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Weekly update from the National Housing Conference
In this issue
October 25, 2020 I Issue 89-39

  • Fed Gov. Brainard joins NHC's National Advisory Council meeting to discuss CRA, housing market 
  • FHFA, GSEs plan to move forward with adverse market fee
  • CFPB waives January 2021 expiration of GSE QM patch
  • Senate blocks measure to oppose OCC's CRA rule
  • Senators introduce Fair Access to Financial Services Act
  • Housing agencies extend underwriting flexibilities
  • Chart of the week: Housing market rebounded to 14-year high after 18% drop in April home sales
Find the information you need at NHC's COVID-19 Housing Resource Center
4+ decades of housing policy
by Joe Ventrone, National Association of REALTORS®

Dear Friend,

After 46 years in the housing policy arena, it is time to exit my “professional” housing policy career, effective Dec. 31, 2020. I will channel my energies earned from 18+ years at the National Association of REALTORS® (NAR) and 32+ years of federal service, including 10 years at the Department of Housing and Urban Development (HUD) and 18 years at the House of Representatives Banking Committee (now Financial Services), into unfinished policy issues such as mortgage finance reform and narrowing the homeownership gap among diverse households, especially African Americans.

I was born in 1949, the same year as the Housing and Community Development Act, which contains a “Declaration of Housing Policy” that promises “a decent home and suitable living environment for every American family,” as soon as possible. So, housing is in my DNA!

My first job was running an elevator in the U.S. Senate while attending graduate school for public administration at American University. Witnessing political strategizing while studying policy was my first glimpse into policymaking that laid the foundation for my housing career. I then started at HUD as an Urban Intern when the Housing and Community Development Act of 1974 was signed. This landmark legislation created the Section 8 New Construction Program and revised the Section 202 Program for Housing for the Elderly. My years at HUD were an incredible learning curve that began with working on the Section 8 Existing Housing Allowance Program. From there, I developed regulations for the Section 8 New Construction Program and created the training program for HUD field staff on the Section 202 Program for Housing for the Elderly that would drive significant housing production across the country. By 1983, I was recommended by HUD legislative affairs officials to join the House Banking Committee Republican staff who were looking for someone with detailed knowledge of HUD housing programs. That was me!

My 18-year tenure on the House Banking Committee/Subcommittee on Housing and Community Opportunity was the most rewarding from a housing policy perspective. I worked nine years in the majority of the House and nine years in the minority, which were even more eye opening in terms of how to best effectuate change. During my time with the committee, I intimately worked on a number of meaningful housing policy laws that continue to impact consumers and the industry today, including:

• 1983 – Housing and Urban-Rural Recovery Act – Repealed most of the Section 8 project-based program and championed the tenant-based Voucher Program; transferred the National Flood Insurance Program to the Federal Emergency Management Agency; and, created the Assistant Secretary for Public and Indian Housing.

• 1986 – Tax Reform Act of 1986 – Discontinued the Accelerated Cost Recovery System depreciation program for real estate; limited losses to passive for real estate investors; and, created the Low-Income Housing Tax Credit program. Many view this law as starting the Savings and Loan debacle!
News from Washington
Fed Gov. Brainard joins NHC's National Advisory Council meeting to discuss CRA, housing market

This week, NHC hosted its second National Advisory Council (NAC) meeting of 2020, bringing together thought leaders to examine pressing housing issues. NHC was pleased to welcome Federal Reserve Board (Fed) Governor Lael Brainard to share an update on the Fed’s Advance Notice of Proposed Rulemaking to modernize the Community Reinvestment Act (CRA) and discuss the state of the housing market more generally.

“The COVID-19 pandemic is raising a new set of housing challenges for renters and the rental market,” said Gov. Brainard, who noted that low- to moderate-income, Black and Latinx households have been particularly hard hit. “There is growing concern about what will happen to individuals who may be behind on their rent or mortgage payments as a result of job loss or reduced hours when eviction moratoria and mortgage forbearance programs come to an end, especially given uncertainty about whether there will be further fiscal support.”

These challenges underscore the importance of thoughtful, effective CRA reform. Gov. Brainard discussed the dual mandate of the original statute to address redlining and systemic inequalities and said the ANPR seeks to advance that purpose to “move the needle on credit access, wealth building, and the availability of community development financing.” She expressed the Fed’s desire to provide a foundation for the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) to come together in a unified rulemaking.

Gov. Brainard said that by providing a longer comment period, the Fed hoped to receive feedback from a wider range of stakeholders. “Your members support community development projects in communities throughout the country,” she said. “And we have benefited from the engagement of NHC and its members both in the form of detailed comment letters and through meetings to discuss different aspects of CRA reform.” NHC is coordinating with CRA Working Group members to respond to the ANPR.

