In the intricate world of housing and mortgages, recent developments have highlighted the need for improved policies and strategies. One such topic of high importance is that of the federal housing agencies: Fannie Mae and Freddie Mac. Presently, an influential housing group has put forth a series of recommendations to aid these government-sponsored enterprises (GSEs) in enhancing their projects under their obligation-to-serve (DTS) plans.
Duty-to-serve plans are mandatory guidelines for the GSEs—Fannie Mae and Freddie Mac—set by The Federal Housing Finance Agency (FHFA). These plans outline their obligation to support the mortgage market in three underserved regions, primarily: manufactured housing, affordable housing preservation markets, and rural housing. These critical areas often fall short of the policy attention they require, leading to inadequate housing services for those who need them the most.
The coalition, made up of several key industry players, has created and distributed this list of recommendations with the objective of encouraging GSEs to improve the effectiveness of duty-to-serve plans. It is apparent that through the coalition’s active involvement, they are committed to creating an environment that provides equitable access to safe, affordable, and sustainable housing.
Unsurprisingly, the primary focus of the recommendations is to expand GSEs’ obligations to include affordable housing. They have emphasized the importance of affordable housing and the necessity of GSEs to think outside of the mainstream box for solutions.
One suggestion put forth is the consideration of ways to facilitate smaller loans, which seems to be a less traditional approach within the industry. These smaller loans could potentially provide accommodation solutions to those who may otherwise struggle to afford a home.
Another proposed strategy is to support resident-owned communities (ROC), a form of affordable housing where homeowners form a cooperative to purchase the ground on which their homes stand. Understanding and supporting these kinds of unique homeownership models may be key to expanding access to affordable housing options and ensuring these homeowners are not priced out of their communities in the future.
The coalition has also suggested that GSEs should gather a wider reach of data to fully understand the housing market. By doing so, they could identify and address gaps in serving rural markets. Furthermore, improvements are needed in servicing loans, particularly for those portfolios that consist primarily of smaller loans. The resounding sentiment appears to be that there should be greater effort in understanding and responding to diverse and multi-faceted housing needs.
Making room for the underserved in the housing market also involves reducing barriers to manufactured housing, which is seen as an essential source of affordable housing. Part of this includes the improvement of titling and lending issues that often plague manufactured homes. The goal is to ensure that financing manufactured homes is more straightforward, reliable, and fair.
The CJJ coalition comprised of community advocacy organizations, financial institutions, manufactured housing groups, and public interest organizations, believes that the effectiveness of DTS plans can be noticeably increased if the recommendations they have proposed are effectively implemented.
In a similar effort to enhance affordable housing preservation, the coalition equally recommends a deliberate commitment towards non-profit organization acquisition and rehabilitation of existing rental projects. This is seen as a relevant effort to ensure that affordable rental projects – particularly aging ones in dire need of repairs – are not converted to market-rate housing that could potentially ignore the housing plight of the underprivileged.
These suggestions offer a paradigm shift in the approach to addressing housing needs. By creating an environment that allows for equality and diversity, and forms an inclusive housing sector, housing affordability could become more than just an idea.
However, the implementation of these recommendations would require a determined commitment from the GSEs and the FHFA. For these changes to come into effect, the consent and support of all involved parties are key. In an ideal world, this series of suggestions would become a roadmap, with clear directions indicating the route towards improved housing services, especially for those currently underserved.
If acted upon, these recommendations would make significant strides in augmenting the GSEs’ duty to serve plans. The housing market would greatly benefit from these proposed changes, especially for underserved communities that have long been overlooked.
In all, changing industry norms and approaching housing problems from new angles can result in improved services and better accommodation for all. Shedding light on the underserved communities and introducing fresh ideas to support these sectors could hold the key to unlocking a more prosperous housing sector, characterized by inclusivity, affordability, and sustainability.
The wheels are set in motion and the industry awaits the implementation of these potentially game-changing recommendations. As the world evolves, the housing sector must keep up and transform itself to better suit the needs of all its participants. This proposed roadmap offers valuable insights and suggestions in the right direction. It’s a call to action that, if adopted, could prove to be a leading way towards increased housing affordability and equality in the future.
