FHFA Director Addresses Underserved Markets

As part of its Duty to Serve (DTS) program, the Federal Housing Finance Agency (FHFA) hosting a series of Listening Sessions focusing on various underserved markets.

The DTS program requires Fannie Mae and Freddie Mac (GSEs) to facilitate a secondary market for mortgages on housing for very low-, low-, and moderate-income families in three underserved markets: Manufactured Housing, Affordable Housing Preservation, and Rural Housing. The DTS program requires the GSEs to prepare Plans detailing specific objectives and activities they plan to implement to fulfill the DTS mandate.

Sandra L. Thompson, Acting Director of the FHFA, discussed manufactured housing at the Virtual Listening Session: Enterprise Duty to Serve 2022-2024 Proposed Plans: Manufactured Housing.

The Housing and Economic Recovery Act of 2008 amended the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 to establish a duty for the GSEs to serve three specified underserved markets–manufactured housing, affordable housing preservation, and rural housing. In late May, the FHFA published its proposed 2022-2024 Underserved Markets Plans, submitted by Fannie Mae and Freddie Mac (the GSEs) under the DTS program.

“Manufactured housing is one option that has potential to grow the affordable housing supply without subsidies. And Duty to Serve has already produced demonstrable results in increasing Enterprise support for manufactured housing,” said Thompson. “The total supply of housing is insufficient to meet ongoing demand. And new housing production is skewing towards higher priced segments of the market. That leaves low- and moderate-income Americans increasingly cut off from housing opportunities.”

As prices continue to rise nationwide, the affordability gap continues to increase. A recent analysis from the Harvard Joint Center for Housing Studies, “The State of the Nation’s Housing 2021,” has found that the pandemic of the past year has opened this disproportionate gap even wider. Millions switched to remote work, saved their stimulus checks, and came out ahead. Others struggled, became ill, lost work, and faced foreclosure or eviction. Programs that helped the latter, such as forbearance plans, will eventually expire.

“All across the United States, Americans are struggling with a housing crisis,” said Thompson. “Each market and community faces its own mix of challenges, but a common theme can be found in widespread shortages of affordable housing.”

Thompson cited manufactured housing as “an especially important resource for many rural communities.”

“Rural areas tend to have limited housing options and older housing stock,” said Thompson. “Getting an accurate appraisal can also be difficult. Fortunately, despite the challenges presented by the COVID-19 pandemic, 2020 saw the Enterprises still able to exceed some of their goals in the rural housing market. FHFA looks forward to them doing even more to connect rural areas to national housing finance.”

The GSEs nearly doubled their purchases of loans secured by manufactured housing titled as “real property” between 2017, the year before Duty to Serve was implemented, and 2020. In addition, both Enterprises exceeded their loan purchase targets for manufactured housing communities with tenant pad lease protections—providing new and important protections for residents.

“FHFA expects the Enterprises to live up to their mission obligations and help ensure that investment capital reaches underserved markets,” said Thompson. “Fannie and Freddie have a responsibility to identify the obstacles these communities face in accessing mortgage credit and affordable housing, as well as a duty to develop strategies for overcoming them safely and soundly. As we enter the next three years of Duty to Serve, I look forward to seeing the Enterprises fulfill their charter purposes by ‘increasing the liquidity of mortgage investments and improving the distribution of investment capital’ throughout the country. Their success in this mission will play a critical role in relieving our nation's widespread affordable housing shortage.”