FHFA Finalizes Duty to Serve Requirements for the GSEs

On Tuesday, December 13th, the Federal Housing Finance Agency (FHFA) completed a new rule which will modify and expand the existing “duty to serve” rule for the GSEs. According to an article in American Banker, this new rule will put in place a set of incentives to compel Fannie and Freddie to promote housing opportunities for low- and moderate-income consumers. Specifically, the final rule gives credit to the GSEs for working to maintain affordable rental housing and homeownership opportunities. Additionally, the GSEs will receive credit for supporting housing in high-needs rural areas.

Under a pilot program, the rule also allows Fannie and Freddie the chance to earn credit by supporting the development of a secondary market for consumer loans used to finance manufactured homes, commonly known as “chattel loans.” Although this pilot program was outlined in the FHFA’s original proposed rule, it is worth noting as many observers were uncertain it would be included in the final rule.

The GSEs are now expected to submit plans for adopting the provisions of the new rule to the FHFA. Following the implementation of those plans, the FHFA will then score each of the GSEs on their adherence and report their evaluation to Congress.

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