Weekly update from the National Housing Conference |
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In this issue
June 26, 2022
Issue 91-25
· Black Homeownership Collaborative celebrates first anniversary
· GAO Examines OCC Oversight of Bank Redlining
· Sandra Thompson Sworn In as FHFA Director
· HUD Announces Various Funding Awards
· Draft THUD Bill Released
· Senators Introduce Bill for CDFI Tax Credit
· Fair Housing Improvement Act of 2022 Introduced
· Chart of the week: State of the Nation’s Housing Report shows dwindling supply
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Special Purpose Credit Programs and closing the homeownership gap
By David M. Dworkin NHC President and CEO
This week, we will take a closer look at one of the most interesting “new” tools in the effort by a wide array of NHC members and the Black Homeownership Collaborative to close the racial homeownership gap – Special Purpose Credit Programs (SPCPs).
In fact, SPCPs are not new. They originated in the 1974 Equal Credit Opportunity Act (ECOA). However, regulators of the Government Sponsored Enterprises and the banking industry have singled out SPCPs as one of the few ways to directly target specific underserved groups who have been subjected to discrimination, often under the color of federal law, throughout our nation’s history.
This note will examine SPCPs in detail with the help of a new SPCP toolkit published this month by the National Fair Housing Alliance and the Mortgage Bankers Association. That’s quite a pairing and a sure sign that SPCPs will be a part of the future. The remainder of this note will quote liberally from this highly detailed online guide and should serve as a reasonable introduction. However, I encourage you to spend as much time as possible with the SPCP toolkit to fully understand the many facets of this important tool.
SPCPs are targeted lending products designed to specifically advantage an economically disadvantaged group of people. SPCPs are explicitly permitted by ECOA, which prohibits discrimination in credit based on race or national origin, among other factors. However, ECOA also states that it does not constitute discrimination for a for-profit organization to refuse to extend credit offered under a special purpose credit program in order “to meet special social needs” or for a nonprofit to administer a “credit assistance program” for its members or an “economically disadvantaged class of persons.”
Congress ensured that these programs permit consideration of prohibited bases such as race, national origin, or sex to increase access for people denied it in the past. This is especially important because the privileges of government-subsidized mortgages were made widely available to white borrowers and denied to people of color. These benefits have a multigenerational impact.
Lenders can choose to create an SPCP targeted by race or ethnicity and by geography based on majority-minority, greatest disparities, and greatest need. The determination of whether to base a program on individual characteristics or geographic characteristics depends in part on the data demonstrating the need for the program, in part on the specific goals of the lender, and in part on the lender’s risk tolerance.
Monitoring provides data and feedback to ensure it reaches the intended beneficiaries, including race and/or ethnicity, among other program data. In the case of SPCPs based on individual characteristics more...
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News from Washington | By Luke Villalobos
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Black Homeownership Collaborative celebrates first anniversary
On Monday in Atlanta, the Black Homeownership Collaborative celebrated its first anniversary, releasing its first annual report and launching an updated version of the 3by30.org website. The new site offers tools for consumers seeking information about homeownership and the home buying process, including a mortgage calculator based on savings rather than anticipated downpayment, a downpayment resource locator, and direct links to real estate professionals. Representatives from NHC, the Mortgage Bankers Association, National Association of REALTORS®, National Association of Real Estate Brokers, National Fair Housing Alliance, Urban Institute, Atlanta Neighborhood Development Partnership, NeighborWorks America, Urban League of Greater Atlanta, the US Department of Housing and Urban Development and local Atlanta government officials gathered at Atlanta Metropolitan State College on the Juneteenth federal holiday.
Ginnie Mae President Alanna McCargo, Atlanta Mayor Andre Dickens, and National Urban League President and CEO Marc Morial, among others, delivered remarks. Atlanta native Big Boi, founder of the Hip Hop duo OutKast, made a special celebrity guest appearance speaking about his personal experience with homeownership and wealth-building.
“To get the Black homeownership rate to 50 percent, that’s ambitious, but it’s modest. We…have to talk about the ultimate goal. We have to affirm the ultimate goal,” said Morial. “We also have to affirm the goal to build public support. This is not some giveaway program that’s designed to give houses to the unworthy. This is an initiative designed to simply level the playing field. It’s just an effort to make opportunity real. It’s an effort to say, let’s be candid and honest - redlining and the early FHA and the early Fannie and the early Freddie didn’t guarantee mortgages for African Americans. And we can’t go back and rewrite that history. But what we can do is recognize that today we need added energy, added efforts, special initiatives, a special effort in order to do this.”
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GAO examines OCC oversight of bank redlining
The Government Accountability Office (GAO) on Tuesday published a new report called Fair Lending: Opportunities Exist to Enhance OCC’s Oversight of Banks’ Lending Practices. The report examines the Office of the Comptroller of the Currency (OCC) and found that the OCC used outdated examination guidance with inconsistent procedures, made process changes in 2018 that contributed to fewer examinations of smaller banks, and did not assess the effects of its process changes.
In particular, examinations of cases with potential redlining found inconsistencies and did not account for new statistical methods used to analyze redlining. The report further found that there has been a drop in the number of fair lending examinations performed.
The report offered recommendations to address the issues, including updated and clearer guidance for examiner conclusions. The OCC has responded to the report and says it will update guidance and develop examiner training.
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Sandra Thompson sworn in as FHFA Director
On Wednesday, Sandra Thompson was officially sworn in as the Director of the FHFA. She will serve five years after serving as Deputy Director of the Division of Housing Mission and Goals and Acting Director since June 2021.
