On December 15, the Federal Housing Finance Agency (FHFA) released a proposed rule detailing Fannie Mae and Freddie Mac's "duty-to-serve" underserved markets as required by the “Housing and Economic Recovery Act of 2008.” The proposed rule comes five years after the agency last attempted to issue a duty-to-serve rule outlining the two government sponsored enterprises’ (GSEs) responsibilities, but that rule was never finalized.
Under the new proposed rule, the GSEs would be required to serve three specific underserved markets: manufactured housing, affordable housing preservation, and rural markets. The proposed rule requires the GSEs to submit plans for improving the "distribution and availability of mortgage financing in a safe and sound manner for residential properties that serve very low-, low-, and moderate-income families." Each GSE would be required to submit to FHFA a three-year duty-to-serve plan, detailing the activities and objectives it will use to meet the rule's requirements.
The proposed rule would give the GSEs duty-to-serve credit for eligible activities that facilitate a secondary market for residential mortgages that originate in underserved markets. The GSEs will also receive duty-to-serve credit for qualifying activities that promote residential economic diversity in underserved markets. The rule establishes the manner in which the GSEs would be evaluated for their efforts. FHFA is required to report evaluation findings to Congress annually.
Comments on the proposed rule are due by March 17, 2016. FHFA is requesting comments on numerous issues, including whether preservation activities should extend a “property’s regulatory agreement that restricts household incomes and rents for some minimum number of years . . . beyond the date of the Enterprises’ loan purchase.”
Read the proposed rule here: http://www.regulations.gov/#!documentDetail;D=FHFA-2015-0026-0001
Read FHFA’s press release here: http://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Issues-Proposed-Rule-on-Fannie-Mae-and-Freddie-Mac-Duty-to-Serve-Underserved-Markets.aspx