FHFA Requests Feedback on Enterprise Duty to Serve Plans
Written By: Joel Palmer, Op-Ed Writer
The Federal Housing Finance Agency (FHFA) has issued a request for input (RFI) on the proposed 2025-2027 Underserved Markets Plans submitted by Fannie Mae and Freddie Mac under the Duty to Serve (DTS) program.
By statute, the two enterprises are required to serve three specified underserved markets — manufactured housing, affordable housing preservation, and rural housing — by increasing the liquidity of mortgage financing for very low-, low-, and moderate-income families in those markets.
The plans under review would go into effect January 1, 2025 and last through the end of 2027.
“Providing sustainable liquidity for affordable housing preservation, rural housing, and manufactured housing in a safe and sound manner is a key component of the enterprises’ statutory responsibility to serve underserved markets,” said FHFA Director Sandra L. Thompson. “I look forward to hearing the public’s input and feedback on the plans the enterprises have proposed.”
Public input was a critical part in the creation of the current 2022 to 2024 plan.
FHFA required both GSEs to revise their original plans published in May 2021 because they did not meet the standard for any of the three underserved markets targeted by the DTS Program.
The rejection of those plans came just over two months after a coalition of housing organizations expressed concern with the enterprises’ proposals.
In October 2021, the Underserved Mortgage Markets Coalition sent a letter to FHFA, urging the agency to require Fannie and Freddie to “substantially improve” their Duty to Serve proposals before the regulator approved them.
The coalition says it wants to help “demystify the complicated secondary mortgage market and organize the affordable housing community to work more efficiently with Fannie and Freddie.” It has grown from 20 housing organizations to 32 in the last three years and believes it plays a bigger role in affordable housing finance with the mortgage business moving increasingly from federally regulated banks to other lenders.
In February 2024, the coalition proactively released a blueprint for Fannie’s and Freddie’s 2025–2027 Duty to Serve plans. The group said its blueprint “urges the enterprises to increase certain loan purchases in DTS markets, develop new, accessible loan products and programs, and evaluate new partnership opportunities.”
“Duty to Serve is one of the most important affordable housing regulations this country has,” said George W. McCarthy, president and CEO of the Lincoln Institute of Land Policy.
Housing affordability remains an ADJ issue. Redfin reported this week that the median U.S. home-sale price hit an all-time high of $394,000 during the four weeks ending June 9. That was up 4.4 percent year over year—the biggest increase in about three months. While there are signs that both home prices and mortgage rates may level off, the typical homebuyer’s monthly housing payment is still over $2,800, according to Redfin.
Meanwhile, more homes are sitting on the market for at least a month because too many buyers have been priced out of the market, according to Redfin.
Feedback on the proposed 2025-2027 Duty to Serve plans can be submitted by August 12, 2024. The public can review the RFI and submit responses through the DTS page on FHFA’s website. FHFA also will hold three listening sessions to review the proposed Plans on July 15, 16, and 17. Interested participants can register here.
The objectives outlined by the enterprises to achieve proposed plan activities will remain subject to FHFA review and approval.
About the Author
As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
