The Federal Housing Finance Agency (FHFA) recently issued a proposed rule on a method for evaluating and rating Fannie Mae and Freddie Mac’s compliance with the “duty to serve” underserved markets, including manufactured housing, affordable housing preservation and rural housing.
The proposed rule, according to the press release, creates certain eligible activities that would earn Duty to Serve credits. Under the proposed rule, Fannie Mae and Freddie Mac would be required to submit to FHFA an Underserved Market Plan covering a three-year period, subject to public review and comment. Each plan must include activities delineated under the categories of statutory (activities that assist affordable housing projects as part of the specifically enumerated programs under the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, or any comparable state law), regulatory (certain activities specific to the three underserved markets provided under the proposed rule) and additional (any other activities proposed by Fannie Mae and Freddie Mac and determined by the FHFA to serve an underserved market).
For the manufactured housing market, Duty to Serve credits would be provided if Fannie Mae and Freddie Mac create a secondary market for mortgages of manufactured homes secured as real property. According to the FHFA, chattel loans are not currently included in the proposed rule, given their lower performance levels, faster depreciation, higher default rates, and weaker consumer protections related to the financing.
The comment period for the proposal runs 90 days and will close March 17.