis deficient</li></ul></td><td><ul class="FHFA-List"><li>MRAs, individual and/or systemic violations are identified in the subject year</li><li>Enterprise’s efforts to resolve outstanding violations or MRAs and conduct any remedial activities are deficient</li><li>Enterprise generally lacks candor and cooperation in oversight</li></ul></td><td><ul class="FHFA-List"><li>Enterprise’s commitment to equity deficient</li><li>Enterprise sets goals that are unambitious and/or with minor impact</li><li>Efforts to meet EHFP goals deficient and/or justifications underlying unmet goals generally weak</li><li>EHFP reflects some stakeholder engagement but not from a diverse range or minimal integration of feedback into the plan</li><li>Few EHFP objectives and actions logically relate to identified barriers for underserved communities</li></ul></td></tr><tr><td style="text-align:center !important;">5</td><td><ul class="FHFA-List"><li>One or more business units’ consideration of less discriminatory alternatives or controls and collaboration with fair lending compliance program is critically deficient or nonexistent</li><li>Most, if not all, key disparity metrics show negative trends, and/or justification for negative trends weak or non-existent</li><li>Board and management unengaged in fair lending oversight program or actively obstructionist</li><li>At least some business units routinely fail to review policies for fair lending risk</li></ul></td><td><ul class="FHFA-List"><li>Minimal/no controls imposed for high-risk activities</li><li>Minimal/no ongoing monitoring of key underwriting, pricing, and automated valuation models and policies</li><li>Goals and objectives of compliance program critically deficient and Enterprise does not meet minimum legal standards</li><li>Most business units do not receive fair lending training, or the training provided is deficient</li><li>Quality of fair lending analysis critically deficient</li></ul></td><td><ul class="FHFA-List"><li>Individual and/or systemic violations and MRAs identified in the subject year</li><li>Enterprise’s efforts to resolve outstanding violations or MRAs and conduct any remedial activities critically deficient</li><li>Enterprise is dishonest and/or uncooperative in oversight</li></ul> </td><td><ul class="FHFA-List"><li>No articulated commitment to equity</li><li>EHFP goals easy to achieve and/or with minimal impact</li><li>Efforts to meet EHFP goals critically deficient and/or justifications underlying unmet goals deficient or nonexistent</li><li>EHFP objectives and actions do not logically relate tobarriers and/or actions for an underserved community</li><li>Enterprise generally only engages with stakeholders with whom it has pre-existing relationships and/or is unresponsive to feedback </li></ul></td></tr></tbody></table>V. Composite RatingsComposite ratings are based on a careful evaluation of an Enterprise’s fair lending compliance practices and furtherance of equity goals, including the Enterprise’s operations and efficacy, fair lending oversight program, supervision process and legal compliance, and equitable housing finance activities.Composite 1 – The Enterprise’s demonstrated commitment to fair lending compliance, risk prevention, and equity and its fair lending oversight program is strong in every respect and typically, each component is rated “1” or “2.” The Enterprise as a whole is candid, proactive, and cooperative with regulators about any issues and the Enterprise is in substantial compliance with the law and with supervisory standards.Composite 2 – The Enterprise’s dedication to fair lending compliance, risk prevention, and equity and its fair lending oversight program is generally strong and most components are rated “1” or “2,” with no component rated more severely than a “3.” The Enterprise is in significant compliance with the law and with supervisory standards, and engagement with regulators regarding fair lending issues is satisfactory.Composite 3 – The Enterprise’s dedication to fair lending compliance, risk prevention, and equity and its fair lending oversight program needs improvement. Most components are rated “3” or better, with no component rated more severely than a “4.” The Enterprise may be in non-compliance with one or more legal requirements or supervisory standards and its engagement with regulators regarding fair lending issues and/or equity goals needs improvement.Composite 4 – The Enterprise’s dedication to fair lending compliance, risk prevention, and equity and its fair lending oversight program is weak and deficient. The Enterprise is in non-compliance with the law or supervisory standards.Composite 5 – The Enterprise’s dedication to fair lending compliance, risk prevention, and equity and its fair lending oversight program is critically deficient or nonexistent. The Enterprise is in substantial non-compliance with the law or supervisory standards and equity goals and requirements.VI. Component RatingsA. Enterprise Operations and EfficacyWhen rating an Enterprise’s operations and efficacy, FHFA reviews the Enterprise’s business units to determine whether they are adequately contributing to the identification of risk and compliance with fair lending laws. FHFA also reviews any information supporting conclusions regarding Board and management commitment and engagement with respect to fair lending compliance and equity goals. When making this determination, FHFA may assess:<ul class="FHFA-LowerAlpha-List"><li>Do programs and activities have clear, legitimate, and nondiscriminatory business justifications?</li><li>Are clear, written, documented policies and procedures in place whenever appropriate?</li><li>Do business units cooperate with internal fair lending program personnel to ensure that fair lending risk is identified and mitigated prior to the development of MRAs or violations?</li><li>Does the Enterprise ensure that any discretionary decision-making in policies, procedures, programs, and activities is limited to situations where there is a clear, legitimate, nondiscriminatory business justification for such discretion?</li><li>If a disparate impact is foreseeable or identified, does the Enterprise search for less discriminatory alternative means to achieve the business purpose?</li><li>If fair lending risk is foreseeable or identified, does the Enterprise consider altering the program or introducing appropriate controls to mitigate that risk?</li><li>After implementation, are policies, procedures, programs, and activities appropriately analyzed, monitored, and/or reviewed on a regular schedule, with high fair lending risk activities screened more frequently?<a href="#Ftn10" class="super-script">10</a></li><li>Is fair lending compliance reinforced as a priority across the entire Enterprise, including by the Board of Directors, senior management, and business unit officials?</li><li>Do business units analyze, assess, and mitigate fair lending risk in third- and fourth-party interactions?</li><li>Does the Enterprise make meaningful efforts and/or consistent progress to improve existing accept rate gaps and similar disparities in outcomes presented by the Automated Underwriting System and related credit policies?</li><li>Are trends for key disparity metrics like accept rate gaps, pricing disparities, and acquisitions improving?<a href="#Ftn11" class="super-script">11</a></li></ul>Enterprise Operations and Efficacy Ratings<ol class="FHFA-NumList"><li>A rating of 1 indicates: Business units prioritize risk mitigation, adoption of controls and less discriminatory alternatives in evaluating new and revised policies, procedures, programs, and activities. Fair lending is prioritized across the Enterprise and business units collaborate with internal fair lending oversight and legal programs. The Board and management are meaningfully engaged in and proactive about fair lending risk mitigation. Business units regularly and thoroughly review all policies for fair lending risk at intervals commensurate with potential risk according to a comprehensive fair lending risk assessment process. Discretionary decision-making is substantially limited wherever possible, and regularly monitored for development of risk. The Enterprise’s key disparity metrics show positive trends or meaningful efforts to improve metrics.