The Spring Street Brief

The Federal Housing Finance Agency has proposed a sweeping overhaul of the Duty to Serve regulations governing Fannie Mae and Freddie Mac. The proposed rule replaces the existing prescriptive Activities framework with a flexible, principles-based approach — and expands LIHTC credit eligibility across all three Duty to Serve underserved markets. For LIHTC investors, affordable housing developers, and structured finance practitioners, the comment deadline of July 24 and a target effective date of January 1, 2028, make this a near-term priority.

Show Notes

The Federal Housing Finance Agency has proposed a sweeping overhaul of the Duty to Serve regulations governing Fannie Mae and Freddie Mac. The proposed rule replaces the existing prescriptive Activities framework with a flexible, principles-based approach — and expands LIHTC credit eligibility across all three Duty to Serve underserved markets. For LIHTC investors, affordable housing developers, and structured finance practitioners, the comment deadline of July 24 and a target effective date of January 1, 2028, make this a near-term priority.

Key Takeaways:

  • FHFA proposes to eliminate the current Activities framework entirely, including Statutory and Regulatory Activity lists, Additional Activities, extra credit provisions, and minimum activity requirements from three-year plans.
  • Enterprises would instead be permitted to pursue any action consistent with Duty to Serve, unless FHFA has specifically deemed it ineligible by regulation or case-by-case review.
  • LIHTC investments would earn Duty to Serve credit across all three underserved markets — rural housing, manufactured housing, and affordable housing preservation — up from rural only under the current framework.
  • The restriction on subordinate multifamily liens (previously limited to energy and water improvement financing) would be removed, opening the door to broader layered financing structures for multifamily affordable deals.
  • The income calculation methodology would be revised to more accurately reflect families in areas of concentrated low-income populations, and affordability determinations for manufactured housing communities would be updated.
  • Comments on the proposed rule are due July 24, 2026; regulatory changes are targeted to take effect January 1, 2028.
  • A correction affecting refinancing mortgages that are not arms-length or borrower-driven transactions was posted June 26, 2026.

The shift from a prescriptive activity checklist to a principles-based framework with a published ineligible-actions list will fundamentally reshape how Fannie Mae and Freddie Mac structure their Duty to Serve plans — and, by extension, how they engage with LIHTC deals, manufactured housing finance, and preservation transactions. The July 24 comment deadline gives the industry a narrow window to influence what ends up on the ineligible list. Practitioners with active pipeline in any of the three underserved markets should engage now.

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