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30 | TH E M R EP O RT FEATURE A Different Perspective How will the replacement of Duty-to- Serve requirements with a market access fund impact the business strategy for Fannie and Freddie? By Brian Yoho P lans for reform of Fannie Mae and Freddie Mac have been diverse and numerous following the completion of the federal bail- out of the two mortgage giants and the creation of the Federal Housing Finance Agency (FHFA) in 2008. Several developments in the first half of 2019 have renewed in- terest in the future of Fannie Mae and Freddie Mac (the government- sponsored enterprises, or "GSEs"). First, in February, Sen. Mike Crapo, Chairman of the Senate Banking Committee, released an outline of significant reform to the housing finance system that called for the privatization of the GSEs. Second, in March, the Trump administration issued a memoran- dum directing the Department of Treasury and the Department of Housing and Urban Development (HUD) to develop options for housing finance reform. Finally, the April confirmation of Mark Calabria to lead FHFA was preceded by Senate hearings in which the reform of the GSEs featured heavily. One central element for any reform plan is the extent to which the GSEs will become either more like a public utility, an ordinary branch of the federal government, or a private corporation, compet- ing with other entities in the business of guaranteeing payment on mortgage-backed securities (MBS). Additionally, an important element of the debate amongst would-be reformers is whether the Duty-to-Serve (DTS) requirements will continue to be imposed on the GSEs or any other corpora- tion competing with them in the secondary mortgage market. The Current Scenario T he current DTS requirements originated in the Federal Housing Enterprises Financial Safety and Soundness Act of 1992. The Act mandated the establish- ment of goals for the GSEs for purchase of mortgages securing loans to the low- and moderate- income families. Congress deter- mined that it was necessary to increase those duties when it en- acted the Housing and Economic Recovery Act of 2008 (HERA). While creating FHFA to oversee the GSEs through conservator- ship, it mandated that the GSEs develop loan products and under- writing guidelines to facilitate a secondary market for mortgages securing loans to the underserved markets. The underserved mar- kets were identified as low- and