</li><li>A rating of 2 indicates: Business units generally consider risk mitigation, adoption of controls, and less discriminatory alternatives in evaluating new and revised policies, procedures, programs, and activities. Policies are generally reviewed for fair lending risk according to a comprehensive fair lending risk assessment process and business units generally collaborate with the fair lending oversight program to mitigate risks. The Board and management are engaged in fair lending risk mitigation efforts. Most of the Enterprise’s key disparity metrics show positive trends or meaningful efforts to improve and there is strong business justification for negative trends.</li><li>A rating of 3 indicates: Business units sometimes consider risk mitigation, adoption of controls and less discriminatory alternatives in evaluating new and revised policies, procedures, programs, and activities and are at least sometimes ineffective in mitigating risk. Policies are sometimes reviewed for fair lending risk according to a comprehensive fair lending risk assessment process but the schedule of reviews and consistency in reviewing needs improvement. Business units do not always collaborate with the fair lending oversight program. The Board and management’s engagement with fair lending risk mitigation efforts need improvement. The Enterprise’s key disparity metrics show at least some negative trends for which there are usually strong business justification or efforts to improve key metrics need improvement.</li><li>A rating of 4 indicates: At least some business units do not generally consider non-discriminatory alternatives or controls and risk mitigation and frequently do not review new or revised policies, procedures, programs, and activities for fair lending risk prior to adoption. At least some business units’ collaboration with the fair lending oversight program is deficient. The Board and management’s engagement with fair lending risk mitigation efforts is deficient. Many of the Enterprise’s key disparity metrics show negative trends and there is weak justification for some negative trends and/or efforts to improve key metrics are deficient.</li><li>A rating of 5 indicates: One or more business units’ consideration of non-discriminatory alternatives or controls and collaboration with fair lending oversight program is critically deficient or non-existent. Business unit employees do not surface fair lending violations or fair lending concerns even if fully trained on fair lending. The Board and/or management are unengaged on fair lending risk mitigation efforts, their engagement is critically deficient, or they actively obstruct mitigation efforts. Most, if not all, of the Enterprise’s key disparity metrics show negative trends and there is weak or non-existent justification for some negative trends and/or efforts to improve key metrics are minimal or critically deficient. </li></ol>B. Fair Lending Oversight ProgramWhen rating an Enterprise’s fair lending oversight program, FHFA determines whether the Enterprise’s program strives to exceed minimum legal standards, conducts effective monitoring of high-risk activities, and performs robust fair lending analysis. When making this determination, FHFA may assess:<ul class="FHFA-LowerAlpha-List"><li>Is there a fair lending oversight program in place, and if so, how is the program structured?</li><li>Does the program incorporate appropriate controls, monitoring, and training components?</li><li>Are there sufficient resources and personnel dedicated to fair lending oversight to effectively identify fair lending risks and prevent fair lending violations, including a sufficient number of trained and committed fair lending professionals across disciplines and lines of defense?</li><li>Are consumer-impact models, including underwriting, pricing, and automated valuation models and collateral risk tools, regularly monitored for disparities and less discriminatory alternatives?</li><li>Are Enterprise employees throughout the organization sufficiently trained commensurate with their job responsibilities in fair lending compliance to identify potential fair lending risk and raise potential fair lending concerns to the appropriate officials?</li><li>Does the program incorporate both qualitative and quantitative fair lending analysis of policies, procedures, processes, and activities?</li><li>Does the program produce comprehensive fair lending analysis appropriately tailored to the risk presented?</li><li>Does the program conduct heightened, ongoing fair lending monitoring for policies, procedures, programs, and activities that involve discretionary decision-making, including having a process for identifying such policies, procedures, programs, and activities?</li><li>Does the program regularly conduct comprehensive and independent fair lending compliance reviews of business units and business activities presenting heightened fair lending risk?</li><li>Does the program aim to exceed minimum legal standards, meaning, does it seek to prioritize equity and implement fair lending best practices including mitigating fair lending risk and disparities in areas of legal uncertainty?<a href="#Ftn12" class="super-script">12</a> Does it in fact exceed minimum legal standards?</li></ul>Fair Lending Oversight Program Ratings<ol class="FHFA-NumList"><li>A rating of 1 indicates: The work of designated fair lending officials and the function of the fair lending oversight program are strong. Enterprise business units regularly receive comprehensive, updated, relevant, and evidence-based fair lending compliance training. The Enterprise conducts strong ongoing monitoring of all consumer-impact underwriting, pricing, and automated valuation models and policies and other high-risk activities are limited and subject to heightened reviews. Fair lending analysis conducted by the program and fair lending officials is strong. The Enterprise strives to exceed minimum legal standards when setting goals and achieving outcomes, and in fact does exceed them. Compliance management practices are strong, including regular, frequent reviews of activities tailored to the risk presented; effective controls; and quantitative and qualitative monitoring with mechanisms to address issues identified.</li><li>A rating of 2 indicates: The work of designated fair lending officials and the function of the fair lending oversight program are satisfactory. Enterprise business units regularly receive relevant fair lending compliance training. The Enterprise conducts satisfactory ongoing monitoring of key consumer-impact underwriting, pricing, and automated valuation models and collateral risk tools and policies, and other high-risk activities are appropriately limited and generally subject to heightened reviews. Fair lending analysis conducted by the program and fair lending officials is meaningful. The Enterprise strives to exceed minimum legal standards when setting goals and achieving outcomes and does generally exceed them. Compliance management practices are satisfactory, including generally consistent reviews of activities; controls placed on appropriate programs and activities; evidence-based monitoring generally conducted; and issues are generally able to be addressed.</li><li>A rating of 3 indicates: The work of designated fair lending officials and/or the function of the fair lending oversight program need improvement. Not all business units receive regular fair lending compliance training and/or fair lending compliance training may at times be inadequate to address the risk presented. The Enterprise conducts ongoing monitoring of key consumer-impact underwriting, pricing, and automated valuation models and collateral risk tools and policies but it may not be comprehensive, sufficiently frequent, and/or evidence-based. Fair lending analysis conducted by the program and fair lending officials needs improvement. Where a policy or program is identified as presenting high fair lending risk, it may not be subject to heightened or routine review or regularly monitored commensurate with the risk presented. The quality, frequency, and/or mechanisms to address issues raised by fair lending analysis conducted by the program and fair lending officials needs improvement. The Enterprise may seek to exceed minimum legal standards when setting goals and achieving outcomes but does not always do so.