Weekly update from the National Housing Conference |
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In this issue
February 21, 2022
Issue 91-7
• Republican Senators delay vote on Thompson and Fed nominees
• HPN appoints Hughes to succeed outgoing CEO Bledsoe
• Acting Comptroller Hsu hints at forthcoming CRA rule
• NFHA releases "gold standard" framework to audit algorithmic bias
• HUD removes COVID-19 FHA multifamily mitigants
• OCC launches third regional REACh initiative in Detroit
• Ginnie Mae adds green status field to multifamily disclosure
• Freddie Mac announces automated income assessment tool
• HUD announces disaster assistance for Hawaii
• Chart of the week: Apartment market tightness spiked in 2021
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What can we do about skyrocketing housing costs?
By David M. Dworkin, NHC president and CEO
Housing prices continue to climb to new heights for renters and homebuyers of all incomes. Some have raised concerns about a housing bubble, ready to burst as it did in 2007, triggering the deepest and longest recession since the Great Depression. The housing crash was caused by an artificial expansion of demand through the proliferation of highly leveraged toxic mortgages that were badly underwritten. Over the following decade, we grew a deficit of nearly two million homes that were never built.
Despite recent record home building of single-family and multifamily homes, housing prices are rising rapidly, driven by supply shortages, and making shelter less affordable for everyone across the income spectrum. This is as true for rental housing as it is for homeownership. We’re all in this together.
The Case-Shiller House Price Index (HPI) was up 18.8% year-over-year in November, and the Federal Housing Finance Agency’s HPI was up 17.5%. This is higher than the peak before the crash that triggered the Great Recession. Rents are as bad. Year-over-Year rents are up 17.8% nationally. Rent increases are occurring everywhere, from Phoenix, AZ (27.9%) to Greensboro, NC (23.2%). Even Omaha, NE, saw rents rise 10%. Rents in New York City went up 33.5%.
As a result, shelter costs are driving inflation ever higher. Over the past 12 months, the Consumer Price Index rose at an annual rate of 7.5%, the highest since 1982. As White House economists wrote last Fall, “shelter makes up nearly a third of the basket for CPI inflation, and 40 percent of the basket for core CPI that excludes the volatile food and energy components. As a result, even small increases in rent and home prices can, in principle, have noticeable effects on overall inflation.” And since housing is a lagging factor, we can expect to see the impact rise more...
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News from Washington | By Luke Villalobos
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Republican Senators delay vote on Thompson and Fed nominees
Republican members of the Senate Banking Committee boycotted a vote scheduled for Tuesday in protest of President Biden’s nomination of Sarah Bloom Raskin to be the Federal Reserve Board of Governors’ Vice Chair for Supervision. The boycott denied the committee a quorum, delaying a vote not only on Raskin’s nomination but also on Biden’s other Fed Board nominees and on Sandra Thompson, Biden’s nominee for FHFA Director.
Republican Senators have raised concerns about Raskin’s views on climate change and financial risk and about their claim of a conflict of interest stemming from her tenure on the board of a Colorado-based FinTech company. Sen. Pat Toomey (R-Pa.) said before the walkout that the committee’s Republican members would have agreed to vote on the other nominees slated to be considered with Raskin, but Chairman Sherrod Brown (D-Ohio) declined to separate Raskin’s vote from those of the others.
NHC President and CEO David Dworkin praised Biden’s nomination of Raskin last month, calling her “eminently qualified” for the Fed Board’s powerful enforcement role. Dworkin also endorsed Thompson’s nomination for a full five-year term as FHFA director, praising her tenure as acting director and saying that she has “repeatedly demonstrated her commitment to an equitable housing finance system.”
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HPN appoints Hughes to succeed outgoing CEO Bledsoe
The Board of Directors of the Housing Partnership Network (HPN) unanimously appointed Robin Hughes, currently the head of Abode Communities, as HPN’s next president and CEO on Monday. Hughes will join HPN, a coalition of community development organizations that facilitates peer-to-peer learning among nonprofits, on July 1.
Hughes succeeds HPN’s longtime president and CEO Tom Bledsoe, who announced last November that he is retiring from his post of 25 years. Hughes said that she hopes to sustain the progress Bledsoe and other leaders at HPN have made since the organization’s founding in 1992. “My goal is to build on the legacy of the first 30 years and bring bold, innovative, and transformative solutions to addressing the nation’s housing crisis and scaling the impact of HPN’s members,” she said.
