Weekly update from the National Housing Conference
News from Washington | By Luke Villalobos
Bair and Frater to step down from Fannie Mae leadership roles

Fannie Mae announced that Board Chair Sheila Bair and CEO Hugh R. Frater are stepping down, effective May 1, 2022. The Board has named Michael J. Heid interim chair. Heid is a Fannie Mae Board member who retired from Wells Fargo in 2016, following a 28 year-long career where he held several prominent leadership roles. He led the company’s mortgage business between 2004 and 2016. David C. Benson, the company’s current president, has been named interim CEO.

Fannie Mae said that it would begin searching for permanent replacements for Bair and Frater immediately. However, Bloomberg reported that their search for a CEO could be difficult as Congress capped compensation for Enterprise executives at $600,000 annually. That pay cap has been cited as a cause of previous high-level departures from the Enterprises, as has declining prospects for the Enterprises' exiting conservatorship. “Smart and dynamic executives want the freedom and latitude to do smart and dynamic things at their discretion,” Tim Rood, a former Fannie Mae executive who is now head of industry relations at SitusAMC, told HousingWire. “If you put operational and policy restrictions on these executives – as FHFA has certainly done – then morale at the top suffers and that trickles down to their subordinates.”

Fannie Mae and Freddie Mac have struggled to retain high level leaders after 12 years of conservatorship. John Forlines, Fannie Mae’s chief risk officer, left the company last March, and Andrew BonSolle, who has held a variety of mission critical roles at the company, left in 2020. David Brickman resigned as CEO of Freddie Mac after less than two years in the role. All three executives had long careers at the Enterprises, but were frustrated by the lack of progress on moving out of conservatorship. 
Treasury releases ERAP reallocation guidance

Treasury released guidance last week on the reallocation of the second tranche of Emergency Rental Assistance Program (ERAP) funds, clearing the way for redistribution of funds allocated under last year’s American Rescue Plan (ARP). Treasury stated that grantees who have spent less than 40% of their second round of ERAP funding by April 30 may have their funds reallocated, with the amount reclaimed based on the precise percentage of funds spent. Reallocations will be available to grantees that have obligated over half of their second tranche of ERAP funds and which Treasury deems likely to need additional funding “promptly.”
“In this guidance, Treasury has worked to balance reallocating funds to grantees that are quickly running out of funds even as the need for assistance remains significant with ensuring that renters in states where funds have moved more slowly have an opportunity to receive assistance,” the agency said. “For this reason, Treasury will continue to prioritize reallocating funds within the same state when possible, and where excess funds remain, it will provide them to areas with significant demonstrated need and ability to provide assistance promptly.”
Treasury’s announcement of the reallocation guidance coincided with its release of new data on ERAP expenditures through February. According to the data, grantees spent nearly $30 billion of the $46 billion made available under ARP and the Consolidated Appropriations Act of 2020, which established the program. Treasury reported that funds have been distributed to over 4.7 million people across the country, with low-income families accounting for 80% of recipients.
FHLBank Chicago commits $11 million to affordable housing and community development

The Federal Home Loan Bank of Chicago (FHLBank) announced that it would invest over $11 million in affordable housing and community development in Illinois and Wisconsin. The funds would be distributed through three initiatives, two of which aim to expand access to affordable housing in the region while the other focuses on small business development.
The Community First Diverse Developer Initiative will provide grants to support affordable housing developers who are members of underrepresented groups. The Community First Housing Counseling Resource Program will help housing counseling agencies expand their reach in low-income communities and communities of color.
FHLBank Chicago is accepting applications for Diverse Developer Initiative grants until May 13. Application deadlines for the Housing Counseling Resource Program will be announced soon by the Illinois Housing Development Authority and the Wisconsin Housing and Economic Development Authority, which are administering the program on behalf of the bank.
Fannie Mae announces expanded Housing Choice Initiative

On Monday, Fannie Mae announced a new Expanded Housing Choice Initiative providing a new pricing incentive for multifamily property owners participating in the Housing Choice Voucher (HCV) program. The 12-month initiative seeks to expand the number of landlords that accept HCVs by offering them discounted financing.

The initiative will be tested in North Carolina and Texas, which Fannie Mae selected as pilot markets since neither state considers vouchers a protected source of income and both have a relative abundance of affordable housing. Fannie Mae will also collect feedback from stakeholders during the pilot to expand understanding of the HCV program and help lenders and borrowers maximize its impact.

“If we can incentivize a property owner to participate in this initiative, particularly in markets where vouchers as an acceptable source of income are not required by law, then we can increase the number of properties available for voucher holders,” said Michele Evans, executive vice president and head of multifamily at Fannie Mae.
USDA broadens equity mission

On Thursday, USDA established a Rural Community Economic Development (RCED) Subcommittee as part of their previously established Equity Commission. The Commission’s goal, established in response to President Biden's executive order on Advancing Racial Equity and Support for Underserved Communities, identifies USDA programs, policies, and practices that contribute to racial, economic, health, and social disparities. The new subcommittee will be responsible for providing recommendations to address issues related to rural development, persistent poverty, and underserved communities. An interim report of their findings and recommendations is expected in September 2022.

