S UMMARY

STATUTORY REQUIREMEN T

Federal law requires the Federal Housing Finance Agency (FHFA) 

to issue a regulation to implement the Duty to Serve requirements

specified in the Federal Housing Enterprises Financial Safety and 

Soundness Act of 1992, as amended by the Housing and Economic 

Recovery Act of 2008. The statute requires Fannie Mae and Freddie 

Mac (the Enterprises) to provide leadership to facilitate a secondary 

market for mortgages on housing for very low-, low-, and moderateincome families in three underserved markets specified in the 

statute:

• Manufactured housing

• Affordable housing preservation 

• Rural housing

FHFA has issued a proposed rule that seeks to strike a balance 

between the requirement that the Enterprises serve families in these 

markets and their continued safety and soundness.

UNDERSERVED MARKETS PLANS 

Under the proposed rule, the Enterprises would each be required to submit to FHFA a draft Underserved Markets Plan 

covering a three-year period, and the public would be invited to provide input on the draft Plans. The draft Plans would be 

posted on FHFA’s website, and the final Plans would be posted on the Enterprises’ and FHFA’s respective websites. 

The Plans would comprise “Activities,” including Core Activities that the Enterprises would be required to consider in 

developing their Plans. The Core Activities represent nine categories of Statutory Activities and eleven categories of 

Regulatory Activities developed by FHFA. The Enterprises could also propose Additional Activities in their Plans. 

Eligible Activities would receive Duty to Serve credit (scoring points). If Fannie Mae or Freddie Mac decides not to 

include a Core Activity in its Plan, it would be required to provide reasons why in the Plan.

FHFA would also provide Duty to Serve credit for Fannie Mae or Freddie Mac activities that promote residential economic 

diversity in an underserved market for affordable housing in high opportunity areas or mixed-income housing in areas of 

concentrated poverty.

MANUFACTURED HOUSING

For the manufactured housing market, Duty to Serve credit would be provided for Regulatory Activities that Fannie Mae 

and Freddie Mac undertake related to financing manufactured housing units titled as real estate and not “chattel” loans 

secured by personal property, because real estate loans perform better, have greater borrower protections, and have lower 

default rates than chattel financing. However, the proposed rule invites public comment on whether the final rule should 

authorize Duty to Serve credit for the purchase of chattel loans. 

Under the proposed rule, Fannie Mae and Freddie Mac would also be required to consider undertaking Regulatory 

Activities related to purchasing blanket loans on the following types of manufactured housing communities: small 

communities with 150 rental sites or fewer; communities owned by their residents, nonprofits or governmental agencies; 

and communities where tenants’ site leases include certain tenant protections.

BACKGROUND

On December 15, 2015, FHFA issued a 

proposed rule on Fannie Mae and Freddie 

Mac Duty to Serve Underserved Markets.

The public comment period is 90 days from 

publication in the Federal Register.

FHFA invites comments on all aspects of 

the proposed rule.

FHFA issued an Advance Notice of Proposed 

Rulemaking in 2009 and a Notice of Proposed 

Rulemaking in 2010 but did not complete the 

rulemaking process. 

Link to FHFA news release

FACT SHEET: FHFA PROPOSED RULE ON FANNIE MAE & 

FREDDIE MAC DUTY TO SERVE UNDERSERVED MARKETS 
FEDERAL HOUSING FINANCE AGENCY • FHFA.gov

AFFORDABLE HOUSING P RESERVATION

For affordable housing preservation, Duty to Serve credit would be provided for Statutory Activities that Fannie Mae and 

Freddie Mac undertake related to preservation of affordable housing funded under the following programs enumerated in 

the statute: 

• U.S. Department of Housing & Urban Development (HUD) Section 8 Rental Assistance Program;

• HUD Section 236 Interest Rate Subsidy Program;

• HUD Section 221(d)(4) FHA Insurance Program;

• HUD Section 202 Housing Program for Elderly Households;

• HUD Section 811 Housing Program for Disabled Households;

• McKinney-Vento Homeless Assistance Programs;

• USDA Section 515 Rural Housing Programs;

• Federal Low-Income Housing Tax Credits; and 

• Other comparable state and local affordable housing programs.

Duty to Serve credit would also be provided for Regulatory Activities that Fannie Mae and Freddie Mac undertake related 

to purchasing loan pools from small banks and community-based lenders on small multifamily rental properties of 5 to 50 

units; Activities related to public housing properties that use HUD’s Rental Assistance Demonstration Program; Activities 

related to properties in designated areas under HUD’s Choice Neighborhoods Initiatives Program; purchasing energy 

efficiency retrofit loans on multifamily rental properties; and purchasing energy retrofit loans on single-family properties 

with Fannie Mae or Freddie Mac first mortgage liens.

Fannie Mae and Freddie Mac would also be required to consider undertaking Regulatory Activities that support preserving 

affordable homeownership for single-family properties under shared equity programs that are administered by a community 

land trust, a nonprofit organization or a state or local governmental agency. Eligible shared equity programs must ensure 

affordability for 30 years -- or longer if permitted by state law, monitor the units to ensure affordability is preserved over

resales, and support the homeowners to promote successful homeownership.

RURAL HOUSING 

For the rural housing market, Duty to Serve credit would be provided for Activities that serve rural areas generally. Duty to 

Serve credit would also be provided for Regulatory Activities supporting housing in high-needs rural regions, defined as

Middle Appalachia, the Lower Mississippi Delta region, and colonias, which are communities located primarily within 150 

miles of the U.S.-Mexico border in Arizona, New Mexico, Texas, or California; and Activities supporting housing for highneeds rural populations defined as members of a Federally recognized Native American tribe located in a Native American 

area, or migrant or seasonal agricultural workers, as defined in the proposed rule. The proposed rule would define a “rural

area” as a census tract outside of a Metropolitan Statistical Area (MSA) as designated by the Office of Management and 

Budget, or a census tract in an MSA, but outside of the MSA’s Urbanized Areas and Urban Clusters, as designated by the 

U.S. Department of Agriculture’s Rural Urban Commuting Area codes.

EVALUATIONS AND RATI NGS 

FHFA would annually evaluate and rate Fannie Mae and Freddie Mac’s performance under their Underserved Markets 

Plans by allocating points for each Activity performed and translating the composite scores to overall ratings for each of the 

three underserved markets. FHFA would report those results to Congress on an annual basis.