</li><li>A rating of 4 indicates: The work of designated fair lending officials and/or the function of the fair lending oversight program is deficient. Business units receive inconsistent or inadequate fair lending training. The Enterprise may fail to conduct regular, ongoing monitoring of consumer-impact underwriting, pricing, and automated valuation models and collateral risk tools and policies, or such ongoing monitoring may be deficient to mitigate the risk presented. The quality of fair lending analysis conducted is deficient. Many high-risk activities allow for discretion without appropriate controls or risk mitigation guardrails. Compliance goals and objectives are designed to only meet minimum legal standards and the Enterprise frequently fails to meet those goals.</li><li>A rating of 5 indicates: The work of designated fair lending officials and/or the function of the fair lending oversight program is critically deficient. Business units do not receive fair lending training, or the training is critically deficient. The Enterprise may fail to conduct ongoing monitoring of consumer-impact underwriting, pricing, and automated valuation models and collateral risk tools and policies entirely, or such ongoing monitoring is minimal. The quality of fair lending analysis is critically deficient. There are no or minimal controls or risk mitigation guardrails for high-risk activities and those that allow for discretion. Compliance goals and objectives are critically deficient, and the Enterprise frequently fails to meet minimum legal standards. </li></ol>C. Supervision Process and Legal ComplianceWhen rating an Enterprise’s supervision process and legal compliance, FHFA determines whether any new adverse findings were made during the rating year and the severity of those findings, as well as an Enterprise’s efforts to resolve outstanding adverse findings. FHFA similarly considers any relevant regulatory or enforcement actions that are initiated, pending, finalized, and undergoing remediation during the rating year. When making this determination, FHFA may assess:<ul class="FHFA-LowerAlpha-List"><li>Were MRAs or violations identified during the rating year?</li><li>If MRA(s) were identified, what is the severity of the MRA(s)?</li><li>If there were violations, were they individual or systemic?</li><li>Were any other regulatory or enforcement actions initiated, pending, finalized, and/or undergoing remediation during the rating year?</li><li>Did the compliance oversight program identify any fair lending risks that the Enterprise failed to correct or sufficiently mitigate?</li><li>If so, what was the duration of the risky activity or violation?</li><li>If a violation exists, is the evidence overt, comparative, or related to disparate impact?</li><li>If comparative or overt evidence, is it due to unnecessarily discretion-oriented policies or a lack of appropriate oversight?</li><li>Is the Enterprise working diligently and efficiently to resolve outstanding adverse findings, including by submitting remediation activities in a complete and timely manner?<a href="/SupervisionRegulation/AdvisoryBulletins/Pages/Ftn13" class="super-script">13</a></li><li>Is the Enterprise cooperative and candid throughout oversight activities, including when sharing information?</li></ul>Supervision Process and Legal Compliance Ratings<ol class="FHFA-NumList"><li>A rating of 1 indicates: No violations of fair lending law are identified in the rating year and any minimal MRAs are Deficiencies. If applicable, the Enterprise works diligently and efficiently to resolve outstanding MRAs, violations, and other adverse findings including by proposing and executing comprehensive remediation plans and submitting complete remediation activities in a timely manner. The Enterprise is cooperative and candid about new or outstanding issues when engaging with regulators in oversight and examination activities.</li><li>A rating of 2 indicates: Most, if not all, fair lending risks identified and managed so that adverse findings, including violations of fair lending law or MRAs do not develop; those that do occur are isolated. If applicable, the Enterprise’s efforts to resolve outstanding MRAs, violations, and other adverse findings are significant including by submitting complete remediation activities in a timely manner. The Enterprise is generally cooperative and candid about new or outstanding issues when engaging with regulators in oversight and examination activities.</li><li>A rating of 3 indicates: Violations of fair lending law and/or MRAs are identified during the rating year. If applicable, the Enterprise’s efforts to resolve outstanding MRAs, violations, and other adverse findings need improvement including by submitting complete remediation activities in a timely manner. The Enterprise is sometimes cooperative and candid about new or outstanding issues when engaging with regulators in oversight and examination activities.</li><li>A rating of 4 indicates: Violations of fair lending law and/or MRAs are identified during the rating year. Adverse findings may include widespread individual violations of fair lending law or systemic violations. If applicable, the Enterprise’s efforts to resolve outstanding MRAs, violations, and other adverse findings are deficient. The Enterprise generally lacks cooperation and candor when engaging with regulators in oversight about new or outstanding issues and examination activities.</li><li>A rating of 5 indicates: Violations of fair lending law and/or MRAs are identified during the rating year. Adverse findings may include widespread individual violations of fair lending law or systemic violations and MRAs are generally serious. If applicable, the Enterprise’s efforts to resolve outstanding MRAs, violations, and other adverse findings are critically deficient or nonexistent. The Enterprise is dishonest and/or uncooperative when engaging with regulators in oversight about new or outstanding issues and examination activities. </li></ol>D. Equitable Housing FinanceWhen rating an Enterprise on equitable housing finance, FHFA evaluates an Enterprise’s planning and execution of its Equitable Housing Finance Plan (“EHFP”). FHFA also considers objective metrics and analytics as part of its evaluation. When making this determination, FHFA may assess:<ul class="FHFA-LowerAlpha-List"><li>Is equity prioritized across the Enterprise?</li><li>Does the Enterprise set ambitious and impactful goals as part of the EHFP?</li><li>Does the Enterprise pursue changes to its EHFP midcycle to further improve equity in accordance with the framework for EHFP updates?</li><li>Does the Enterprise build upon current and prior EHFPs' goals and objectives in pursuing equity?</li><li>Does the Enterprise work diligently towards the goals it sets in the current EHFP?</li><li>Does the Enterprise in fact meet goals set in its EHFP, and if not, is there a strong justification for why the goal was not met?</li><li>Are EHFP objectives and actions innovative, designed to catalyze meaningful impact, and do they logically relate to identified barriers for underserved communities?</li><li>Are EHFP objectives and actions clearly linked to specific measurable goals?</li><li>Does the EHFP reflect engagement with and responsiveness to a wide variety of individual and community stakeholders, including stakeholders with whom the Enterprise does not have a prior relationship?</li><li>Does the Enterprise use innovative community-based techniques when engaging with a diverse range of individual and community stakeholders?</li></ul> Equitable Housing Finance Ratings<ol class="FHFA-NumList"><li>A rating of 1 indicates: Equity is prioritized across the Enterprise, including by building upon goals and objectives specified in both the current and prior EHFPs. The Enterprise sets ambitious, impactful goals in its EHFP and pursues changes to its stated goals and objectives mid-cycle to further improve equity. The Enterprise works diligently to achieve the goals set out in the EHFP and has strong justifications for goals unmet. The EHFP reflects strong and respectful engagement with a diverse range of individual and community stakeholders using innovative community-based techniques and the EHFP is responsive to outside feedback. EHFP objectives and actions are innovative, designed to catalyze meaningful impact, and clearly related to identified barriers.