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Weekly update from the National Housing Conference |
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In this issue
August 16, 2020 I Issue 89-29
- Industry reacts to ‘shameful’ new refinance fee
- Housing advocates say executive order does not go far enough
- HUD approves new flexibilities for CDBG
- FHFA offers new protections for tenants of properties in forbearance
- Senate bill tasks Federal Reserve with addressing racial inequality
- Quicken and City of Detroit continue partnership to support local homeowners
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Chart of the Week: Interest in suburban living outpaces previous years
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Find the information you need at NHC's COVID-19 Housing Resource Center |
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“Suburban Housewives”
By David M. Dworkin, NHC president and CEO
Dear Friend,
Recently, postings on Twitter and in other social media have risen out of housing’s ugly past. It goes something like this: “Suburban Housewives” need protecting from fair housing laws because their neighborhoods are going to be “invaded” by people who place them in danger and depreciate their precious housing wealth. It’s actually quite impressive that so many racist and sexist tropes can be communicated in less than 280 characters. It used to take a full speech by Jesse Helms or George Wallace. We’ve come a long way.
This message is offensive to millions who were explicitly discriminated against in America’s housing laws before 1968 and have been protected by the Fair Housing Act since. It also represents a gross generalization that is equally offensive to women from all backgrounds.
It’s easy to make this a partisan issue, but sadly it’s not. Ask any affordable housing developer in the most progressive communities in the country, from the Bay Area in California to Long Island, New York, and they’ll tell you that they have heard far worse than the “Suburban Housewives” argument at zoning board hearings for nearly every project they’ve proposed. And it’s not just zoning. In many communities throughout California, development fees can easily exceed $100,000 per unit. Exceptions for affordable housing? None. On a 100-unit Low Income Housing Tax Credit development, that’s $10 million before you buy one square foot of land and stick a shovel in it.
To some extent, it’s helpful for the “Suburban Housewives” trope to be brought out in the open, so that everyone can see it for what it really is – a brazenly racist and misogynistic appeal to this country’s worst instincts and darkest moments. By introducing this message into the public forum, we can more clearly dispel the myths underlying it and have an honest discussion of where we’re at as a nation right now.
First of all, housing values are subject to the law of supply and demand, which cannot be repealed. One of the most pernicious and tenacious suburban myths is that if people who don’t look like you move into the neighborhood (and the “you” here is almost always someone who looks like me), property values are going to collapse. I know something about this, because I grew up in the 1960s and 1970s when this was quite common in residential neighborhoods in Detroit and its suburbs. But how is this possible when the law of supply and demand dictates that if demand exceeds supply, prices will rise? The answer is fear.
In 1993, a study published in the Journal of Housing Research found that the magic number in this equation is three. The number of Black families required to create a panic among White residents is three. In some neighborhoods, one was too many, but in those where most people considered themselves liberal-minded, two was disconcerting and three meant it was time to go. Ironically, the very same number applied to Black homebuyers. The first three required a pioneering mindset. After that, it was safer for those with a lower tolerance for racial risk. As Whites put their homes on the market, however, property values began to respond to the increase of supply. Ultimately, those hurt the most were the White families who would not run, and the Black families brave enough to be the first. The result is a self-fulfilling prophecy built on fear and a false narrative, as New York University professor Tom Sugrue brilliantly documented in his book, Origins of the Urban Crisis.
Second, fair housing laws are the foundation of equal opportunity that our country and our economy depend upon. Reasonable people can differ on the nuances of individual regulations, but the idea that neighborhoods should be segregated by the whims of any given community is a principle that has no place in a modern democratic society.
Finally, references to a Black man (most recently one who is a United States Senator and recent presidential candidate) as the source of this danger is one of the most repugnant and reliable racist tropes of all; responsible for generations of violence, lynching and judicial abuse. It should never be tolerated by any American ever again. I fear it is a sign of my stubbornly persistent naivete that I was surprised to see it used in 2020.
I know that some may think I am overreacting. Others will applaud my “woke” thinking. I must reject both points of view. Equal opportunity is a founding principle of our nation. “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” The fact that it was written by an owner of enslaved fellow humans, well aware of his own contribution to our nation’s “original sin” but too consumed by it to change, is a testament to its importance and power and truth. He, and many of his fellow patriots and patriot-hypocrites, risked their lives and the lives of their families to create the nation in which we live. It is the “more perfect union” we strive for. The very least we can do is everything in our power to make it so.
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Industry reacts to ‘shameful’ new refinance fee
Citing “higher risk” and “loss forecasting precipitated by COVID-19,” Fannie Mae and Freddie Mac notified lenders on Wednesday that beginning on Sep. 1, 2020, a fee of 50 basis points would be imposed on new refinances. A coalition of housing, financial services and consumer advocates, including NHC, the Mortgage Bankers Association (MBA), Center for Responsible Lending, National Association of Affordable Housing Lenders and National Community Stabilization Trust, quickly issued a letter, urging the Federal Housing Finance Agency (FHFA) to withdraw the surprising policy change.