“The Rural Community Economic Subcommittee (RCED) will be crucial to addressing issues of persistent poverty in rural communities,” said USDA Secretary Tom Vilsack. “We are committed to giving each recommendation the Equity Commission makes full consideration in an effort to implement systemic, lasting change.”

The deadline for nominations and applications for RCED is May 6.
HUD celebrates Fair Housing Month

HUD's Office of Fair Housing and Equal Opportunity held its annual Fair Housing Month Ceremony on Tuesday, April 5, celebrating the start of Fair Housing Month. HUD Secretary Marcia Fudge delivered remarks highlighting the Biden administration's work to combat discrimination and affirmatively support fair housing. Fudge noted, "Last year, HUD published an interim final rule that requires every local government that accepts federal housing dollars to certify compliance on affirmatively furthering fair housing. HUD is also in the process of designing a rule, in consultation with stakeholders, to more comprehensively implement the ‘affirmatively furthering fair housing’ requirement." 
The same day, HUD announced it would make an additional $3.3 million in American Rescue Plan funding available for HUD's Fair Housing Initiatives Program (FHIP) to help combat housing discrimination related to the COVID-19 pandemic. The funds may be used to conduct fair housing enforcement and education, as well as respond to housing inquiries, conduct tests, provide legal assistance, and cover costs related to the pandemic. Eligible organizations can apply for this funding until May 5, 2022. 
FHFA temporarily suspends foreclosures for HAF applicants

On Wednesday, FHFA announced that Fannie Mae and Freddie Mac would begin to require servicers to temporarily suspend foreclosures if they have been notified that a borrower has applied for help through the Homeowner Assistance Fund (HAF). Foreclosures can be delayed for up to 60 days to allow pending applications time to proceed and avoid unnecessary foreclosures. 
The announcement is consistent with CFPB's recommendation from last month that servicers "ensure that borrowers are not improperly referred to foreclosure, for example, especially while a servicer is working with a borrower during the HAF application process or waiting for payment of HAF funds." That recommendation was made in a blog post outlining the CFPB's expectations for servicers interacting with HAF programs, saying that CFPB would be "closely monitoring servicer conduct to ensure that they are complying with all applicable federal consumer financial laws and assisting consumers with resolving delinquencies and preventing avoidable foreclosures."
Treasury posts HAF plan tracker

Treasury published a list of Homeowner Assistance Fund (HAF) plans submitted by states and territories on Wednesday. The list tracks each state and territory's HAF implementation plan, which grantees developed from pilots run with 10% of their HAF allocation, as well as Treasury's feedback on the plans.
Treasury's list included plans from every state and territory grantee except American Samoa, Delaware, and Washington as of Friday. Treasury says that it will continue to work with grantees to get each program up and running, and that it has “developed policies to encourage consistency among programs and support the successful implementation of programs across the country.”
Freddie Mac announces RISE award recipients

Freddie Mac announced the winners of its annual RISE awards for low-income mortgage originations on Thursday. The RISE awards recognize originators of Freddie Mac’s Home Possible and HFA Advantage loan products, both of which are targeted at low-income and underserved buyers.
Awardees included NHC members Guild Mortgage, JPMorgan Chase, and Wells Fargo. Guild Mortgage was recognized for leading originators in HFA advantage volume, JPMorgan Chase was recognized for leading originators in Home Possible loans, and Wells Fargo was recognized for leading originators in Home Possible loans and refinances.
Chart of the week
Pandemic's "donut effect" hollows out urban areas while fueling exurban growth

Slate visualizes the COVID-19 pandemic's "donut effect," in which dense central cities lost population while outlying areas experienced growth, largely due to the increase in remote work. Slate examines two ways the donut effect could evolve: if companies urge employees to return to work at least part-time, exurbs of major cities may grow even faster in future years. "On the other hand, if fully remote work becomes the norm, employees could leave major metropolitan areas altogether. In this scenario, we should see rapid population growth in lower-cost areas with attractive weather and amenities [and] America’s superstar cities could become less important over time.”
What we're reading
Enterprise Community Partners’ Andrew Jakabovics collaborates with several other researchers for a paper about the effects of LIHTC development on nearby property values in the Journal of Housing Economics. The findings indicated that proximity to LIHTC developments was associated with accelerated property value growth in the Chicago area over a twenty-year period, and that even a concentration of LIHTC properties “did not lower property values overall.”
report from the Local Initiatives Support Corporation’s (LISC) Los Angeles office details steps on improving diversity among California's subcontractors. Arguing that addressing the state's housing crisis creates the chance to “advance economic opportunity for diverse and woman-owned firms to access development related contracts," the report provides a roadmap for California to diversify development and procurement processes. The report warns that "without explicit and specific plans to do otherwise, affordable housing development resources [will continue to go] to white-led firms across the state at a rate that is disproportionate with the state's racial and ethnic diversity."
The Urban Institute published a blog post about the Community Reinvestment Act (CRA) and how it could be improved by specifically addressing race in a new rule in response to redlining. The piece examines the current structure, focusing on low- and moderate-income households, and shows gaps in lending to neighborhoods with more borrowers of color. It also calls for an explicit focus on race in CRA enforcement to truly mitigate the impact of redlining. 
The week ahead
Monday, April 11
Tuesday, April 12
NLIHC: Legislative working group, 12:30 – 1:30 p.m. ET
Wednesday, April 13
Thursday, April 14
Friday, April 15
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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