FHFA Issues Final ‘Duty to Serve’ Rule

The Federal Housing Finance Agency today issued a final rule requiring Fannie Mae and Freddie Mac to submit plans for improving the distribution and availability of safe and sound residential mortgage financing in underserved markets. The rule implements the “duty to serve” provisions outlined in the GSEs’ authorizing statutes, establishing a method for annual evaluation of the GSEs and awarding duty to serve credit based on activities detailed in the reports.

Under the rule, the GSEs will be required to submit three-year draft plans detailing their planned activities and objectives for serving three underserved markets: manufactured housing, affordable housing preservation and rural housing. The plans will become effective in Jan. 2018.

While the rule outlines a number of specific activities that Fannie and Freddie may consider undertaking to receive duty to serve credit, it does not mandate any particular courses of action. It does, however, allow GSEs to re-enter the market for low income housing tax credits, which ABA has opposed in previous comments to FHFA, adding that the GSEs’ activities should remain confined to the secondary market.

“As we pointed out in our comment letter, the LIHTC market is a vibrant, fully subscribed market,” said ABA SVP Joe Pigg. “Allowing the GSEs back into the market will likely be disruptive and likely will drive smaller players from the field — and we do not see how that serves to further the goals of expanding affordable housing, especially in underserved areas.”

Along with the release of the rule, FHFA has created a new informational webpage on the implementation of the duty to serve program, and will release further items related to the rule for public comment in 2017. The agency also plans to host a series of hearings to gather feedback on the GSEs’ underserved market plans. ABA will continue to provide additional feedback to FHFA on this initiative as needed. For more information, contact ABA’s Joe Pigg.


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