Vice president of single-family
By Danny Gardner
Illustration by Dennis Wunsch
Freddie Mac’s Duty to Serve proposal
addresses affordable-housing challenges
Although many believe the economy and the housing market have
rebounded from the 2008 global financial crisis, numerous areas
of the country will continue to experience housing challenges for
years to come. This is particularly true for families in need of affordable housing.
The lack of suitable affordable housing is even more pronounced
in rural markets. This impacts millions of American families, and the
problem is expected to continue to grow as long as wages remain
relatively stagnant and home prices continue to rise.
Freddie Mac is attempting to address the nation’s housing-affordability woes through its Duty to Serve proposal, which seeks to
bring liquidity, stability and affordability to three underserved markets: rural housing, manufactured housing and affordable-housing
preservation. The government-sponsored enterprise (GSE) is working with mortgage originators and other dedicated professionals in
these communities to help more American families with their housing needs by developing and expanding solutions to some of society’s
most persistent housing problems.
Freddie Mac’s increased focus on affordable-housing issues is an
extension of its overall efforts to facilitate the financing of housing for
very low-, low- and moderate-income families. Freddie Mac will work
to increase loan purchases in the underserved market sectors mentioned; develop new offerings; conduct market research; build technical skills for industry participants; and expand homebuyer education, community engagement and local outreach.
A cornerstone of Freddie Mac’s plan is its intention to work with
mortgage originators and other dedicated industry participants who
are deeply knowledgeable about these communities. The Housing
and Economic Recovery Act (HERA), enacted in 2008, established for
GSEs Freddie Mac and Fannie Mae a duty to increase liquidity and
improve the distribution of capital available for mortgage financing
in those markets.
Congress charged the GSEs’ regulator, the Federal Housing
Finance Agency (FHFA), with implementing a program to meet this
obligation. The agency published its Duty to Serve final rule on
Dec. 13, 2016, which directed the GSEs to establish plans to lead the
development of loan products and flexible underwriting guidelines to facilitate secondary financing in the three targeted sectors. Pending FHFA feedback, Freddie Mac’s Duty to Serve plan is
slated to become effective as early as Jan. 1, 2018.
Manufactured homes are a crucial source of affordable-housing stock
for American families. The average price of a new manufactured
home in the U.S. is $71,600, while the average price of a new, single-family, site-built home is $372,900, according to the U.S. Census
Bureau. More than 17 million Americans lived in 6. 9 million manufactured homes in 2010, the Corporation for Enterprise Development, which recently changed its name to Prosperity Now, says.
Manufactured homes are unique in that they may be titled as
either personal property (also known as chattel) or real property.
This distinction can have significant ramifications for taxation,
financing, consumer protections and remedies in case of default.
Approximately 80 percent of new manufactured homes are titled as
personal property, according to the U.S. Census Bureau.
In public outreach that took place as Freddie Mac developed
its plan, the GSE repeatedly heard concerns about the limited
number of lenders that provide financing to manufactured homebuyers. Market participants encouraged the GSE to expand
liquidity, implement standardization measures and enhance consumer protections. > > >