Weekly update from the National Housing Conference
In this issue
January 22, 2023
Issue 92-3

· HUD proposes new Fair Housing Rule
· FHFA reduces fee for commingled securities
· Ginnie Mae extends COVID relief policies to address lingering effects of pandemic
· CDFI Fund opens FY2023 funding round
· Freddie Mac increased affordable housing loans by 60 percent
· Housing groups ask VA to expand loss mitigation options
· HUD announces funding opportunities to address lead hazards for low-income families
· HUD seeking comments on disaster recovery
· Reports finds evidence of discrimination against voucher recipients
· Fannie Mae announces Innovation Challenge winners


Chart of the week: Older millennials spur household growth between 2016 and 2021
Breaking Down Silos -- A Story of CONVERGENCE

By Steve O'Connor, the Senior Vice President of Affordable Housing Initiatives at the Mortgage Bankers Association and Chair of the National Housing Conference.

When the Mortgage Bankers Association (MBA) launched its Affordable Housing Initiatives program in 2019, we made addressing the racial homeownership gap a top priority. While we would continue to pursue policy remedies to this challenge, we believed that a market-based approach could provide new insights, ideas, and solutions. Thus, we launched two place-based, multi-year, collective impact initiatives focused on testing new ways to reach aspiring minority homeowners. These efforts, called “CONVERGENCE,” involve public, private, and non-profit partners working together to raise awareness and educate consumers (and practitioners) about existing resources, programs, and products, and, importantly, to bring new innovations to the market.

The concept behind CONVERGENCE was born from an extensive “listening” tour that I conducted during 2019 with a wide variety of stakeholders, including real estate professionals, mortgage lenders, housing counselors, community development leaders, and public officials. A key theme emerged: that while lots of great work was being done, most of it was being done in silos. This reality hit home for me during two meetings that I hosted in Memphis that year to discuss a potential partnership to address the city’s racial homeownership gap. In those meetings, it became readily apparent that although they were all working toward the same goal, many had never met in person or even discussed the idea of working together. I saw firsthand the “fractured” work that so many people had mentioned during my listening tour. I also saw the extraordinary potential of having so many talented and passionate professionals collaborating with a common “playbook” that leveraged their individual expertise and relationships.

Capitalizing on the interest from a diverse constellation of stakeholders, MBA immediately began organizing its place-based pilots. In March 2020, MBA launched CONVERGENCE Memphis in partnership with the Tennessee Housing Development Agency (THDA). In July 2021, we launched CONVERGENCE Columbus in partnership with the Ohio Housing Finance Agency (OHFA) and the John Glenn College of Public Affairs at the Ohio State University. This transition from concept to reality was possible because of our committed partners. Building on that early momentum, both efforts now involve over 50 organizations and over 120 individuals from all sectors of the affordable housing ecosystem. While each city has its own strategic plan, they are focused on common challenges, namely four key “gaps” that often prevent minorities from becoming homeowners. more...
News from Washington | By Brittany Webb
HUD proposes new Fair Housing rule

HUD announced a new proposed Affirmatively Furthering Fair Housing (AFFH) rule on Thursday, aiming to better fulfill the promise of the 1968 Fair Housing Act while streamlining the required fair housing analysis for communities. The proposed rule keeps much of the 2015 AFFH framework intact, with some changes based on lessons learned by HUD during the 2015 implementation and stakeholder feedback. The new proposal retains what it calls the “core planning process, pursuant to which program participants will identify fair housing issues in their communities, set goals to remedy them, submit Equity Plans for review by HUD, and implement their Equity Plans.” It will also provide more transparency and public engagement, with a new streamlined analysis for program participants to complete, which HUD considers less burdensome than the 2015 rule. In addition, the proposed rule states HUD will provide “robust technical assistance” and understandable data for program participants. The new proposal was met with widespread applause from the housing industry and advocates.
 
Specifically, the rule states HUD will give underserved communities greater say in the actions that program participants take to address fair housing issues, streamline the Equity Plans required for fair housing analysis while providing easy-to-use data to support the analysis, place greater focus on fair housing goals, provide more flexibility to improve submitted Equity Plans, create a more direct link between the plan’s fair housing goals and planning processes, implement a more transparent process for participant’s development and review of plans, track progress on fair housing goals, and increase accountability by creating a mechanism for members of the public to file complaints.
 
HUD Secretary Marcia Fudge penned an opinion piece discussing the new rule. You can read NHC’s comments on the 2018 advance notice of proposed rulemaking here. Comments on the new proposed rule are due 60 days after its publication in the Federal Register.
FHFA reduces fee for commingled securities

The FHFA announced changes to Fannie Mae’s and Freddie Mac’s (the Enterprises) single-family pricing framework, lowering the fee of commingled universal mortgage-backed securities (UMBS) from 50 basis points to 9.375 basis points. The UMBS allows for a single security backed by mortgages guaranteed by either or both Enterprises. But in 2022, a new 50-basis-point-fee was implemented that drew criticism from the industry. Many applauded last week’s fee reduction.
 
