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December 21, 2020

Duty to Serve: The End is Just the Beginning

Corey Aber
Article By
Corey Aber, Senior Director of Mission, Policy and Strategy

December 2020 marks the closing of our first three-year Duty to Serve Plan. FHFA released regulatory guidance for Duty to Serve in 2017 and we began acting on our plans in 2018. From inception to today, the program can be summed up in two words: impact and opportunity.

Dynamic Challenges, Dynamic Approach

The reason we exist has not changed since 1970: it is our job to provide liquidity and stability to the market, and to further housing affordability. Duty to Serve has been an important vehicle through which we have both increased our impact in preserving affordable housing and identified opportunities to further our mission — and to further opportunity for renters.

Defining Opportunity

While the issues in the underserved markets that are the focus of Duty to Serve are longstanding, the potential for scale is new — especially in some of the most targeted markets. In many cases, we saw the opportunity to not just understand these problems better, but to amplify the way they are being addressed.

For example, in our 2018, 2019 and 2020 research paper series we synthesized differing definitions of high opportunity areas to reveal their common themes and features. We also did case studies on successes to show how a combination of soft funds, public subsidies, state and local support, and debt provided by Freddie Mac can make affordable housing possible even in very expensive markets.

We also deployed new tools to make finding Duty to Serve and mission-focused preservation opportunities easier, such as our Mission Map. It synchronizes data from multiple sources to help lenders and investors better understand affordable housing opportunities in hard to serve markets. They can easily identify areas where they could do business, such as Duty to Serve designations, opportunity zones or other areas where states prioritize Low-Income Housing Tax Credit (LIHTC) development.

This work was important to helping us and our investors and lenders better understand how we can apply ourselves more effectively to further opportunity for social and economic mobility for renters.

Innovating for Impact

In the last three years we built upon our market-leading business platform to find more ways to drive impact in the market. In 2018, we reentered the LIHTC equity market. By the end of 2020, we anticipate that we will have invested $1.5 billion to support housing where it’s needed most, including in Duty to Serve rural markets.

We also found ways to do more for renters. For example, we worked tenant protections into our Manufactured Housing Community (MHC) offering. Prior to Duty to Serve — and our work on this program — this specific set of tenant protections did not exist.

Because this set of protections was brand new, we needed to provide an incentive for borrowers to encourage adoption, require the renter protections be applied equally for all eligible pad sites at an MHC while allowing owners enough time to adopt them, and make the offering straightforward so it could work for both smaller and larger communities. Duty to Serve was a proving ground for the feasibility and scalability of this concept. Now it is a key component of our mission-driven volume objectives under our 2021 Conservator Scorecard.

Future Impact and Opportunity

How else can three years of work be summed up? Over $20 billion of capital devoted to historically underserved markets, supporting around 200,000 renter households and preserving the nations affordable housing stock. But there’s much more to be done.

The alignment of the program with our scorecard and mission criteria can continue to help the industry focus and serve our country’s households even better. We have a lot in the works around social and economic mobility for renters, and we’ll be using our platform to make inroads on leveling housing inequities. A heartfelt thanks to all our lenders and those we worked with for helping make this possible. We're looking forward to increasing our impact together in 2021 and beyond.

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