</li><li>A rating of 2 indicates: The Enterprise pursues equity through its current EHFP while continuing to build upon goals and objectives specified in prior EHFPs. The Enterprise sets difficult, meaningful goals in its EHFP and sometimes pursues changes to its stated goals and objectives mid-cycle to further improve equity. The Enterprise makes a good faith effort to achieve the goals set out in the EHFP and has strong justifications for most goals unmet. The EHFP reflects extensive engagement with a diverse range of individual and community stakeholders and the EHFP is generally responsive to outside feedback. Nearly all EHFP objectives and actions are meaningful and logically related to identified barriers for underserved communities and linked to specific measurable goals.</li><li>A rating of 3 indicates: The Enterprise’s commitment to equity is limited to its current EHFP. The Enterprise sets moderately difficult and/or impactful goals in its EHFP and does not generally consider changes to its stated goals and objectives mid-cycle to further improve equity. The Enterprise’s efforts to achieve the goals set out in the EHFP need improvement and/or the Enterprise has weak justifications for at least some goals unmet. The EHFP reflects engagement with a range of individual and community stakeholders and the EHFP includes evidence of contribution. Most EHFP objectives and actions logically relate to identified barriers for underserved communities and are sometimes linked to specific measurable goals.</li><li>A rating of 4 indicates: The Enterprise’s commitment to equity is deficient. The Enterprise sets goals that are unambitious or have minor impact in its EHFP and rarely considers changes to its stated goals and objectives mid-cycle to further improve equity. The Enterprise’s efforts to achieve the goals set out in the EHFP are deficient and/or the Enterprise generally has weak justifications for goals unmet. The EHFP reflects some engagement with stakeholders but not from a diverse range of stakeholders and feedback provided is minimally integrated into the EHFP. Few EHFP objectives and actions logically relate to identified barriers for underserved communities and are generally not linked to specific measurable goals.</li><li>A rating of 5 indicates: The Enterprise has no articulated commitment to equity or its commitment is critically deficient. The Enterprise sets goals that are easy to achieve or have minimal impact in its EHFP and does not consider changes to its stated goals and objectives mid-cycle to further improve equity. The Enterprise’s efforts to achieve the goals set out in the EHFP are critically deficient and/or the Enterprise generally has weak or nonexistent justifications for goals unmet. The Enterprise generally only engages with stakeholders with whom it has a pre-existing relationship and/or is unresponsive to feedback. EHFP objectives and actions do not logically relate to identified barriers for underserved communities and are mostly not linked to specific measurable goals.</li></ol> <hr /> <a name="Ftn1" class="super-script">1</a> 12 U.S.C. 4511(b)(2), 42 U.S.C. 3608(d). <a name="Ftn2" class="super-script">2</a> 12 U.S.C. 4513(b)(v). <a name="Ftn3" class="super-script">3 </a><a href="/SupervisionRegulation/Rules/Pages/Policy-Statement-on-Fair-Lending.aspx">https://www.fhfa.gov/SupervisionRegulation/Rules/Pages/Policy-Statement-on-Fair-Lending.aspx</a> <a name="Ftn4" class="super-script">4 </a><a href="/SupervisionRegulation/AdvisoryBulletins/AdvisoryBulletinDocuments/AB%202021-04%20Enterprise%20Fair%20Lending%20and%20Fair%20Housing%20Compliance.pdf">https://www.fhfa.gov/SupervisionRegulation/AdvisoryBulletins/AdvisoryBulletinDocuments/AB%202021-04%20Enterprise%20Fair%20Lending%20and%20Fair%20Housing%20Compliance.pdf</a> <a name="Ftn5" class="super-script">5</a> See <a href="/SupervisionRegulation/AdvisoryBulletins/AdvisoryBulletinDocuments/20130531_AB_2013-03_FHFA-Enforcement-Policy_508%20(2).pdf">https://www.fhfa.gov/SupervisionRegulation/AdvisoryBulletins/AdvisoryBulletinDocuments/20130531_AB_2013-03_FHFA-Enforcement-Policy_508%20(2).pdf</a> <a name="Ftn6" class="super-script">6</a> Order No. 2021-OR-FHLMC-2; Order No. 2021-OR-FNMA-2. <a name="Ftn7" class="super-script">7</a> “Legal Compliance” includes findings related to targeted examinations and the supervision process as well as all other relevant regulatory or enforcement actions. <a name="Ftn8" class="super-script">8</a> A “2” rating for Supervision Process and Legal Compliance is possible with MRA – Deficiency and individual violation of law findings during the calendar year. <a name="Ftn9" class="super-script">9</a> All “3” or higher ratings for Supervision Process and Legal Compliance include at least one adverse finding during the calendar year. <a name="Ftn10" class="super-script">10</a> All policies should be reviewed periodically, but not all policies must be reviewed according to the same timeframes. For example, policies that pose the greatest fair lending risk should be reviewed the most frequently, at a minimum, as they change or as enough data accumulates to reconsider effectiveness. Policies that do not pose the greatest fair lending risk may be reviewed less frequently than the first group, at a minimum, when changes to the policy are implemented to be sure that there is no new fair lending concern. Policies that do not pose significant fair lending risk may be reviewed the least frequently, at a minimum, according to a risk-focused program for regular policy review. <a name="Ftn11" class="super-script">11</a> FHFA will not penalize the Enterprise for market factors outside the Enterprise’s control. FHFA will consider the Enterprise’s direct or indirect actions that contribute to disparities even when market factors are also found to contribute to disparities. <a name="Ftn12" class="super-script">12</a> Minimum legal standards are defined as not violating clearly established law. The Enterprise should strive to exceed minimum legal standards by prioritizing equity and fair lending best practices because simply meeting legal standards in fair lending presents litigation, management, operational, reputational, and regulatory risks to the Enterprise, especially given the sometimes-uncertain application of standards and defenses under fair lending law. <a name="Ftn13" class="super-script">13</a> Outstanding MRAs or violations from prior rating years would not be considered a sole basis for considering a negative rating under this assessment. Inadequate or untimely remediation deliverables, lack of cooperation in remediation, or other failures during the rating year, however, will be considered, as will responsible business conduct, fulsome corrective action, and other successes in remediation activities.<div style="padding-top:12px !important;"><div><table width="100%" class="ms-rteTable-default" cellspacing="0" style="font-family:"source sans pro", sans-serif;font-size:14px;font-style:normal;font-weight:400;"><tbody><tr><td class="ms-rteTable-default" style="width:776px;">FHFA has statutory responsibility to ensure that the regulated entities carry out their missions consistently with the provisions and purposes of FHFA's statute and the regulated entities' authorizing statutes and applicable law. Advisory Bulletins describe supervisory expectations in particular areas and are used in FHFA examinations of the regulated entities. For comments or questions pertaining to this Advisory Bulletin, contact James Wylie at <a href="mailto:James.Wylie@fhfa.gov">James.Wylie@fhfa.gov</a> or by phone at 1-202-649-3209. </td></tr></tbody></table> </div></div><div class="ms-rtestate-read ms-rte-wpbox"><div class="ms-rtestate-notify ms-rtestate-read 38e820da-7fa4-43ad-a57b-337845bba1a0" id="div_38e820da-7fa4-43ad-a57b-337845bba1a0" unselectable="on"></div><div id="vid_38e820da-7fa4-43ad-a57b-337845bba1a0" unselectable="on" style="display:none;"></div></div>