“FHFA’s move to lower the fee significantly for commingled securities is a sound decision and should remove much of the friction observed in the UMBS market since the fee was implemented last summer,” said Mortgage Bankers Association President and CEO Bob Broeksmit. “While MBA continues to believe that there should not be any fee for commingled securities, we appreciate FHFA’s receptiveness to industry feedback and its willingness to make an adjustment that better reflects any perceived risk.”

The changes are aimed at lowering costs for low and moderate-income borrowers, with additional changes offsetting the reductions with increased pricing for mortgages for higher income customers. The FHFA announcement notes that developing a pricing framework for the Enterprises to maintain support for single-family borrowers limited by wealth or income was included in the 2022 and 2023 scorecards for the Enterprises. The updated fees go into effect on May 1, 2023.
 
“By locking in the upfront fee eliminations announced last October, FHFA is taking another step to ensure that the Enterprises advance their mission of facilitating equitable and sustainable access to homeownership,” said FHFA Director Sandra Thompson.
Ginnie Mae extends COVID relief policies to address lingering effects of the pandemic

Ginnie Mae announced in two All Participants Memoranda (APMs) an extension of two temporary measures it implemented during the COVID-19 pandemic for delinquency reporting and the use of alternative auditing processes. APM 23-01 grants issuers flexibility to submit audited financial statements and audit report documentation with a fiscal year ending on or before June 30, 2023. APM 23-02 extends temporary relief to exclude delinquencies occurring on or after April 2020.
 
Recognizing the continued impacts of COVID-19, Ginnie Mae Principal Executive Vice President Sam Valverde, said, “These extended flexibilities are an appropriate response to the lingering effects of the pandemic on Issuer operations.”
CDFI Fund opens FY2023 funding round

The Treasury Department's Community Development Financial Institutions (CDFIs) Fund opened the Capital Magnet Fund's fiscal year (FY) 2023 funding round. The CDFI Fund awards CDFIs and non-profit housing organizations awards to finance affordable housing and community-economic development. The Fund plans to provide $320.6 million in awards for FY 2023, allocated by Fannie Mae and Freddie Mac. In addition to affordable housing and economic development, awardees of Capital Magnet Funds may use financing towards "loan loss reserves, revolving loan funds, undertaking risk-sharing loans, and providing loan guarantees.” The deadline to submit application materials to the Capital Magnet Fund is 11:59 p.m. ET on March 21, 2023.
Freddie Mac increased affordable housing loans by 60 percent

Freddie Mac announced that in 2022 it increased its targeted affordable housing loans by almost 60 percent, with production volume totaling $73.8 billion. The volume includes a record nearly $1 billion in Low Income Housing Tax Credit (LIHTC) equity investments. The company also set a new record for targeted affordable loan purchases for sites with regulatory rent restrictions or subsidies at $15.3 billion in 2022, an increase from $9.6 billion in 2021.
 
“In a year marked by record rent inflation and a rental housing supply crisis, Freddie Mac Multifamily prioritized its affordable housing mission,” said the head of Freddie Mac Multifamily, Kevin Palmer. “Not only did we exceed our aggressive affordable housing goals, but we also set a record for Targeted Affordable Housing, ramped up our LIHTC equity investments by 45% and made nearly $2 billion in forward commitments designed to bolster future housing supply.”
Housing groups ask VA to expand loss mitigation options

A group of housing organizations, including NHC, sent a letter to U.S. Department of Veterans Affairs Secretary Denis McDonough seeking an expansion on loss mitigation options for VA loans. The letter responds to an advance notice of proposed rulemaking on the VA Home Loan Guaranty Program. It states that the program needs better loss mitigation tools overall and notes immediate action is needed to prevent avoidable foreclosures. Specifically, the letter asks to reactivate the partial claim program, reconfigure and expand the statutorily authorized refund program, extend mortgage repayment to a full 40-year term if needed, and expand the use of limited documentation applications.
 
“While the VA has historically provided suitable solutions that address borrower financial hardship, there is currently a lack of parity between the options available to a VA borrower in financial distress and those available to homeowners with other types of government-backed mortgages,” the letter reads. “Without equivalent loss mitigation options, veterans who secured a VA loan as a benefit for serving their country now find themselves with inferior forms of mortgage assistance.”
HUD announces funding opportunities to address lead hazards for low-income families

HUD announced two Notices of Funding Opportunities (NOFOs) that will target investments toward addressing lead and other hazards to increase health and safety for low-income families. The NOFOs divide $568 million into two grant opportunities. First, HUD’s Lead Hazard Reduction Grant Program will provide over $403 million to state and local governments to assist privately owned, aging, low-income homes. The second funding notice offers $165 million to Public Housing Agencies to improve health and safety in public housing. These funds come from HUD combining the Housing-related Hazards Capital Fund and the Lead-Based Paint Capital Fund (HRHLBP) Programs.
 
