Congress increases HUD budget as part of $450 billion funding package

Congress passed a $450 billion funding package to avoid a partial government shutdown, which President Biden signed into law. The House passed the package of six bills, called a “minibus,” as it only includes half of the spending bills required to operate the federal government, with a 339-85 vote. The Senate followed suit, approving the package on a 75-22 vote on Friday night. The minibus funds HUD, the Food and Drug Administration, and the Departments of Transportation, Agriculture (USDA), Interior, and Veterans Affairs.

The spending bill provides $70.7 billion for HUD, a $1.8 billion increase from last year’s levels, covering a slew of programs. The Housing Choice Voucher program receives $32.4 billion, an increase of $2.1 billion over the fiscal year 2023 levels. According to the National Low Income Housing Coalition, the increased funding should result in an additional 3,000 vouchers for households. Project-Based Rental Assistance receives $16 billion, $1.1 billion over the previous fiscal year. The HOME Investment Partnerships Program gets $1.25 billion, $250 million below fiscal year 2023, but the program avoids a previously proposed significant cut. Public housing receives $8.8 billion, a $379 million increase from the previous fiscal year. Section 202 Housing for the Elderly gets $913 million, $162 million below fiscal year 2023. Native American Programs received $1.34 billion, a $324 million increase above last fiscal year.

Notably, USDA’s Rural Development funding includes language that gives the agency the authority to allow mortgage decoupling, a significant priority for many rural housing owners and advocates. The decoupling enables Section 521 Rental Assistance recipients to disconnect from the currently required Section 515 or 514 mortgage, meaning rental assistance can continue on those properties even if the mortgage exits the USDA housing portfolio. Meanwhile, many other rural programs saw funding cuts in the package.  

Powell suggests Basel changes forthcoming

At his Semiannual Monetary Policy Report to Congress, Federal Reserve Board of Governors Chairman Jerome Powell told members that he expects “broad and material” changes to the Basel III Endgame proposal, which many in the housing industry expressed deep concerns about after its publication. Several Senators, including Mike Rounds (R-S.C.), Bob Menendez (D-N.J.), and (Thom Tillis (R-N.C.) raised concerns about Basel’s impact on mortgage lending during Powell’s testimony. Tillis noted NHC in his comments on the diversity of groups who expressed concerns over the proposal.

Powell's written testimony discussed the inflation risks over the past year, including impacts on housing, and stated that high mortgage rates have limited activity in the housing sector. During Basel’s open comment period, housing advocates argued that Basel could worsen the market by requiring higher mortgage capital standards. Chair Powell noted in his responses to Basel questions during the hearing that "it's more important to get it right than it is to do it fast. We're not in a hurry. And but my guess is we'll work this out over the course of this year." Powell did not dismiss the idea of a re-proposal.

Sens. Raphael Warnock (D-Ga.) and Tina Smith (D-Minn.) also engaged in some dialogue surrounding housing and mortgage costs in general. They agreed that there is an issue around housing supply but noted the impact of higher costs on lower-income families who cannot achieve homeownership with higher mortgage interest rates.

FHFA issues statement on land title pilot

Federal Housing Finance Agency (FHFA) Director Sandra Thompson issued a statement on the agency approving a Biden Administration pilot program that waives the requirement for lender’s title insurance on certain transactions. The statement explains that homeowners who want to refinance their mortgages are often surprised by out-of-pocket costs that make refinancing more expensive. One such cost is a new lender’s title insurance policy that covers the lender but not the homeowner.

“The recently approved title acceptance pilot will waive the requirement for lender’s title insurance or a legal opinion on certain low-risk refinance transactions where there is confidence that the property is free and clear of any prior lien or encumbrance,” the statement reads. “The title acceptance pilot will make it possible to test whether allowing lenders to sell these refinance loans is a responsible approach to reducing the closing costs incurred by existing homeowners.” It concludes with a reminder that, “As with any pilot undertaken by an Enterprise, this effort will be subject to robust oversight by FHFA to monitor the effectiveness of the pilot in meeting its desired outcomes.”

The announcement garnered criticism and pushback from groups, including the Mortgage Bankers Association and the American Land Title Association (ATLA), who argue that the program could undermine consumer protections and potentially increase risk.  

HAC launches new effort to preserve rural multifamily rental housing

The Housing Assistance Council (HAC) announced the establishment of the Center for Rural Multifamily Housing Preservation (CRMHP), a comprehensive effort aimed at safeguarding rural rental housing, with a specific focus on properties financed through the Department of Agriculture's (USDA) Section 515 program. CRMHP will champion successful strategies, devise necessary solutions, and bolster housing organizations' role within rural communities. 

"The time to act is now," said HAC CEO David Lipsetz. "The cost of housing is at a historic high across the United States. Workers, seniors, young people, and families are all feeling the pinch. As the nation's rural housing intermediary, HAC must do its part to help small towns keep great quality housing and build to meet the demands of the modern economy. The Center will do just that."

Rental properties financed by USDA programs serve as crucial sources of affordable housing, with the Section 515 program alone facilitating the creation of 550,000 affordable apartments in rural areas. Despite this, the Section 515 program has declined for over a decade, resulting in the loss of over 150,000 original units.

HUD unveils $10 million homeownership counseling grant

HUD announced a $10 million grant to support housing counseling services aimed at prospective homebuyers. This funding will allow housing counseling agencies to provide pre- and post-purchase counseling that is also culturally sensitive.

“Housing counselors across America offer invaluable information and guidance. I am pleased that even more people will be able to access their services, purchase homes, and begin building wealth, thanks to today’s announcement,” said HUD Secretary Marcia Fudge.

Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon stated, “Access to high quality, culturally and linguistically appropriate housing counseling can help more households attain the many benefits of homeownership, including the ability to build intergenerational wealth.” You can find additional grant information at grants.gov.