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FHFA Duty to Serve Update

Hopefully, you already read our recent update on the Federal Housing Finance Agency’s duty-to-serve rule that requires Fannie Mae and Freddie Mac to increase liquidity and access to financing in underserved markets for low- and moderate-income households. The period to provide public comment to FHFA on the Enterprises’ proposed Underserved Market Plans ended on July 10th. On behalf of our mission, members, and the broader field, we submitted a 9-page letter of concrete recommendations to make the Plans even more robust and impactful for shared equity homeownership and inclusive community building.

To highlight some activities proposed in the plans, both Fannie Mae and Freddie Mac proposed outreach and product development activities, which would promote a greater number of lenders originating to buyers of shared equity homes and greater clarity of underwriting and expansion of offerings across shared equity models. Additionally, Fannie Mae set loan purchase goals that would increase over the three years of the Plan.  Fannie Mae also plans to explore how they may potentially better support limited equity housing cooperatives. Freddie Mac also proposed a potential investment in research and development of a way to potentially grow the field through a shared appreciation loan fund. This builds upon Grounded Solutions Network’s ongoing project that has received support this year from Freddie Mac. This project is exploring whether such a fund may be feasible as an alternative way to provide affordable homeownership opportunities without relying upon public subsidies. Due to being under conservatorship and the limits of their charters, the Enterprises are prohibited from making grants and are constrained in their investment options. Hence, we are thrilled that Freddie Mac is interested in making an investment in a new potential tool to scale the field.

Grounded Solutions Network’s summaries of the shared equity homeownership sections of the Underserved Market Plans and our recommendations were presented to the Enterprises in a face-to-face event on June 27th. This presentation provides a more succinct review of our public comment. Ultimately, we generally agreed with the Enterprises’ approaches and identified activities; however, we are urging them to be more ambitious and to pursue more strategic activities.

We are very eager to see how FHFA and the Enterprises will respond to our recommendations in the final Plans, and we are excited to work with them to increase access to mortgage financing for buyers of shared equity homes in an impactful way.

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