Key facts
- The Mortgage Bankers Association (MBA) has urged the Federal Housing Finance Agency (FHFA) to be cautious when finalizing changes to its Duty to Serve (DTS) rule.
- The MBA is particularly concerned about proposed changes to the definition of a manufactured home.
- The proposed rule aims to create a more flexible, outcome-based framework for Fannie Mae and Freddie Mac's support of manufactured housing, affordable housing preservation, and rural housing.
- The MBA warned that evolving factory-built housing products may not fit current GSE purchase standards and highlighted operational challenges.
- The MBA recommended that FHFA coordinate any updated manufactured housing definition with other federal initiatives and maintain a 60-day public input period.
The Mortgage Bankers Association (MBA) has advised the Federal Housing Finance Agency (FHFA) to proceed with caution as it finalizes changes to its Duty to Serve (DTS) rule. In a comment letter sent to FHFA Director Bill Pulte, the trade group expressed support for a shift towards more flexible "eligible actions" but raised concerns about potential unintended consequences for manufactured housing and lender operations.
The FHFA's proposed rule, introduced in June, seeks to implement an outcome-based framework that would alter how Fannie Mae and Freddie Mac support manufactured housing, affordable housing preservation, and rural housing. This includes emphasizing chattel loans, broadening the treatment of Low-Income Housing Tax Credit (LIHTC) activities, and expanding "high-needs" coverage.
A primary concern for the MBA is the FHFA's inquiry into whether to broaden the definition of a manufactured home to encompass factory-built housing beyond units covered by the U.S. Department of Housing and Urban Development (HUD) code, such as modular homes. The MBA stated that financing and collateral policies should adapt to ongoing innovation in factory-built housing to maximize the DTS program's effectiveness, noting that some new products have ownership or titling structures that do not align with current GSE purchase standards. They also pointed to varying state titling laws and affixation rules as operational hurdles.
Furthermore, the MBA urged the FHFA to coordinate any updated manufactured housing definition with other federal initiatives aimed at expanding factory-built housing. The trade group also recommended that the agency maintain the current 60-day public input window for DTS plans, rather than shortening it to 45 days as proposed, to allow for adequate industry feedback. The MBA also suggested that revisions to the GSEs' DTS plans should allow for changes beyond "extraordinary and significant market disruptions" under specific conditions, supported by data.
Overall, the MBA advocated for a "do no harm" approach, believing that the proposed revisions, if managed correctly, could maintain and improve support for manufactured housing, rural housing, and affordable housing preservation while enhancing administrative and oversight processes for the GSEs and the regulator.