NHC hosts Vice Chair Barr for conversation on CRA

NHC hosted a forum with Michael Barr, Vice Chair for Supervision of the Board of Governors of the Federal Reserve System, to discuss the new Community Reinvestment Act (CRA) and how it brings CRA into the 21st century. The forum began with a conversation between NHC President and CEO David Dworkin and Vice Chair Barr that spanned topics from changes to how housing credit programs are evaluated under CRA and mortgage-backed security churning to the future of branch banking.

“CRA officers need to know that this deal is going to count,” Barr explained, noting the set of illustrative activities spelled out in the new rule. “It’s also important for communities. If you’re a community member, to be able to come to a bank and say I’ve got a deal that’s a qualifying CRA deal, I need your help. That kind of clarity is really important.”

After the discussion, a panel of housing and banking industry representatives reacted to the discussion and the new CRA rule. Panelists were Lindsey Johnson, President and CEO, Consumer Bankers Association; Michael J. Novogradac, CPA, Managing Partner, Novogradac; and Lisa Rice, President and CEO, National Fair Housing Alliance. The group discussed the implications of new data analysis, use of AI in housing, racial equity, and how to best leverage the new rule to drive investments in underserved areas.

Enterprises meet 2022 housing goals, fall short on Duty to Serve

The Federal Housing Finance Agency (FHFA) released its 2023 Annual Housing Report, which determined that Fannie Mae and Freddie Mac (the Enterprises) met their 2022 housing goals. The report analyzes the Enterprises’ affordable housing and mission-driven activities. It provides an overview of the Enterprises’ affordable housing goals, changes to credit score and valuation models and approvals, updates to the single-family pricing framework, and the Equitable Housing Finance Plans. The report noted that since the Equitable Housing Finance Plans took effect, more than 834,000 families have been assisted through associated programs. 

FHFA also reported that neither Enterprise received high ratings on all their Duty to Serve requirements, which require the Enterprises to serve very low-, low-, and moderate-income families in three underserved areas: manufactured housing, affordable housing preservation, and rural housing. The agency determined Fannie Mae to be below target for its goals for manufactured homes titled as real property and communities not privately owned, as well as Section 515 and Rental Assistance Demonstration goals. Freddie Mac was below target for resident-owned communities in manufactured housing, USDA 515 transactions in affordable housing preservation markets, seasoned small balance loans from small financial institutions, and Section 515 properties under rural housing.

FOMC maintains current federal funds rate

The Federal Reserve Board of Governors’ Federal Open Market Committee (FOMC) agreed to hold the current target federal funds rate steady at 5.25-5.50% after they met last week, the second consecutive pause this year following 11 prior rate hikes.

“After picking up somewhat over the summer, activity in the housing sector has flattened out and remains well below levels of a year ago, largely reflecting higher mortgage rates. Higher interest rates also appear to be weighing on business fixed investment. The labor market remains tight, but supply and demand conditions continue to come into better balance,” said Federal Reserve Chairman Jerome Powell during a press conference. He later referenced mortgage interest rates nearing 8% and the significant effect the rates have on the housing market. 

FHA aligns manufactured home appraisal requirements

FHA announced updates to its appraisal requirements for manufactured homes certified under Fannie Mae’s MH Advantage™ and Freddie Mac’s CHOICEHome® programs, aligning the requirements with industry standards. The revisions will improve the valuation process for borrowers seeking FHA-insured mortgages for these homes, in line with the Biden-Harris Administration’s Housing Supply Action Plan, which aims to increase the availability and affordability of manufactured housing.

“The critical step we’re taking today ensures HUD is in alignment with our industry partners, and it will make more quality affordable housing available to people across the country,” said HUD Secretary Marcia Fudge. Effective immediately, the updated policy requires appraisers to use the most appropriate site-built-home comparable sales when fewer than two comparable sales of certified manufactured homes are available. These changes are part of FHA’s broader effort to enhance financing flexibility and contribute to a more diverse housing market.

“Updating FHA appraisal requirements to align with the Fannie Mae and Freddie Mac certification programs supports our comprehensive efforts to increase both the supply and affordability of manufactured homes,” said Federal Housing Commissioner Julia Gordon.

HUD Proposes Rule to Lift Fair Housing Tester Conviction Limits

The U.S. Department of Housing and Urban Development (HUD) introduced a new rule, outlined in a Notice of Proposed Rulemaking, to remove restrictions on fair housing testers. The proposed changes would eliminate restrictions for individuals with prior felony convictions or other criminal records participating in the Fair Housing Initiatives Program (FHIP) and Fair Housing Assistance Programs (FHAP).

“We trust fair housing testers to identify bias and discrimination in housing so we can fulfill our mission to root it out. Through this new rule, we can ensure people with criminal records who want to participate in this important work aren’t facing unnecessary barriers,” said HUD Secretary Marcia Fudge. The proposed rule strives to make HUD’s programs more inclusive and empower FHIP and FHAP-funded entities to investigate potentially discriminatory screening policies. HUD is seeking public comment with a Dec. 29 submission deadline through Regulations.gov.