9/27/2023 6:00:54 PM

Home / Supervision & Regulation / Advisory Bulletins / AB 2023-05: Enterprise Fair Lending and Fair Housing Rating System Advisory Bulletin The rating system is a framework

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FHFA House Price Index Up 0.8 Percent in July; Up 4.6 Percent from Last Year

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Washington, D.C. – U.S. house prices rose in July, up 0.8 percent from June, according to the Federal Housing Finance Agency (FHFA) seasonally adjusted monthly House Price Index (HPI®). House prices rose 4.6 percent from July 2022 to July 2023. The previously reported 0.3 percent price increase in June was revised upward to a 0.4 percent increase.For the nine census divisions, seasonally adjusted monthly price changes from June 2023 to July 2023 ranged from +0.1 percent in the East South Central division to +1.4 percent in the Middle Atlantic and South Atlantic divisions. The 12-month changes ranged from +0.3 percent in the Mountain division to +8.1 percent in the New England division.“U.S. house prices continued to appreciate in July, consistent with the trend observed over the last several months.” said Dr. Nataliya Polkovnichenko, Supervisory Economist in FHFA’s Division of Research and Statistics. “Regionally, all nine census divisions posted positive price appreciation over the last 12 months, although the Pacific and Mountain divisions experienced only modest growth.”The FHFA HPI is a comprehensive collection of publicly available house price indexes that measure changes in single-family home values based on data that extend back to the mid-1970s from all 50 states and over 400 American cities. It incorporates tens of millions of home sales and offers insights about house price changes at the national, census division, state, metro area, county, ZIP code, and census tract levels. FHFA uses a fully transparent methodology based upon a weighted, repeat-sales statistical technique to analyze house price transaction data. FHFA releases HPI data and reports quarterly and monthly. The flagship FHFA HPI uses seasonally adjusted, purchase-only data from Fannie Mae and Freddie Mac. Additional indexes use other data including refinances, Federal Housing Administration mortgages, and real property records. All the indexes, including their historic values, and information about future HPI release dates, are available on FHFA’s website:<a href="/DataTools/Downloads/Pages/House-Price-Index.aspx"> https://www.fhfa.gov/HPI</a>. FHFA will release its next HPI report on October 31, 2023, including data through August.

9/26/2023 1:00:20 PM

Home / Media / FHFA House Price Index Up 0.8 Percent in July; Up 4.6 Percent from Last Year News Release

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Foreclosure Prevention, Refinance, and FPM Report - 2Q2023

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<h2 style="border-color:currentcolor;font-family:lato, sans-serif;font-style:normal;padding-top:8px !important;">2Q23 Highlights — Foreclosure Prevention </h2> The Enterprises' Foreclosure Prevention Actions:<ul><li style="line-height:1.4 !important;">The Enterprises completed 47,370 foreclosure prevention actions in the second quarter of 2023, bringing the total to 6,818,471 since the start of conservatorships in September 2008. Of these actions, 6,113,843 have helped troubled homeowners stay in their homes, including 2,655,071 permanent loan modifications.</li><li style="line-height:1.4 !important;">Initiated forbearance plans decreased to 27,738 in the second quarter from 34,749 in the first quarter of 2023. The total number of loans in forbearance at the end of the quarter was 54,109, representing approximately 0.17 percent of the total loans serviced, and 11 percent of the total delinquent loans.</li><li style="line-height:1.4 !important;">Nineteen percent of modifications in the second quarter were modifications with principal forbearance. Modifications that include extend-term only accounted for 77 percent of all loan modifications during the quarter.</li><li style="line-height:1.4 !important;">There were 193 completed short sales and deeds-in-lieu during the quarter, bringing the total to 704,628 since the conservatorships began in September 2008.</li></ul> The Enterprises' Mortgage Performance:<ul><li style="line-height:1.4 !important;">The 60+ days delinquency rate decreased from 0.75 percent at the end of the first quarter to 0.72 percent at the end of the second quarter of 2023, the lowest level since the pandemic.</li><li style="line-height:1.4 !important;">The Enterprises' serious (90 days or more) delinquency rate fell to 0.55 percent at the end of the second quarter. This compared with 3.71 percent for Federal Housing Administration (FHA) loans, 2.15 percent for Veterans Affairs (VA) loans, and 1.61 percent for all loans (industry average).</li></ul> The Enterprises' Foreclosures:<ul><li style="line-height:1.4 !important;">Foreclosure starts decreased 10 percent to 17,919 while third-party and foreclosure sales increased 2 percent to 3,783 in the second quarter.</li></ul><blockquote style="border-color:currentcolor;font-family:"source sans pro", sans-serif;font-size:14px;font-style:normal;font-weight:400;margin-left:40px;"> For an interactive online map that provides state data, click on the following link:  <a href="/DataTools/Tools/Pages/Borrower-Assistance-Map.aspx" style="border-color:currentcolor;font-family:"source sans pro", sans-serif;">Fannie Mae and Freddie Mac State Borrower Assistance Map</a> </blockquote> <h2 style="border-color:currentcolor;font-family:lato, sans-serif;font-style:normal;padding-bottom:8px !important;">2Q23 Highlights — Refinance Activities </h2><ul><li style="line-height:1.4 !important;">Although muted for the overall quarter, total refinance volume increased in June 2023 as mortgage rates increased in May but remained below the October peak of 6.90 percent. Mortgage rates rose in June: the average interest rate on a 30-year fixed rate mortgage increased to 6.71 percent from a May level of 6.43 percent.</li><li style="line-height:1.4 !important;padding-bottom:0px !important;margin-bottom:0px !important;">The percentage of borrowers refinancing into shorter term 15-year mortgages decreased to 11 percent in June. The average interest rate savings of a 15-year mortgage over a 30-year mortgage has been higher in 2021 through 2023 compared to previous years. </li></ul> <a href="/Media/PublicAffairs/Pages/FHFA-Releases-2nd-Quarter-2023-Foreclosure-Prevention-and-Refinance-Report.aspx">Related News Release</a>

