Freddie, Freddie (enterprises) released updated single-family social bonds framework.
Included updates to each enterprise's Mortgage-backed securities (MBS) disclosures.
Mission-centered MBS and retooled disclosures aim to support underserved borrowers.
Follows FHFA proposed enterprise social bond program policy framework, #163784.
Fannie issued blog on enhanced disclosures and impact on single-family social MBS.
Mission Index
In 2022, enterprises adopted social index, methodology for measuring degree to which various types of lending activity are supported in a given pool, #146187, #153824.
Aimed to provide insights into the mission-oriented lending activities underlying MBS.
This allows them to allocate capital in a more targeted way towards these activities.
Freddie and Fannie will rename existing social index as the mission index in Feb. 2024.
Updated the formulation of the index in May 2024 and Feb. 2024, respectively.
Applies to pools issued by Freddie beginning in Jun. 2024 and to Fannie in Mar. 2024.
Label applied to MBS when its underlying pool exceeds a certain score in mission index
Social Bond Framework
Updated framework sets forth criteria for enterprise mortgage collateral that is eligible to be pooled, issued and labeled as social MBS beginning with Jun. 2024 issuances.
Will provide social MBS impact reporting annually beginning in 2025, which will help market participants understand the effects of loans underlying social MBS investment.
Developed to support ESG strategic priorities and is intended to enable investors to join in reducing issues surrounding equity and affordability in US housing market.
Addressed 4 core components of the ICMA Social bond principles (SBP), #143186.
Use of proceeds, project evaluation and selection, proceeds management, reporting.
Effectiveness
The renamed and reformulated mission index will begin to apply to pools issued by Freddie Mac beginning in Jun. 2024 and for Fannie Mae beginning in Mar. 2024.
Will assign social label to MBS meeting social bond criteria beginning in Jun. 2024.
