Fannie Mae’s Priscilla Almodovar on strengthening the US housing system

Strategic Objectives & Scope

• Fannie Mae's core strategic goals are to make the U.S. housing system more equitable and sustainable.
• The organization currently finances one in four mortgages in the U.S., representing 17 million mortgages on a $4.3 trillion balance sheet.
• Fannie Mae operates in the secondary market, purchasing mortgages from originators to provide liquidity and securitizing them into mortgage-backed securities (MBS) that comprise roughly 25% of the fixed-income market.
• The organization emphasizes a continuum of the "consumer housing journey," focusing on obstacles faced by renters, future homebuyers, and current homeowners.

Market Forecasts & Trends (6–12 Month Outlook)

• Economists revised the forecast from a potential recession to "slow growth" due to conflicting macroeconomic signals.
• Mortgage rates are projected to decline from October's 8% peak to the low-to-high sixes, potentially reaching the fives by late 2025.
• Housing sales are expected to increase in 2024 after hitting a 25-year low in the previous year, driven by the rate decline.
• Home price appreciation is forecast to slow to approximately 3% for the year (down from 7% previously), though prices will continue to rise due to a critical lack of supply.
• The primary drivers of the current "frozen" market are affordability constraints and a shortage of housing inventory.

Supply Side Dynamics & Demographics

• The supply shortage is exacerbated by the "lock-in effect," where current homeowners with mortgage rates of 2–4% are unwilling to sell.
• Baby Boomers (approx. 21–22 million) are staying in place rather than downsizing, remaining "overhoused" and reducing available inventory.
• Millennial homebuyers are the largest demographic driving demand, prompting home builders to shift from luxury amenities to smaller "starter homes."
• Unlike historical trends reliant on existing home resales, current supply growth is increasingly driven by new construction.

Equity Initiatives & Credit Innovation

• The U.S. faces a stubborn homeownership gap: approximately 30% between Black and White homeownership, and 20% for Latino households.
• Projections indicate that 90% of new homeowners in the next decade will be people of color (70% Latino).
• Fannie Mae launched an initiative allowing rental payments to count toward creditworthiness for mortgage eligibility, addressing the "credit invisible" population.
  • 5,000 future homebuyers have been deemed mortgage-eligible via this new assessment of unstructured bank statement data.
  • A rent-reporting pilot has enrolled over 350,000 renters, resulting in a 30–35 point credit score improvement for those who previously had a score, and establishing credit for those who did not.
• The "HomeReady" program supports 3% down payments; data shows borrowers with this structure maintain 97% loan-to-value ratios, strong FICO scores (avg. 738), and debt-to-income ratios of 38%.

Investor Relations & Market Structure

• Fannie Mae introduced a "Mission Index" to provide investors with data on the demographic and socioeconomic impact of specific MBS pools (e.g., census tract, income level) while maintaining privacy compliance.
• The index was co-designed with European investors to meet demands for measurable impact and mission-based investments.
• The organization continues to partner with the private sector for green bonds, offering incentives for rental properties built to specific sustainability standards.

Leadership & Demographic Representation

• Priscilla Ortiz is the only Latina CEO among Fortune 500 companies and a Fannie Mae board member since December 2022.
• Latino population representation has grown from 9% in 1990 to over 20% today; female representation on Fortune 500 boards has risen to 10% from roughly 2% in 1990.
• Ortiz attributes her trajectory to the immigrant values of stability, education, and homeownership, noting her parents' achievement of these goals in the 1950s.
• The speaker emphasizes a constructive relationship with regulators, viewing government, private sector, and non-profits as interdependent "force multipliers" required to solve systemic housing issues.