[1]Fannie Mae [2]and Freddie Mac [3] may soon be made to offer mortgages for homes in 'underserved markets.'
A new rule, introduced Tuesday, requires the Federal Housing Finance Agency [4](FHFA) by federal law to issue a regulation to implement the Duty to Serve requirements specified in the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended by the Housing and Economic Recovery Act (HERA) of 2008 among both GSEs.
According to a press release [5] from the FHFA, the proposed regulation will require the GSEs to serve three underserved markets including manufactured housing, affordable housing preservation, and rural markets.
"The proposed rule would require the Enterprises to adopt plans to improve the distribution and availability of mortgage financing in a safe and sound manner for residential properties that serve very low-, low-, and moderate-income families in the three specified underserved markets," the FHFA stated in the release.
As part of the newly introduced rule, both GSEs will have Duty to Serve credit for all transactions that involve a secondary market for mortgages on residential properties in the specified underserved markets. In addition, the FHFA said that the rule would also create a method for gauging the GSEs' performance every year.
FHFA's Duty to Serve credit for Underserved Markets:
- For the manufactured housing market, Duty to Serve credit would be provided for eligible Enterprise activities related to manufactured homes financed as real property and blanket loans for certain categories of manufactured housing communities.
- For the affordable housing preservation market, Duty to Serve credit would be provided for eligible Enterprise activities related to preserving the affordability of housing for renters and homebuyers, including activities under the programs specified in the Safety and Soundness Act. Duty to Serve credit would also be provided for activities related to existing small multifamily rental properties, energy efficiency improvements on existing multifamily rental and single-family first-lien properties, shared equity homeownership programs and the HUD's Choice Neighborhoods Initiative and Rental Assistance Demonstration program.
- For the rural market, Duty to Serve credit would be provided for eligible Enterprise activities related to housing in rural areas, including activities serving the following high-needs rural regions and populations: Middle Appalachia, the Lower Mississippi Delta, colonias, members of a Native American tribe located in a Native American area, and migrant and seasonal agricultural workers.
The FHFA also announced that they are now accepting comments on the rule for a period of 90 days.
Click here [6] to view the complete rule.
Click here [7] to view the rule fact sheet.