Duty to Serve forum challenges industry to ‘change the housing landscape’

June 26, 2017 | By

“It’s not just a ‘duty’ to serve underserved parts of the housing market, it’s an honor.” That’s how Fannie Mae’s affordable housing leader Jeff Hayward opened Fannie Mae’s Duty to Serve Housing Forum in Washington DC earlier this month.

The half-day event brought together more than 120 housing industry participants to learn more about Fannie Mae’s proposed plan to provide greater support to three underserved parts of America’s housing market: manufactured housing, affordable housing preservation, and rural housing. The event also included breakout sessions focused on each of these areas that provided opportunities for attendees to ask questions, give feedback, and learn more about the proposed plan.

The Federal Housing Finance Agency (FHFA) issued its Duty to Serve (DTS) Underserved Markets final rule in December 2016. The rule requires Fannie Mae and Freddie Mac (the Government Sponsored Enterprises or GSEs) to develop three-year underserved markets action plans. Proposed plans were submitted to FHFA last month and are currently posted on FHFA’s website, where the public may submit comments until July 10.

After the comment period, FHFA will work with the GSEs to finalize the plans for 2018 implementation. “Duty to Serve will help illuminate challenges and innovative solutions within the underserved markets, creating new business and growth opportunities for lenders and others,” says Michael Hernandez, Fannie Mae’s vice president – Housing Access, Affordable Housing Initiatives.

“We believe that seizing these opportunities will require a high degree of creativity and collaboration with housing partners who best understand the unique challenges of these markets. We also believe that success in serving the Duty to Serve markets can set the stage for broader economic benefits and successful, sustainable communities,” he adds.

In his opening remarks, Hayward, Fannie Mae’s executive vice president and head of its Multifamily business, underscored that Fannie Mae was taking a “holistic, enterprise-wide approach” to Duty to Serve and challenged attendees to “change the housing landscape.”

Face-to-Face

Fannie Mae previously offered DTS webinars, but the Forum on June 16 was its first in-person DTS event. “Our goal today is to engage key housing stakeholders, ensuring they are aware and informed of our plans and the opportunity to provide formal input during FHFA’s public comment period,” Hernandez says.

“Everyone in this room knows these markets are underserved and their challenges can seem overwhelming. They lack physical infrastructure. They may lack a legal, regulatory, and tax infrastructure. And they lack services. They also lack support from the secondary market, and that’s where we come in,” Hayward told attendees in his opener. “We need to look at these markets as partners and channel the power of information to help the underserved,” Hayward says. “This is our role — leading meaningful projects side-by-side with our industry partners.”

Hernandez explained that Fannie Mae’s proposed plan is based on four strategic priorities:

  1. Analyze – These markets lack the data-driven understanding enjoyed by participants in well-served housing markets.
  2. Test and Learn – Fannie Mae is committed to listening to and working closely with existing and new partners who best understand these challenging markets to learn how we can support them in new, efficient ways.
  3. Partner and Innovate – Partners shouldn’t be unafraid to innovate, to try new ideas.
  4. Do What We Do Best – By harnessing the power of the secondary market, Fannie Mae strives to bring private capital to make housing more affordable in all markets.

“We’re excited that the Duty to Serve rule will allow us to focus again in areas that need the most help,” Hayward says.

Calls to Action

Jonathan Lawless, Fannie Mae’s vice president – Product Development and Affordable Housing and Bob Simpson, vice president – Affordable Green and Small Business Loans provided overviews of the challenges for single-family and multifamily housing in the three areas. They called for innovative thinking, partnering with local experts, and changing the way the industry prioritizes underserved segments.

Key points included:

  • Manufactured housing (MH): Fannie Mae’s Single-Family business is reviewing current Selling Guide restrictions on MH loans and hopes to increase purchases of MH loans from HUD and USDA. On the Multifamily side, the company is reviewing its current products to consider financing strategies for government, non-profit, and resident-owned manufactured housing communities (MHC), and is researching and evaluating FHFA’s proposed minimum tenant pad lease protections.
  • Affordable Housing Preservation: Single-Family is engaging with customers and partners to increase liquidity for shared equity models such as community land trusts and resale restricted properties. It is also increasing financing opportunities for energy efficiency improvements and rehabilitation of distressed properties. Multifamily is exploring preservation strategies for HUD project-based Section 8 rental assistance, USDA Section 515 rural rental housing, HUD Section 202 supportive housing for the elderly, and federal low-income housing tax credits.
  • Rural housing: Single-Family is building and strengthening relationships with local and regional lenders including small financial institutions and exploring ways to increase collaboration with non-profit and government entities that support affordable housing in rural areas. Multifamily is studying high-needs rural regions and populations to determine the best role for Fannie Mae, including loan purchases, product development, and outreach, as well as increasing purchases of rural multifamily loans from small financial institutions.

Both speakers also noted that Fannie Mae supports the Duty to Serve rule and expanding access to affordable housing through innovative mortgage products, tools, and resources. HomeReady® mortgage offers low down payments and unique underwriting flexibilities. Desktop Underwriter® and Day 1 Certainty™ help lenders serve more home buyers with confidence. And its current Multifamily programs support and sustain affordable rental housing in all markets.

‘It All Starts With Data’

In his opening, however, Fannie Mae’s Jeff Hayward emphasized the importance of strong data in order to develop solutions that work. “You can’t change the narrative without additional facts,” Hayward says. “That’s what is required in order for us to identify tools and approaches that will truly expand access to low-income buyers in rural areas, those living in manufactured housing communities, Native American buyers, and others targeted by the DTS rule.”

Hayward also emphasized the need to build strong partnerships between Fannie Mae and the groups and experts who know these markets best. “Partnering is the most important thing we do,” Hayward told attendees. “We welcome the ideas, creativity, and collaboration of our customers and industry partners throughout the 2017 Duty to Serve planning process,” he says.

“In 2018 and beyond, as we implement our three-year plan, there are many opportunities for collaboration and partnership as we conduct research, outreach, pilots, and other market-focused activities.”

“But it all starts with data,” he adds. “That’s what will make these projects successful.”

At the forum’s conclusion, there was a clear sense of excitement focused on the future of Duty to Serve—both for the collaborative planning process and the highly anticipated 2018 implementation.

Additional information, including Fannie Mae’s Underserved Markets Plan, is available on FHFA’s website. Fannie Mae resources for Duty to Serve are available here.

 

 

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