A recording of Gov. Brainard’s remarks from the meeting, which was led by NAC co-chairs Barry Zigas, senior fellow at Consumer Federation of America, and Jackie O’Garrow, former Bank of America executive, is available here.
FHFA, GSEs plan to move forward with adverse market fee

During remarks at the Mortgage Bankers Association’s (MBA) 2020 convention, Federal Housing Finance Agency (FHFA), Fannie Mae and Freddie Mac leadership expressed their intention to move forward with a 50-basis-point fee on refinances to address adverse market conditions proposed earlier in the summer. Following the initial announcement of the fee, NHC joined a group of 20 housing organizations to urge FHFA to withdraw the decision.

Shortly after, FHFA announced plans to delay the implementation of the fee, originally scheduled to go into effect on Sept. 1, until Dec. 1. NHC applauded the delay. “We look forward to working with FHFA and the GSEs to avoid any increase in the cost of refinancing for homeowners,” said NHC’s David Dworkin. “It’s never been more important for homeowners to reap the financial benefits and savings of low interest rates. Now is the time to encourage refinancing – not make it harder.”

While many industry stakeholders had hoped for a complete withdrawal of the proposed fee, it appears that it will move forward and be charged for GSE refinances above $125,000 beginning in December.

“It is critical to remember that this fee covers losses that are the result of policies that have helped millions of Americans stay safe in their homes during a global pandemic,” said FHFA Director Mark Calabria in his remarks during the industry event. FHFA estimates that the GSEs will incur at least $6 billion in losses as a result of COVID-19. Director Calabria left open the possibility that “Congress may take the opportunity to review alternatives.”

Both Freddie Mac CEO David Brickman and Fannie Mae CEO Hugh Frater defended the fee during the conference. "Costs have changed, risks have changed. What we put in place is an appropriate and prudent response to that change in the external environment," said Brickman.

Frater said, "The bottom line is, it's never easy to raise your prices and there’s never a good time, but when it's the right thing to do, you have to do it.”
CFPB waives January 2021 expiration of GSE QM patch

The GSE patch for Qualified Mortgage (QM) treatment was scheduled to expire on Jan. 10, 2021, until the Consumer Financial Protection Bureau (CFPB) published its final rule this week. Under the final rule, the GSE patch will remain in effect until the mandatory compliance date of the CFPB's eventual final rule amending the larger QM definition.

An estimated 957,000 mortgages would become ineligible upon the sunset of the GSE patch. The CFPB attributed its pivot to the need to “ensure that responsible affordable credit remains available to consumers who may be affected if the GSE Patch expires before the mandatory compliance date of a final rule.” Several organizations including the American Bankers Association and the National Association of Federally-Insured Credit Unions welcomed the extension.
“We knew when the bureau first issued the QM rule that the patch was set to expire in 2021, and recognizing that…we issued a general QM proposal just a few months ago,” CFPB Director Kathleen Kraninger said during remarks at an industry event.

NHC joined seven other housing organizations in September to respond to the notice of proposed rulemaking on the general QM, which recommended the CFPB guard against discrimination, adopt a price-based approach, raise the safe harbor threshold and overall cap for rebuttable presumption loans, clarify ability to repay requirements, refrain from adopting a seasoning approach for non-QM loans and engage in further data analysis for small loans.
Senate blocks measure to oppose OCC's CRA rule

The Senate rejected a measure to consider a resolution introduced by House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) in June to nullify the OCC’s version of the CRA modernization final rule. The motion to consider H.J. Res. 90 was struck down by a 48-43 vote against consideration. Senate Banking Committee Chair Mike Crapo (R-Idaho) opposed the joint resolution; he said the OCC’s proposal addressed failings in the existing regulation and had several areas of overlap with the Fed’s proposal.

Senate Banking Committing Ranking Member Sherrod Brown (D-Ohio) urged fellow members to repeal the OCC’s rule, saying the agency “ignored the thousands of civil rights groups and local nonprofits and banks who all told them their plan just wouldn’t work for low- and moderate-income communities.” Chairwoman Waters, who originally sponsored the resolution, condemned the Senate’s action, saying the OCC final rule would “effectively turn the Community Reinvestment Act into the Community Disinvestment Act, making it easy for banks to get a passing grade with consumers paying the price.”
Senators introduce Fair Access to Financial Services Act

This week, a group of Democratic senators introduced a new bill aimed at combatting discrimination in the consumer financial services market. The Fair Access to Financial Services Act, introduced by Sens. Sherrod Brown (D-Ohio), Tina Smith (D-Minn.), Cory Booker (D-N.J.), Bob Menendez (D-N.J.), Elizabeth Warren (D-Mass.), and Chris Van Hollen (D-Md.), would restrict financial service providers – not covered by the Civil Rights Act of 1964 – from discriminating against consumers on the basis of race, color, religion, national origin, sex, gender identity, or sexual orientation. The bill is supported by several civil rights and community development organizations.

