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Senate Banking subcommittee hearing highlights housing challenges and recommends policy changes

On Dec. 9, the Senate Banking, Housing and Urban Affairs Subcommittee on Housing, Transportation, and Community Development held a hearing on Inequality, Opportunity, and the Housing Market. The panelists discussed the range of challenges that continue to plague the housing recovery: concentrated foreclosures, negative equity, vacant and abandoned homes, tight credit, and households of color shut out of the conventional mortgage market. The hearing highlighted that despite overall economic improvement, many families and neighborhoods are being left out of the recovery. The panelists highlighted a number of policy recommendations that would improve family and neighborhood outcomes. Areas for Congressional action

  • Complete housing finance reform in a way that ensures affordable access to credit. The uncertainty of the GSE’s future negatively impacts the housing market. NHC has repeatedly urged Congress to enact housing finance reform.
  • Pass the Mortgage Debt Relief Act through 2015. Homeowners considering short sales need certainty that they will not face negative tax consequences so they pursue this better option over a foreclosure or walking away. NHC has advocated on this issue along with many allies.

Areas for Federal Housing Finance Agency action

  • Fannie Mae and Freddie Mac should update their credit score models, using options like FICO 9 and Vantage Score, which are more refined and open up the mortgage market to more borrowers. This action could also encourage other lenders to update their credit score models.
  • Fund the National Housing Trust Fund and Capital Magnet Fund, which would help create more affordable housing.*
  • Continue work with other regulators to improve mortgage servicer rules.

REO Disposition

  • FHA’s Distressed Asset Stabilization Program (DASP) offers a viable way to preserve homeownership and stabilized neighborhoods. Though FHA has made some improvements to the program, it could make additional changes to DASP so that nonprofits were better able to participate like awarding extra points to Neighborhood Stabilization pool bidders committed to social outcomes. NHC discussed this program in a recent blog.
  • The Federal Housing Finance Agency (FHFA) should strengthen its First Look program for REOs, so that homebuyers and nonprofits have a longer period to purchase those homes. The program could also be improved by considering how to give nonprofits and homebuyers access when prices decrease.

Panelists at this hearing were Wayne Meyer of New Jersey Community Capital, Julia Gordon of the Center for American Programs, Mabel Guzman of the National Association of Realtors and Deborah Goldberg of the National Fair Housing Alliance.

*On Dec. 11, the Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to begin setting aside and allocating funds to the Housing Trust Fund and the Capital Magnet Fund. You can read NHC’s blog post here.

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