FHFA Final Rule Amends GSEs’ ‘Duty to Serve’ Regulation for ‘Colonias’

The Federal Housing Finance Agency on Apr. 12 published a final rule to amend the Duty to Serve Underserved Markets regulation for Fannie Mae and Freddie Mac. The final rule allows Fannie Mae and Freddie Mac’s activities in all colonia census tracts to be eligible for Duty to Serve credit.

“Implementation of this rule strengthens our commitment to promoting affordable, equitable and sustainable housing in underserved and rural communities,” said FHFA Director Sandra L. Thompson. “FHFA will continue to ensure that Enterprise Duty to Serve activities meet the needs of people living in colonias.”

The final rule:

  • Adds a new definition for “colonia census tract” to mean a census tract containing a colonia, which will serve as a census tract-based proxy for a colonia;
  • Amends the definition of “high-needs rural region” by substituting “colonia census tract” for “colonia;” and
  • ​Amends the definition of “rural area” to include all colonia census tracts, regardless of their location.

In the United States, a colonia is a type of unincorporated, low-income, slum area located along the Mexico–United States border region that emerged with the advent of shanty towns. These colonias consist of peri-urban subdivisions of substandard housing lacking in basic services such as potable water, electricity, paved roads, proper drainage and waste management.

FHFA published a notice of proposed rulemaking in September 2022 with a 60-day public comment period. The final rule will go into effect on July 1.

Link to Final Rule