The article discusses the introduction of the Mission Index by the GSEs in 2022, later renamed in 2024, to quantify how effectively loans cater to underserved demographics. The GSEs, including Fannie Mae, set specific benchmarks for Low Income and Very Low Income loans, while also highlighting the financial benefits of compliance. Investors are attracted to these loans due to their longer retention in the market. Metrics such as Mission Criteria Share (MCS) and Mission Density Score (MDS) assess loan compliance and influence pricing, encouraging lenders to focus on Mission loans to avoid penalties.
In 2022, GSEs launched the Mission Index to assess the effectiveness of loans for underserved markets, providing financial incentives for lenders to prioritize these loans.
The Mission Index not only serves social objectives but also financially benefits GSEs by attracting secondary market investors who favor longer-term, Mission-compliant loans.
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