purchase by the GSE's. There are different ways to treat seasoned loans when comparing the GSES' purchases to market originations. The most appropriate and most consistent is to exclude seasoned loans from the GSE data for the year in which they are purchased by the GSE's, and count them instead in the year in which they are originated. This approach is taken in the accompanying Tables 1 and 2. Table 1 reports the GSE data on an "origination-year" basis. This is the closest in concept to the market data, which are also presented on an "origination-year" basis. The GSE data in Table 1 for the year 2001 include all the GSEs' purchases through 2002 of loans originated during 2001; in other words, it includes the GSES' purchases of 2001 originations during both 2001 and 2002. Thus, in Table 1, seasoned loans (that is, 2001 mortgage originations purchased by the GSE's in 2002) are reallocated back to their year of origination. This places them on a comparable basis with the HMDA market origination data. As shown in Table 1, lowand moderate-income families accounted for 41.7 percent of the GSES' purchases (through 2002) of 2001 mortgages. Table 1 also shows that low- and moderate-income families accounted for 42.9 percent of the mortgages originated in the conventional conforming market during 2001. Thus, for low- and moderate-income loans, the GSES' purchases of 2001 originations lagged the 2001 origination market.

The percentages reported in Table 1, taken together, show that the ratios for each of the GSE housing goals (indicated as "Both GSE's") were behind the market ratios in both 2001 and 2002. Freddie Mac lagged behind both the market and Fannie Mae, except in 2002 when Freddie Mac equaled Fannie Mae in the special affordable category. Fannie Mae's mortgage purchase ratios lagged behind the market ratios, except in 2002 when Fannie Mae surpassed the market in the low- and moderate-income category.

Table 2 compares the GSEs' ratios with market loan origination. ratios for three race/ethnicity categories. Again, the ratios for "Both GSE's" were behind the market ratios for African American borrowers, Hispanic borrowers, and all minority borrowers in both 2001 and 2002. During 2001 and 2002, Fannie Mae's ratios lagged behind the market in the African American category but exceeded or equaled the market in the other two categories (Hispanic and All Minorities). Freddie Mac's ratios fell below the market in all three race/ethnicity categories in both 2001 and 2002.

Tables 3 and 4 repeat the analyses in Tables 1 and 2, except that the GSE data are expressed on a "purchase year" basis. This means that all the GSEs' purchases in a particular year are compared to mortgages originated in the market in that same year. Thus, in this analysis, the GSES' data for 2001 include not only their purchases during 2001 of mortgages originated during 2001, but also their purchases of prior-year, or so-called "seasoned mortgages," such as mortgages originated during 1999 or 2000. These ratios for the GSE's are not as directly comparable to the market ratios as are the ratios in Tables 1 and 2. They measure the overall purchase activity of the GSE's during 2001, rather than the purchases of the GSE's of loans originated in 2001.

Using this "purchase year" approach, Table 3 compares the percentage shares of goal-qualifying mortgages in the GSEs' purchases

and market originations. It shows that all of the GSE housing goal category ratios (indicated as "Both GSE's") were behind the market ratios in both 2001 and 2002. Freddie Mac lagged behind Fannie Mae, while Fannie Mae's mortgage purchase ratios equaled or exceeded the market ratios in 2002. Table 4 compares the GSEs' ratios with market loan origination ratios for three race/ethnicity categories. Again, the ratios for "Both GSE's" were behind the market ratios for African American borrowers, Hispanic borrowers, and all minority borrowers in both 2001 and 2002. However, Fannie Mae's ratios exceeded the market in two of three racial/ethnicity categories in 2001 and all three racial/ethnicity categories in 2002, while Freddie Mac's ratios fell below the market in both years.

As explained above, the GSEs' ratios in Tables 3 and 4 include their purchases of loans originated both in the current year and in prior years. The GSES' purchases of loans originated in prior years typically tend to include a greater share of goals-qualifying mortgages than do their purchases of loans originated in the year of purchase by the GSE. Thus, the GSE percentages tend to overstate the GSES' performance in a particular category, relative to a consistent concept of loans originated in a given year (as presented in Tables 1 and 2).

