HUD releases final HOME rule

The U.S. Department of Housing and Urban Development (HUD) published its highly anticipated final rule on the HOME Investment Partnership Program (HOME). The final rule looks to modernize, streamline, and strengthen the HOME program that has built and preserved more than 1.34 million affordable homes and provided direct rental assistance to over 403,000 families through flexible and gap financing. Specifically, the rule will reduce unnecessary burdens on grantees by streamlining income determinations, simplifying rental housing requirements and tenant-based rental assistance, aligning more effectively with Low-Income Housing Tax Credit (LIHTC) funding, strengthening tenant protections, strengthening green building and energy efficiency practices, and expanding availability of access for Community Housing Development Organizations and Community Land Trusts. Many of the rule updates are responsive to consensus industry recommendations to maximize program effectiveness and efficient use of funding, which were reiterated in comments on the proposed rule in July 2024.

“These new rules build on HUD’s commitment to reducing the red tape and making programs easier to use,” said HUD Agency Head Adrianne Todman. “For more than 30 years, HOME has provided funding to build new homes, assist home buyers, and provide rental assistance. HOME funding plays a critical role in advancing housing opportunities for families across the country.”

The final rule is effective on February 5. 

Britt Van joins NHC as Senior Policy Director

NHC has appointed Britt Van as its new Senior Policy Director. Van brings a wealth of experience in policy development and strategic leadership, having served as a Senior Advisor to the President of Ginnie Mae and the Policy Director for the New Democrat Coalition in the U.S. House of Representatives.

“Throughout her career, Britt has demonstrated the ability to navigate complex policy landscapes,” said NHC’s President and CEO David M. Dworkin. “Her commitment to creating opportunities for communities in a variety of roles makes her an exceptional addition to our organization. We are thrilled to have her expertise and leadership as we work to tackle some of the most pressing housing challenges of our time.”

Van also shared her excitement about joining NHC. “Housing is at the heart of opportunity, stability, and equity for families and communities,” said Van. “I’m honored to join the National Housing Conference and work alongside such a dedicated team to address the critical housing challenges facing our nation. Together, we can advance policies that ensure everyone has access to a safe, affordable place to call home.”

Barr, Thompson to step down 

Michael Barr announced that he will step down from his position as Federal Reserve Board vice chair for supervision of the Board of Governors of the Federal Reserve System. He will continue to serve as a member of the Federal Reserve Board of Governors. The decision is effective February 28, or such earlier time as a successor is confirmed. Barr was appointed to Vice Chair by President Biden and has served in the position since July 2022. The announcement notes that the Board does not intend to consider major rulemakings until a new vice chair is confirmed.

"It has been an honor and a privilege to serve as the Federal Reserve Board's vice chair for supervision, and to work with colleagues to help maintain the stability and strength of the U.S. financial system so that it can meet the needs of American families and businesses," Vice Chair for Supervision Barr said. "The position of vice chair for supervision was created after the Global Financial Crisis to create greater responsibility, transparency, and accountability for the Federal Reserve's supervision and regulation of the financial system. The risk of a dispute over the position could be a distraction from our mission. In the current environment, I've determined that I would be more effective in serving the American people from my role as governor."

Sandra Thompson, Director of the Federal Housing Finance Agency (FHFA) also plans to step down from her role prior to the new Administration according to an agency spokesperson. She has served as Director since May 2022 and was its Deputy Director since 2013. During her tenue, Thompson led efforts to expand the Enterprises leadership in affordable housing while continuing to add to capital. She also advocated for modernization of the Federal Home Loan Bank System.

“Sandra Thompson and Michael Barr provided outstanding leadership at a time when it was need most,” said NHC President and CEO David Dworkin. “The National Housing Conference looks forward to working closely with new leadership at the Federal Reserve Board of Governors and the Federal Housing Finance Agency.”

HUD seeks comments on insurance crisis

HUD is seeking public comments from stakeholders on the escalating insurance crisis. In a Request for Information, HUD notes that homeowners and housing providers alike have seen significant increases in their property insurance premiums and deductibles within recent years, coupled with an increase in extreme weather events and natural disasters. According to Intercontinental Exchange, Inc., average monthly insurance payments have risen 52% since early 2020, three times the rate of rising principal and interest amounts with some higher-risk areas rising as high as 90%. HUD is now seeking public input on how best to assess measures to increase the resilience of residential properties to natural hazards and extreme weather. The Department previously hosted a summit in July 2024 to address challenges in the property insurance market.

