HAC submitted comments in response to the October 5, 2022 Notice of Proposed Rulemaking (NPRM) on the Enterprise Duty to Serve Underserved Markets Amendments published by the Federal Housing Finance Agency (FHFA). HAC has conducted significant research on housing finance, including numerous aspects of Fannie Mae’s and Freddie Mac’s statutory Duty to Serve Underserved Markets. The regulatory change under consideration, in fact, is based on HAC research for Fannie Mae. Thus HAC is well positioned to comment on this proposal.

HAC generally supports FHFA’s proposed definition and use of “colonia census tracts” to target efforts by Fannie Mae and Freddie Mac (the Enterprises) to meet the credit needs of these high-poverty rural areas. As the NPRM explains, the colonia census tract model is based on Colonias Investment Areas, a concept developed by HAC for use by Fannie Mae in meeting its Duty to Serve the colonias. HAC’s research makes clear that using census tracts containing colonias as a basis for identifying and evaluating colonias activities would not only provide clarity, but would also meet the goals of the Duty to Serve statute and regulations.

Key Takeaways

1. Census tracts are the best available geography for a revised colonia definition, as HAC’s research has demonstrated, and HAC supports FHFA’s proposal to base its definition on tracts.
2. Focusing activities in the places FHFA identifies as colonias census tracts would meet the goals of the Duty to Serve requirement.
3. Alternative definitions have proven to be too broad or too difficult to use.
4. HAC recommends providing greater weight to Duty to Serve activities in colonia census tracts in rural areas than to those in urban or suburban places, because rural tracts have greater needs.
5. The colonias census tract database should be updated more often than every ten years if interim changes warrant.

To learn more about HAC’s full recommendations, read our full comment letter.