The new fee comes amidst a refinance boom in a historic low-interest rate environment that has allowed many households to lower their monthly payments at a critical moment. Recent refinance activity “is also reducing risk to the GSEs and taxpayers,” the coalition letter states. “At a time when the Federal Reserve is purchasing $40 billion in agency mortgage-backed securities per month to help reduce the cost of buying or refinancing a home and stimulate the broader economy, this action by the GSEs raises those costs, contradicting and undermining Fed policy.” If not reversed, the policy could harm at-risk households and dampen the economic recovery; the letter states, “The pricing increase is particularly harmful for our nation's low- and moderate-income homeowners and for the emerging, but unsteady improvements to the national economy.”
In an op-ed for HousingWire, former Federal Housing Administration (FHA) Commissioner David Stevens wrote, “FHFA is not a friend to the housing community and failure to be vocal will be perhaps the greatest mistake industry leaders can make. This isn’t about protecting taxpayers, this is about increasing the cost and availability of mortgages for hard working Americans in the middle of a global pandemic. That’s shameful.”
“For the GSEs to add a 50 basis-point surcharge on refinances when the nation is struggling with the greatest economic downturn since the Great Depression is outrageous,” MBA President and CEO Bob Broeksmit told the Wall Street Journal.
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HUD approves new flexibilities for CDBG
The Department of Housing and Urban Development (HUD) this week announced that states and local governments can use Community Development Block Grant funds appropriated by the CARES Act (CDBG-CV), as well as other federal funds, to support their communities in the wake of the coronavirus outbreak. HUD is also providing flexibility to communities who want to utilize their existing, non-CARES Act federal dollars to support their coronavirus recovery efforts.
Key new flexibilities available to communities in administering their CDBG-CV funds include the following:
- States may carry out activities directly or pass funds through to local governments in both rural and urban areas throughout the state (Some funds must be set aside for rural areas.);
- Economic development rules updated and streamlined so grantees can move quickly to help small businesses; and
- Emergency payments to a provider or landlord on behalf of a family or individual, usually limited to 90 days, may extend for up to six months.
The Notice also contains waivers and alternative requirements to expedite submissions across multiple grant programs so states and local governments can quickly realign existing resources to respond to COVID-19.
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FHFA offers new protections for tenants of properties in forbearance
“To increase awareness of available tenant protections,” FHFA announced new requirements for multifamily property owners in forbearance as a result of COVID-19. The provisions, which only apply to properties backed by Fannie Mae and Freddie Mac, require property owners to inform tenants that they may not be evicted for nonpayment of rent. This new protection comes in addition to existing requirements, including a 30-day notice to vacate period, waiver of late fees and penalties, and flexible repayment options in lieu of lump sum payments. FHFA also asked Fannie Mae and Freddie Mac to update their renter resource pages to prominently feature tenant protections and make it easier for residents to determine whether or not their property is financed by one of the government-sponsored enterprises. NHC’s COVID-19 Resource Center also provides centralized resources and information for renters across all property types.
In response to FHFA’s new requirements, both Fannie Mae and Freddie Mac announced the respective changes for multifamily property owners in forbearance. “Our goal in launching these initiatives is to ensure that renters can easily learn of or proactively determine what tenant protections might apply to their unique circumstances,” said Debby Jenkins, head of Freddie Mac’s multifamily department.
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Consensus starting to form around federal rental assistance
Last week, the president signed an executive order aimed at helping struggling renters. The executive order does not extend the CARES Act eviction moratorium, but instead gives the Centers for Disease Control and the Department of Health and Human Services the discretion to determine whether temporary measures to halt evictions are necessary to control the spread of COVID-19. The Treasury Department and the Department of Housing and Urban Development (HUD) also have the authority to provide temporary financial assistance to renters and homeowners financially impacted by COVID-19. While the executive order acknowledges the scope and severity of the impending eviction crisis, it does not provide financial support or rental assistance to households and small businesses. NHC issued a statement this week saying the executive order doesn’t do enough to forestall an eviction crisis.
HousingWire covered the growing number of housing organizations calling for broader support and quoted NHC President and CEO David Dworkin, who said, “The order would do nothing to help Americans pay rent and would place the financial burden on millions of small businesses while making an eviction crisis even more likely later this year. A moratorium alone is a temporary and unfunded mandate that hurts landlords now at the expense of tenants later.” Dworkin also appeared on MSNBC earlier this week to discuss the urgent need for comprehensive rental assistance with Chris Jansing.
Several Democratic members of Congress came out in opposition to the president’s actions this week. House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) said in a statement, “It provides no new funding to assist renters and does not extend the eviction moratorium.” Senate Banking, Housing and Urban Affairs Committee Ranking Member Sherrod Brown (D-Ohio) said the president’s “housing order fails to help renters and homeowners keep roofs over their families’ heads.”
