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Weekly update from the National Housing Conference
News from Washington
31 housing organizations urge Congress to support struggling renters

A broad group of 31 housing groups urged congressional leaders and the administration to return to negotiations on a stimulus package to protect renters, property owners and the stability of the nation’s rental housing stock. “We implore you to immediately return to the negotiating table and reach agreement on rental assistance and broader relief legislation that keeps people in their homes,” the letter said, sent on Friday, Aug. 21 to the joint congressional leadership, the Secretaries of Treasury and Housing and Urban Development, and the White House Chief of Staff and National Economic Council Director.

Although the president signed an executive order aimed at helping struggling renters, it does not actually extend the CARES Act eviction moratorium or provide urgently needed rental assistance. Politico reported this week that HUD plans to extend the foreclosure and eviction moratoriums for households living in homes backed by the agency. The announcement, however, falls short of what’s needed to stave off a larger wave of COVID-19 related evictions. In an article this week in the Washington Post, NHC president and CEO noted that while the executive order does not solve the eviction crisis, it “is a valuable step in the right direction for the president to publicly recognize the importance of addressing this issue immediately.”

“The need for action on behalf of America’s renters is urgent. According to the latest information from the U.S. Census Bureau, nearly 21% of renter households were behind on their rent payment,” the Aug. 21 letter said. “Renters impacted by the COVID-19 pandemic already owe an estimated $25 billion in back rent and could owe up to $70 billion by the end of the year. Without federal rental assistance, these debts will be unsustainable and financially ruinous for renter households across the nation.” In a press release announcing the letter, Dworkin said, “There should be no higher priority than avoiding millions of evictions throughout the country. Without emergency rental assistance funding, we will face a catastrophic crisis

The letter was signed by the California Housing Consortium, CCIM Institute, Consumer Federation of America, Council of Large Public Housing Authorities, Enterprise Community Partners, Habitat for Humanity International, Housing Assistance Council, Institute of Real Estate Management, Local Initiatives Support Corporation, Low Income Investment Fund, Mortgage Bankers Association, National Affordable Housing Management Association, National Alliance to End Homelessness, National Apartment Association, National Association of Affordable Housing Lenders, National Association of Home Builders, National Association of Housing Cooperatives, National Association of Real Estate Brokers, National Association of REALTORS®, National Community Stabilization Trust, National Council of State Housing Agencies, National Housing Conference, National Housing Resource Center, National Leased Housing Association, National Low Income Housing Coalition, National Multifamily Housing Council, National NeighborWorks Association, New York Housing Conference, Stewards of Affordable Housing for the Future, ULI Terwilliger Center for Housing, and Up for Growth Action.
New ‘Seasoned QM’ would require lenders to portfolio loans for three years

The Consumer Financial Protection Bureau (CFPB) issued a notice of proposed rulemaking to create a new category of Qualified Mortgages (QM). In addition to the standard QM definition, which the CFPB proposed amending in June, including replacing the current debt-to-income (DTI) limit, the agency has suggested the addition of a new “Seasoned QM.”
In order to receive the regulation’s safe harbor protections, mortgages would have to be first-lien, fixed-rate and meet performance requirements, including no more than two 30-day delinquencies and no 60-day delinquencies, over a 36-month period. During the first three years, the loan would have to be held in portfolio. To qualify, the lender must also “consider and verify” the borrower’s DTI or residual income at the time of origination. The new category is likely to be most beneficial to bank lenders that have the capital available to hold onto mortgages for three years.
“Today’s proposal continues the Bureau’s work to encourage safe and responsible innovation in the mortgage origination market,” Director Kathleen Kraninger said in the CFPB’s announcement on Tuesday. “Our goal through our very deliberative rulemaking process is to protect, promote and preserve the financial well-being of American consumers while at the same time offering access to responsible, affordable mortgage credit.”
In response to the CFPB’s Advanced Notice of Proposed Rulemaking last August, NHC joined a coalition of housing and banking organizations to support the removal of the DTI threshold from the standard QM. A letter from the coalition last year encouraged the CFPB to “craft a forward-thinking QM definition that embraces the technological advances and innovation in the mortgage finance industry.” 
GAO says current reporting underestimates homeless figures

A report prepared by the Government Accountability Office (GAO) for House Financial Services Chairwoman Maxine Waters (D-Calif.) suggests that current data on homelessness in the U.S. likely underestimates the true size of the homeless population. “While HUD has taken steps to improve data quality,” the report states, “identifying people experiencing homelessness is inherently difficult.”

GAO suggests that HUD could enhance the accuracy of homeless estimates by strengthening oversight and providing more guidance for the organizations responsible for collecting and reporting homelessness data. Specifically, the report recommends HUD perform quality checks on Continuums of Care’s (CoC) data collection methodologies, provide clearer instructions for probability sampling techniques and offer enhanced assistance to CoCs.

The report was shared with HUD prior to publication and includes the agency’s response to the findings. “HUD will continue to dedicate resources to collect more accurate data and empower CoCs to use that data to make better-informed decisions,” wrote HUD Acting Assistant Secretary for Community Planning and Development John Gibbs in a letter to GAO Director of Financial Markets and Community Investments Alicia Cackley. “One of HUD’s core priorities includes using data to better understand homelessness to improve our ability to prevent and end homelessness.”
Letter from GSEs suggests plans to move forward with refi fee 

Over the past week, housing stakeholders continued to voice their frustration with Fannie Mae and Freddie Mac’s planned 50-basis point fee that would be imposed on new refinances beginning on Sep. 1, 2020. Both Republican and Democratic members of Congress sent letters to Federal Housing Finance Agency (FHFA) Director Mark Calabria asking for justification and withdrawal of the new fee. NHC joined more than two dozen housing, financial services and consumer advocacy organizations in a letter calling on FHFA “to withdraw this ill-timed, misguided directive.”
Fannie Mae CEO Hugh Frater and Freddie Mac CEO David Brickman responded to the widespread criticism in a letter on Wednesday that suggests the fee will have a minimal effect on refinance borrowers; “Some have asserted that this price adjustment could impact borrowers by as much as $1,400—but this life of the loan estimate is a misrepresentation of how this cost would be applied.” Frater and Brickman go on to say that some lenders may choose to absorb the new fee. Frater and Brickman went on to say that some lenders may choose to absorb the new fee. 

