S T A T UT OR Y R E Q U I R E M E N T

The Federal Housing Finance Agency (FHFA) has issued a

final rule 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 moderate-income families in three

underserved markets specified in the statute:

• Manufactured housing

• Affordable housing preservation

• Rural housing

The statute requires FHFA to annually evaluate and rate each

Enterprise’s compliance with their Duty to Serve requirements

and to report annually to Congress on FHFA’s evaluations.

The final rule sets forth specific activities that the Enterprises

may consider undertaking, at their discretion, to be eligible to

receive Duty to Serve credit, and provides that the Enterprises

B A C K G R O U ND

On December 13, 2016, FHFA issued a final rule

on Fannie Mae’s and Freddie Mac’s Duty to

Serve Underserved Markets. The final rule

becomes effective 30 days after publication in the

Federal Register.

FHFA received 1,567 comments on the proposed

rule, which was issued December 15, 2015.

FHFA previously 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 final rule.

Updates will be posted at www.FHFA.gov/DTS.

may propose additional activities. The final rule does not mandate any particular activities. The final rule provides

for the Enterprises to consider ways to better serve families in the three underserved markets.

U N D E R S E R V E D M A R K E T S P LA N S

Each Enterprise will submit to FHFA a proposed Underserved Markets Plan (Plan) by April 13, 2017 covering a 

three-year period, and the public will be invited to provide input on the proposed Plans. The proposed Plans will be 

posted on www.FHFA.gov/DTS, and the final Plans will be posted on the Enterprises’ and FHFA’s respective 

websites.

The Enterprises must assist each of the three underserved markets through activities, as specified in the Enterprises’

Plans. There are nine Statutory Activities (enumerated in the Duty to Serve statute), and FHFA has identified fifteen

Regulatory Activities. The Enterprises are required to consider a minimum number of Statutory or Regulatory

Activities for each underserved market when creating their Plans. The Enterprises may also propose Additional

Activities in their Plans. For each Activity, the Plans must include measurable objectives stating how the Enterprises

will accomplish the Activity.

Certain impactful activities, including activities that promote residential economic diversity in an underserved market

are eligible for Duty to Serve extra credit.

The Plans will become effective January 2018.

FACT SHEET: FANNIE MAE & FREDDIE MAC

DUTY TO SERVE PROGRAM
DUTY TO SERVE PROGRAM FACT SHEET

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M AN UF A C T U R E D HO U S I N G

For the manufactured housing market, Regulatory Activities that the Enterprises undertake supporting financing of

manufactured homes titled as real estate are eligible for Duty to Serve credit. Enterprise Activities supporting financing of

manufactured homes titled as personal property, also known as chattel, initially as a pilot program, are also eligible for Duty

to Serve credit. FHFA will issue a Request for Input in 2017 on considerations for a potential Enterprise chattel loan pilot

program. Further details will be available at www.FHFA.gov/DTS. In addition, Regulatory Activities related to Enterprise

purchases of blanket loans on: (1) manufactured housing communities owned by their residents, nonprofits or government

agencies or instrumentalities, and (2) manufactured housing communities where tenants’ site leases include certain

minimum tenant protections are eligible for Duty to Serve credit.

A F F O R D A B L E H OU S I N G P R E S E R V A T I ON

For affordable housing preservation, Statutory Activities that Fannie Mae and Freddie Mac undertake related to

preservation of affordable housing funded under the following programs specified in the statute are eligible for Duty

to Serve credit:

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

• HUD Section 236 Rental and Cooperative Housing Program;

• HUD Section 221(d)(4);

• 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.

Regulatory Activities that Fannie Mae and Freddie Mac undertake related to: purchasing loans on small multifamily

rental properties of 5 to 50 units; purchasing energy efficiency improvement loans on multifamily rental properties;

purchasing energy efficiency improvement loans on single-family properties with Fannie Mae or Freddie Mac firstmortgage liens; activities that support financing of purchase or rehabilitation of certain distressed properties;

activities related to public housing properties that use HUD’s Rental Assistance Demonstration Program; and

activities related to properties in designated areas under HUD’s Choice Neighborhoods Initiatives Program are

eligible for Duty to Serve credit.

In addition, Regulatory Activities undertaken by the Enterprises that support preserving affordable homeownership

for single-family properties under shared equity programs administered by a community land trust, a nonprofit

organization or a state or local government agency are eligible for Duty to Serve credit. Eligible shared equity

programs must ensure affordability for 30 years, monitor the units to ensure affordability is preserved over resales,

and support the homeowners to promote successful homeownership.
DUTY TO SERVE PROGRAM FACT SHEET

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FEDERAL HOUSING FINANCE AGENCY • FHFA. gov

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R U R A L HO U S I N G

For the rural housing market, Regulatory Activities undertaken by the Enterprises that support housing in high-needs

rural regions, defined as Middle Appalachia, the Lower Mississippi Delta, colonias, and rural tracts in certain

persistent poverty counties are eligible for Duty to Serve credit. Enterprise activities supporting housing for highneeds rural populations, defined as members of a Federally recognized Native American tribe located in a Native

American area, and agricultural workers are eligible for Duty to Serve credit. In addition, Enterprise activities that

support financing by small financial institutions of rural housing, and Enterprise activities that support small

multifamily rental property activity in rural areas are eligible for Duty to Serve credit. The final rule defines a “rural

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

Management and Budget, or (ii) a census tract in an MSA, but outside of the MSA’s Urbanized Areas as designated

by the U.S. Department of Agriculture’s Rural-Urban Commuting Area Code (RUCA) 1 and outside of tracts that

have a housing density of over 64 housing units per square mile for USDA’s RUCA Code 2.

E V A L U AT I O N S AN D R AT I NG S

FHFA will annually evaluate and rate Fannie Mae’s and Freddie Mac’s performance under their Plans through a

three-step evaluation process that will be further detailed in FHFA Evaluation Guidance. First, FHFA will review

the extent to which the Enterprise has achieved the objectives it identified in its Plan. This is a quantitative evaluation

of the Enterprises’ performance and will be used to determine whether an Enterprise has failed its statutory Duty to

Serve responsibilities or is eligible for a passing rating. If an Enterprise is eligible for a passing rating, FHFA will

determine its final rating through the second and third steps of the evaluation process.

In the second step of the process, FHFA will evaluate the Enterprise’s performance under its Plan from a qualitative

perspective, assessing the extent to which the objectives achieved meaningful impact and were implemented

skillfully.

In the third step of the process, FHFA may award extra Duty to Serve credit for eligible residential economic

diversity activities undertaken by the Enterprise, as well as for other activities eligible for extra credit that will be

identified in the Evaluation Guidance.

FHFA will award a final rating of Fails, Minimally Passing, Low Satisfactory, High Satisfactory, or Exceeds to the

Enterprise based on the quantitative, qualitative, and extra credit assessments. FHFA will report the overall ratings

results to Congress on an annual basis.

FHFA will post proposed Evaluation Guidance for public input within 30 days of publication of the final rule.