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Acting Comptroller Hsu hints at forthcoming CRA rule
In remarks delivered Monday at a National Community Reinvestment Coalition event, Acting Comptroller of the Currency Michael J. Hsu said that regulators would issue a joint Community Reinvestment Act (CRA) rulemaking in the "not-too-distant future." Hsu said that regulators are using the Federal Reserve Board of Governors' 2020 advance notice of proposed rulemaking as a "basic framework" for the new rule, which he said would increase the law's ability to combat racial disparities in credit access.
The upcoming joint rulemaking by OCC, FDIC and the Fed Board will be the first issued by all three CRA regulators since OCC proposed its own rule in 2020, which advocates said would have gutted the anti-redlining law. That rule, which was rejected by FDIC and the Fed Board, was formally rescinded late last year.
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NFHA releases "gold standard" framework to audit algorithmic bias
The National Fair Housing Alliance (NFHA) released a new framework for evaluating bias in algorithmic systems such as credit scoring, automated underwriting, and tenant screening on Thursday. The framework, called Purpose, Process and Monitoring (PPM), provides a process for auditing algorithmic systems to prevent them from unfairly denying credit or benefits from consumers due to factors such as race or gender.
Though they are often touted as unbiased, algorithmic systems are often built using historical data tainted with discrimination by humans. This reinforces algorithmic learning that perpetuates discrimination rather than eliminating it. In a prime example discovered by researchers at Berkeley found that in 2019, FinTech lenders’ algorithms cost Black and Hispanic borrowers $765 million yearly by offering inflated interest rates.
NFHA said that PPM could be the “gold standard” for auditing algorithmic systems for this sort of bias. “NFHA’s PPM framework provides an equity-centered auditing solution at a time when policymakers and civil rights organizations are calling for fairness, accountability, transparency, explainability, and interpretability,” said NFHA’s Chief Tech Equity Officer Michael Akinwumi, who recently chaired a panel on artificial intelligence and the future of housing equity at NHC’s Tech and Housing Online Symposium. “The framework is system-oriented, and it covers every decision point involved in designing, developing, deploying, and monitoring an algorithmic solution. It will drastically limit the capacity of models to harm consumers if embraced by the industry.”
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HUD removes COVID-19 FHA multifamily mitigants
HUD announced on Monday that effective immediately, it is removing temporary mitigants on FHA multifamily transactions put in place in April 2020. The mitigants, which included requiring increased capital reserves, 250% repair escrows and limits on cash-out refinances, were put in place to protect a potential negative impact of COVID-19 on FHA’s portfolio. However, FHA properties have proved to be mostly resistant to the pandemic’s effects so far, with an annual default rate of less than 1%, which FHA officials said prompted Monday’s move.
“Through actions taken under the Biden-Harris Administration to help the nation recover from the pandemic, including the historic American Rescue Plan, mortgages in FHA’s Multifamily insurance portfolio experienced fewer challenges than expected,” said Lopa Kolluri, HUD Principal Deputy Assistant Secretary for the Office of Housing and FHA.
The change allows lenders to begin adhering to the less stringent Multifamily Accelerated Processing Guide requirements after nearly two years of increased safeguards during the pandemic. HUD Deputy Assistant Secretary for Multifamily Housing Ethan Handelman stated that would make it easier to execute affordable housing projects. "FHA multifamily mortgage insurance helps to create much-needed rental homes in communities nationwide. Returning to our normal underwriting safeguards will put more capital to work for affordable housing,” he said.
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OCC launches third regional REACh initiative in Detroit
OCC announced Tuesday the creation of a new regional Roundtable for Economic Access and Change (REACh) initiative in Detroit. The initiative is the third regional offshoot of the national Project REACh that OCC has announced in recent months, following ones in Los Angeles and the District of Columbia.
OCC launched Project REACh last July as a way to increase credit access in underserved communities, particularly for use toward homeownership and small business expansion, through conversations between industry leaders and regulators. Acting Comptroller of the Currency Michael J. Hsu said that he hoped the initiative would foster new collaborations between community organizations in Detroit, a city that has suffered severely from the effects of disinvestment and White flight.
