UMMC Comment Letter Warns FHFA’s Duty to Serve Overhaul Could Reduce Access to Affordable Housing
On Friday, July 24, members of the Underserved Mortgage Markets Coalition (UMMC), a coalition of more than 40 organizations convened by the National Association of Affordable Housing Lenders (NAAHL), submitted formal comments to the Federal Housing Finance Agency (FHFA) on its proposed rewrite of the Duty to Serve (DTS) rule. The full letter can be read here.
DTS is a statutory mandate established by Congress for Fannie Mae and Freddie Mac (the Enterprises) to meet the needs of very low-, low-, and moderate-income families in three underserved markets: manufactured housing, rural housing, and affordable housing preservation. Over the past ten years, the DTS rule that implements the statutory mandate has driven the Enterprises to better support renters and homeowners, including through the creation and preservation of nearly 34,000 affordable rental units in rural communities, supporting homeownership for 269,000 families in high-needs rural regions, and supporting access to mortgage credit for 195,000 manufactured homeowners.
UMMC’s central concern: the proposed rule removes much of the program structure, giving Fannie Mae and Freddie Mac significant discretion to decide how and how much to invest in markets that have historically gone underserved. History has shown that, without strong guardrails, the Enterprises will gravitate toward easier-to-serve, higher-income markets, which is why Congress created DTS initially. The rule also proposed a change that would let the Enterprises get credit for serving higher income borrowers, making it easier for the Enterprises to hit their DTS targets while leaving working families behind. Under the proposal, police officers in Charleston, South Carolina; teachers in Little Rock, Arkansas; and firefighters in Boise, Idaho—all of whom qualify for DTS support today—could lose access. The net effect will likely leave working families, seniors, and the most economically distressed rural communities – already underserved – even further behind.
“Duty to Serve exists because history has shown that, without clear guardrails, the housing finance system drifts toward the borrowers who are easiest to serve rather than the ones who need the support the most,” said Sarah Brundage, President and CEO of NAAHL, which convenes UMMC. “This proposal would let Fannie Mae and Freddie Mac get credit for reaching families they serve in the normal course of business, while rural communities, manufactured homeowners, and lower-income families and seniors fall further behind – contrary to Congress’ intent when it enacted Duty to Serve in 2008. FHFA has a chance to strengthen this program instead of hollowing it out, and we are urging the agency to take the time to get it right.”
The letter lays out six recommendations to strengthen the rule:
Maintain a robust strategic planning process, including the three-year DTS Plan cycle and 60-day public comment period.
Allow DTS Plan modifications, paired with clear annual target levels of support and public comment on substantive changes.
Revise the area median income methodology to protect lower-income borrowers while addressing real need in high-needs rural regions.
Retain statutory and regulatory activities eligible for DTS credit in each market, including manufactured housing tenant protections.
Strengthen the evaluation system with clear metrics and real consequences for success or failure.
Continue robust data collection and public disclosure so stakeholders can track the rule’s real-world effects.