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Weekly update from the National Housing Conference |
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In this issue
January 31, 2021
Issue 90-4
• Senate confirms Janet Yellen as first female Treasury Secretary
• Presidential action takes aim at discriminatory housing practices
• eNote adoption hits new milestone
• Flood protection standard reinstated to protect housing stock and critical infrastructure
• Congresswoman Fudge echoes HUD mandate to serve the "most vulnerable" in her Senate testimony
• Memorandum aims to enhance coordination with tribal nations disproportionately impacted by COVID-19
• Chart of the week: Younger generations and minorities will be most impacted by declines in homeownership
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Find the information you need at NHC's COVID-19 Housing Resource Center |
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Making CRA modernization matter
by David M. Dworkin, NHC President & CEO
Dear Friend,
NHC and the CRA Working Group are hard at work on our comment letter on the Federal Reserve Board’s Advance Notice of Proposed Rulemaking (ANPR), which is due on Feb. 16. Under the leadership of Chairman Jay Powell and Governor Lael Brainard, the Fed has offered a genuine request for feedback on modernizing one of the most impactful rules in housing and community development. The depth and detail of the ANPR’s 99 questions make clear they want to hear about our experiences and get our feedback as they engage in the formal rulemaking process.
I’m especially encouraged by the renewed prospect of a unified rulemaking across the Fed, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency, particularly with Michael Barr as a leading candidate for Comptroller. During the Clinton administration, Barr helped strengthen CRA and launch the New Markets Tax Credit, and in the Obama administration he was a driving force behind the creation of the Consumer Financial Protection Bureau. Barr’s academic work, while teaching at the University of Michigan, has focused on advancing racial justice, including the creation of the Entrepreneurs of Color Fund and the Detroit Neighborhood Entrepreneurs Project to support minority-owned small businesses in Detroit. If nominated and confirmed, he can reinvigorate the prospects of uniform modernization that spans all three banking regulators.
NHC’s advocacy for CRA modernization has focused on four basic principles. To be successful, CRA modernization must (1) increase investment in communities that are currently underserved; (2) benefit more low- and moderate-income households, particularly minority households, who live in those communities; (3) ensure CRA lending and investment does not lead to displacement of the very people it is intended to serve; and (4) make both bank performance and government enforcement more transparent and predictable. Our comment letter will address the issues of mortgage securitization, community development lending and investing, and the need to modernize the way we think about assessment areas in a market dominated by interstate and mobile banking. We will also offer guidance to the Fed on how to address racial equity more directly, consistent with the letter and intent of the CRA statute and the Fair Housing Act.
If you’re an NHC member and you feel strongly about how the Fed should approach any of these issues in its rulemaking, please share your views with us at [email protected] so that we can be aligned in advocating for a unified solution. As someone who has read thousands of comment letters during the course of my career, I can attest to the effectiveness of multiple stakeholders sharing unique experiences around a common theme. The most valuable thing you can offer a regulator is your detailed experience and insights. You are the expert. You know how the proposed changes will impact your organization, your lending, your programs, and your community. Share that real-world experience and powerful point of view, and your feedback will be welcome and impactful. |
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Senate confirms Janet Yellen as first female Treasury Secretary
NHC President and CEO David Dworkin issued a statement congratulating Secretary Yellen: “Her leadership will be essential to addressing the mounting economic crisis as a result of the devastating impact of COVID-19. Secretary Yellen’s background as Federal Reserve Board Chairwoman will be critical to her role in navigating the nation through the challenges ahead of us…We look forward to working with her.” |
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Presidential action takes aim at discriminatory housing practices
In one of his first executive actions, President Joe Biden issued a memorandum redressing discriminatory housing practices. The memorandum acknowledges the long history of racial inequity in housing policies “that contributed to segregated neighborhoods and inhibited equal opportunity and the chance to build wealth for Black, Latino, Asian American and Pacific Islander, and Native American families, and other underserved communities.”
