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Stakeholders urge FHFA to refine 'first‑generation' buyer definition and allow HFA flexibility
Summary
Housing agencies and advocates told FHFA that the Enterprises' draft 'first‑generation home buyer' definition is too broad for restorative goals and urged that HFAs be permitted to use state definitions and that definitions include foreclosure history exceptions.
State housing agencies, fair‑housing advocates and nonprofit housing groups urged FHFA to refine the Enterprises' draft definition of a "first‑generation home buyer" so it better targets those who have been historically excluded from home‑ownership.
Heidi Weltz of Minnesota Housing said the Enterprise definition appears to mirror mortgage‑revenue bond language and argued it is "too broad" to deliver restorative justice. Multiple HFAs and policy groups asked that HFAs be explicitly allowed to use state or local definitions for targeted programs and that the Enterprises clarify that GSE use of a single definition should not render existing HFA programs ineligible for purchase or securitization.
Several commenters proposed specific clarifications: allow households whose parents lost a home to foreclosure to qualify, permit one spouse or domestic partner to meet a 'no ownership' requirement for couples, and treat limited legacy ownership (an inherited fractional interest) differently so it does not disqualify otherwise eligible borrowers.
Quote: "We ask FHFA and the GSEs to clarify and work to make it understood widely that the definition is not binding on HFA and other state and local programs," an HFA representative said.
Why it matters: The definition will affect whether loans made under state HFA programs are eligible for purchase by Fannie Mae or Freddie Mac and therefore affects liquidity and pricing for targeted first‑generation programs. Stakeholders requested explicit FHFA guidance that preserves HFA flexibility while ensuring GSE purchases do not inadvertently block successful state programs.
Next steps: Stakeholders were urged to provide written suggestions before the RFI deadline; FHFA did not announce changes at the session.
