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Latest Duty to Serve plans are an improvement, affordable housing coalition says

Underserved Mortgage Markets Coalition says it hopes that both companies will work collaboratively to amend their DTS plans

A coalition of 21 affordable housing groups on Wednesday said Fannie Mae and Freddie Mac made important improvements to their plans to offer housing financing in underserved markets, but still have a ways to go.

The Underserved Mortgage Markets Coalition, which includes the Center for Community Progress, the National Housing Conference, the National Council of State Housing Agencies, the National Community Stabilization Trust and the Lincoln Institute of Land Policy, on Wednesday released its scorecard on the government-sponsored enterprises’ 2022-2024 “Duty to Serve” plans, which were produced on April 27 after the prior plans were rejected by Sandra Thompson, the FHFA director.

The federal regulation requires that the GSEs prioritize and improve affordable housing opportunities related to manufactured housing, affordable housing preservation and rural housing.

“The scorecard recognizes significant improvement in the latest plans compared with the versions released a year earlier,” the UMMC, which is spearheaded by the Lincoln Institute, said in a statement Wednesday. “However, the scorecard finds that Fannie Mae and Freddie Mac failed to fully implement a majority of the improvements recommended in the Blueprint for Impactful Duty to Serve Plans, which the UMMC released January 20.”

In October 2021, affordable housing groups heavily criticized the GSEs for seeking to eliminate programs to purchase chattel loans and for reducing loan targets for manufactured housing, affordable housing preservation and rural housing.

Affordable housing advocates in particular have sought a stronger commitment from the GSEs on manufactured housing. On that front, the scorecard presents a mixed grade for the enterprises.


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“Neither Fannie Mae nor Freddie Mac is substantially increasing its commitment to help manufactured housing homeowners obtain real property loans,” the UMMC said in its scorecard, noting that Fannie Mae is targeting the purchase of 9,500 real property loans for manufactured housing by 2024 and Freddie Mac is targeting between 6,300 and 7,500. Those targets fall short of prior years. Fannie Mae’s 2021 target was 12,650 loans, and Freddie Mac’s 2021 target was 8,200 loans.

Freddie Mac, however, agreed to a pilot program to purchase between 1,500 and 2,500 manufactured homes not titled as real property, better known as chattel loans, which make up 42% of the manufactured housing market. Those loans tend to have fewer consumer protections than mortgages and higher interest rates. Fannie Mae has not yet committed to buying chattel loans, which the coalition encouraged.

The scorecard for rural housing finance was also mixed. Fannie Mae met the UMMC’s recommendation of 13 loans related to Section 515 property investment, a key financing program for rental housing in rural areas. Freddie Mac projects to make four transactions by 2024, below the UMMC’s recommendation of 13.

“The USDA anticipates 183 Section 515 properties will exit the program between 2022- 2024,” the UMMC said. “Fannie Mae’s significant loan purchase will substantially preserve affordability for rural renters. Freddie Mac’s lower targets will do much less to mitigate the loss of affordable housing.”

Neither of the GSEs adopted the UMMC’s recommendation to target 10% of their loan purchase to low- and moderate-income families in areas with high energy cost burdens.

However, both made some improvements related to single-family affordable housing preservation targets, notably in loan purchases for shared equity homes.

“Fannie Mae will increase loan purchases for borrowers of shared equity homes by 100% above its baseline by 2024 and is working to update its Selling Guide to promote standardization,” the UMMC said. Freddie Mac also updated its selling guide and is looking at ways to increase lender participation.

In a statement, the UMMC said it hopes that “both companies will work collaboratively to amend their DTS plans so that the UMMC can issue an updated DTS scorecard with higher scores.”

In response, Fannie Mae on Wednesday said it appreciates UMMC’s “continued interest in our DTS plan and the work we have underway to achieve our objectives. We look forward to our continued engagement with the UMMC members, other industry stakeholders, and our business partners to provide innovative solutions to expand access, explore options, and knock down barriers in these underserved markets across the country and help more families have an affordable place to call home.”

Freddie Mac responded: “Freddie Mac appreciates the input of stakeholders as we work toward the objectives set forth in our Duty to Serve plan. The plan builds on our first three-year initiative with ambitious but appropriate targets. We are continually evaluating what opportunities exist to do more in support of underserved markets.”

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