“Project REACh convenes interested community stakeholders who are working together to remove barriers that limit full, fair and equal access by economically disadvantaged communities in our economy and financial system,” Hsu said. “Through expanding our local efforts into the Greater Detroit Community, we continue to provide the forum to support financial inclusion for hardworking Americans.”
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Ginnie Mae adds green status field to multifamily disclosure
Ginnie Mae announced Tuesday that it had added a "green status" field to its multifamily disclosure form, in which lenders can provide information about the environmental impact of given pools of loans. Ginnie Mae said the move would make its securities more attractive to investors looking to mitigate their climate impact during what HUD Deputy Secretary Adrianne Todman called a “decisive decade to combat climate change.”
Ginnie Mae announced its intention to add the field to its multifamily disclosure form in a January bulletin that included instructions on interpreting lenders' entries. Ginnie Mae President Alanna McCargo said the move was part of a broader effort to increase the attractiveness of Ginnie Mae securities for socially-conscious investors, which also included last year’s move to increase transparency about loan pools' impact on working-class communities. “This new pool disclosure represents progress in our ongoing effort to enhance the value proposition of investing in Ginnie Mae mortgage-backed securities and make strides in the sustainable investing arena,” she explained.
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Freddie Mac announces automated income assessment tool
Freddie Mac announced Tuesday that the company would launch a new effort to assess income using direct deposit records, reducing paper use and simplifying the borrowing process. The tool will use bank account information to analyze income directly from the borrower's deposits, allowing mortgage lenders to stop relying on paper checks when making loans.
"Our direct deposit solution is an innovative, data-driven approach that takes minutes, not days to assess income so our clients can serve more borrowers more efficiently," said Matt Vincent, Freddie Mac's vice president of credit and capacity. "Sourcing data directly from the mortgage applicant's bank account increases accuracy, removes subjectivity, reduces manual underwriting errors and delivers a better experience for borrowers and lenders." It will be available to lenders nationwide through the Loan Product Advisor asset and income modeler.
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HUD announces disaster assistance for Hawaii
HUD announced disaster relief measures for Oahu and Maui in Hawaii on Wednesday in conjunction with President Biden’s declaration of a federal disaster following the flooding and landslides that hit the islands in December.
The assistance, which is available in Honolulu and Maui counties, includes foreclosure relief for FHA-insured properties and mortgage and home rehabilitation insurance for all homeowners. It also includes administrative relief for local agencies whose administrative capacity was impacted by the storms and ramped-up enforcement of fair housing laws.
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Chart of the week: Apartment market tightness spiked in 2021
CalculatedRisk’s Bill McBride graphs National Multifamily Housing Council (NMHC) data showing a spike in apartment market tightness in 2021. Though market tightness has decreased since its peak last year thanks to increased construction activity, NMHC Chief Economist Mike Obrinsky noted last month that “absorptions have more than kept pace, such that apartment occupancy remains at record-highs.”
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A blog post by Harvard’s Joint Center for Housing Studies explores the conservatorship of Fannie Mae and Freddie Mac after 14 years of oversight by FHFA and the loss of enthusiasm for comprehensive GSE reform in favor of smaller reforms to the existing companies. The post notes two important current GSE activities underway: the GSEs retaining earnings to build capital and revisions to the minimum capital rule.
The House Financial Services Committee held a hearing on Wednesday highlighting how federal support for MDIs and CDFIs has expanded credit in disadvantaged communities. The committee heard testimony from representatives of MDIs and CDFIs and discussed the need for additional support for the institutions, the potential impacts of inflation and the institutions' role in COVID-19 relief.
Bloomberg reports that a wealthy Atlanta neighborhood’s effort to secede from the city was stymied after the leader of the Georgia State Senate voiced opposition to considering the proposal this year. The proposal was part of the Atlanta region’s burgeoning “cityhood” movement, in which well-off, majority-White neighborhoods have attempted to secede from majority-Black jurisdictions to gain more control over taxation, policing and zoning. Experts say the movement could entrench racial and class segregation by codifying existing divides between neighborhoods in municipal boundaries.
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Tuesday, February 22
Wednesday, February 23
Thursday, February 24
Friday, February 25
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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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