Federal Housing Finance Agency Releases Final ‘Duty to Serve’ Rule

The Federal Housing Finance Agency released its final “Duty to Serve” rule on Tuesday after a several-year long rule-making process.  

FHFA identified the mortgage finance activities that Fannie Mae and Freddie Mac may undertake in order to get Duty to Serve credit for serving affordable housing and underserved markets. The rule applies to both single-family and multifamily finance and there are three specific underserved markets: affordable housing preservation, manufactured housing and rural housing.

One element of the final rule interesting to multifamily lenders is FHFA’s decision relating to the GSEs’ ability to provide Low Income Housing Tax Credit equity. Both GSEs had invested in LIHTC equity prior to being placed in conservatorship in 2008. The Duty to Serve final rule permits the GSEs to return to LIHTC equity investment but in rural areas only. There is no change to GSEs’ authority to invest in LIHTC debt.  

FHFA has posted the final rule and a fact sheet at www.FHFA.gov/DTS. The agency will hold a stakeholder webinar on December 19th.  

The rule will become effective 30 days after it is published in the Federal Register. The GSEs must develop their respective Underserved Markets Plans and FHFA expects those plans to be effective in January 2018.

MBA’s next Multifamily Council call will discuss the final rule. Scheduling will be announced shortly. MBA’s comment letter on the proposed Duty to Serve rule is available here for reference.