Weekly update from the National Housing Conference
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Feature Message I
By Buzz Roberts
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Dear Friend,
The Trump Administration's September 5 plan for housing finance reform is really two reports-one from the Treasury Department and one from the U.S. Department of Housing and Urban Development (HUD)-and covers two pathways-one legislative and one administrative. Here's what they might mean for affordable multifamily housing.
In general, the plan reaffirms two pillars of the current housing finance system. First, unlike previous proposals, the Trump plan would keep Fannie Mae and Freddie Mac at the heart of the system rather than replace them with new government sponsored enterprises (GSEs). Although the plan does call for a greater role for private competitors, that would mostly come from scaling back the GSEs' footprint. Other entities could apply for GSE charters, but the plan does not depend on their stepping forward. In any case, only Congress could allow for new GSE charters.
Second, the Trump plan reaffirms the federal government's role in providing guarantees for housing finance. Many conservatives on and off Capitol Hill have insisted that the federal government should end its role in the secondary mortgage markets. That is now apparently off the table. The Trump plan calls for legislative changes to how the federal guarantee is structured, by limiting the guarantee to mortgage backed securities through Ginnie Mae, but absent legislation the federal government's remaining $114 billion back-stop capacity would continue to be available.
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News from Washington I
By Tristan Bréaux and
Quinn Mulholland
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Treasury and FHFA allow GSEs to retain earnings
On Monday, the Treasury Department and the FHFA
announced an agreement to modify the terms of the Preferred Stock Purchase Agreements (PSPAs) that will allow Fannie Mae and Freddie Mac to retain a total of $45 billion in profits. This widely anticipated step was the first in the ongoing process of recapitalizing the GSEs so they can eventually be released from conservatorship. In
a statement, FHFA Director Mark Calabria described the agreement as “an important milestone on the path to reform.” In
a blog post for the Harvard Joint Center for Housing Studies, former Freddie Mac CEO Don Layton wrote, “While ending the sweep is only temporary and challenging decisions needed to make it permanent were put off until the future – very possibly until after the upcoming presidential election – this is nevertheless a momentous event as finally, after more than a decade, the first concrete step has been taken to actually implement GSE reform and end the conservatorships.”
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Velázquez introduces bill to fund public housing capital improvements
On Wednesday, Representative Nydia Velázquez (D-N.Y.)
introduced the Public Housing Emergency Response Act, which would direct $70 billion to the nation’s public housing capital needs backlog through HUD’s Public Housing Capital Fund. Some $32 billion of that investment would go to New York’s public housing agency, NYCHA, where tenants are bracing for another winter without reliable, consistent access to heat, according to
a recent report from the New York Daily News. Though Velázquez said she is realistic that the bill stands little chance of passing Congress, she told the New York Daily News, “We must start somewhere and that means putting pen to paper, specifying how much is needed and introducing a bill that Congress, activists and others can coalesce behind.” So far, the entire New York City delegation in the House has signed onto the bill, but few others.
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Two new studies warn of housing bubble
Two high-profile studies released recently warn of an impending housing crash. One, from Swiss bank UBS,
warns that real estate in many cities around the world is greatly overvalued and in danger of being a bubble.
The study found that the most-overvalued cities are clustered in Europe and Canada, but several are in America, including San Francisco, Los Angeles and New York. Another recently released study, from researchers at HEC Montréal and Johns Hopkins,
found that climate change is introducing risk into the housing market similar to that introduced by subprime mortgages in the run-up to the financial crisis. According to the study, banks are shielding themselves from this risk by selling mortgages for homes in areas likely to be affected by natural disasters to Fannie Mae and Freddie Mac at higher rates than other mortgages.
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Homes closer to Metro stations are more expensive
According to
new research from
Freddie Mac published last week, homebuyers in the D.C. region pay almost $9,000 more to be within a mile of a Metro station, and $40,000 more to be within a quarter mile. This price premium is the highest in areas where prices range between $310,000 and $414,900, according to Freddie Mac.
