The Federal Housing Finance Agency (FHFA) — the federal regulator for both Fannie Mae and Freddie Mac – has issued a proposed rule that would modify existing capital retention requirements for the federal mortgage giants. The proposed rule, published in the Federal Register on June 30, 2020 (at pp. 39274-39406), would establish an amended Regulatory Capital Framework for the Enterprises, subject to FHFA enforcement and oversight, premised, in part, on the anticipated exit of the Enterprises from the federal conservatorship under which both entities have been operating since September 6, 2008.

MHARR is currently analyzing the proposed rule in order to assess its potential impact on the manufactured housing consumer financing market in general and on the implementation of the Duty to Serve Underserved Markets (DTS) as related to federally-regulated manufactured housing in particular. After its review is complete, MHARR expects to submit written comments to FHFA on the proposed rule. The deadline for comments as set forth in the Federal Register notice, is August 31, 2020.

The primary focus of MHARR’s expected comments will be on any potential negative impact of the proposed Regulatory Capital Framework on: (1) Fannie Mae and Freddie Mac’s full compliance with DTS through market-significant securitization and secondary market support for mainstream manufactured housing consumer loans (including the personal property or “chattel” loans which account for nearly 80% of the manufactured housing finance market according to federal data); or (2) FHFA’s enforcement of full DTS compliance by Fannie Mae and Freddie Mac within the manufactured housing financing market after 12 years of needless and highly-damaging delay. 

This is particularly the case insofar as MHARR, in a May 11, 2020 communication with FHFA Director Mark Calabria, highlighted the continuing failure of Fannie Mae and Freddie Mac to serve the vast bulk of the manufactured housing market under DTS, while resorting to excuses, distortions and diversions in order to avoid the law’s express mandate. That communication has made it clear to FHFA that Fannie and Freddie have not complied with federal law and that this matter will not simply “go away,” while the Enterprises engage in diversionary activity which benefits only one or two of the industry’s largest corporate conglomerates.

MHARR will continue to press for full accountability with regard to DTS and for FHFA to finally fulfill its responsibility and obligation to ensure the availability of market-significant support by Fannie and Freddie for the mainstream, affordable manufactured housing market as mandated by Congress.