Weekly update from the National Housing Conference |
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In this issue
January 17, 2022
Issue 91-2
• Senate Banking Committee considers nominations of Brainard, Powell and Thompson
• Treasury publishes new ERA data but faces criticisms on reallocation process
• Biden nominates Raskin for Fed Board enforcement role and two others to fill remaining vacancies
• Treasury issues State and Local Fiscal Recovery Funds final rule
• IRS extends LIHTC relief
• FHA slows investor purchases of REO homes
• HUD announces funding and disaster relief
• Chart of the week: $17.4 billion distributed so far through ERA, 63% of funds still available
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Housing discrimination is not a thing of the past
By David M. Dworkin, NHC president and CEO
As today is Martin Luther King, Jr. Day, we recall in his own words the realities of housing discrimination. It is easy for us to consider housing discrimination as a part of our history, resolved once and for all by the Fair Housing Act of 1968, for which King fought and ultimately one of the issues for which he died. The Chicago Campaign for fair housing began in 1965 and peaceful civil rights demonstrations were met by violent attacks by mobs of angry White men and women. Yet today, housing discrimination still exists in many forms, and the legacy of generations of discrimination lives on. More than half a century since passage of the Fair Housing Act, Black Homeownership rates are no greater than they were when Dr. King marched in Cicero. Physical boundaries still exist to block streets between majority-Black cities like Detroit and majority-White ones like Grosse Point Park. Racial discrimination in housing is not just a part of history.
This is why NHC formed the Black Homeownership Collaborative, an ambitious effort to create 3 million net new Black homeowners by 2030. The initiative was launched in Cleveland on the first federal Juneteenth holiday and is led by a steering committee of the National Urban League, the Mortgage Bankers Association, the National Association of Real Estate Brokers, the National Fair Housing Alliance, the National Association of REALTORS®, the NAACP, and NHC, supported by research from the Urban Institute. Over 100 of our members and stakeholders are participating in this initiative. You can learn more about the Black Homeownership Collaborative at www.3by30.org. – David M. Dworkin, president and CEO, National Housing Conference
My concern for the welfare of Negroes in the North was no less than that for Negroes in the South, and my conscience dictated that I should commit as much of my personal and organizational resources to their cause as was humanly possible. Our primary objective was to bring about the unconditional surrender of forces dedicated to the creation and maintenance of slums and ultimately to make slums a moral and financial liability upon the whole community. Chicago was not alone among cities with a slum problem, but certainly we knew that slum conditions there were the prototype of those chiefly responsible for the Northern urban race problem…
For twelve years I, and others like me, had held out radiant promises of progress. I had preached to them about my dream. I had lectured to them about the not too distant day when they would have freedom, "all, here and now." I had urged them to have faith in America and in white society. Their hopes had soared. They booed because they felt that we were unable to deliver on our promises, and because we had urged them to have faith in people who had too often proved to be unfaithful. They were hostile because they were watching the dream that they had so readily accepted turn into a frustrating nightmare.
When we first went to Chicago, there were those who were saying that the nonviolent movement couldn't work in the North, that problems were too complicated and that they were much different from the South and all that. I contended that nonviolence could work in the North…
Midsummer of 1966 saw the boil of Northern racism burst and spread its poisons throughout the streets of Chicago as thousands of Negro and white marchers began their demonstrations for open housing. More...
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News from Washington | By Luke Villalobos
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Senate Banking Committee considers nominations of Brainard, Powell and Thompson
The Senate Banking Committee held hearings on several key Biden administration nominees this week: Lael Brainard, Biden’s nominee for vice chair of the Federal Reserve Board of Governors; Jerome Powell, nominated for a second term as the Board’s chairman; and Sandra Thompson, the current acting FHFA director who Biden has nominated for a full five-year term heading the agency. The committee heard Powell’s nomination on Tuesday and held a joint hearing for Brainard and Thompson on Thursday.
Committee members focused their questions for Brainard and Powell on what they would do to combat inflation. Brainard said that the Board's "most important task" was getting inflation back down to 2% annually. “Inflation is too high, and working people around the country are concerned about how far their paychecks will go,” she said. For his part, Powell said that he thinks the economy is mostly healthy despite current inflation levels and that he expects to begin raising rates over this year.
