Weekly update from the National Housing Conference |
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In this issue
April 24, 2022
Issue 91-16
• FHA adds 40-year mortgage modification for borrowers struggling due to COVID-19
• Wells Fargo announces SPCP aimed at increasing Black homeownership
• HUD releases 2022 Income Limits
• HUD issues civil rights guidance
• CRS publishes report on housing issues
• USDA announces Rural Partners Network
• HUD announces funding disbursements and Massachusetts disaster assistance
• Chart of the week: Renters are more pessimistic than ever about prospects for homeownership
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NHC Annual Member Meeting Info
Annual Meeting (online)
June 14, 2022 12:00 p.m. ET
Questions?
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Fair Housing Forum: Increasing Fair Access to Credit
By Erika Ramirez, NHC policy associate
In celebration of April Fair Housing Month, the Black Homeownership Collaborative (BHC) held a Fair Housing Forum to discuss ways to increase fair access to quality credit in communities of color. The BHC is a diverse group of housing advocates and industry leaders working together to create 3 million net new Black homeowners by 2030. April Fair Housing month recognizes the passage of the Fair Housing Act, a law designed to desegregate housing and increase mortgage access for communities of color. However, the Black homeownership rate remains as low today as it was before the Fair Housing Act was passed in 1968. This forum convened leaders from the Federal Housing Finance Agency (FHFA), Freddie Mac, and the U.S. Department of Housing and Urban Development (HUD) to discuss efforts to increase access to homeownership for historically marginalized communities, expand economic opportunities, and address the racial wealth gap.
Keynote speaker Michael J. Hsu, Acting Comptroller of the Currency, highlighted the significant challenges faced along the pathway to homeownership for Black Americans in the United States. Black Americans experience higher mortgage denial rates, lower home valuations, and a multi-generational wealth gap. As Hsu stated, “It is important both historically and currently that we have the tools and strategies to address [issues of race].” Hsu calls on the importance of the “federal government, including the OCC, to make real change by expanding fair access and homeownership opportunities for minorities and LMI areas.”
The launch of the PAVE task force and Project REACh, two initiatives highlighted by Acting Comptroller Hsu, work toward “greater federal oversight and effective monitoring for discrimination.” When questioned by Bryan Greene, Vice President of Policy Advocacy at the National Association of REALTORS®, about taking race into account in CRA modernization, Hsu shared that the new rules “would give regulators new tools intended to update how we examine bank CRA performance and encourage greater dollars reaching LMI individuals and communities.”
Nikitra Bailey, Senior Vice President of Public Policy at the National Fair Housing Alliance, led representatives from HUD, FHFA, and Freddie Mac in a discussion of federal efforts toward increasing access to quality credit and the impact of housing discrimination on credit worthiness for borrowers and communities of color. Demetria McCain, Principal Deputy Assistant Secretary for Fair Housing and Equal Opportunity at HUD, and James Wylie, Associate Director of Fair Lending at FHFA, expanded on the memorandum of understanding between the agencies and highlighted the importance of interagency coordination, including efforts on fair housing more...
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News from Washington | By Luke Villalobos
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FHA adds 40-year mortgage modification for borrowers struggling due to COVID-19
HUD announced Monday that the Federal Housing Administration (FHA) would create a new 40-year partial claim mortgage as a loss mitigation option for homeowners struggling due to the COVID-19 pandemic. The option, described in detail in an FHA mortgagee letter, is intended to help borrowers who cannot reduce their mortgage payments by 25% through FHA’s existing 30-year mortgage modification option.
Under the new program mortgage servicers will proactively mail modified mortgage documents to borrowers who qualify for the payment reduction. If the borrower chooses to accept the modification, they only need to sign and return the mortgage modification documents. Homeowners may begin to use the new option immediately, and servicers will be required to offer it starting July 17.
The 40-year modification option was initially implemented as a temporary COVID-19 mitigation measure and will expire with the presidentially declared COVID-19 National Emergency. The new policy will allow servicers to offer 40-year modifications on a permanent basis. Comments are due on a proposed rule that would implement that change on May 31.
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Wells Fargo announces SPCP aimed at increasing Black homeownership
Last week, Wells Fargo announced a $150 million investment in a new special purpose credit program (SPCP) aimed at assisting Black families in achieving long-term homeownership. For Black customers wishing to refinance current Wells Fargo mortgages, the program will use bank cash to lower mortgage rates and lower closing costs. “This program goes beyond the usual lending programs and puts the company’s own money to work refinancing minority families' homes,” a Wells Fargo spokesperson said. “The company will assess its progress and will publicly disclose it annually.”
SPCPs have emerged in recent years as a promising way to increase credit access for underserved communities. However, many lenders have been slow to take them up, partially due to concern about their legality under fair housing laws. That concern prompted a statement from eight federal regulators earlier this year that affirmed their legality. According to HUD Principal Deputy Assistant Secretary for Fair Housing and Equal Opportunity Demetria McCain, who participated in NHC’s recent Fair Housing Forum, that statement was so definitive that lenders “just need do it [and] create viable, scalable programs.” Wells Fargo’s SPCP for Black borrowers is the first new program announced since that statement was released.
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HUD releases 2022 Income Limits
Novogradac’s analysis highlighted the new income limits in a blog post that also described a change in how the cap on year-over-year fluctuations was calculated this year for LIHTC income limits. This change resulted in 56% of areas being capped, compared to 14% in 2021. The new methodology makes it more difficult for prospective tenants in affected counties to qualify under the income limits, which could be problematic given the current inflation rates. However, the overall impact is minimal, as 99% of counties did have an increase in their income limits. The new limits are effective immediately and require compliance within 45 days of their release.
