Weekly update from the National Housing Conference
News from Washington | By Luke Villalobos
Senate Banking holds hearing on financial oversight

The U.S. Senate Committee on Banking, Housing, and Urban Affairs met on Tuesday for a hearing titled Oversight of Financial Regulators: A Strong Banking and Credit Union System for Main Street. Michael Barr, vice chair for supervision of the Board of Governors of the Federal Reserve System; Todd Harper, National Credit Union Administration chair; Martin Gruenberg, FDIC acting chair; and Michael Hsu, Office of the Comptroller of the Currency acting comptroller, testified. The witnesses discussed what they are doing to protect consumers in an economy recovering from inflation and to improve and modernize the banking and credit union systems. They covered the Community Reinvestment Act (CRA), crypto activity, bank mergers, diversity, equity and inclusion, and climate-related risks. On CRA, one of NHC’s top regulatory priorities, Gruenberg, Hsu, and Barr spoke about prioritizing improving access to CRA funding for rural communities, and in particular for Native American communities. New flexibility in proposed lending and community development test changes beyond traditional branch-based assessment areas will help give banks credit for serving those rural populations.
“The banking system is constantly evolving, so regulation and supervision must also adjust to respond to new and emerging risks,” Barr said. “I am also committed to making the financial system fairer, which is fundamental to financial oversight. Households and businesses need access to safe and reliable banking services as they make their financial decisions. While safety and fairness may seem distinct, they are interwoven. Financial instability disproportionately harms those who are economically vulnerable, so making the financial system safer is making it fairer, and unfair practices can make the financial system riskier.” 
FHFA announces $150 billion multifamily loan purchase cap

Last week, FHFA announced the 2023 multifamily loan purchase caps for Fannie Mae and Freddie Mac (the Enterprises) will be $75 billion each for a combined total of $150 billion. The announcement included a fact sheet highlighting the multifamily caps and explaining FHFA anticipates the caps will be appropriate given the current market forecasts. However, the agency said it would continue to monitor the market and update the cap and mission-driven requirements if data changes warrant an adjustment.

“The 2023 multifamily loan caps, coupled with a new mission-driven category for workforce housing properties, will continue to ensure that the Enterprises have a strong commitment to addressing the need for affordable housing,” said FHFA Director Sandra Thompson. “The new workforce housing category will provide incentives for conventional borrowers to maintain rents at affordable levels for extended periods of time.”
CDFI Fund announces 2022 Round of NMTC

The U.S. Department of the Treasury Community Development Financial Institutions (CDFI) Fund opened its CY 2022 round of the New Markets Tax Credit (NMTC) Program on Friday. The announcement is for $5 billion of allocation authority available, and the Notice of Allocation Availability is anticipated to be published in the Federal Register on November 22. Some program updates are included in the announcement, including revised minimum thresholds for Qualified Equity Investments (QEI) issuance and NMTC program FAQ updates. The CDFI Fund will also host a webinar on December 1 to answer application questions.

The deadline for Community Development Entity Certification application submission is December 2. The deadline for NMTC Application registration is December 15, and the application for NMTC allocation is January 26, 2023. Finally, the deadline for QEI issuances and Qualified Low-Income Community Investment requirements is May 4, 2023
FHFA releases performance report

The FHFA released 2022 Performance and Accountability Report. The 2022 Performance and Accountability Report provides financial statements and analysis of FHFA and its performance as a regulator of Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System. In addition, the report notes FHFA’s efforts to maintain the safety and soundness of the regulated entities while also helping to identify and manage climate-related risks, strengthen core programs like Duty to Serve, and responsibly meet their mission obligations through the implementation of the Equitable Housing Finance Plans. The report found no material weaknesses or significant deficiencies in their internal controls and for the fourteenth consecutive year, FHFA received an unmodified audit opinion from the Government Accountability Office on its FY 2022 statements.
“Success in meeting FHFA’s mission and goals requires empowered and supported staff and prudent business practices that responsibly steward the Agency’s infrastructure. FHFA’s high-performance culture leads us to continuously review our work to identify opportunities for improvements. All of FHFA’s work reflects the Agency’s values of fairness, accountability, integrity, and respect (FAIR values), built on a foundation of competence, diversity, equity, and inclusion,” said Director Thompson concerning the report.
CFPB reports that tenant credit reports suffer from careless procedures

The CFPB released two reports on tenant background checks. The reports analyze more than 24,000 complaints, which the bureau says highlights renter challenges stemming from errors in background checks. These errors lead to increased costs and barriers to rental housing. The tenant background check industry develops reports, including credit history, civil and criminal records, credit scores, and proprietary risk scores.