While many stakeholders have called on FHFA to intervene to halt the policy change, the letter says that the announcement was the result of regular discussions with the conservator on “risk, pricing and capital considerations.” The letter gives no indication that either Fannie Mae or Freddie Mac intend to reverse their decision. “While the re-financing market remains strong, there will be delinquencies and defaults that hit companies because of COVID-19. This modest fee will help us continue helping those who are really hurting during the pandemic,” said Frater and Brickman.  
FHA continues $40 million modernization initiative

The Federal Housing Administration (FHA) announced the latest development in the agency’s multi-year technology modernization initiative. FHA Catalyst, the agency’s cloud-based platform for lenders and servicers, developed with recent appropriations from Congress, will now allow lenders to submit and manage residential appraisals through the Electronic Appraisal Delivery module. Lenders may begin using the module on Sep. 1, 2020, which coincides with the expiration of FHA’s temporary appraisal requirement flexibilities during COVID-19.
“Transforming FHA technology is the cornerstone upon which we intend to achieve a stronger business and risk management approach,” said Assistant Secretary for Housing and Federal Housing Commissioner Dana Wade. “The FHA Catalyst streamlined appraisal submission capability is one more way FHA is supporting the housing market with innovative technology during the COVID-19 economic recovery.”
Pent-up demand may lead to latter year boost in residential construction 

Fannie Mae’s Economic and Housing Outlook for August suggests that the dwindling supply of spec inventory, absence of existing homes for sale, and growing purchase demand for suburban and rural housing could drive up new construction going into the fall and winter months. The effects of rising demand are already evident in the housing market. Last week, HUD and the Census Bureau released the residential construction activity for July, which included an 18.8% increase in building permits from June as well as a 22.6% month-over-month increase in housing starts.
“We believe housing will continue to be a sector with relative strength amid the larger downturn,” said Doug Duncan, Fannie Mae senior vice president and chief economist, citing inventory constraints and low interest rates. He added that the Economic and Strategic Research Group has observed “some early signs of shifting buyer preference to locate to lower density areas.” This trend is likely attributed to the increasing interest among current urban residents to relocate to less densely populated areas of the country in light of COVID-19. 
FHFA refuses to end fee on closed loans in forbearance prior to sale to GSEs 

On Aug. 20, FHFA Director Calabria responded to a letter by a broad group of housing and civil rights organizations, which NHC co-signed, to express deep concern over policy changes regarding the treatment of mortgages that close but enter forbearance before being sold to Fannie Mae or Freddie Mac or insured by FHA. The group cautioned that the changes would further reduce access to credit for borrowers of color and those living in communities hardest hit by the Coronavirus.

In response, he stated, “Allowing these previously ineligible loans to be delivered to the Enterprises gives an unprecedented new tool to originators, enabling them to continue lending and thus supporting liquidity in our nation’s mortgage markets at this critical time. This is consistent with the Enterprises’ countercyclical mission.”

The response letter indicates that FHFA plans to share data CFPB to ensure borrowers qualify for mortgages they can afford. “The data sharing will allow FHFA to fulfill its obligation under the so-called ‘QM Patch’ to ensure that loans sold to the Enterprises are complying with the intent of Dodd-Frank’s ability to repay provisions.”
Chart of the Week
Report tracks where Americans have moved during COVID-19

HireAHelper – an online marketplace for moving services – published a report on migration trends during COVID-19. The report reveals that densely populated states with more extensive virus spread, such as New York and California, saw the largest outflow of residents. Meanwhile, states like Idaho, New Mexico and Delaware saw substantial increases in new residents. Looking at the city level, the report says, “it becomes quite apparent that people were fleeing big urban centers.”
What we're reading
The National Association of REALTORS® (NAR) recently convened its annual Leadership Summit in which Richard Rothstein, distinguished fellow of the Economic Policy Institute and author of “The Color of Law,” remarked, “REALTORS®, banks, and developers all participated knowingly and willingly in that unconstitutional federal housing policy.” In a post, NAR said it’s up to REALTORS® to lead the change in their communities and help undo years of systemic racial segregation.
A new report from Brookings examines the “middle class time squeeze,” and challenges faced by middle class households that are dependent on income from two earners. These households are left with “limited time for other activities such as family care, sleep and leisure,” the report finds. Brookings also notes, “the gap in longevity between those with higher and lower incomes has widened in the U.S.”
The National Low Income Housing Coalition (NLIHC) circulated a Call to Action this week, asking housing advocates to join together in a Day of Action on Aug. 24 to call on Congress to return to Capitol Hill to pass COVID-19 relief legislation. In addition to providing a sample script for calls to Congress and sample social media posts, NLIHC has developed an advocacy toolkit to assist stakeholders in scheduling meetings with members of Congress. 
The week ahead
Monday, August 24
Tuesday, August 25
Wednesday, August 26
Thursday, August 27
Friday, August 28
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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