Sensible CRA improvements, NHIA endorsement and more in the NHC Member Brief

Weekly update from the National Housing Conference

March 13, 2018

President's Message I By David M. Dworkin

Dear Friend,

This past weekend, I had the pleasure of addressing the National League of Cities Community and Economic Development Federal Advocacy Committee at the NLC’s annual Congressional City Conference. NLC’s Executive Director, Clarence Anthony, is an old friend and colleague who is a committed, effective advocate for affordable housing and community development and I’m thrilled that we will have the opportunity to work together in the coming year on issues that are critical to both of our organizations.

The topic of my talk was the Community Reinvestment Act of 1977, which is the subject of a major review by the Treasury Department. You can read more about the Treasury review in my remarks here. Treasury’s report is expected any day, and when it is released, NHC will hold a detailed briefing on the report exclusively for our members (so don’t forget to renew your membership as soon as possible!).

CRA was enacted in response to concerns over disinvestment in low-income communities and persistent allegations of redlining, the practice of avoiding investment in minority neighborhoods. As Americans continued to leave cities for new suburban “bedroom” communities there was a growing disparity between where banks raised their deposits and where they invested, particularly in housing and mortgage finance. While laws like the Fair Housing Act of 1968 prohibited discrimination, Congress sought to incent banks to invest in the communities where their branches were located. A high CRA rating was intended to provide that incentive. The first release of data under the Home Mortgage Disclosure Act in 1977 made clear that more tools were needed to address the disparities in lending to low- and moderate-income communities.

Over 40 years later, the landscape of banking and investment in the United States has changed in major ways, but the CRA has remained essentially unchanged. Interstate banking, mortgage securitization, internet and mobile banking and the resurgence of America’s cities are just a few of the major changes we have seen in the past four decades.

To understand why the Community Reinvestment Act remains so important, one need only look at the numbers of minority homeowners in the 50 years since the passage of the Fair Housing Act. Overall, minority homeownership plummeted during the Great Recession, falling from 52 percent in 2004 to 46 percent in 2016. The homeownership rate for African-Americans is lower today than it was when the Fair Housing Act was passed in 1968. That is a national tragedy.

Treasury’s report, and ultimately, the actions of the independent regulators that enforce CRA– the FDIC, OCC and Federal Reserve Board—will have to address how CRA investments are measured in a way that doesn’t dilute the original intent of the law, while addressing changes in the banking industry over the past 40 years.

Most banks have long ago learned to appreciate the value of CRA; though they are often frustrated by how it is applied. We want CRA compliance to be fair, timely and accurate, and so do they. I am optimistic that this process will result in a strengthening of the effectiveness of CRA through sensible improvements.

Sincerely,

David M. Dworkin

President and CEO

News from Washington I By Kaitlyn Snyder

NHC officially endorses NHIA

NHC has officially joined the list of national coalition members supporting the Neighborhood Homes Investment Act (NHIA). NHIA would allow states to use private activity bonds to address the appraisal gap created from acquiring and rehabilitating a single-family home in a distressed market. The bill does not yet have congressional sponsors, but they are actively being solicited. Other national partners include Center for Community Progress, Enterprise Community Partners, Habitat for Humanity, Housing Partnership Network, Local Initiative Support Corporation, the National Association of Affordable Housing Lenders, the National Community Stabilization Trust and the National NeighborWorks® Association. NHC encourages our members to consider supporting the bill.

Sec. Carson responds to HUD’s changing its mission statement

On March 8, Secretary Carson sent this open letter to HUD employees in response to media reports regarding possible changes to HUD’s mission statement. Sec. Carson writes, “it’s not enough that I merely assert these news reports are patently false; it’s necessary that I personally address them and reassure you, the HUD family, that nothing could be further from the truth.”

HUD posts ad hoc HOME reports

HUD posted several frequently requested ad hoc HOME reports on HUD Exchange, including HOME units completed by state, HOME units completed by congressional district and HOME units completed within LIHTC projects by state. HUD will periodically update these reports and add new reports to the list. This is a valuable database for making a tangible argument on the importance of increasing the allocation of HOME funds in the FY 2019 budget to members of Congress.

