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Weekly update from the National Housing Conference
News from Washington | By Luke Villalobos
Supreme Court allows eviction moratorium to remain in place through end of month

The Supreme Court narrowly upheld a stay on an order to strike down the Center for Disease Control and Prevention’s (CDC) eviction moratorium, with Chief Justice John Roberts joining the court’s three liberal justices and Justice Brett Kavanaugh issuing a separate concurrence. Kavanaugh was the only justice to offer a rationale for his decision in the case, which he said he came to despite agreeing that the CDC lacked authority to issue a blanket eviction ban.

“I agree...that the [CDC] exceeded its existing statutory authority by issuing a nationwide eviction moratorium. [However], because the CDC plans to end the moratorium in only a few weeks, on July 31, and because those few weeks will allow for additional and more orderly distribution of the congressionally appropriated rental assistance funds, I vote at this time to deny the application to vacate the [...] stay,” Kavanaugh wrote. “In my view, clear and specific congressional authorization (via new legislation) would be necessary for the CDC to extend the moratorium past July 31.”

The case against the CDC’s eviction moratorium was brought by a group of landlords and realtors who claimed the CDC had overstepped its authority when it ordered a halt on evictions. The CDC had originally issued the moratorium after the expiration of the eviction moratorium in the CARES Act last July, citing its mandate to stop the spread of infectious disease. However, as the pandemic waned and the economy recovered, landlords became increasingly frustrated at their inability to evict non-paying tenants. Last week, the CDC extended the moratorium through July 31, for what it said would be the last time.
New FHFA leadership announced

The Federal Housing Finance Agency (FHFA) made three changes to its leadership team on Monday, elevating three agency veterans to higher posts as the agency continues to reshuffle following the removal of its former director, Mark Calabria, in late June.

Naa Awaa Tagoe, formerly the agency’s principal associate director of the Office of Capital Policy, was selected to serve as Acting Deputy of the Division of Housing Mission and Goals, the role Sandra Thompson vacated to take over as Acting FHFA Director upon Calabria’s removal. Former Senior Associate FHFA Director Daniel E. Coates was selected to serve as Senior Advisor to Acting Director Thompson. Former Director of Stakeholder Relations at FHFA’s Office of Congressional Affairs Danielle Walton will join Coates in the director’s office as Thompson’s Acting Chief of Staff. Coates and Walton will likely serve in their roles only temporarily pending Thompson’s replacement with President Biden’s pick to lead FHFA.
Senators reintroduce affordable housing task force bill

Last Wednesday, Sens. Todd Young (R-Ind.), Angus King (I-Maine), Maria Cantwell (D-Wash.), John Kennedy (R-La.), and Jon Tester (D-Mont.) reintroduced the Task Force on the Impact of the Affordable Housing Crisis Act that would create a housing task force to better understand and combat the affordable housing crisis. The task force would be formed with goals to evaluate housing costs and provide recommendations to Congress for increasing affordable housing options.

The task force would specifically look at how affordable housing impacts other areas of life, evaluate and quantify costs incurred in programs due to lack of affordable housing, and make recommendations on how affordable housing effectiveness can improve overall life outcomes for citizens.
FHFA issues rules protecting borrowers

On Wednesday, FHFA announced that it would allow reduced interest rates for borrowers with loans backed by the government sponsored enterprises (GSEs). Under prior regulation, only borrowers with market-to-market loan-to-value (MTMLTV) ratios of 80% or higher were eligible for the reduction, but due to the unprecedented nature of the COVID-19 pandemic, the regulator is making it available to all borrowers regardless of the LTV ratio.

FHFA is joined by other federal housing agencies currently working to avoid a wave of evictions and foreclosure as COVID-19 protections are set to expire. Loss mitigation efforts like the interest rate change seek to bolster home retention and help guide borrowers out of forbearance through reduced monthly payments. FHFA also announced on Tuesday that the GSEs would not be permitted to make a first notice of foreclosure that would be prohibited by the CFPB under the Protections for Borrowers Affected by the COVID-19 Emergency Under the Real Estate Settlement Procedures Act (RESPA), Regulation X Final Rule in most cases before Dec. 31, 2021.

