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TH E M R EP O RT | 25 We've also partnered with Next Step, a nonprofit housing intermediary, to roll out a consumer education pilot in Kentucky for buyers of manufactured homes titled as real property. In addition, we're actively seeking new lenders interested in making real prop - erty loans for energy-efficient manufactured homes in conjunction with Next Step. Challenges in Rural Housing T he Duty to Serve final rule encour- ages us to focus on "high-needs" rural regions, which it identifies as Middle Ap- palachia, the Lower Mississippi Delta, the Colonias (parts of Arizona, California, New Mexico and Texas along the U.S.-Mexico border), and rural tracts located in counties with persistent poverty. It also encour- ages housing support for high-needs rural populations, specifically Native Americans in Indian areas and agricultural workers. Although they're socially, economically and geographically diverse, these areas face many common challenges. During information- gathering sessions with a wide range of rural market participants, we learned of the multifaceted scope of these challenges, which affect virtually all residents of these regions. Moreover, they extend beyond housing af - fordability to encompass persistent poverty, declining employment, and limited access to financial services, among other factors. In light of this information, we propose undertaking the following activities in rural areas: • Increase financing for homebuyers, • Expand our research to better understand the rural market, and enrich the national conversation by sharing information about the housing needs of these communities nationwide, • Review our loan offerings and underwrit - ing parameters to address consumer needs, and • Increase our efforts to provide comprehen - sive homebuyer education and technical training to industry professionals. Challenges in Affordable Housing Preservation O ur efforts to preserve affordable single- family housing will focus on two fronts: energy-efficient home improvements and shared equity programs. Energy Efficiency: Heating and cooling costs are the largest utility expenses for most U.S. homes, according to the Department of Energy, accounting for more than half of the energy used in a typical home. While there are several new financing options for energy- efficient improvements on residential proper - ties, the market remains relatively small. During our outreach, we learned that one significant challenge is the lack of standard- ization among financing products, which makes it difficult for lenders and investors to support this segment in a scalable way. It's also difficult to assess both the risk and the impact of energy-efficient improvements on property values. That's why we plan to study the effects of energy-efficient features on single-family prop - erty values and loan performance—two key factors that should help inform our product design and underwriting policy decisions, ac- cording to our Energy Efficiency Task Force. Shared Equity: Although shared equity programs have achieved limited scale so far, research shows that, when properly con- structed, they can be an effective way to pro- vide income-eligible families with sustainable homeownership opportunities. This, in turn, allows them to build wealth while ensuring that home prices remain affordable to sub- sequent buyers. To address the limited scale, we propose building both the capabilities and infrastructure necessary to facilitate growth. As with energy efficiency financing programs, it seems that existing shared equity programs also lack standardization. Organizations develop highly customized programs based on their unique geographic needs, existing partnerships, available budgets, and funding mechanisms. This siloed devel - opment process generates a relatively small number of loans, both individually and in aggregate. We believe a more standardized program will achieve broader benefits. In addition, shared equity homeownership programs are not widely understood, causing lenders to shy away from financing them due to their non-traditional structures. Therefore, we propose the following steps to preserve affordable housing: Identify the current market infrastructure and develop financing standards; provide data and underwriting guidance that can be leveraged by other market participants; enhance consumer awareness about financing options; boost lender awareness about Freddie Mac's product capabilities; minimize opera - tional complexity and incorporate automation, where feasible; and leverage pilots to test new product features and underwriting options. DANNY GARDNER is the VP of Single-Family Affordable Lending and Access to Credit at Freddie Mac. Previously, he led Community Reinvestment Act lending at Citibank and Capital One and served as CEO at the National Community Stabilization Trust. 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