Thompson began her hearing by stating her commitment to providing broad access to credit for homeownership, saying that “safety and soundness and access to credit are not mutually exclusive.” In response to a question from Sen. Jon Tester (D-Mont.) on ways FHFA can reduce the Black-White homeownership gap, Thompson pointed to actions she has already taken in her acting role, including FHFA's new requirement that the Enterprises create Equitable Housing Finance plans to expand housing access to disadvantaged groups. However, those same measures were criticized by Ranking Member Pat Toomey (R-Pa.), who called them "affirmative action in housing."
Thompson also emphasized that FHFA is not empowered to bring Fannie Mae and Freddie Mac out of conservatorship even in their current state, but said she would commit to "working with the Congress to do whatever is necessary to move them out of conservatorship on a responsible timeline." Housing finance reform is a priority of both members of the Banking Committee of both parties, though Republicans have historically favored a quicker path out of conservatorship for the GSEs than Democrats, who have argued that Congress should prioritize increasing housing access over moving the GSEs back into private control.
NHC supports the confirmations of all three nominees and has sent letters to Brown and Toomey urging them to vote to confirm them.
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Treasury publishes new ERA data but faces criticisms on reallocation process
Last Friday, Treasury published new data on spending through the Emergency Rental Assistance (ERA) program. In November of last year, Treasury disbursed $2.9 billion, the largest amount in a single month since the program started, bringing the total number of families that have received ERA payments to 3.1 million. This marks the third straight month that programs moved more than $2.8 billion in expenditures and made over 500,000 payments to tenants and landlords. Based on the November data, Treasury projects that approximately $25 to $30 billion in ERA funds were spent or obligated by the end of 2021.
Treasury also published new information on the ERA reallocation process. The agency reported that it had recaptured $1.1 billion from grantees that had been slow to move their funds and released a list of jurisdictions with higher demonstrated need that would receive the funds instead. However, some took issue with Treasury’s method of reallocation, which saw some large jurisdictions receive relatively few reallocated funds. Officials in New York were especially surprised by their reallocation, with Mayor Eric Adams (D) saying, “New York state has only received $27 million out of the $1.1 billion the Treasury Department set aside for further assistance. That is insulting to our state.” Adams was joined in his criticisms of the reallocation process by New York Governor Kathy Hochul (D) and several other governors, who asked Treasury to reconsider the formula it had used to redistribute unused money.
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Biden nominates Raskin for Fed Board enforcement role and two others to fill remaining vacancies
President Biden nominated Sarah Bloom Raskin to succeed Richard Clarida as the Federal Reserve Board of Governor’s vice chair for supervision, the White House announced on Friday. Raskin, a former Board member and Treasury Department official, is a darling of progressives who would likely bring a more hands-on approach to the Fed’s top enforcement role than outgoing vice chair Richard Clarida.
NHC President and CEO David Dworkin applauded the nomination, calling Raskin “eminently qualified” and praising her tenure at Treasury. “I served with Ms. Raskin at the Treasury Department during her time as Deputy Secretary. During that time, she brought a refreshing commitment to the needs of underserved communities to the Treasury while balancing it with the requirements of well-functioning markets,” he said.
Biden also tapped PhD economists Lisa Cook and Philip Jefferson, both progressives who emphasize the Fed’s role in labor markets and climate policy, to fill the Board’s other two vacancies. Along with Lael Brainard, Biden’s nominee for the Board’s vice chair position, the three nominees would be well-positioned to move the seven-member Board in a more progressive direction, allowing them to tackle issues like climate change and racial equity that had largely been sidelined by the Board’s conservative majority.
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Treasury issues State and Local Fiscal Recovery Funds final rule
Many stakeholders welcomed the final rule for its increased clarity and for easing requirements around income- and geography-based targeting. The initial rule had restricted such targeting unless grantees could prove that the pandemic had disproportionately affected the group it sought to target, which some felt limited localities' ability to use the funds in the hardest hit communities.
However, others noted that Treasury had not modified the rule to allow ARP funds to be used as gap financing for LIHTC properties. According to Jennifer Schwartz, director of tax and housing advocacy at the National Council of State Housing Agencies, "The pandemic has created new challenges in Housing Credit development, with supply chain disruptions, workforce shortages, and rising prices of construction-related commodities all driving up development costs. Given these challenges, many state and local governments would like to use SLFRF funds with the Housing Credit to fill these gaps. [...] However, Treasury’s final rule did not make these critical changes."
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IRS extends LIHTC relief
On Tuesday, IRS extended COVID-19 pandemic relief for housing financed through Low Income Housing Tax Credits (LIHTC) and Private Activity Bonds (PAB). The extension covers relief for the 10% test for carryover allocations, the 24-month minimum rehabilitation period, the placed-in-service deadline, the reasonable period for restoration or replacement after a casualty loss, agency correction periods and gives recipients more time to meet occupancy requirements.
