Senators urge Treasury to clarify GSE status

A bipartisan group of 20 Senators led by Mark Warner (D-Va.) and Jerry Moran (R-Kan.) sent a letter to Treasury Secretary Janet Yellen asking for clarification that Fannie Mae and Freddie Mac (the GSEs) are not Tax-Exempt Controlled Entities (TECE). The request asks for written guidance after recent tax counsel questioned some Low-Income Housing Tax Credit (LIHTC) investors on interpreting the Federal Housing Finance Agency’s conservatorship of the GSEs. The IRS rule in question under Section 168(h)(6) states that investors partnering with TECE organizations are not entitled to benefits such as accelerated and bonus depreciation and other tax credits. 

“It’s imperative for Treasury to issue guidance as uncertainty about the tax status of the GSEs is having a negative impact on their ability to invest in multi-investor LIHTC funds and to fulfill their statutory Duty to Serve requirements in underserved rural areas,” the letter reads. “Unfortunately, uncertainty around the tax-exempt controlled entities issue, where involvement in a multi-investor fund taints the fund for all participating investors, has sidelined the GSEs from participating in multi-investor Funds that deliver the majority of capital to rural LIHTC deals.” 

HUD seeks comments on Fair Market Rent methodology

The U.S. Department of Housing and Urban Development’s (HUD) Office of Policy Development and Research published a Notice of Proposed Changes to update its methodology for calculating Fair Market Rents (FMRs), the primary standard many housing assistance programs use. The proposed changes include retaining and expanding the use of rent inflation factors calculated by private sector sources, as was first done for FY 2023 FMRs. Comments are due by July 24.

Housing groups emphasize credit transition challenges

A group of housing organizations including NHC sent a letter to Federal Housing Finance Agency (FHFA) Director Sandra Thompson highlighting the immense challenges of adopting the FICO 10T and VantageScore 4.0 credit score models and the bi-merge credit reporting policy. The groups specifically questioned FHFA's proposed 3.5 years timeline for the transition. The groups suggest that the timeline be considered “soft” to accommodate future input as the transition is ongoing.

“We recognize FHFA’s intent to recalibrate the credit scoring framework. However, the transition, as outlined, will occur in a multi-stage process that does not adequately address the far-reaching impacts, significant costs, and immense operational complexity of the policy changes,” the letter states. “We write to urge FHFA to reformulate the proposed timeline to provide sufficient time and an adaptable structure that will permit stakeholder feedback to be considered and incorporated.”

Administration announces new community development measures

The Biden Administration publicly released a policy memorandum about its Executive Order on Further Advancing Racial Equity and Support for Underserved Communities Through the Federal Government that directs agencies to strengthen equitable development practices. The memo outlines guiding principles for federal agencies to undertake efforts for advancing equitable development that a variety of stakeholders can use, including: expanding access to resources for underserved communities, building community wealth, investing in community strengths, empowering community voices and visions, responding to multiple areas of community need, and measuring and expanding upon what is already working.

A Fact Sheet released alongside the memorandum includes new actions taken by the Interagency Community Investment Committee (ICIC). ICIC members include the U.S. Department of Agriculture (USDA), the U.S. Department of Commerce, HUD, Treasury, the U.S. Department of Transportation, and the Small Business Administration. The ICIC will now adopt a “no wrong door” policy for small businesses and entrepreneurs to get information and assistance across their network of offices. They will also support market development through secondary markets by having HUD, Ginnie Mae, Treasury’s CDFI Fund, and USDA engage with the Federal Home Loan Banks to enable more borrowers to access affordable homeownership through HUD’s Ginnie Mae guarantee. The ICIC will also better connect rural communities to capital through workforce training and identify areas of opportunity to align federal investments better to maximize community impact. 

Agencies release new data on mortgage market, underserved areas

The Uniform Appraisal Dataset (UAD) Aggregate Statistics for the first quarter of 2023 have been published by the Federal Housing Finance Agency. This release includes new statistics and property characteristics that show details of lot size categories, property condition ratings, the presence of an accessory dwelling unit, and the largest race/ethnicity in the tract on residential property sales comparisons. The additions help provide insights into the appraisal process.

The Consumer Financial Protection Bureau announced the Federal Financial Institutions Examination Council (FFIEC) recently released the 2022 mortgage lending transactions reported under the Home Mortgage Disclosure Act (HMDA). The Snapshot of National Loan-Level Dataset included key findings from information on 14.3 million home loan applications that offer insight into mortgage market activity.

Finally, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency jointly published the 2023 list of distressed or underserved nonmetropolitan middle-income geographies. The list shows which census tracts can receive credit under the Community Reinvestment Act. The announcement notes that the agencies also apply a one-year lag period for geographies included in the 2022 list but are no longer considered distressed or underserved.