On March 27 at 2 p.m. EDT, the Federal Housing Finance Agency will host an informational webinar on the new proposed rule modifying its Affordable Housing Program. Register here. Questions may be submitted in advance to DHMG.HCI@fhfa.gov. NHC is engaged on this issue and plans to submit comments, which are due on May 14. Comments are due 60 days from publication in the Federal Register, meaning comments will be due sometime in early May.

Op-ed from mayors and CEOs on housing infrastructure

Mayors Muriel Bowser of Washington, D.C., Darrell Steinberg of Sacramento, California and Steve Hogan of Aurora, Colorado published an op-ed in The Hill on their new Mayors and CEOs for U.S. Housing Investment initiative. They argue that affordable housing should be a part of any administration infrastructure plan and call for increased funding for existing programs, as well as the creation and funding of new programs. For more information, check out this blog post I wrote after the launch event.

Senate Democrats release infrastructure plan with housing funds

Last week, Senate Democrats released an infrastructure plan, which includes $62 billion for neighborhood revitalization, lead remediation and affordable housing. The housing section of the plan, which begins on page 15, calls for increased funding for the Public Housing Capital Fund, HOME, the Housing Trust Fund, Choice Neighborhoods, Community Development Block Grant, Indian Housing Block Grant, USDA’s Rural Housing Service rental housing and homeowner assistance programs and lead-based paint removal efforts. Senate Democrats also call for strengthening the Low Income Housing Tax Credit. The plan calls for $40 billion to provide universal high-speed internet that would close the connectivity gap for many low-income households. The $1 trillion plan was unveiled by Senate Democratic Leader Chuck Schumer (D-N.Y.) and Sens. Patrick Leahy (D-Vt.), Ron Wyden (D-Ore.), Bill Nelson (D-Fla.), Tom Carper (D-Del.), Debbie Stabenow (D-Mich.), Maria Cantwell (D-Wash.), Bernie Sanders (I-Vt.) and Sherrod Brown (D-Ohio).

Mapping the African-American homeownership gap

The Urban Institute recently released “ Mapping the black homeownership gap,” which shows that while no city has closed the racial homeownership gap, southern and western cities have come closer. The cities with the highest African-American homeownership gaps are mostly northern and eastern cities, Minneapolis, Minnesota (50 percent), Albany, New York (48.8 percent), Buffalo, New York (44.5 percent), Salisbury, Maryland (43.2 percent) and Bridgeport, Connecticut (42.3 percent). The cities with the smallest African-American homeownership gaps are Killeen, Texas (14.5 percent), Fayetteville, North Carolina (17.4 percent), Charleston, South Carolina (18.1 percent), Austin, Texas (21.5 percent) and August, Georgia (21.7 percent). Currently, the national homeownership gap between white and African-American homeowners is 30 percent; in 1970, two years after the Fair Housing Act was passed, the gap was 24.2 percent. Meanwhile, the overall African-American homeownership rate has remained virtually unchanged - 42.6 percent in 1970 to 41.3 percent in 2016.

New report on Hispanic homeownership

The National Association of Hispanic Real Estate Professionals® and the Hispanic Wealth Project™ recently released the 2017 “ State of Hispanic Homeownership Report.” According to the report, 7,472,000 Hispanics owned a home in 2017, an increase of 167,000 from 2016’s numbers. This increase equates to a Hispanic homeownership rate of 46.2 percent for 2017, an increase of 0.2 percent from 2016. Notably, Hispanics are the only demographic to increase their rate of homeownership for the last three consecutive years. This year’s report conducts an analysis of the impact on homeownership gains from housing inventory shortage, natural disasters and immigration, with a specific focus on the impacts of the recent changes to Deferred Action for Childhood Arrivals.

Everyone in America should have equal opportunity to live in a quality, affordable home in a thriving community. The National Housing Conference educates decision makers and the public about housing policies and practices to move housing forward together. NHC convenes and collaborates with our diverse membership of housing stakeholders including tenant advocates, mortgage bankers, nonprofit and for-profit home builders, property managers, policy practitioners, real estate professionals, equity investors and more to advance our policy, research and communications initiatives to effect positive change at the federal, state and local levels. Founded in 1931, we are a nonpartisan, 501(c)3 nonprofit organization.

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