Comments are due on February 28. 

FHA adds flexibility to multifamily mortgage insurance programs

The Federal Housing Administration (FHA) and HUD announced updated requirements for its multifamily mortgage insurance programs that look to increase financing flexibility for lenders and developers who create or refinance affordable rental properties. The actions impact two categories of transactions. First, FHA is decreasing the required debt service coverage ratios and increasing the maximum allowable loan-to-value/loan-to-cost ratios for mortgages under 223(d)(4) and 223(f) programs. Such transactions primarily help a property that offers rent-assisted affordable rental homes targeted to incomes at or below 80 percent of the Area Median Income (AMI). Second, FHA outlines new policies for a new category of “middle-income” renters, where half or more of the rental homes are targeted to individuals and families with incomes at or below 120 percent AMI. These policies establish new underwriting thresholds under the FHA 221(d)(4) loan program to support the development of middle-income rental housing in response to market needs.

“These changes are part of a series of FHA initiatives aiming to meet the evolving needs of lenders, developers, and affordable housing providers as we work toward our shared goal of increasing the availability of quality affordable rental housing,” said Federal Housing Commissioner Julia Gordon. “During this Administration, we’ve sought to make policy changes that achieve a double bottom line: making it easier for FHA’s private partners to access our programs while helping provide more safe and affordable homes to the low-income individuals and families who need them.”

The Mortgage Bankers Association applauded the changes, issuing a press release in support of the announcement. “HUD’s decision to refine FHA underwriting criteria to more appropriate levels should result in an increase in production of much-needed rental housing by tens of thousands of units over the next three years at little to no additional risk to the FHA fund or taxpayers,” it said. 

HUD develops “Universal Notice” for disaster recovery funds

HUD announced a new Universal Notice for the Community Development Block Grant-Disaster Recovery (CDBG-DR) program, alongside the allocation of nearly $12 billion for communities across 24 states and territories. According to the announcement, the Universal Notice is designed to improve the administration of CDBG-DR funds in response to a 2022 Request for Information (RFI) on the program. The Universal Notice will inform potential CDBG-DR grantees and other stakeholders about each phase of the CDBG-DR grant process, including pre-award grantee submissions, grantee steps and timelines, and Action Plan development, submittal, and implementation.  

The CDBG-DR program has been a vital long-term disaster recovery program; however, it lacks permanent authorization. Consequently, HUD requires congressional approval and must write a new set of regulations to guide grantees each time the agency needs to deploy CDBG-DR resources, resulting in a nearly two-year timeline to deliver funds to impacted communities.

“The Universal Notice published today reflects the input of communities and professionals who have been through the process of recovery and makes dozens of survivor-centered improvements to accelerate recovery,” said Marion McFadden, Principal Deputy Assistant Secretary for Community Planning and Development. “I’m proud to say that we did everything we could – absent permanent authorization by Congress – to strengthen the program, reduce red-tape, and support survivors as they rebuild.”

CFPB removes medical debt from credit reporting

The Consumer Financial Protection Bureau (CFPB) finalized a new rule that bans the inclusion of medical bills on credit reports used by lenders and prohibits them from using medical information in lending decisions effective in March. The action will remove an estimated $49 billion in medical bills from the credit reports of 15 million Americans. The agency expects the change to lead to the approval of nearly 22,000 additional affordable mortgages annually, and an average 20-point rise of credit scores. CFPB cited research that found that a medical bill on a person’s credit report is a poor predictor of loan repayment and recent action from major creditors to lessen the impact of medical impact on credit score.

Senate Banking Committee Chair Tim Scott (R-S.C.) responded to the announcement in a press release stating, “Medical debt is a serious challenge for many Americans, but the CFPB’s final rule will do nothing to address the underlying issues. Instead, the rule will reduce access to credit and important health care services while putting lenders and medical providers at risk.”