With remarks from FHA Commissioner Brian Montgomery, other leading experts
WASHINGTON – Housing leaders from around the country meet to develop solutions for the growing affordability crisis, which has left one in five adults, age 25-35 living with their parents, according to research conducted by the National Association of Home Builders. “We need to fix this housing crisis before it’s too late,” said NHC President and CEO David M. Dworkin.
In his keynote speech, FHA Commissioner Brian D. Montgomery acknowledged multiple problems with housing, including affordability issues faced by millennials, credit scores of homebuyers at 10-year lows, increased cash-outs refinances taken by homeowners tapping equity and losses in FHA reverse-mortgage program for seniors.
“This is a critical time for FHA and the housing finance system at large,” said Commissioner Montgomery who testifies before Congress next week on FHA’s recent report on the state of its Mutual Mortgage Insurance (MMI) fund.
FHA says the MMI Fund exceeded its congressionally mandated minimum reserves in FY 2018 for the fourth year in a row. In its 2018 Annual Report to Congress, the agency said its Capital Reserve Ratio was 2.76 percent at the end of the year, an 0.58 percentage point increase from FY 2017. The Economic Net Worth of the fund was $34.8 billion an increase of more than $8 billion from the previous year.
But FHA’s Montgomery says there are troubling signs for the future of the fund.
“Cash out refinances are growing astronomically, making up 63 percent of FHA refinance transactions this year versus 39 percent last year,” Montgomery said. “We also see an increase in mortgages with high-debt-to-income ratios.” Furthermore, Montgomery warned, “credit scores of FHA borrowers are going down. Last year they were the lowest since 2008, making it increasingly important to manage that portfolio.”
But there are steps Congress can take right now. NHC’s Dworkin sees bipartisan efforts in the next Congress as a real possibility.
“Senators Orin Hatch (R-UT) and Maria Cantwell (D-WA) have written bipartisan legislation to expand the housing tax credit. Congress should take that up immediately. It’s not enough by itself to solve the affordable housing crisis, but it’s a good start.”
“We need a housing finance system that serves all of the market all of the time,” said Yana Miles, senior legislative counsel at the Community for Responsible Lending.
During the plenary panel discussion on housing finance reform, Anne Segrest McCulloch, president and CEO of Housing Partnership Equity Trust, who also participated on the panel, said housing finance reform must include three essential elements to be effective and bipartisan: stability, affordability and social equity.
At a breakout session on Fair Housing, Agatha So, policy analyst with UnidosUS, spoke on Hispanic homeownership, saying that “Latinos are denied a mortgage at double the rate of whites and are often not treated the same way as whites. In fact, 1 in 3 Latinos experience discrimination when looking to buy a home.”
For NHC’s Solutions’ Advocacy Day, attendees gathered in the morning for a breakfast plenary before heading to Capitol Hill. The plenary included remarks from Linda Mandolini, president of Eden Housing in California and NHC board chair, on lessons learned and strategies used while advocating along with other community leaders for critical resources for affordable housing when California’s redevelopment funding was wiped out.
“We spent the better part of 10 years working to build coalition and to create legislative leaders that really could lead for us on housing,” said Mandolini.
This year in California, voters approved Propositions 1 and 2, which will provide a combined $6 billion in new funding for the development and preservation of affordable and supportive homes. Proposition 1 will dedicate about $4 billion in funding to build and preserve housing, including supportive housing, and provide homeowner assistance through a variety of proven and effective programs.
The state is expected to issue its first notices of funding availability in spring 2019. With $2 billion, Proposition 2 will build an additional 20,000 supportive rental homes that will provide mental health services to help end homelessness for thousands of people. California voters also voted down Proposition 10, which would repeal existing state law that prohibited local governments from enacting rent control on most housing units occupied since 1995.
At the networking reception, Congresswoman-elect Elaine Luria (VA-2nd District) assured housers she would work to advance affordable housing on the Hill.
Solutions was attended by close to 200 top decision makers in housing finance, development, federal and local government, including officials from the U.S. Department of the Treasury, U.S. Department of Housing and Urban Development and the Federal Housing Finance Agency, as well as decision makers in advocacy. JPMorgan Chase & Co. was the national presenting sponsor.
About NHC: 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.