“As a seasoned financial regulator, I understand how critical a time it is to serve in this role. I am committed to ensuring our nation’s housing finance systems and our regulated entities operate in a safe and sound manner. There is a widespread lack of affordable housing and access to credit, especially in underserved communities of color. It is FHFA’s duty, through our regulated entities, to ensure that all Americans have equal access to safe, decent, and affordable housing,” said Thompson.
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HUD announces various funding awards
On Wednesday, HUD announced a series of funding awards to assist and enforce housing initiatives.
A new package of resources totaling $365 million seeks to address unsheltered homelessness and homeless encampments, with $54.5 million for homelessness in rural communities. The package also includes $43 million to fund an estimated 4,000 new incremental Housing Choice Vouchers.
HUD also announced an allocation of $30.1 million in funding for its state and local fair housing enforcement agencies across the country under its Fair Housing Assistance Program (FHAP). Funding will go to state and local enforcement agencies that support fair housing complaint investigations and education and outreach activities.
The Native Hawaiian Housing Block Grant (NHHBG) program also will receive $22 million of funding to support the Department of Hawaiian Home Lands (DHHL) in meeting the needs of low-income Native Hawaiian families. Lastly, HUD announced $4 million of funding to public housing agencies to help protect families from radon exposure. The funding will go to nine public housing agencies to conduct radon testing and any needed mitigation for approximately 1,000 housing units. |
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Draft THUD bill released
On Wednesday, the House Appropriations Committee released a draft version of its FY2023 spending bill for Transportation, Housing and Urban Development, and Related Agencies (THUD). The bill would provide $62.7 billion for HUD, an increase of $9 billion compared to FY22 levels and $1.1 billion above President Biden’s FY23 budget request.
The bill proposal invests significantly in housing programs, including $31 billion for Tenant-Based Rental Assistance, $14.9 billion for Project-Based Rental Assistance, $8.7 billion for public housing, $3.3 billion for Community Development Block Grants, $1.7 billion for the HOME Investment Partnerships Program, $500 million for a new Manufactured Housing Improvement and Financing Program, $175 million for Self-Sufficiency Programs, and more.
You can see a full bill analysis here. The subcommittee approved the draft bill by voice vote on Thursday. |
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Senators introduce bill for CDFI tax credit
Last Thursday, Sens. Mark R. Warner (D-VA), Roger Wicker (R-MS), Chris Van Hollen (D-MD), and Cindy Hyde-Smith (R-MS) introduced new bipartisan legislation to help unlock more equity and long-term financial capital for community development financial institutions (CDFIs) by creating a CDFI Tax Credit. The tax credit would go to private-sector investors who make equity investments or long-term patient capital available to CDFIs, helping unlock more equity and capital for low-income and minority-owned businesses that need access to financing.
Several organizations expressed support for the legislation, including the National Association of Affordable Housing Lenders, Local Initiatives Support Corporation, and Community Development Bankers Association.
“Investing in our small businesses generates more shared prosperity in our communities and CDFIs are a key force multiplier, particularly in financing businesses and projects in economically underserved communities. This legislation will leverage long-term, private sector investments to support their good work and help them expand their efforts to support new and growing small businesses,” said Sen. Van Hollen. |
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Senators reintroduce Fair Housing Improvement Act of 2022
On Thursday, Senator Tim Kaine (D-VA) reintroduced the Fair Housing Improvement Act of 2022, along with cosponsoring Senators Chris Van Hollen (D-MD), Michael Bennet (D-CO), Amy Klobuchar (D-MN), Patrick J. Leahy (D-VT), and Catherine Cortez Masto (D-NV). The bill would protect veterans and low-income families from housing discrimination by banning discrimination based on source of income, including housing vouchers that many veterans and low-income renters rely on to be able to pay their rent.
“Landlords should not be able to deny any American access to affordable housing based on how they legally pay their rent,” said Senator Klobuchar. “By prohibiting landlords from discriminating against families who utilize housing vouchers from the federal government, this legislation will enable more veterans and low-income Americans to enjoy the safety and stability that affordable housing provides.”
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State of the Nation's Housing Report shows dwindling supply
On Wednesday, the Joint Center for Housing Studies of Harvard University released its annual report, The State of the Nation’s Housing. The report covers a breadth of issues within the industry, including record home price growth, pandemic stresses, and continued cost burdens for lower-income households and households of color. In addition, housing supply remains a driver for increased housing costs, with fewer existing homes available in January 2022 than at any point in the late 1990s.
“Once the pandemic began, the number of available homes fell by an astounding 20 percent year over year by April 2020, then another 21 percent between April 2020 and April 2021, and yet another 10 percent between April 2021 and April 2022,” the report states.
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A segment on Last Week Tonight with John Oliver discussed the skyrocketing costs of rents. The piece notes that the median monthly rent in the US passed $2,000 in May, with some cities seeing increased costs of 30-50%. Oliver examines the issue of low affordable housing supply and the relationship of supply to NIMBYism, institutional investors, and programs like rent control and housing choice vouchers.
An article in The Washington Post reports that Meta Platforms (formerly Facebook Inc.) will settle its housing discrimination case with the U.S. Department of Justice. The platform will have to overhaul its internal ad targeting tool to prevent further discrimination and build a new automated advertising system with more equitable delivery. It will also pay a $115,054 fee, the maximum penalty available under the law.
A blog post by the Federal Reserve Bank of St. Louis examining debt throughout the pandemic and St. Louis mortgage distress rates. The post included programs available for borrowers seeking relief, and potential equitable routes for economic growth. |
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Monday, June 27
Tuesday, June 28
Wednesday, June 29
Thursday, June 30
Friday, July 1
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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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