National Policy June E-blast

Federal Policy and Shared Equity Update

This spring has turned out to be a busy time for shared equity and federal policy with two significant events happening within a month of each other. First, HUD released a proposed rule for the HOME program, which includes several changes that would impact the shared equity field. The other is the release of Freddie Mac and Fannie Mae’s proposed plans for the 2025-2027 round of Duty to Serve.

HOME Proposed Rule

HUD’s proposed rule [[link removed]] for the HOME program ( direct link to the full rule [[link removed]]) details broad changes to the program, which include four key elements:

1. Specifying four types of eligible resale formulas. HUD is proposing to explicitly approve four types of resale formulas into regulation, which should resolve a perennial frustration with interpretations of HUD’s policy on what formulas are considered eligible. The four types are itemized, index-based, appraisal-based, and fixed-rate formulas. 2. Clarifying use of the term “community land trust” in the HOME program. The placement and specificity of the definition of “community land trust” in the original authorizing language for the HOME program has been another source of frustration for some in our field. The proposal by HUD provides clarity on the application of the term and broadens the range of community land trusts that meet the definition. 3. Codifying the preemptive purchase option for CLTs. In 2016, Congress gave community land trusts the right to exercise a preemptive purchase option. The proposed rule codifies this into regulation, an important step in making sure CLTs can preserve lasting affordability. 4. Adjusting the community housing development organization (CHDO) board membership eligibility criteria. The composition of the governing boards of CHDOs is currently required to comprise a) at least one-third representation of low-income communities and/or households and b) only up to one-third public officials or employees of governmental entities. HUD proposes to loosen both restrictions to encourage more organizations to become eligible to receive the 15% funding set-aside for CHDOs.

There are many more changes, but these are the ones we want to draw your attention to.

The proposed rule is open for comment through July 29th. Grounded Solutions will submit our own comment letter and we encourage others to do the same. We will be sending out additional materials to our members including response templates, talking points, and general guidance on what makes an effective comment.

Proposed Duty to Serve Plans for 2025-2027

The other big piece of news is the release of the proposed 2025-2027 Duty to Serve plans [[link removed]] by Freddie Mac ( link [[link removed]]) and Fannie Mae ( link [[link removed]]). Freddie and Fannie have been good partners in the past and we will always ask them to do more, especially since this round of Duty to Serve continues the unfortunate pattern of low loan purchase targets by both GSEs.

However, we are heartened to see Freddie Mac’s proposal to build the field from the ground up, including engagement with established programs and actively reaching out to lenders. Lender reluctance is a fundamental issue for shared equity programs. Many of our members have successfully built partnerships with lenders, but the relative complexity, small market, and low balances of shared equity loans make them less appealing to lenders who favor the simpler terms of traditional mortgages. Freddie’s proposal would move us a long way toward realizing one of our central policy objectives: making a loan on a shared equity property a standard practice for lenders.

Duty to Serve also includes proposed actions on multifamily preservation and manufactured housing, two topics which often come up in conversations with members and allies. While Grounded Solutions focuses on the shared equity component of Duty to Serve, we would encourage our members to review the proposed activities from both GSEs regarding these two topics. Manufactured housing is a growing component in CLTs and limited equity cooperatives, as it is generally less expensive to build and more energy efficient than other housing types. It is in the interests of the field that GSN and its members explore avenues for the GSEs to support shared equity and manufactured housing in the same developments.

As with the proposed HOME rule, the release of the proposed plans comes with a 60-day comment period that goes through August 12. Grounded Solutions will be providing substantial comments on the proposed plans, along with our partners in the Underserved Mortgage Markets Coalition (UMMC). We encourage everyone to review the proposed Duty to Serve plans and will be providing additional support to our members in reading and responding to the proposed actions.

Thank you for your interest in our policy work. Please contact us with any questions, concerns, or if you want to get engaged in our advocacy in support of shared equity ownership – [[email protected]].

Where we live matters.

We bring together an extensive network of partners and member practitioners from local communities who have a deep understanding of best practices in community land trusts, shared equity housing, local housing policies such as inclusionary zoning, and more.

At Grounded Solutions Network, we know what policies and strategies work to build and preserve housing opportunities, and we help communities use them.

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