“Ongoing legacies of residential segregation and discrimination remain ever-present in our society,” the memorandum states. “These include a racial gap in homeownership; a persistent undervaluation of properties owned by families of color; a disproportionate burden of pollution and exposure to the impacts of climate change in communities of color; and systemic barriers to safe, accessible, and affordable housing.”
Acting Department of Housing and Urban Development (HUD) Secretary Matthew E. Ammon applauded the measure, saying, “Only by recognizing and acknowledging our nation's history of housing discrimination can we begin to lift the barriers to safe, accessible, and affordable housing. With this executive order, President Biden is taking meaningful action to advance racial equity in housing and expand opportunity for all.”
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eNote adoption hits new milestone
Ginnie Mae announced its very first issuance of a mortgage-backed security made up entirely of a pool of eNotes as part of the Digital Collateral Program and Ginnie Mae’s larger push to modernize the mortgage securitization process.
“The issuance of securities backed by Digital Pools validates the viability of the securitization model outlined in our Digital Collateral Program and sets the foundation for broader and more rapid adoption of digital mortgages,” said Ginnie Mae Director of Policy and Program Development Angel Hernandez. “This event is the culmination of efforts by numerous internal and external stakeholders in our digital initiatives, including Issuers, Document Custodians, warehouse lenders, technology providers and other industry partners.”
MISMO® President Seth Appleton said, “This Ginnie Mae success is an example of the growing momentum for digital mortgages and the progress we expect to see in 2021.”
A white paper from the Federal Housing Finance Agency (FHFA) Office of Inspector General (OIG) underscored the growing popularity of eNotes: “eMortgages offer borrower convenience, minimize post-closing review delays, eliminate the need to physically transfer a note, and make closings easier while allowing social distancing, an attractive feature during the COVID-19 pandemic.”
Fitch Ratings similarly observed, “Shutdowns and social distancing measures have led to a greater reliance on digitalization of certain aspects of the mortgage origination process, and this has facilitated the implementation of eMortgage processes.” |
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Flood protection standard reinstated to protect housing stock and critical infrastructure
“In many coastal states, home construction is increasing the fastest in the most flood-prone areas, including places that could soon be underwater,” the New York Times wrote in a recent article. “And despite strong public support for tougher building codes in high-risk areas, just one-third of local jurisdictions have adopted disaster-resistant provisions in their building codes.”
To address this risk and mitigate the long-term effects of climate change, President Biden reinstated the Federal Flood Risk Management Standard. The flood protection standard, which requires federally-funded infrastructure like public housing and hospitals be built to a higher safety standard to protect against climate events, was revoked in 2017.
The Executive Order will require federal agencies to apply “more protective siting and design requirements” said the National Resources Defense Council. “As the seas rise and rainstorms become more extreme, the reinstatement of the flood protection standard will help to protect lives, lower disaster costs, and save taxpayer dollars by ensuring public infrastructure is built to withstand the climate of the future.”
Acting HUD Secretary Ammon said, “HUD applauds President Biden for taking immediate steps to tackle our country’s climate crisis head on. Without bold action, climate change will have devastating consequences on our health and economy, particularly for low-income communities, communities of color, and other historically marginalized groups.” |
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Congresswoman Fudge echoes HUD mandate to serve "most vulnerable" in her Senate testimony
On Thursday, the Senate Banking Committee convened a hearing on the nomination of Rep. Marcia Fudge (D-Ohio) to serve as the next HUD Secretary. Congresswoman Fudge, who previously served as mayor of an inner ring suburb of Cleveland, Ohio, “knows what it’s like to run a city, and understands all the challenges facing renters and homeowners,” said Committee Chair Brown during his introductory remarks.
During her testimony, Congresswoman Fudge shared her commitment to economic development and affordable housing, as well as her first-hand observations of the housing challenges Americans face from her time as a mayor and a member of Congress. “It bears mentioning, particularly in this moment of crisis, that HUD – perhaps more than any other department – exists to serve the most vulnerable people in America,” she said. “That mandate matters a great deal to me. It is consistent with my own values, and it is precisely what has always motivated me to service.”