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HUD awards $319 million in grants for lead protection, creates ‘info hub’ on Opportunity Zones
On Monday, HUD
announced the awarding of $319 in grants to state and local government agencies and tribal communities to help protect residents from lead hazards. “One of HUD’s priorities is protecting families from lead-based paint and other health hazards,” HUD Secretary Ben Carson said in a statement. “These grants will help states, tribes and local communities do precisely that.” Also last week, Secretary Carson
announced a new HUD
website that will “serve as a hub of information” on the Opportunity Zones program. The website includes a map of all 8,764 Opportunity Zones nationwide and a list of federal tools and resources about Opportunity Zones
. HUD
also awarded
$43 million in housing counseling grants to help the efforts of national, state, and local organizations and housing finance agencies, including many in designated Opportunity Zones.
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FHFA instructs Federal Home Loan Banks to begin transitioning away from LIBOR
Last Friday, the FHFA
instructed the 11 Federal Home Loan Banks that as of the end of this year, they should stop purchasing investments in assets tied to the London Interbank Offered Rate (LIBOR). This is part of a broader effort being led by the Fed-backed Alternative Reference Rates Committee, which NHC is a part of, to transition from LIBOR to the secured overnight financing rate (SOFR) as a basis for interest rates for products like adjustable-rate mortgages. “This is an important step in the transition away from LIBOR to a more robust reference rate,” Director Calabria said in a statement. “Beginning this process immediately and providing clear timelines will help the Federal Home Loan Banks manage the risks associated with LIBOR in the most safe and sound manner possible.”
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Senators introduce bills to end homelessness, boost rural housing
On Thursday, Senators Kamala Harris (D-Calif.), Patty Murray (D-Wash.), Mazie Hirono (D-Hawaii), and Kirsten Gillibrand (D-N.Y.)
introduced the Ending Homelessness Act. The bill is the Senate version of the bill that House Financial Services Chairwoman Maxine Waters (D-Calif.)
introduced in the House in March, which passed in committee. It would allocate $13 billion over five years to create roughly 400,000 affordable housing units for individuals experiencing homelessness. Also on Thursday, Senate Jeanne Shaheen (D-N.H.)
introduced a package of three bills to help rural communities with affordable housing issues. The bills—the Rural Housing Preservation Act, the Manufactured Housing Community Sustainability Act and the FHA Loan Affordability Act—would create protections for families at risk of losing rental assistance from the USDA Rural Housing Service, help manufactured homeowners purchase heir land from manufactured home park owners and terminate FHA mortgage insurance payments once the loan balance reaches a certain level, respectively.
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A recently published report from the
Center for American Progress focuses on the importance of a right to counsel in eviction proceedings. According to the report, tenants with legal representation “are much more likely to avoid an eviction judgement,” yet only 10 percent of tenants facing eviction have legal representation.
Read the full report here.
In a recent op-ed published in the
Charleston Chronicle, National Urban League President Marc Morial argued that Democratic presidential candidates must speak up on the issue of affordable housing. Morial wrote, “Housing is a fundamental right, and our political process must recognize that right.”
Read the full op-ed here.
In an article published on Monday,
CityLab writer Laura Bliss examined the affordable housing crisis in Fresno. Unlike in other, wealthier California cities where the crisis is driven by high prices, Bliss wrote, the crisis in Fresno is driven largely by low wages, to a similar effect.
Read the full article here.
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Monday, October 7
Thursday, October 10
Friday, October 11
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The National Housing Conference has been defending the American Home since 1931. We believe everyone in America should have equal opportunity to live in a quality, affordable home in a thriving community. NHC convenes and collaborates with our diverse membership and the broader housing and community development sectors to advance our policy, research and communications initiatives to effect positive change at the federal, state and local levels. Politically diverse and nonpartisan, NHC is a 501(c)3 nonprofit organization.
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Defending our American Home since 1931
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