GSE Activity and Mortgage Supply in Lower-Income and Minority Neighborhoods: The Effect of the Affordable Housing Goals

Neil Bhutta

Figure 1:GSE Housing Goals and Performance
year	Fannie Mae Underserved Areas Share	Freddie Mac Underserved Areas Share	Underserved Areas Goal Level	Fannie Mae Low and Moderate Income Share	Freddie Mac Low and Moderate Income Share	Low and Moderate Income Goal Level	Fannie Mae Special Affordable Share	Freddie Mac Special Affordable Share	Special Affordable Goal Level
1993	23.6	21.8	-	34.2	29.7	-	9.7	7	-
1994	29.5	25.2	-	44.8	37.4	-	15.2	11.3	-
1995	31.9	26.4	-	42.3	38.9	-	14.1	12.8	-
1996	28.1	25	21	45.6	41.1	40	15.4	14	12
1997	28.8	26.3	24	45.7	42.6	42	17	15.2	14
1998	27	26.1	24	44.1	42.9	42	14.3	15.9	14
1999	26.8	27.5	24	45.9	46.1	42	17.6	17.2	14
2000	31	29.2	24	49.5	49.9	42	19.2	20.7	14
2001	32.6	31.7	31	51.5	53.2	50	21.6	22.6	20
2002	32.8	31	31	51.8	50.5	50	21.4	20.4	20
2003	32.1	32.7	31	52.3	51.2	50	21.2	21.4	20
2004	33.5	32.3	31	53.4	51.6	50	23.6	22.7	20
2005	41.5	42.3	37	55.1	54	52	26.3	24.3	22
2006	43.6	42.7	38	56.9	55.9	53	27.8	26.4	23

Notes: The "Underserved Areas" goal targets GSE purchases in low-income & minority neighborhoods: tracts with median family income less than or equal to 90% of the MSA median family income, or tracts with a minority population share of at least 30% and a median family income no greater than 120% of the MSA median family income. The "Low and Moderate Income" goal specifies a target share of purchases to borrowers with income below the MSA median family income. The "Special Affordable" goal targets borrowers with income below 60% of the MSA median family income and borrowers with income below 80% of the MSA median family income in a census tract that has a median family income less than or equal to 80% of the MSA median family income.

Return to Figure 1

Figure 3: Falsification Exercise: Discontinuity in GSE-Eligible Originations at GSE and non-GSE Cutoffs
Cutoff	Coefficient	+2 Standard Errors	-2 Standard Errors
0.75	0.0002	0.0370	-0.0365
0.76	-0.0008	0.0313	-0.0328
0.77	-0.0134	0.0209	-0.0477
0.78	0.0025	0.0360	-0.0309
0.79	-0.0085	0.0247	-0.0418
0.80	0.0054	0.0354	-0.0245
0.81	0.0278	0.0581	-0.0025
0.82	0.0048	0.0384	-0.0287
0.83	-0.0175	0.0091	-0.0440
0.84	-0.0111	0.0184	-0.0405
0.85	-0.0090	0.0202	-0.0381
0.86	0.0045	0.0347	-0.0256
0.87	-0.0021	0.0232	-0.0275
0.88	-0.0249	0.0073	-0.0572
0.89	-0.0029	0.0238	-0.0295
0.90	0.0274	0.0526	0.0022
0.91	0.0259	0.0508	0.0009
0.92	-0.0002	0.0291	-0.0295
0.93	-0.0211	0.0051	-0.0473
0.94	-0.0203	0.0064	-0.0471
0.95	-0.0031	0.0219	-0.0281
0.96	0.0078	0.0325	-0.0170
0.97	0.0156	0.0400	-0.0088
0.98	-0.0006	0.0222	-0.0233
0.99	0.0041	0.0291	-0.0209
1.00	0.0028	0.0264	-0.0208
1.01	0.0059	0.0304	-0.0187
1.02	0.0233	0.0476	-0.0011
1.03	-0.0114	0.0117	-0.0346
1.04	-0.0057	0.0210	-0.0323
1.05	-0.0046	0.0204	-0.0295

Notes: Each point represents the estimated discontinuity in (log) number of GSE-eligible originations in a tract between 1997 and 2002 from a seperate regression. Each regression includes tract covariates and scale variables and MSA-fixed effects, and bandwidth (h) is set to 0.02. Standard errors are clustered at MSA-level.

Return to Figure 3

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