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Senate bill tasks Federal Reserve with addressing racial inequality
A group of Democratic members of Congress recently introduced the Federal Reserve Racial and Economic Equity Act. Citing increasing calls for the Fed to assume a leading role in overseeing and addressing racial inequality in the financial system, the proposed legislation would expand the Fed’s mission to include identifying and reducing inequality, as well as stronger reporting on racial disparities in the workforce. Several political leaders have advocated for these changes in recent months, including Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities; Democratic presidential nominee Joe Biden; and Raphael Bostic, president and CEO of the Federal Reserve Bank of Atlanta.
The legislation was introduced by Sens. Elizabeth Warren (D-Mass.), Sherrod Brown (D-Ohio) and Kirsten Gillibrand (D-N.Y.), as well as Rep. Maxine Waters (D-Calif.). "The Fed can use its existing authorities to reverse the serious racial gaps in our economy, including in our current recovery from the COVID-19 crisis – and our bill will require the Fed to do so," said Sen. Warren in a statement. "Inequality is not something that happens on its own. It is a result of specific policy choices and the Fed must take deliberate action to fix it."
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Quicken and City of Detroit continue partnership to support local homeowners
Quicken recently released the results of its 2019 Neighbor to Neighbor campaign. The initiative is provided in partnership with the City of Detroit Board of Review and includes the Homeowners Property Tax Assistance Program (HPTAP), which helps homeowners with overdue property taxes and provides 0% interest loans for home repairs. HPTAP contributed to a 94% decrease in owner-occupied homes entering tax auctions since 2015. The recent findings also reveal that more than 5,000 residents with delinquent property taxes required significant property repairs.
For the upcoming year, Quicken Loans Community Fund will make an additional $1 million investment in the city’s 0% interest program for home rehabilitation, which covers loans up to $25,000. The program addresses the challenges many affordable markets, like Detroit, Michigan, experience. In these cities “home values are actually so low, and the costs of making a mortgage are so high, that lenders and builders can’t afford to produce and finance homes that are affordable to those who need them the most,” said NHC President and CEO David Dworkin in a blog post. In addition to mortgage finance issues, it is often difficult for homeowners to obtain funding to rehabilitate the existing housing stock. “Rehab costs often exceed the appraised value of the home after the work is completed,” said Dworkin. NHC supports legislation that would help close the appraisal gap in affordable cities.
In the absence of federal legislation, programs like Quicken’s are helping local households obtain and maintain affordable homes. “Tax foreclosure is a leading cause of abandonment and blight in Detroit neighborhoods. Home repair assistance is among the tools used to prevent it, and a lack of preventative measures like help with costly home repairs was among advocates' concerns,” Crain’s Detroit Business reported in its coverage of Quicken’s announcement.
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Interest in suburban living outpaces previous years
The COVID-19 pandemic may be responsible for growing interest in relocating to the suburbs among urban residents. New research from realtor.com reveals a significant uptick in views of suburban properties within the country’s 100 largest metro areas, representing 51% of browsing traffic.
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A new report from the Center for American Progress calls on policymakers to expand affordable housing for low-wage workers. The report recommends, “a large-scale direct investment by the federal government in metropolitan land trusts on which equitable transit-oriented developments can be established – particularly in areas where the low-wage jobs-affordable housing fit is poor, in proximity to low-wage job hot spots, and where public transit connects the low-wage workforce to clusters of low-wage jobs.”
A study published by the University of Arizona predicts a surplus of homes will flood the housing market by 2040. As baby boomers age, they’ll likely look to downsize, opting for smaller homes or senior living facilities. The study suggests, however, that as this demographic looks to sell their homes there won’t be sufficient purchase demand from younger generations. The homes currently occupied by baby boomers and Generation X households are likely to be too large and unaffordable for millennials and Generation Z households, resulting in what the study calls “the great senior short-sale.”
In the context of the HUD’s recent termination of the Affirmatively Furthering Fair Housing rule (AFFH), an op-ed from Dan Arsenault, a former state Department of Housing official, in the Hartford Courant looks at Connecticut’s efforts to end housing segregation, specifically taking aim at zoning laws. Arsenault argues Connecticut has a distinct opportunity to stimulate local economies by promoting equitable and affordable housing, writing “the state is now uniquely positioned to tackle an issue that will be essential to our economic recovery in the age of COVID-19: zoning reform.
In a new affordable housing alert, Nixon Peabody examines HUD’s decision to eliminate the AFFH rule and its replacement, the Preserving Community and Neighborhood Choice rule. The new rule establishes “an extremely low bar about what HUD grantees must do to meet their affirmative fair housing duties,” writes Nixon Peabody.
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Monday, August 17
Tuesday, August 18
Wednesday, August 19
Thursday, August 20
Friday, August 21
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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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