NLIHC Submits Comments Expressing Concerns Toward Proposed Duty to Serve Regulatory Changes
Aug 03, 2026
By NLIHC Policy Team
NLIHC submitted comments on the Federal Housing Finance Agency (FHFA)’s Notice of Proposed Rulemaking (NPRM) to dramatically alter the agency’s “Duty to Serve” (DTS) regulations. Entitled “Enterprise Duty to Serve Underserved Markets,” the NPRM states it would enable the agency to “better serve the needs of very low-, low-, and moderate-income families,” however, NLIHC’s analysis finds that it would hinder FHFA’s ability to serve underserved markets, including: manufactured housing, affordable housing preservation, and rural housing. NLIHC’s comment letter, submitted July 24, discusses how “many of the proposed changes would weaken meaningful implementation of the statutory DTS obligation,” demonstrating how the Proposed Rule’s approach undercuts the established commitment.
Background on Duty to Serve
The statutory DTS obligation and the FHFA were established in the “Housing and Economic Recovery Act of 2008” (HERA), a response to the foreclosure crisis and ensuing global financial meltdown. HERA was largely concerned with regulating and strengthening federal oversight over Fannie Mae and Freddie Mac, two government-sponsored enterprises (GSEs) that provide a secondary market for residential mortgages. Fannie Mae and Freddie Mac were placed under conservatorship in 2008, and remain under the control of the federal government, with FHFA as the conservator and regulator.
Duty to Serve requires Fannie Mae and Freddie Mac to lead the industry in developing loan products and flexible underwriting guidelines for manufactured housing, affordable housing preservation, and rural markets, and requires the GSEs to improve access to mortgage financing for very low-, low-, and moderate-income families in these markets. The original final rule for DTS was published in 2016 and informed the creation of the GSEs’ first 3-year plans, which covered 2018-2020. The GSEs are currently working on goals included in their 2025-2027 plans.
NLIHC Comment Letter to FHFA
NLIHC’s comments illustrate how the proposed changes to the existing DTS rule would harm accountability measures for GSEs by removing regulatory requirements, while likely hitting extremely low-income (ELI) households the hardest. The letter emphasizes how:
The proposed rule would remove the Activities framework, including the lists of required Statutory and Regulatory Activities that the GSEs must address. No evidence has been given to demonstrate that such activities are ineffective or unnecessary. While FHFA frames eliminating requirements as encouraging the development of “innovative, high-impact initiatives,” leaving Enterprises to take “any [eligible] action” consistent with DTS, this change instead creates loose guidelines that threaten DTS compliance as Congress intended.
FHFA acknowledges that removing some Regulatory Activities “could appear to negatively impact” populations like Native communities and farmworkers living in rural areas. Rather than name how rural barriers to housing development—such as insufficient federal investments or lower wages—would be addressed, the Proposed Rule claims to reach such groups by revising definitions, i.e., by including “high-needs rural regions” in “rural areas.” In reality, these definitional changes blur whether the communities most in need would be served.
Removing Activities voids justification for FHFA’s repeal of its Fair Lending, Fair Housing, and Equitable Housing Finance Plans (EHFP) regulation. With the repeal citing DTS’s “rigorous performance evaluation and enforcement mechanisms” as sufficient to catching any disparities, removing the Activities framework both challenges this reasoning and potentially allows for disparities to persist.
Current Regulatory Activities offer tenant protections in manufactured housing that effectively serve communities. Some of these protections act as a source of empowerment against institutional investors and private equity companies, whose harms have been noted by the current administration.
Current Statutory Activities contribute to affordable housing preservation through GSE financing. Keeping this language in FHFA regulations ensures maintaining an “essential piece of preserving the nation’s federally assisted housing stock” when preservation is as critical to the housing crisis as supply.
The Proposed Rule would change how area median income (AMI) is used to determine DTS loan credit by expanding eligibility. Although the FHFA argues that the change would “support low-income borrowers in both rural and urban areas while respecting income differences across geographies,” it is only justified in low-income households in High Needs Rural Regions. While NLIHC supports this change in High Needs Rural Regions outside areas with persistent poverty, the new methodology could again blur whether communities most in need would be served.
The usage of AMI would also be modified to “[presume] affordability” for all manufactured housing communities (MHCs)—an assumption that can focus DTS loan purchases toward “luxury” or “lifestyle” MHCs, obscuring where much-needed investments should be directed.
Insufficient reasoning and time are given for the rule’s shortened comment period. While the FHFA claims that DTS’s presence since 2016 gives stakeholders enough familiarity to act within a 45-day comment period, this explanation doesn’t account for other stakeholder obligations and the time needed to consider the rulemaking’s substantial changes. Any finalized regulatory text should include, at minimum, a 60-day comment period in line with current practice—especially when only 60 comments were submitted to this NPRM.
Read NLIHC’s comment letter here.
Read the Proposed Rule here.
Learn more about GSEs and Duty to Serve from Chapter 3 of NLIHC’s 2026 Advocates’ Guide.