Comment

The agency purports that the current definitions within the regulation make it too confusing and difficult for the Enterprises to identify colonias, and thus under serve already underserved regions. However, even if this change is adopted, the issue remains that the Enterprises are in no better position to identify and locate the colonias within the colonia census tracts. Further, even if they were, the agency has not proposed any accountability to ensure that the colonias will be served by the Enterprises. This is evidenced by the fact that under the proposed amendment, the Enterprises endeavors in the colonia census tracts will be eligible for Duty to Serve credit, regardless of where within the tract the Enterprises conduct their activities. The agency seems to indirectly address this issue by emphasizing that “Colonia census tracts-regardless of whether they are located within or outside an MSA-have high poverty rates and low housing density, which contribute to limited access to credit for the households in those communities.” The agency further emphasizes that  “The estimated poverty rate for all colonia census tracts is higher than the estimated poverty rate in Duty to Serve rural areas in general, and even higher than the estimated poverty rate in other high-needs rural regions…” It can be assumed that the agency believes this data substantiates the notion that it is not necessary to specifically identify colonias within the colonia census tracts, because colonia census tracts are worse off than even high-needs rural regions. However, the agency has provided no data as to why colonia census tracts are in such dire need. This data is critical, because it could potentially shed light on how much colonias specifically contribute to the disproportionately high poverty rates in colonia census tracts. If it were to be found that colonias are a major factor to the disproportionately high rates of poverty with a colonia census tract, then requirements that the Enterprises are serving the colonias specifically is itself a necessity. Without such requirements, the agency would find itself right back at square one, colonias being underserved by the Enterprises.

Further, the agency proposes to revise the definition of “rural area” in the regulation to include all colonia census tracts regardless of their location, i.e whether within or outside an MSA. In justifying this, the agency notes it “took into consideration a finding that MSAs may no longer be a good way to distinguish urban territory from rural territory.” However, this is in direct contradiction to the rest of the regulation which still requires  the other high-needs rural regions to be distinguished by an MSA standard. This kind of contradiction within the regulation itself, can lead to confusion and difficulty in implementing any future changes to this regulation or related ones down the line.

In conclusion, colonias are vastly underserved regions in the United States, with many lacking potable drinking water, paved streets, and standard mortgage financing. While this proposed amendment seeks to address that by amending the definition of “high-needs rural region'' by substituting “colonia census tract” for “colonia”, this could potentially backfire if the Enterprises are not held accountable to serve the colonias within the tracts.