A new coalition for affordable housing is calling on the regulator who oversees state-sponsored companies Fannie Mae and Freddie Mac to put proposed underserved market targets on hold until they can be revised.
The “duty-to-service” goals submitted by the GSEs and submitted for oral and written comments earlier this year are not doing enough for affordable housing and need to be reconsidered by Fannie and Freddie, according to a letter dated October 20 to the regulator, from May 20 Groups signed. While at least one restriction on the purchase of GSE loans cited as a challenge to meeting the DTS plans has been suspended and equitable housing plans have subsequently been added that broadened the goals, some fear that other aspects of the original proposal were over which they are concerned about will be postponed without further discussion.
"We respectfully urge the Federal Housing Finance Agency to pause the effective date of the plans while demanding much improved written proposals from companies," the coalition said in the letter.
The letter also identifies three broader policy development challenges of concern among the GSEs: a pending proposal from the former FHFA director calling for new product reviews, a capital plan that is being re-evaluated but still making credit expansion difficult and restrictions on “targeted equity investments” are believed by the Groups to be necessary to meet the needs of some markets.
As for the proposed duty of self-serving, the coalition is protesting lower goals set for all three mandatory categories – prefabricated houses, affordable housing and rural housing – and what the coalition calls shrinkage in some efforts.
"They inappropriately propose to end highly touted and much-needed programs such as the purchase of private property loans for prefabricated houses without a reason," the letter reads, reiterating the long-standing concerns of affordable housing advocates about the fact that the GSEs never fully committed an effort.
In their proposed DTS targets, Freddie stated that it had suspended a pilot for these loans out of "security considerations," while Fannie said, "We are continuing to work with our regulator on security and solidity considerations and the feasibility of a home loan program."
Although prices are low for the homes in question, high financing costs present a hurdle for buyers. AH advocates would like to see if GSE purchases and securitisations could be used to lower the interest rates on these loans.
"I think a lot of people, including at least some who work in the corporations, see prefabricated homes in general, and furniture in particular, as one of the largest untapped markets," said Jim Gray, senior fellow at the Lincoln Institute of Land Policy, one of the groups who signed the letter. "There is a way to safely do this type of lending."
The credit profile of borrowers receiving manufactured home loans called personal property is similar to those receiving mortgage-backed financing, according to a report by the Consumer Financial Protection Bureau earlier this year.
In addition to the Lincoln Institute, other signatories of the letter are: the Center for Community Progress, cdcb, Enterprise Community Partners, Fahe, Grounded Solutions Network, Housing Assistance Council, Housing Partnership Network, Local Initiatives Support Corp., National Council of State Housing Agencies, National Community Stabilization Trust, National Housing Conference, National Housing Trust, NeighborWorks America, Next Step, Novogradac, Opportunity Finance Network, Prosperity Now, RMI and ROC USA.