9/21/2023 4:06:19 PM

Equal Employment Opportunity / No FEAR Act Home / About FHFA / Reports / Foreclosure Prevention, Refinance, and FPM Report - 2Q2023 Of these actions, 6,113,843 have helped

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FHFA Releases 2nd Quarter 2023 Foreclosure Prevention and Refinance Report

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Washington, D.C. – The Federal Housing Finance Agency (FHFA) today released its second quarter 2023 Foreclosure Prevention and Refinance Report. The report shows that Fannie Mae and Freddie Mac (the Enterprises) completed 47,370 foreclosure prevention actions during the quarter, raising the total number of homeowners who have been helped to 6,818,471 since the start of conservatorships in September 2008. The report also shows that 33 percent of loan modifications completed in the first quarter reduced borrowers’ monthly payments by more than 20 percent. The number of refinances increased from 78,445 in the first quarter of 2023 to 93,952 in the second quarter of 2023.The Enterprises’ serious delinquency rate declined slightly from 0.60 percent to 0.55 percent at the end of the first quarter. This compares with 3.71 percent for Federal Housing Administration (FHA) loans, 2.15 percent for Veterans Affairs (VA) loans, and 1.61 percent for all loans (industry average).Other highlights from the report include:<ul><li style="line-height:1.4 !important;"> Forbearance: At the end of the quarter, there were 54,109 loans in forbearance, representing approximately 0.17 percent of the Enterprises’ single-family conventional book of business, down from 65,109 or 0.21 percent at the end of the first quarter of 2023. Approximately 2 percent of these loans have been on a forbearance plan for more than 12 months.</li><li style="line-height:1.4 !important;"> Mortgage Performance: The 60+ day delinquency rate decreased slightly from 0.75 percent at the end of the first quarter of 2023 to 0.72 percent at the end of the second quarter of 2023. </li><li style="line-height:1.4 !important;"> Foreclosures: The number of foreclosure starts decreased 10 percent to 17,919 while third-party and foreclosure sales rose 2 percent to 3,783 in the second quarter.</li><li style="line-height:1.4 !important;"> Real Estate Owned (REO) Activity & Inventory: The Enterprises’ REO inventory decreased 1.2 percent from 11,190 in the first quarter of 2023 to 11,061 in the second quarter of 2023, as property dispositions outpaced acquisitions. The total number of property acquisitions decreased slightly to 1,639, while dispositions rose 16 percent to 1,767 during the quarter. </li></ul> FHFA’s quarterly foreclosure prevention and refinance reports include data on the Enterprises’ mortgage performance, delinquencies, and active forbearance plans, as well as forfeiture actions and refinances by state. The data included in these reports are also available on FHFA's website as an interactive <a href="/DataTools/Tools/Pages/Borrower-Assistance-Map.aspx">Borrower Assistance Map</a>.

9/21/2023 4:07:23 PM

Home / Media / FHFA Releases 2nd Quarter 2023 Foreclosure Prevention and Refinance Report News Release

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FHFA House Price Index Frequently Asked Questions