Tables 3 and 4 present the comparisons in the way that HUD traditionally has reported the GSEs' performance, even though the data are not as comparable as the origination-year basis. Throughout the 1990's the GSE's lagged the market by such a substantial margin that the differences in coverage between the GSE and market data did not affect the result materially and did not change the basic conclusion. The GSEs' improvement in very recent years, and the renewed public interest in their performance, has led HUD to refine the analysis and make the comparisons as precise as possible. These comparisons, as mentioned, appear in Tables 1 and 2. Table 5 compares the GSEs' funding of mortgages for first-time homebuyers with market loan originations for first-time home buyers. This table shows that first-time homebuyers represented 37.6 percent of market loan originations, compared with 26.5 percent of the GSES' purchases; thus, the GSE's fell substantially short of the market originations ratio for first-time homebuyers over the period 1999-2001. For minority first-time homebuyers, the GSE ratio was 6.2 percent, compared to a market originations ratio of 10.6 percent. For African American and Hispanic first-time homebuyers, the GSE ratio was 3.8 percent, compared to a market originations ratio of 6.9 percent. For first-time homebuyers, particularly firsttime minority homebuyers, both GSE's substantially lagged the private conventional conforming market. HUD has not previously published this comparison.

Table 1

Market/GSE Performance Comparisons for 2001 and 2002 in Housing Goal Categories Market and GSE Analysis by Year of Loan Origination

The symbols (-), (=), and (+) indicate direction of difference, if any, relative to the market.

Market percentages are for current-year mortgage originations, based on HMDA data. GSE percentages are for GSEs' mortgage purchases, based on GSE loan-level data provided annually to HUD. GSE percentages for 2001 represent GSE purchases (in 2001 or 2002) of loans originated in 2001. GSE percentages for 2002 represent GSE purchases in 2002 of loans originated in 2002.

The analysis is limited to conventional conforming home purchase mortgages for owner-occupied 1-4 unit properties in Metropolitan Areas. Properties with missing affordability data are excluded from the analysis for Low- and Moderate Income and Special Affordable categories.

Market

Table 2

Market/GSE Performance Comparisons for 2001 and 2002 By Race/Ethnicity
Market and GSE Analysis by Year of Loan Origination

The symbols (-), (=), and (+) indicate direction of difference, if any, relative to the market.

Market percentages are for current-year mortgage originations, based on HMDA data. GSE percentages are for GSEs' mortgage purchases, based on GSE loan-level data provided annually to HUD. GSE percentages for 2001 represent GSE purchases (in 2001 or 2002) of loans originated in 2001. GSE percentages for 2002 represent GSE purchases in 2002 of loans originated in 2002.

The analysis is limited to conventional conforming home purchase mortgages for owner-occupied 1-4 unit properties in Metropolitan Areas. Properties with missing race/ethnicity data are excluded from the analysis.

Table 3

Market/GSE Performance Comparisons for 2001 and 2002 in Housing Goal Categories
Market Analysis By Year of Loan Origination and
GSE Analysis by Year of Purchase

The symbols (-), (=), and (+) indicate direction of difference, if any, relative to the market.

Market percentages are for current-year mortgage originations, based on HMDA data. GSE percentages are for GSEs' mortgage purchases (including purchases of seasoned loans), based on GSE loan-level data provided annually to HUD. Because these ratios for the GSEs include seasoned loans and the market ratios include only current-year mortgage originations, the GSE ratios tend to overstate the GSEs' business shares in each category, compared to mortgage origination activity in a given year.

The analysis is limited to conventional conforming home purchase mortgages for owner-occupied 1-4 unit properties in Metropolitan Areas, excluding mortgages on second homes. Properties with missing affordability data are excluded from the analysis for Low- and Moderate Income and Special Affordable categories.