“When we talk about ending systemic racism and other institutionalized forms of discrimination in our society, we can’t ignore the economic inequalities that hold certain communities back,” said Sen. Menendez. “Our bill levels the playing field by making it illegal for financial institutions to discriminate simply on the basis of race, gender, orientation or religion.”
Housing agencies extend underwriting flexibilities

FHFA and the Department of Housing and Urban Development (HUD) extended several temporary policies enacted during COVID-19. FHFA extended relaxed requirements for exterior-only and desktop-only appraisals, alternative methods of document and income verification and expanded use of power of attorney through Nov. 30. In a separate announcement, FHFA also extended the GSEs’ ability to purchase qualified loans in forbearance. These flexibilities were scheduled to expire at the end of the month. FHFA’s temporary underwriting provisions have eased requirements for lenders, but have also benefited borrowers.

Urban Institute found that appraisal waivers played a key role in boosting refinance activity. “The overwhelming majority of these originations are refinances of mortgages that the GSEs already held, suggesting that the GSEs have not taken on any additional credit risk even as in-person appraisals are waived,” Urban Institute said. At a time when more than one million homeowners are at risk of foreclosure, Urban Institute said policy measures aimed at “facilitating the refinance process and helping borrowers access lower rates or a reduced term could reduce the likelihood of mortgage default.”

Also this week, HUD announced the extension of the deadline for homeowners to request a Federal Housing Administration (FHA) COVID-19 forbearance from Oct. 30 through Dec. 31. FHA’s program allows homeowners experiencing financial hardship as a result of COVID-19 to request an initial forbearance for up to six months, with the option to extend the forbearance for another six months.

HUD urged struggling homeowners to reach out to their mortgage servicer. Deputy Assistant Secretary for Single Family Housing Joe Gormley said, “It’s always in a homeowner’s best interest to make their mortgage payments if they are able. But for those who are struggling right now, we urge them to engage with their servicer immediately. And, if your servicer contacts you, it is crucial that you respond to them to let them know if you need assistance.”
Chart of the Week
Chart of the week: Housing market rebounded to 14-year high after 18% drop in April home sales

Following a “sharp drop” of 18% in existing home sales in April – at the onset of the pandemic – the housing market saw a “dramatic rebound,” Harvard’s Joint Center for Housing Studies reported. Harvard Senior Research Analyst Alexander Hermann attributed the strong turnaround to technology and innovation, citing the important role virtual tours, online real estate searches, automated valuations and remote notarization played in stabilizing the housing market over the summer months.
What we're reading
“Has COVID-19 created a new Jim Crow,” asked Housing Partnership Equity Trust CEO and NHC Board of Governors Chair Anne McCulloch in a recent piece. McCulloch warned that with millions of children attending classes remotely from home, low-income and minority households may be negatively impacted. “As the pandemic wears on, the educational gap between the haves and have nots is widening,” said McCulloch, who called on policymakers and investors to “head off this disastrous split through a laser focus on decent, affordable, and safe rental housing, equipped with necessary facilities and services to help educate our most vulnerable young people.”

The National Association of Home Builders and a group of nearly 100 bipartisan members of Congress called on the White House to take immediate action to address dramatic increases in softwood lumber costs. The spike in prices has contributed to an estimated increase of more than $16,000 in the cost of the average new single-family home over the past six months.

As part of its Opportunity for All project, the Urban Institute published a new report, which proposes several federal policy tools that would “restore the vitality of divested neighborhoods, prevent displacement from revitalizing communities, and expand access to communities already rich with opportunity.” Urban Institutes suggests federal policymakers enforce the mandate in the Fair Housing Act to affirmatively further fair housing, begin equity reviews and kickoff a “race to the top for equitable development.”

Local Housing Solutions published a brief that highlights 10 policy tools localities can deploy when eviction moratoria expire. From emergency rental assistance to alternative dispute resolution options, support for small landlords, tracking of geographic disparities and greater access to counsel, the policy recommendations focus on maintaining stability for renters and landlords, and preserving racial equity.
The week ahead
Monday, October 26

Tuesday, October 27

Wednesday, October 28

Thursday, October 29

Friday, October 30
The National Housing Conference has been defending the American Home since 1931. We believe everyone in America should have equal opportunity to live in a quality, affordable home in a thriving community. NHC convenes and collaborates with our diverse membership and the broader housing and community development sectors to advance our policy, research and communications initiatives to effect positive change at the federal, state and local levels. Politically diverse and nonpartisan, NHC is a 501(c)3 nonprofit organization.
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