Beginning next year, Fannie Mae and Freddie Mac must starting implementing their Duty to Serve Underserved Markets plans.
Back at the end of 2016, the Federal Housing Finance Agency issued a final rule to implement the Duty to Serve Program mandated by the Housing and Economic Recovery Act of 2008. The new rule requires each of the GSEs to adopt a three-year Underserved Markets Plan to fulfill the mandate.
The two government-sponsored enterprises released their plans back in May, outlining how they plan to reach three specified underserved markets in a safe manner for residential properties that serve very low-, low-, and moderate-income families. The three markets include manufactured housing, affordable housing preservation and rural housing.
While the comment period on the plans ended in June, the Urban Institute outlined in a blog six ways the GSSEs can better achieve this mission.
Authored by Sarah Strochak and Edward Golding, the blog highlighted comments from leaders in housing finance at a recent event at the Urban Institute, cosponsored by CoreLogic.
Check here for the six ideas on how the GSEs could maximize the new rule’s impact. As a preview, two points are listed below.
1. Provide standardization for manufactured lending
“Manufactured homes make up 9 percent of new single-family starts, but financial, legal, and regulatory concerns pose barriers to lending for this sector. Ann Kossachev of the National Association of Federally-Insured Credit Unions pointed out that chattel lending for manufactured housing carries special risks arising from the lack of consumer protections and the difficultly collecting reliable data on which to base loan pricing.”
“By expanding their involvement in manufactured housing, including chattel lending, the GSEs can bring standardization to the manufactured housing market, leading to lower costs and increased consumer protections for borrowers.”
2. Fill in gaps in the plan
“The DTS plans could also be improved by including underserved markets that were not sufficiently addressed in the plans, including single-family rentals, small-dollar loans, and farm worker assistance.”