Strict criteria for how the Government Sponsored Entities (GSEs) Fannie Mae and Freddie Mac must facilitate a secondary mortgage market for very low-, low-, and moderate-income families in manufactured, affordable and rural housing were released on March 11 by the Federal Housing Finance Agency (FHFA). (Updated FHFA Guidance)
- FHFA oversees the GSEs, which remain in government conservatorship since the financial crisis of 2008. The Housing and Economic Recovery Act of 2008 established a duty for Fannie Mae and Freddie Mac (the Enterprises) to serve the three specified underserved markets. (FHFA Duty-To-Serve Program)
- Under the Duty-to-Serve regulation, each Enterprise must prepare a three-year plan showing how it will increase the liquidity of mortgage investments and improve the distribution of investment capital available for mortgage financing for the three markets. The new evaluation criteria, which take effect 2021-2023 incorporate several changes:
- Revised ratings framework – The revisions establish four ratings to describe Enterprise performance;
- Higher expectations for impactful plans – The revisions require a minimum concept score of 30 for each objective, rather than the previous requirement that the concept scores of all objectives average a 30;
- Increased threshold for determining compliance – The revisions increase the threshold for compliance scores; and
- Technical changes – The updated Guidance also includes technical changes to reflect current practices that have streamlined processes and improved program administration.
- The evaluation guidance sets forth the process and standards by which FHFA will evaluate, and report annually to Congress on the Enterprises’ performance and achievements under their plans. The updated guidance will ensure that the Enterprises Duty-To-Serve programs have a measurable and significant impact in underserved communities.
- FHFA’s Duty-to-Serve Data and Tools webpage includes datasets on areas defined as rural, Indian tribes, high opportunity, and concentrated poverty. FHFA Manager Jim Gray gives an overview of the Duty-to-Serve program in a video on the FHFA website.
Federal Housing Finance Agency Director Mark Calabria addressed his agency’s oversight of Fannie and Freddie – who own or guarantee $5.6 trillion in single and multifamily mortgages – during The Roundtable’s 2020 State of the Industry Meeting in January. (Roundtable Weekly, Jan. 31)
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