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<table width="75%" class="ms-rteTable-4" bgcolor="#f1f1f1" cellspacing="0"><tbody><tr class="ms-rteTableEvenRow-4"><td class="ms-rteTableEvenCol-4" style="width:100%;"><h2 style="text-align:center;">Table of Contents </h2> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest1">1. What is the value of the FHFA House Price Index (HPI)?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest2">2. What transactions are covered in the FHFA HPI?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest3">3. How is the FHFA HPI computed?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest4">4. How often is the FHFA HPI published?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest5">5. How is the FHFA HPI updated?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest6">6. How do I interpret “four-quarter,” “one-year,” “annual,” and “one-quarter” price changes?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest7">7. How are Metropolitan Statistical Areas (MSAs) and Metropolitan Divisions defined and what criteria are used to determine whether an MSA index is published?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest8">8. Does FHFA use the September 2018 revised Metropolitan Statistical Areas (MSAs) and Divisions?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest9">9. What geographic areas are covered by the FHFA HPI? </a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest10">10. What is the methodology used in computing the FHFA HPI?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest11">11. How does the FHFA HPI differ from the Case-Shiller® Index?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest12">12. How does the FHFA House Price Index differ from the Census Bureau’s Constant Quality House Price Index (CQHPI)?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest13">13. Where can I access MSA index numbers and standard errors for each year and quarter?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest14">14. What role do Fannie Mae and Freddie Mac play in the FHFA HPI?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest15">15. Why is the FHFA HPI based on Fannie Mae or Freddie Mac mortgages?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest16">16. When are the indexes normalized in the downloadable ASCII data?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest17">17. Is the FHFA HPI adjusted for inflation?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest18">18. How do I use the manipulatable data (in TXT files) on the Web site to calculate appreciation rates?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest19">19. How is the FHFA HPI constructed for MSAs?...</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest20">20. How can the FHFA HPI for an MSA be linked to ZIP codes within that MSA?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest21">21. How and why is the FHFA HPI revised each quarter?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest22">22. What transaction dates are used in estimating the index?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest23">23. Are foreclosure sales included in the FHFA HPI?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest24">24. How are the monthly FHFA House Price Indexes calculated?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest25">25. How are the Census Division and U.S. FHFA HPIs formed?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest26">26. What weights are used in forming the Census Division and U.S. FHFA HPIs?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest27">27. For those FHFA HPIs that are seasonally-adjusted, what approach is used in performing the seasonal adjustment?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest28">28. Do you have an FHFA HPI that includes loans which are not purchased or securitized by Fannie Mae or Freddie Mac?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest29">29. Is there an FHFA HPI that corrects for distressed sales?</a> <a href="/Media/PublicAffairs/Pages/House-Price-Index-Frequently-Asked-Questions.aspx#quest29">30. Can I use the data in the FHFA HPI and, if so, how should the index be cited?</a></td></tr></tbody></table>  <ol><li> <a name="quest1">What is the value of the FHFA House Price Index (HPI)?</a> The FHFA House Price Index (HPI) is a broad measure of the movement of single-family house prices.  The FHFA HPIs are built on tens of millions of home sales and offer insights about house price fluctuations at the national, census division, state, metro area, county, ZIP code, and census tract levels.  The FHFA HPIs use a fully transparent methodology based upon a weighted, repeat-sales statistical technique to analyze transaction data from Fannie Mae and Freddie Mac.  The FHFA HPIs also provide 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. Although FHFA constructs several indexes for different geographies and periods, the entire suite of HPIs is often referenced, in a general sense, as the "FHFA HPI".  The production of the FHFA HPI is statutorily mandated (12 U.S.C. 4542).  The Office of the Federal Housing Enterprise Oversight (OFHEO), one of FHFA's predecessor agencies, began publishing the HPI in the fourth quarter of 1995.  FHFA releases data and reports on a quarterly and monthly basis. The flagship FHFA HPI uses seasonally adjusted, purchase-only data, unless otherwise noted.  Additional indexes are based on other data including refinances, FHA mortgages, and real property records.  All the indexes can be downloaded from the FHFA website.  </li><li> <a name="quest2">What transactions are covered in the FHFA HPI?</a> The FHFA HPI 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 “ceiling” limit for one-unit properties in the contiguous U.S. fell to $625,500. For 2019-acquired loans, the ceiling limit rose to $726,525 for one-unit homes in the contiguous U.S. 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 FHFA 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.  </li><li> <a name="quest3">How is the FHFA HPI computed?</a> The FHFA 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 FHFA HPI is updated 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 period and for each subsequent period since 1975.  FHFA house price index reports are released on a monthly basis for the United States and regions and on a quarterly basis for a variety of other geographies.  Most statistics in the reports reference price changes computed by FHFA's standard "purchase-only" HPI.  In some cases, however, the reported statistics reference alternative price measures.  FHFA publishes - and makes <a href="/hpi">available for download</a> - several additional house price indexes beyond the standard "purchase-only" series.  Although they use the same general methodology, the three alternatives rely on slightly different datasets as follows:         <ul style="list-style-type:disc;"><li>"All-Transactions" house price index.  Appraisal values from refinance mortgages are added to the purchase-only data sample.  </li><li>"Expanded-Data" house price index.  Sales price information sourced from county recorder offices and from FHA-backed mortgages are added to the purchase-only data sample.  This index is used to annually adjust the maximum conforming loan limits, which dictate the dollar amount of loans that can be acquired by Fannie Mae and Freddie Mac.  </li><li>"Distress-Free" house price index.  Sales of bank-owned properties and short sales are removed from the purchase-only dataset prior to estimation of the index.  </li></ul> Data constraints preclude the production of all types of indexes for every geographic area, but multiple index types are generally available.  For individual states, for instance three types of indexes are available. The various indexes tend to correlate closely over the long-term, but short-term differences can be significant.    </li><li> <a name="quest4">How often is the FHFA HPI published?</a> 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 U.S. FHFA continues publishing and updating these indexes each month.  </li><li> <a name="quest5">How is the FHFA HPI updated?</a> 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 FHFA HPI.  </li><li> <a name="quest6">How do I interpret "four-quarter," "one-year," "annual," and "one-quarter" price changes?</a> The "four-quarter" percentage change in home values is simply the price change relative to the same quarter one year earlier. For example, if the FHFA HPI release is for the second quarter, then the "four-quarter" 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). "One-year" and "annual" appreciation are used synonymously with "four-quarter" appreciation in the full quarterly FHFA HPI releases. Similar to the "four-quarter" price changes, the "one-quarter" 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 "four-quarter" and "one-quarter" 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.  </li><li> <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> 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: 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-Pompano Beach, FL; New York-Newark-Jersey City, NY-NJ-PA; Philadelphia-Camden-Wilmington, PA-NJ-DE-MD; San Francisco-Oakland-Berkeley, 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.  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. Blanks are displayed where this criterion is not met.   </li><li> <a name="quest8">Does FHFA use the September 2018 revised Metropolitan Statistical Areas (MSAs) and Divisions?</a> Yes, FHFA uses the revised Metropolitan Statistical Areas (MSAs) and Divisions as defined by the Office of Management and Budget (OMB) in September 2018. The delineations became effective with the 2018Q4 FHFA HPI release in February 2019. 