Influential housing nonprofit Enterprise Community Partners this week submitted a comment letter to the Federal Housing Finance Agency (FHFA) regarding the Duty to Serve (DTS) plans submitted by the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.
In its letter, the organization recommended that the GSEs take steps to preserve the affordability of properties financed by the Housing Credit program; commit to energy efficiency goals outlined throughout the Duty to Serve program; address insurance premiums and property resilience; and improve activities related to Native American and Tribal housing.
“There is strong alignment between Enterprise’s mission and the vision laid forth by Director Thompson for FHFA and the GSEs,” the letter said. “However, Enterprise has concerns that the baseline adjustments to key outcomes are not appropriate given the continued – and growing – need to preserve affordable homes. Any adjustments should be calibrated to program-specific estimates of market size in each plan year and should also reflect the new opportunities that are emerging as a result of new funding streams and policies that have been rolled out.”
Enterprise recommended providing DTS credit for Housing Credit equity investments across rural and non-rural markets “that support affordable preservation of existing multifamily buildings. As investors with an explicit public purpose, the GSEs should put the highest priority on preservation of housing affordability for the longest possible time period,” the letter said.
Enterprise also expressed concerns over “the practices of some owners of Housing Credit Limited Partner interests,” which has led to litigation when a limited partner exits, which could be problematic for nonprofit activity and could act counter to Congressional intent and threaten the preservation of needed affordable housing properties.
Enterprise also advocated for modernized applications of energy efficiency standards.
“Energy burdens across the market remain significant and much of the existing stock was built prior to the implementation of – or at best to older, less stringent – energy codes,” the letter said. “Increasing the purchase of loans financing efficiency improvements, especially those purchased in high energy-burdened areas, bringing that stock up to modern energy efficiency standards, can aid in reducing financial impacts felt by many low-income individuals and increase the climate resilience of those communities.”
Elevated insurance costs are also addressed by the letter, as Enterprise hopes standards are developed to keep costs under control while operating in a period of heightened climate risk. More expensive insurance premiums coupled with increasing climate risk threatens the nation’s affordable housing supply, and Enterprise wants to see the GSEs step in.
“Enterprise calls on the GSEs to create processes that facilitate better insurance premiums, to prospectively evaluate catastrophic risk and work with borrowers to access lower-cost insurance, and to create grant programs to incentivize resilience and ensure that their loan products can be paired with other funding sources that make properties more resilient,” the letter said.
Finally, Enterprise urges FHFA and the GSEs to recognize the unique circumstances facing Tribal lands, saying the GSEs should increase their engagement with communities in these areas. The organization also wants to see rural housing developments have better access to financing in order to expand and preserve affordable options in these parts of the country.
Separately, Enterprise also signed onto a comment letter submitted by the Underserved Mortgage Markets Coalition (UMMC) that provided additional recommendations to FHFA and the GSEs.