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HUD issues civil rights guidance
“Today's publication provides practical guidance to help property owners and managers to reach all members of their community,” said Ethan Handelman, HUD deputy assistant secretary for multifamily housing programs. “This is the latest step in the Department's work to support our program participants in their efforts to make affordable housing available without barriers.”
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CRS publishes report on housing issues
The Congressional Research Service (CRS) published a report on housing issues facing the 117th Congress. The report outlines current topline housing concerns for the federal government, including high housing costs, supply constraints, homelessness, and the potential for increased evictions and foreclosures. The report also notes some legislators' interest in addressing racial disparities, increasing climate resilience and disaster response, and reforming the housing finance system.
The report explores housing's effects on the broader economy. “Fluctuations in house prices can also have effects on the economy through so-called wealth effects,” it states. “In this case, if the value of homeowners’ assets (and therefore net wealth) increases, they may be inclined to increase their consumption, which can stimulate the economy. In the United States, consumer spending makes up roughly 70% of the economy; therefore, changes in housing wealth can result in significant changes in GDP.”
The report reviews the 116th and 117th Congresses’ housing policy responses to the COVID-19 pandemic. It examines the various federal eviction and foreclosure moratoria, housing funding provided by the American Rescue Plan, and emergency rental assistance. The report also examines potential investments for the Build Back Better Act as solutions for the issues outlined, including increased LIHTC investments and enacting the Neighborhood Homes Investment Act. The proposed Housing Supply Fund in President Biden’s new FY23 budget is also addressed. Finally, it provides an overview of various actions on fair housing, including the re-established affirmatively furthering fair housing and disparate impact rules and current task forces assigned to find solutions to racial disparities in housing.
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USDA announces Rural Partners Network
The U.S. Department of Agriculture (USDA) unveiled a new Rural Partners Network (RPN) on Wednesday that will assist rural towns in gaining access to government resources, creating jobs, and developing infrastructure, including affordable housing. RPN is a first-of-its-kind collaboration between federal agencies, local leaders, and community members that focuses on improving social and economic well-being. It will launch in selected communities in Georgia, Kentucky, Mississippi, New Mexico, and selected Tribes in Arizona. Individualized assistance will be provided to these communities to navigate federal programs and promote community-driven solutions that use existing resources to address their specific challenges. The RPN will expand to additional counties later in 2022.
“The Rural Partners Network will help communities get funding for investments that create long-lasting benefits for their communities, especially those that have been overlooked in the past,” said USDA Secretary Tom Vilsack. “By providing one-on-one support to these communities, we can lay the foundation for people to build healthy, successful futures on their own terms.”
The White House also published a fact sheet on the new effort. Over 25 rural communities will receive new federal field workers to assist local leaders in navigating and accessing government resources. According to USDA, network staff will also share lessons learned from these counties with federal agencies to expand the voice of rural communities in policymaking. A Washington-based coordinator will also serve as a "front door" for RPN staff. A 17 agency Rural Prosperity Interagency Council will hold regular meetings to coordinate technical support to rural areas, share data and success measurements, and unify funding conditions.
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HUD announces funding disbursements and Massachusetts disaster assistance
HUD announced three major funding disbursements this week. On Monday, the agency closed a rental assistance demonstration transaction with Tampa’s municipal housing authority that funded nearly 200 affordable units in the city's West River neighborhood. On Wednesday, HUD announced a $10.3 million loan guarantee to Los Angeles for a mixed-use development through the Section 108 Loan Guarantee Program. And on Thursday, HUD announced that FHA would insure a $65.5 million mortgage for an energy-efficient transit-oriented project in Roselle, Illinois.
HUD also announced this week that it would extend disaster assistance to residents of southern Massachusetts following a severe winter storm there in January. Measures include foreclosure relief, mortgage insurance, and ramped-up fair housing enforcement to protect residents, as well as administrative relief for agencies whose capacity was affected by the storm.
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Renters are more pessimistic than ever about prospects for homeownership
Renters increasingly doubt that they will ever own a home due, according to a survey by Liberty Street Economics that found widespread expectations of further housing price inflation in the near- and medium-term. Renters surveyed said they had on average a 43% chance of ever owning a home, down from an average 52% chance last year.
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A brief from the Urban Institute examines how Fannie Mae and Freddie Mac could use credit risk transfer (CRT) to encourage loans for manufactured and multifamily housing. “Although CRT initiatives are not a panacea for the nation’s housing woes, they are a powerful and underused tool the GSEs can use to help address affordable housing issues related to cost, access, and supply,” the brief argues.
An article in Vox asks why fair, unbiased artificial intelligence (AI) is so hard to make, arguing that much of the difficulty comes down to different, incompatible notions of fairness. The article parses the difference between procedural fairness, in which an AI treats all applicants the same based on some objective criterion like a FICO score; and distributional fairness, in which an AI’s decisions are considered fair only if they result in an equitable distribution of loans across social groups, which might mean lowering credit standards for members of socially disadvantaged groups.
A report from CFPB with important implications for Community Reinvestment Act lending analyzes credit access challenges in rural areas, finding that the physical branches and small banks rural communities disproportionately rely on are rapidly disappearing. According to the report, between 2012 and 2017, 40% of rural communities lost bank branches, and rural census tracts are now ten times more likely to be in a banking desert than urban tracts.
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Monday, April 25
Tuesday, April 26
Wednesday, April 27
Thursday, April 28
Friday, April 29
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The National Housing Conference is a diverse continuum of affordable housing stakeholders that convene and collaborate through dialogue, advocacy, research, and education, to develop equitable solutions that serve our common interest. |
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