“Congresswoman Fudge would bring a much-needed fresh approach to national housing policy. She has been a strong supporter of the HOME program and played a leading role in getting Congress to approve desperately needed funds to stabilize the hardest hit neighborhoods during the Great Recession,” said NHC’s David Dworkin. “We look forward to supporting her confirmation by the United States Senate and working with her in the days and years to come.” |
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Memorandum aims to enhance coordination with tribal nations disproportionately impacted by COVID-19
Recent data from the National Indian Council on Aging (NICOA) and the Centers for Disease Control and Prevention highlights the disparate impact of the pandemic on American Indians and Alaska Natives. NICOA said the data “demonstrates the importance of documenting and understanding the reasons for these disparities while developing collaborative approaches with federal, state, municipal, and tribal agencies to minimize the impact of COVID-19 on Native communities.”
Another study from the Urban Indian Health Institute examines challenges faced by urban American Indians in the Pacific Northwest. The study warns, “the ending of the state-wide eviction moratorium will have a significant effect on the community the Native direct-service organizations serve and, without additional support, it is predicted to increase homelessness.” The Urban Indian Health Institute recommends additional funding to ensure American Indian and Alaska Native households remain safely housed during and after the pandemic.
Private financial institutions have targeted support to tribal nations, including Bank of America, who recently announced $13 million in investment to Native American communities impacted by the pandemic.
President Biden issued a memorandum reaffirming the federal government’s commitment to tribal sovereignty and engaging in consultation with tribal nations. Acting HUD Secretary Ammon applauded the measure, saying, “HUD plays an instrumental role in providing safe, affordable housing for Tribal communities, and this work could not be done without the engagement of our Tribal partners. The President’s memorandum will ensure that our agency will work tirelessly to consult with Tribal leaders when formulating policies to expand opportunity and equity in Native communities.” |
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Chart of the week: Younger generations and minorities will be most impacted by declines in homeownership
Research from Urban Institute forecasts a gradual decline in the U.S. homeownership rate over the next 20 years, from 65% to 62%. According to Urban Institute, “Though this may seem like a modest decline, it will have an enormous impact on each successive generation in their prime homebuying and equity-building years, especially Black millennials and Black seniors.”
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In an op-ed for The Hill, U.S. Mortgage Insurers President Lindsey Johnson argues for the importance of increasing access to affordable mortgages for minority borrowers. "[W]hile we must focus on the pandemic and its impact on [...] minority borrowers, we must also not lose sight of addressing the longer-term systemic issues that unncessarily increase costs or create barriers for minority borrowers." Among Johnson's proposed solutions are balancing GSE capital holding requirements with ensuring that mortgages remain affordable, reducing or eliminating loan-level price adjustments, and increasing access to low-downpayment mortgage options.
A recent article in Fast Company profiles the $58 million Housing Impact Fund in Charlotte, North Carolina, which is largely backed by local investors and community organizations. Recognizing the challenges Charlotte faces due to rapid growth and gentrification, as well as the limitations of existing affordable housing bonds, the Housing Impact Fund is dedicated to preserving the city’s existing affordable multifamily housing stock.
Although the immediate focus for the new Biden administration is the stabilization of the economy and prevention of evictions and foreclosures, the long-term challenges of affordable housing and record low housing inventory remain. In a recent article on housing supply issues, Marketplace spoke to NHC’s David Dworkin, who said, “we’ve seen housing prices continue to rise and become less affordable, even though we’re in the middle of a historically deep recession.”
New research from Harvard’s Joint Center for Housing Studies examines the overlap of forest management programs and housing affordability and the overall impact on conservation efforts in the U.S. and Canada. “We have both a climate crisis and a housing crisis,” said author Julia Smachylo. Forest preservation tax incentive programs “could be one of a host of integrated tools that planners and policymakers use to incorporate environmental concerns in the development of affordable housing options.” |
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Monday, February 1
Tuesday, February 2
Wednesday, February 3
Thursday, February 4
Friday, February 5
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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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Defending our American Home since 1931 |
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