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: <a href="https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf">https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf</a> Previously, FHFA produced metropolitan area indexes based on the February 2013 delineations (and as revised in July 2015, August 2017, and April 2018) and, before that release, the December 2009 delineations provided by the OMB. The 2018Q4 FHFA HPI report has a Technical Note which explains the transition to the newest definitions. The accompanying tables are posted on the FHFA HPI Downloadable Data page under the “Additional Data” section then the “Utility Files and Background Information for Index Construction” subsection. Information for the prior delineations are also posted on that page. </li><li> <a name="quest9">What geographic areas are covered by the FHFA HPI?</a> The FHFA 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 384 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, 404 indexes are released: 373 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. 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, 231 MSAs and Metropolitan Divisions satisfy this criterion. For the remaining areas, MSAs and Divisions, one-year and five-year rates of change are provided.   </li><li> <a name="quest10">What is the methodology used in computing the FHFA HPI?</a> The methodology is a modified version of the Case-Shiller® geometric weighted repeat- sales procedure. A detailed description of the FHFA HPI methodology is available upon request at (202) 649-3195 or online at: <a href="http://go.usa.gov/8BBT"> http://go.usa.gov/8BBT</a>.  </li><li> <a name="quest11">How does the FHFA HPI differ from the Case-Shiller® Index?</a> Although both indexes employ the same fundamental repeat-valuations approach, there are a number of data and methodology differences. Among the dissimilarities:</li><ol><li>The Case-Shiller Indexes® only use purchase prices in index calibration, while the all-transactions FHFA 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 Case-Shiller Indexes use information obtained from county assessor and recorder offices.</li><li>The 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 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. For details on these and other differences, consult the FHFA HPI Technical Description (see <a href="http://go.usa.gov/8BBT"> http://go.usa.gov/8BBT</a>) and the Case-Shiller methodology materials (see <a href="http://us.spindices.com/index-family/real-estate/sp-corelogic-case-shiller"> https://us.spindices.com/index-family/real-estate/sp-corelogic-case-shiller</a>). A paper that analyzes in detail the methodological and data differences between the two price metrics can be accessed at <a href="http://go.usa.gov/8BBJ"> http://go.usa.gov/8BBJ</a>.  </li></ol><li> <a name="quest12">How does the FHFA HPI differ from the Census Bureau's Constant Quality House Price Index (CQHPI)?</a> The FHFA HPI 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. The quarterly purchase-only FHFA HPI is based on more than nine million repeat transaction pairs over 44 years. This gives a more accurate reflection of current property values than the Commerce Department index. The FHFA HPI also can be updated efficiently using data collected by Fannie Mae and Freddie Mac in the normal course of their business activity.  </li><li> <a name="quest13">Where can I access MSA index numbers and standard errors for each year and quarter?</a> 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://go.usa.gov/8kXz"> http://go.usa.gov/8kXz</a>.  </li><li> <a name="quest14">What role do Fannie Mae and Freddie Mac play in the FHFA HPI?</a> FHFA uses data supplied by Fannie Mae and Freddie Mac in compiling the FHFA 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.  </li><li> <a name="quest15">Why is the FHFA HPI based on Fannie Mae or Freddie Mac mortgages?</a> 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.  </li><li> <a name="quest16">When are the indexes normalized in the downloadable ASCII data?</a> The ASCII data for metropolitan areas are normalized to the first quarter of 1995. That is, the FHFA 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.  </li><li> <a name="quest17">Is the FHFA HPI adjusted for inflation?</a> No, the FHFA HPI is not adjusted for inflation. For inflation adjustments, one can use the Consumer Price Index "All Items Less Shelter" 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: <a href="http://data.bls.gov/cgi-bin/srgate"> http://data.bls.gov/cgi-bin/srgate</a>.  </li><li> <a name="quest18">How do I use the manipulatable data (in TXT files) on the website to calculate appreciation rates?</a> 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. To calculate appreciation between any 2 quarters, use the formula: (QUARTER 2 INDEX NUMBER - QUARTER 1 INDEX NUMBER) / QUARTER 1 INDEX NUMBER You can generate annual numbers by taking the four quarter average for each year or monthly numbers by finding the difference between two months.  </li><li> <a name="quest19">How is the FHFA HPI constructed for MSAs? The website says that FHFA uses the 2018 definitions based on the American Community Survey and Census Bureau population estimates for 2015 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> The FHFA 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.  </li><li> <a name="quest20">How can the FHFA House Price Index for an MSA be linked to ZIP codes within that MSA?</a> Although FHFA has published experimental house price indexes for some 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 area.   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: <a href="http://www.huduser.org/portal/datasets/usps_crosswalk.html">http://www.huduser.org/portal/datasets/usps_crosswalk.html</a>.  </li><li> <a name="quest21">How and why is the FHFA HPI revised each quarter?</a> Historical estimates of the FHFA HPI revise for three primary reasons:</li><ol><li>The FHFA 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 "repeats" in the form of a sale or refinance, average appreciation since the prior sale/refinance period is influenced. </li><li>Fannie Mae and Freddie Mac (the Enterprises) purchase seasoned loans, providing new information about prior quarters. </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. In connection with the release of the 2012Q2 FHFA HPI results, a special revision was made to two historical FHFA 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 FHFA HPI releases for 2012Q2 and later periods reflect the change. With the release of the 2019Q1 FHFA HPI results, modeling data became available for Vermont-1976Q1. The FHFA HPI releases for 2019Q1 and later periods reflect the change.  </li></ol><li> <a name="quest22">What transaction dates are used in estimating the index?</a> For model estimation, the loan origination date is used as the relevant transaction date.  </li><li> <a name="quest23">Are foreclosure sales included in the FHFA HPI?</a> 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.  </li><li> <a name="quest24">How are the monthly FHFA HPIs calculated?</a> 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.  </li><li> <a name="quest25">How are the Census Division and U.S. FHFA HPIs formed?</a> As discussed in the Highlights article accompanying the 2011Q1 FHFA HPI Release (available for download at <a href="http://go.usa.gov/8k5d">http://go.usa.gov/8k5d</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 "built-up" from quarterly growth rate estimates (monthly growth rates for the monthly index) for the component states. 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. The national FHFA 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.  </li><li> <a name="quest26">What weights are used in forming the Census Division and U.S. FHFA HPIs?</a> 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.  For years since 2000, state shares are calculated as follows: <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 2006-2017, the estimates are from the annual ACS.</li><li>Until 2018 ACS estimates become available, shares from the 2017 ACS are used for subsequent periods. </li></ul> </li><li> <a name="quest27">For those HPIs that are seasonally adjusted, what approach is used in performing the seasonal adjustment?</a> 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.   To obtain more information on the FHFA HPI contact us via the Data and Research Contact page at <a href="http://go.usa.gov/8kN3">http://go.usa.gov/8kN3</a>.  </li><li> <a name="quest28">Do you have an FHFA HPI that includes loans which are not purchased or securitized by Fannie Mae or Freddie Mac?</a> Yes, the expanded-data index includes purchase-money mortgages from other sources. The approach to estimating the expanded-data HPI is detailed in the Highlights article published with the 2011Q2 FHFA HPI at <a href="http://go.usa.gov/8kNm"> http://go.usa.gov/8kNm</a>. In general, the methodology is the same as is used in the construction of the standard purchase-only FHFA 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: (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.  </li><li> <a name="quest29">Is there an FHFA HPI that corrects for distressed sales?</a> FHFA released a "distress-free" HPI in 2012Q2 along with the Highlights article at <a href="http://go.usa.gov/8kNJ"> http://go.usa.gov/8kNJ</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://go.usa.gov/8kRB"> http://go.usa.gov/8kRB</a>.  </li><li> <a name="quest30">Can I use the data in the FHFA HPI and, if so, how should the index be cited?</a>  Yes. The FHFA HPI data are freely available for download at <a href="/hpi">https://www.fhfa.gov/hpi</a>. To cite the index in an article or story, we suggest at least an attribution like "Source: FHFA HPI" or "Source: Federal Housing Finance Agency House Price Index (HPI)". Additional clarifications could be helpful to denote the type of index (purchase-only, all-transactions, expanded-data) and whether the data are adjusted for seasonality or inflation. A more detailed citation might be "Source: FHFA HPI (purchase-only, seasonally-adjusted, nominal)". <a href="/Media/PublicAffairs/PublicAffairsDocuments/FHFA-HPI-FAQs_11262019.pdf"> FHFA HPI FAQs (PDF) as of 11/26/2019</a> </li></ol>

8/29/2023 1:00:40 PM

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