WASHINGTON, DC–Fannie Mae and Freddie Mac have unveiled their respective Duty to Serve plans. The Duty to Serve is a blueprint for the GSE on how it will address challenging housing markets in the US. It is shaped by public input and feedback from the Federal Housing Finance Agency.
Per the proposals they submitted last year, both of the GSEs will be focusing on affordable housing, rural housing and manufactured housing using, in Fannie Mae's case, a combination of analysis, testing, partnerships, and loan purchases to serve these markets. “This is an important milestone in Fannie Mae's ongoing efforts to improve access to mortgage financing and create affordable housing opportunities for people of modest means across the country,” Jeffery Hayward, Executive Vice President and Head of Multifamily at Fannie Mae said in a prepared statement.
Freddie Mac is taking a very similar approach: its plan includes increased loan purchases in these three markets as well as new products, research and expanded consumer education. The company is working with the mortgage industry, community nonprofits, local government and other organizations, it said.
Freddie Mac's multifamily plan highlights include re-entering the Low-Income Housing Tax Credit (LIHTC) equity market and increasing liquidity for developers that qualify for federal subsidies, including Section 8 vouchers.
To be sure the GSEs have been working to support these three areas for years as part of their overall mandates. To name one example, last month the GSEs announced they would resume their purchasing activity in the Low Income Housing Tax Credit market next year. The Federal Housing Finance Agency authorized the GSEs to invest in LIHTC equity up to an annual cap of $500 million, subject to certain conditions.
In another example, earlier this year Fannie Mae launched a program for manufactured housing that is specifically tailored to New Hampshire, following state legislation that allowed residents to take ownership of a portion of the land that their manufactured homes sits on. It was a significant departure from how the GSE usually lends on manufacturing housing stock because the state law now permits the housing that sits on these resident-owned communities to be treated as a home and not as chattel or personal property.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