Tuesday's announcement is the third extension of the relief, which was first offered in April of 2020. It also extends state agencies' timeline to review tenant files through the end of 2022 and defers all physical inspections through June 30, 2022.
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FHA slows investor purchases of REO homes
FHA announced Thursday that it would lengthen the period in which investors are forbidden from purchasing some single-family homes acquired by HUD after foreclosures, known as real estate owned (REO) properties. Beginning March 1, the period in which purchase eligibility is limited to prospective owner-occupants, local governments or nonprofits will increase from 15 days after listing to 30 days after listing. The change is limited to homes eligible for financing under FHA's 203(b) program, which must be in good condition and require only limited repairs before sale.
The move is intended to increase the stock of homes available to owner-occupants, who are increasingly being outcompeted by investors with cash in hand. HUD Principal Deputy Secretary for Housing and FHA Lopa Kolluri said that the move would also support the Biden administration’s effort to create 100,000 affordable homes over the next three years. “FHA is actively supporting the Administration’s efforts to increase the supply of affordable housing and provide more opportunities to those who have traditionally faced barriers to homeownership,” she said. “By extending the time frame individuals have to bid on REO property, we are offering families a better chance to purchase a quality HUD-owned home to live in, build equity, and create generational wealth.”
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HUD announces funding and disaster relief
On Wednesday, HUD announced awards totaling $104.7 million to nonprofits and local governments to protect children and families from home-based health hazards. The awards were given to 60 organizations across 29 states through the Healthy Homes Production Grant Program, and they will serve an estimated 7,400 households.
Also on Wednesday, HUD announced a $14 million loan guarantee to Florida’s Palm Beach County to entice businesses to the area on the condition that a majority of the people they employ are low- and moderate-income residents. The loan guarantee was offered through the Section 108 program, which allows Community Development Block Grant recipients to leverage their grant to facilitate economic development.
HUD also announced disaster assistance measures targeted at southeastern Missouri following severe storms and tornadoes in the region. Measures include foreclosure relief, mortgage insurance, administrative relief for local governments, and increased anti-discrimination efforts.
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Chart of the week: $17.4 billion distributed so far through ERA, 63% of funds still available
The Mortgage Bankers Association visualizes data from the Treasury Department showing that $17.4 billion has been distributed so far through ERA, representing 37% of the program’s total allocation under the Consolidated Appropriations Act of 2021 and ARP. $29.1 billion remains to be spent, representing 63% of the total allocation.
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Shane Phillips, author of The Affordable City, discusses housing choice vouchers (HCVs) with researcher Rob Collinson on the UCLA Housing Voice podcast. Collinson highlights his 2018 paper on how changes to HCV program design affect users' access to neighborhood amenities. The paper found that tilting the value of vouchers based on housing prices at the neighborhood level allowed more voucher holders to access higher-opportunity neighborhoods without increasing program costs.
In the wake of FHFA raising maximum conforming loan limits to nearly $1 million, former Freddie Mac CEO Don Layton asks in Housing Perspectives, “should the GSEs, which finance mortgages on favorable terms due to significant subsidies from the taxpayer, be doing so to benefit families who are wealthy enough to carry a million-dollar mortgage? Is that an appropriate use of taxpayer support?” Layton thinks that it is not, and he discusses five questions to consider during what he says should be a reassessment of conforming loan limits not only for Fannie Mae and Freddie Mac but also for FHA and VA.
A white paper from Enterprise Community Partners finds that more than half of all counties lost housing inventory between 2010 and 2020, an unprecedented increase over the 15% of counties that experienced housing loss in the 2000s. According to Enterprise, the data “suggests a reconcentration of the population in places that are already struggling to provide suitable dwellings to all residents. Absent a sweeping change in construction and zoning patterns in these locations, it is unlikely they will be able to meet all that demand.”
Novogradac’s Peter Lawrence analyzes FHFA’s new single- and multifamily housing goals for the next several years, which represent a significant increase over previous goals as FHFA attempts to improve the GSEs’ performance in underserved markets. Lawrence endorses the new goals, saying that they will “help to mitigate the affordable housing crisis in the United States, which predates but was made worse by the COVID-19 pandemic.”
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Tuesday, January 18
Wednesday, January 19
Thursday, January 20
Friday, January 21
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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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