The Federal Housing Finance Agency has registered a formal objection to Fannie Mae and Freddie Mac’s 2022 to 2024 plans to meet legislatively mandated goals the two agencies have to support underserved communities.

The two government-sponsored enterprises, which buy a large percentage of the mortgages in the United States, will need to draw up revised Duty-to-Serve goals for rural, manufactured and affordable housing in response.

“Neither enterprise’s plan meets the DTS non-objection standard for any of the three underserved markets,” the FHFA said in a statement issued on Jan. 5. “The agency has directed both enterprises to submit additional revisions to improve the plans’ impact on all three DTS underserved markets.”

Fannie and Freddie will be able to proceed with their current goals in place while they work on revisions. The FHFA declined to provide additional comment beyond its statement on what types of changes might be needed to meet its standard.

Both GSEs issued statements in response to the objection.

“We welcome the opportunity to enhance our DTS plan with input from FHFA and we will continue our ongoing work to serve these underserved markets,” Fannie Mae said in an email.

“Since 2018, Freddie Mac has implemented innovative solutions for rural housing, manufactured housing, and affordable housing preservation through our Duty to Serve efforts,” Freddie Mac said in a separate email. “We are committed to providing even more impactful support for these underserved markets in our 2022-2024 plan.”

Duty-to-Serve plans typically go through a revision process. Those currently under review drew some particular objections from a coalition of affordable housing groups last year. Among those objections were concerns that current capital considerations and restrictions on targeted equity investments could hamper the GSEs’ ability to address the needs of underserved communities. The coalition also reiterated a longstanding concern around the lack of a goal that would bring the GSEs into the relatively lower-cost market for chattel manufactured homes. The mortgage lenders Fannie and Freddie typically work with often aren’t comfortable making these loans because they are titled as personal property rather than secured by real estate.

The Underserved Mortgage Markets Coalition that raised concerns about the lack of a chattel manufactured housing goal and other aspects of 2022-2024 underserved markets plans in a letter to the FHFA last year had not yet convened to discuss the FHFA’s objection at deadline. But one member of the group welcomed the FHFA’s action.

“We are very pleased by FHFA’s decision to object to the Duty-to-Serve plans and we hope that Fannie Mae and Freddie Mac will take us up on our offer to help them improve their plans to something that can pass muster,” said Jim Gray, senior fellow at the Lincoln Institute, in an email.


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