FHFA Requests Input on Duty to Serve Program

The Federal Housing Finance Agency on Wednesday requested public input on chattel loan pilot initiatives for Fannie Mae and Freddie Mac and its proposed Evaluation Guidance under the final rule on Duty to Serve Underserved Markets.

FHFA issued a final rule on Dec. 13, 2016 (https://www.fhfa.gov/SupervisionRegulation/Rules/Pages/Enterprise-Duty-to-Serve-Underserved-Markets-Final-Rule.aspx) to implement the Duty to Serve provisions mandated by the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended by the Housing and Economic Recovery Act of 2008. The statute requires the Fannie Mae and Freddie Mac to serve three specified underserved markets–manufactured housing, affordable housing preservation and rural housing–by improving distribution and availability of mortgage financing in a safe and sound manner for residential properties that serve very low-, low- and moderate-income families in these markets. The rule requires Fannie Mae and Freddie Mac to adopt three-year Underserved Markets Plans to fulfill this mandate.

The final rule established as a Regulatory Activity Enterprise activities designed to facilitate a secondary market for loans on manufactured homes titled as personal property, also referred to as chattel, through pilot initiatives undertaken in a safe and sound manner.

FHFA issued the Request for Input (https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/Chattel-Pilot-RFI.pdf) on what an Enterprise should include in a chattel pilot initiative, if an Enterprise decides to pursue a pilot initiative.

FHFA also seeks public input on its proposed Evaluation Guidance, released January 13, which communicates FHFA’s expectations regarding the process for developing the Enterprises’ Underserved Markets Plans as well as the process by which FHFA will evaluate the Enterprises’ achievements under their Plans each year.

For the manufactured housing market, the final rule provides eligibility for Duty to Serve credit for GSE activity supporting manufactured homes titled as real property, manufactured homes titled as personal property (also known as chattel) and blanket loans for certain categories of manufactured housing communities.

For the affordable housing preservation market, the final rule provides eligibility for Duty to Serve credit for Enterprise activity supporting the preservation of affordable rental housing and affordable homeownership opportunities. These categories include Enterprise activities under the programs specified in the Safety and Soundness Act, as well as activities supporting small multifamily rental properties, energy efficiency improvements on multifamily rental and single-family first-lien properties, shared equity homeownership programs, purchase or rehabilitation of certain distressed properties, and activities under HUD’s Choice Neighborhoods Initiative and Rental Assistance Demonstration program.

For the rural housing market, the final rule provides eligibility for Duty to Serve credit for Enterprise activity supporting housing in high-needs rural regions and for high-needs rural populations, financing of housing by small rural financial institutions, and activities related to small multifamily rental properties in rural areas.

In a March 2016 letter (http://mba-pc.informz.net/mba-pc/data/images/FINAL MBA Comments on FHFA Duty to Serve – 3-17-16.pdf), the Mortgage Bankers Association said the GSEs’ role as secondary market investors can be amplified through explicit encouragement of the GSEs’ ability to leverage their secondary market role in assessment of new product opportunities. MBA recommended FHFA direct the GSEs to incorporate products and programs previously or currently under development, maintain flexibility in grading the GSEs progress and ensure plans are drafted in a way that can be easily and accurately communicated through the GSEs’ Guide framework.

“MBA believes successful implementation will provide an opportunity to demonstrate how the GSEs can serve underserved markets through viable and measurable activities,” MBA said.

FHFA requested input through its dedicated webpage, www.FHFA.gov/DTS, on potential manufactured home chattel loans pilots by Feb. 17; and on its proposed Evaluation Guidance by May 15.