Sandra Thompson, acting director of FHFA, stated “Allowing more families to qualify for an interest rate reduction will prevent unnecessary foreclosures, help strengthen the Enterprises’ books of business, and make sustainable homeownership a reality for more families currently living with the uncertainty of forbearance.”
CFPB issues final rule on COVID-19 forbearance

On Monday, the Consumer Financial Protection Bureau (CFPB) issued a final rule for its federal mortgage servicing regulations as part of an effort to create safeguards for the phaseout of the foreclosure moratorium. The rule, called the 2021 Mortgage Servicing COVID-19 Rule, comes into effect on Aug. 31, 2021. In total, over 7 million consumers utilized the COVID-19 hardship forbearance offering, and 2 million remain in forbearance today, making an orderly transition away from the program vital in order to maintain the housing market’s stability.

The new rules focus on efforts to avoid foreclosures by giving borrowers meaningful opportunities to pursue loss mitigation, allowing servicers to help borrowers faster, and communicating to borrowers all of their options to avoid foreclosure. Foreclosures will still be permitted to start if a borrower has abandoned their property, if the mortgage was 120 days behind before March 1, 2020, if the borrower is 120 days behind and has not responded to outreach, or if the borrower has been evaluated for options and none will avoid foreclosure.

CFPB plans on working further with federal agencies to ensure an equitable and orderly transition into a post-pandemic housing market.
Ginnie Mae to offer 40-year mortgage modifications

Ginnie Mae announced last week that it would create a new loan pool made up of modified loans with terms up to 40 years, 10 years longer than the current term cap of 30 years. The new pools will have a minimum size of one loan and a minimum balance of $25,000, with no caps on size as long as all loans meet the issuing agency’s requirements.

“It is probable that this pool is being created in anticipation of the number of FHA, VA, and USDA loans that will be coming out of pandemic-related forbearance plans,” according to Mortgage News Daily’s Jann Swanson, who noted that the new pools will come online in October, just as forbearance plans are set to expire. According to Ginnie Mae, the new pool is intended to “allow Ginnie Mae issuers to offer loan modifications that carry a lower monthly payment than would a 30-year term while retaining the ability to securitize the loans for sale into the secondary market.”
Chart of the week
Chart of the week: Nonbank lenders issued nearly 70% of mortgages in 2020

An analysis from the Wall Street Journal found that nonbank lenders originated 68% of all mortgages in 2020, an increase of 9% from the year before. The article notes that banks failed to capitalize on the massive boom in mortgage lending that occurred during the pandemic, with firms like JPMorgan Chase’s and Wells Fargo’s origination volume increases dwarfed by those of nonbanks. According to Mortgage Bankers Association Chief Economist Mike Fratantoni, “earlier this decade, independent mortgage bankers were primarily gaining share in terms of the purchase business. But in the last several years, they’ve also gotten the majority of the refinance business as well. This is a continuation of that trend.”
What we're reading
A blog post from the Joint Center for Housing Studies examines the likely outcomes of Cambridge’s new affordable housing overlay, which expands the areas where affordable housing can be built by property owners “as-of-right” and provides height bonuses for affordable housing developers across the entirety of the city. The post finds that the overlay is likely to decrease development costs for affordable projects by 10-15% but notes that its success in increasing the city’s affordable housing stock will depend on the amount of capital available for such projects.

An article from Vox asks why infrastructure costs so much to build in the United States, finding that the source of inflated costs is often the same as the source of high housing prices: lawsuits from small, unrepresentative groups of opponents. According to one California researcher, lawsuits have “imperiled infill housing in Sacramento, solar farms in San Diego, and transit in San Francisco. The mere threat of a lawsuit is enough to stop small projects especially housing from starting in the first place.”

HousingWire surveys several recent studies on racial disparities in housing and concludes that Black Americans continue to face massive barriers to sustainable homeownership that is primarily due to discrimination at virtually every juncture of homebuying process. According to Bryan Greene, vice president of policy advocacy at the National Association of REALTORS®, “Black people who succeed in buying a home have to be Superman or Superwoman. They need to have higher degrees, they have more debt, they face persistent rejection and generally carry around bigger burdens to achieve the same goal as white people.”
The week ahead
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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