“These background reports are heavily used by corporate landlords that own an increasing share of rental housing in our country, so we are taking steps to ensure these reports do not contain false information,” said CFPB Director Rohit Chopra.

CFPB also released a new Supervisory Highlights report examining legal violations across consumer financial products and services. The report finds consumer reporting companies violated the Fair Credit Reporting Act, and it highlights fees charged by mortgage servicers when homeowners made payments on their mortgages. In addition, inaccurate information in credit reporting demonstrates that one or more of the nationwide consumer reporting companies failed to submit results of erroneous credit reporting complaints.
Gruenberg nominated as FDIC Chair

The White House announced Monday that it intends to nominate Martin Gruenberg as FDIC chairman. Gruenberg served as FDIC chair from 2012 to 2018 and has been acting chairman since February following the resignation of Jelena McWilliams. The nomination requires Senate confirmation. However, if not confirmed, Gruenberg could remain as acting chief indefinitely.

The news follows the White House’s September announcement that it intends to nominate Travis Hill as FDIC vice chair and Jonathan McKernan as a director. If the Senate confirms Gruenberg, Hill, and McKernan, it will be the first time since 2015 that the FDIC has had an entire board.
“Marty has years of experience shepherding the agency through difficult economic times, working with board members of both parties, and taking actions that protect consumers and strengthen the banking system,” said Sen. Sherrod Brown (D-Ohio).
FHA reports MMI Fund strongest in recent history

On Tuesday, the FHA released its annual report on the financial status of the Mutual Mortgage Insurance Fund (MMI Fund). The report included an updated MMI Fund Capital Ratio of 11.11 percent, an increase of 3.08 percentage points from FY 2021. The new ratio indicates the current strength of the fund, which fell below 2 percent in FY 2009 and turned negative in FY 2012. The report notes new and improved loss mitigation tools as one reason for the strength of the fund.
“Behind the bottom-line numbers are some two million individuals and families who were able to achieve homeownership or stay in their homes through hard times thanks to assistance from FHA,” said Federal Housing Commissioner Julia Gordon.

According to the report, FHA assisted more than one million homeowners in obtaining FHA COVID-19 forbearance and FHA COVID-19 recovery. As a result, as of Sep. 30, 2022, the rate of serious delinquencies of mortgages 90 or more days past due stood at 4.77 percent. That’s a reduction of almost half from fiscal year 2021. The report also details program modifications, revised guidelines to address income eligibility and employment gaps, and rental history underwriting policy changes.
Chart of the week
Chart of the week: Pace of rent growth is slowing

A blog post by CalculatedRisk’s Bill McBride examines the year-over-year (YoY) growth rates of three rent indexes: Apartment List’s National Rent Index, Zillow’s Observed National Rent Index, and CoreLogic’s Single Family National Rent Index. The data shows an extreme rise in rent prices from spring 2021 through mid-2022. However, recent data indicates a sharp slowdown in growth and, in some cases, a negative percent change. This new data suggests rent prices in 2023 will be lower than those seen this summer and fall, which could mean financial relief for some renters. 
What we're reading
An article in the Milwaukee Journal Sentinel reports on a new study from UCLA that sought to disprove theories that housing voucher recipients bring crime to neighborhoods. The study specifically examined the fear that voucher recipients attract crime to neighborhoods, a stigma that persists despite a lack of clear evidence. The study finds crime rates do not increase when Black voucher recipients move to majority-white suburbs. The stigma often results in communities resisting the construction of affordable housing, making access to high-opportunity neighborhoods difficult for low- and moderate-income households.
An article by Governing examines various housing initiatives on ballots across the country on Election Day and the implications of their success with voters. Many housing provisions were passed, showing public interest in investments to address the housing crisis. However, the article notes that housing often influences primary elections more than general elections, when it often becomes “a nonissue.”
A.P. News reported on a new study from Rebuild Design showing 90 percent of counties in the U.S. suffered a weather disaster between 2011 and 2021. The study examined data from contractors who work closely with FEMA to analyze disasters down to the county level and showed that vulnerable populations are not receiving equitable assistance after disasters. 
The week ahead
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