WASHINGTON — The Federal Housing Finance Agency finalized a rule Tuesday that will create a "duty to serve" for Fannie Mae and Freddie Mac to help low- and moderate- income consumers, including encouraging a secondary market for manufactured housing loans.
The final rule appears largely similar to a proposal unveiled a year ago, but manufactured housing advocates have been watching to see whether the FHFA kept a pilot program that gives credit to the government-sponsored enterprises for supporting so-called "chattel loans," which are manufactured homes titled as real property. The FHFA said it will issue a proposal next year asking for comment on how to create the pilot program.
Manufactured housing advocates were hopeful the agency would approve the pilot program, noting that 70% of all manufactured homes are financed with chattel loans.
The final rule also give the GSEs credit for supporting the preservation of affordable rental housing and affordable homeownership opportunities, such as shared equity homeownership programs. Additionally, Fannie and Freddie will receive credit for supporting housing in high-needs rural regions.
The rule was mandated by the Housing and Economic Recovery Act of 2008, under which Congress charged Fannie and Freddie with creating a secondary market for underserved areas, including manufactured, rural and affordable housing for low- and moderate-income families.
"We look forward to working with Fannie Mae and Freddie Mac to help meet the critical housing needs for very low-, low-, and moderate-income American families around the country in the manufactured housing, affordable housing preservation, and rural housing markets," said FHFA Director Mel Watt.
While the rule lists specific activities that the enterprises may consider undertaking to receive credit, it does not mandate particular moves.
Fannie and Freddie are expected to submit plans to FHFA on how they will meet the requirements of the Duty to Serve rule. Once approved, the GSEs receive points based on their follow-through in implementing the plans. The FHFA will annually evaluate, rate and report to Congress each GSE's compliance with the rule. The assessment has three parts: a quantitative evaluation, qualitative assessment and a grade for extra-credit eligible activities, including those that promote residential economic diversity.
The agency plans to host "public listening sessions" to obtain input on the GSE's Underserved Markets Plans. The first session is scheduled for Jan. 25 at the Federal Reserve Bank of Chicago.
The rule becomes effective 30 days after its publication in the Federal Register.