“We are proud to continue fulfilling commitments made under the Biden-Harris Administration’s Lead Pipe and Paint Action Plan, including the new funding opportunities we have announced today. These efforts will protect children, babies, and families from lead exposure, which can be detrimental at even low levels, and other home health hazards,” said HUD Secretary Marcia Fudge. The Lead Hazard Reduction NOFO will remain open for state and local governments until March 14, 2023. For Public Housing Agencies, the HRHLBP fund will remain open until April 13, 2023.
HUD seeking comments on disaster recovery

HUD published two Requests for Information (RFI) for the Community Development Block Grant-Disaster Recovery (CDBG-DR) program. The first RFI requests feedback regarding the allocation formula used to determine disaster impacts and recovery needs. HUD must develop new rules and regulations following the Congressional approval process of disaster recovery funds for every new disaster. To enhance fund allocation and the assistance of disaster survivors, HUD seeks public recommendations to ensure efficient and equitable funding. The second RFI solicits feedback to modify and streamline CDBG-DR rules and requirements. Comments will help identify recommendations to reduce the burden of funding implementation and accelerate assistance to affected communities. Comments are due by Feb. 21, 2023.
 
The RFIs come after the publication of data from the U.S. Census Bureau's latest Household Pulse Survey, which included new questions on disasters. The new data showed that, as of December 2022, disasters displaced close to 1.9 million households. Renter households disproportionately experienced displacement at 1.7 percent compared to homeowners at 1.4 percent. Renter households were also more likely to experience displacement over extended periods. Black, non-Latino and Latino households experienced more significant displacement at 2.4 percent compared to White, non-Latino households at 1.4%. Further, households below $25,000 in income were more likely to experience displacement than households with incomes over $100,000. Ensuring greater efficiency and equitable access to funding will address the burden of disaster experienced by marginalized communities.
Reports finds evidence of discrimination against voucher recipients

A new report from The National Fair Housing Alliance and the Legal Defense
Fund titled The Bad Housing Blues Discrimination in the Housing Choice Voucher Program in Memphis, Tennessee finds evidence of discrimination against housing choice voucher (HCV) recipients in Memphis. The study was conducted over three years and found two dozen instances of discrimination in Memphis and the surrounding Shelby County area. Ultimately, the study recommends adding source of income as a protected class to help prevent discriminatory practices, expanding the HCV program, and other improvements.
 
“Housing discrimination is most evident where racism and income inequality converge. And because we have never gone back to fix the harm on which our country was built, existing laws and policies continue affecting people of color and families with low-income disproportionately and negatively. The report’s findings show us the insidiousness of source of income and housing discrimination. It will take significant commitment and resources at the federal, state, and local levels, and from quasi-government agencies to ensure equitable access to safe and affordable housing for all,” said Lisa Rice, president and CEO of NFHA.
Fannie Mae announces Innovation Challenge winners

Fannie Mae’s Sustainable Communities Partnership and Innovation initiative announced the selection of five organizations to receive a $5 million award through the Innovation Challenge. This challenge focuses on promoting sustainable communities and generating cross-sector approaches to removing barriers and advancing racial equity. Winners of the Innovation Challenge include ReBUILD Metro, Southside Community Development and Housing Corporation (SCDHC), Twin Cities Habitat for Humanity, The Community Builders, and Module.
 
“The proposals we selected provide thoughtful, tangible, scalable solutions to the most salient housing problems people face in the U.S. We are excited to work with these organizations and to support their innovative projects,” said Maria Evans, vice president of Community Impact at Fannie Mae.
Chart of the week
Older millennials spur household growth between 2016 and 2021

New research from Harvard’s Joint Center for Housing Studies shows a surge in household growth accelerated by millennials. The number of households headed by 25-34-year-olds grew by 300,000 annually from 2016 to 2021. That’s up sharply from the previous annual growth of 45,000 households between 2011 and 2016. Households headed by 35-44-year-olds grew by 400,000 per year from 2016 to 2021 after a decline of 150,000 from 2011 to 2016. The increases suggest older millennials can now form households after being delayed in much of the 2010s. Increased savings opportunities from stimulus payments and the student loan pause likely contributed to this shift.
What we're reading
An article in Politico reports mayors are seeing increased concern from their constituents regarding affordable housing and homelessness. During the U.S. Conference of Mayors held in Washington, D.C., housing and community development were popular topics. For example, several mayors expressed the need for more housing stock and assistance with pilot programs to help their struggling markets. Some were frustrated that federal funding typically goes to states rather than local governments.
 
An article in The Daily Yonder offers an overview of incentive programs offered by rural towns trying to attract homebuyers. For example, programs like “Move Duncan” of Duncan, Oklahoma attempt to attract remote workers with $4,000 of incentives in closing cost assistance. Currently, there are more than 50 relocation programs in rural counties offering cash and other incentives to new residents, ranging from credits for high-speed internet to welcome potluck dinners.
 
Bloomberg reports the White House is weighing a range of actions to help expand renter protections. Executive actions could include sealing eviction records, standardizing leases, and promoting a right to counsel during eviction proceedings. The considerations come after discussions between White House officials and tenant advocates in November highlighting skyrocketing rent prices.
The week ahead
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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