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Weekly update from the National Housing Conference
News from Washington | By Luke Villalobos
Powell signals intention to taper MBS purchase

Federal Reserve Board Chairman Jerome Powell signaled his intention to begin tapering the Fed’s purchase of Fannie Mae and Freddie Mac mortgage-backed securities (MBS). However, he suggested he is inclined to do so in sync with Treasury bond purchases. Some have suggested that the Fed should reduce MBS purchases more rapidly than Treasuries, which would increase home mortgage interest rates as a means of slowing the growth in home prices.

Powell said he wasn’t inclined to take this step but acknowledged that Fed economists are studying its impact. The Fed currently purchases $40 billion worth of MBS each month, in addition to $80 billion in Treasury securities.

Powell said the program’s impact on mortgage interest rates may make a modest contribution to housing prices, “but it's not something that's big.” Interest rates are one of many factors contributing to home prices, though the lack of housing supply is the primary driver in today’s housing market.
Waters introduces legislation to renew eviction moratorium

On Thursday, Housing Financial Services Committee Chairwoman Maxine Waters (D-Calif.) introduced legislation to enact a new federal moratorium on evictions. The Centers for Disease Control and Prevention (CDC) moratorium, mandated in September 2020, expired on July 31. Waters’ bill would enact a ban on evictions through the end of the year.

According to the Treasury Department, around $3 billion of the $46 billion allocated for emergency rental aid has been used to cover rent. In a Los Angeles Times article, NHC's David Dworkin pointed out how challenging it has been receiving assistance for landlords."[Landlords] have to effectively navigate these state and local bureaucracies to get assistance," he said.

A recent opinion by Justice Brett Kavanaugh indicated that a majority of Supreme Court justices believe the CDC overstepped its authority when it issued its moratorium. Justice Kavanaugh stated that Congressional action is required to extend the moratorium. President Biden faced pressure to renew the CDC’s moratorium in the face of rising COVID-19 cases but ultimately decided to allow it to lapse, asking Congress to send him legislation creating a new federal evictions ban.
FHFA to require 30-day notice before evictions from multifamily properties

The Federal Housing Finance Agency (FHFA) announced this week that tenants evicted from multifamily properties secured by Fannie Mae or Freddie Mac (the Enterprises) due to nonpayment of rent must be given 30-days notice to vacate before being required to leave the property. FHFA noted that the order would apply to all Enterprise-financed properties, regardless of whether they are enrolled in a COVID-19 forbearance program. FHFA said that it would work with Fannie Mae and Freddie Mac to notify affected landlords of the new policy.
FHFA extends eviction moratorium on REO properties 

FHFA announced that Fannie Mae and Freddie Mac (the Enterprises) are extending the moratorium on single-family real estate owned (REO) evictions until September 30, 2021. The REO eviction moratorium applies to properties that an Enterprise has acquired through foreclosure or deed-in-lieu of foreclosure transactions. The current moratorium was set to expire on July 31, 2021. “The pandemic continues to have an outsized impact on the ability of Americans to meet their monthly rent or mortgage payments. Today’s extension of the eviction moratorium protects particularly vulnerable Americans who otherwise would be at risk of losing a place to live,” said Acting Director Sandra L. Thompson.
CFPB finds credit market rebound left out subprime consumers

A report released Tuesday by the Consumer Financial Protection Bureau (CFPB) found that consumer credit applications had mostly returned to pre-pandemic levels by May of this year. However, there remain several areas in which credit usage is lagging. Auto loans and mortgages showed the most pronounced recoveries from their spring 2020 lows, with mortgage applications consistently averaging 10-13% higher than their pre-pandemic average by last summer. However, mortgage application increases are unevenly distributed, with some states posting increases of over 40% and others barely clearing the 10% mark.

CFPB reports that credit applications from consumers with subprime and deep subprime credit scores remain depressed, something they attribute to the tightening of credit standards during the pandemic recession. This dip was least pronounced for mortgage applications, reflecting the mortgage market’s unusual level of activity during the pandemic recession. But even in the mortgage market applications for subprime and deep subprime credit scores, consumers have respectively hovered 10% and 30% below pre-pandemic levels. The only point at which deep subprime credit applications approached pre-pandemic levels after summer 2020 was in the spring of this year, during the distribution of stimulus checks under the American Rescue Plan.
Property Appraisal and Valuation Equity Task Force leadership announced

On Thursday, Domestic Policy Council director Ambassador Susan Rice was announced as a co-chair, alongside HUD Secretary Marcia Fudge, for the Property Appraisal and Valuation Equity Task Force. President Biden established the task force to analyze the “extent, causes, and consequences of undervaluing of properties,” according to a HUD source for HousingWire.

The task force will deliver a report to the President within six months, describing the conditions that contribute to racial valuation gaps between neighborhoods. Ambassador Rice is leading administration efforts for advancing racial justice and equity. Melody Taylor, previously a regional director at HUD, was also announced as the task force's executive director.
Senators introduce Reforming Disaster Recovery Act

Last week, Sens. Brian Schatz (D-Hawaii), Susan Collins (R-Maine), Todd Young (R-Ind.), Patrick Leahy (D-Vt.), and Bill Cassidy (R-La.) introduced the Reforming Disaster Recovery Act. The bipartisan bill would help communities plan for and recover from major disasters by strengthening HUD’s current disaster recovery grants for states, localities and tribes.

“Damage from disasters can be unpredictable, but the process of getting funding for long-term recovery shouldn’t be,” Leahy said in a statement. “This bill will fix the haphazard process of allocating funding on a case-by-case basis and give community leaders and residents one less thing to worry about in the aftermath of a disaster.”
CFPB launches rental assistance tool

On Wednesday, CFPB launched a new online tool called the Rental Assistance Finder. The tool intends to help both renters and landlords easily find and apply for rental and utility assistance. “People across the country are already receiving billions of dollars in assistance, and with this new tool we hope even more renters and landlords will take advantage of this emergency relief. This money is a win-win for both landlords and renters and a better outcome for all than costly, needless evictions,” stated Acting CFPB Director Dave Uejio.

The tool adds to industry efforts to curb a wave of anticipated evictions when the federal eviction moratorium ends on July 31. Of the $25 billion initially allocated to assist households struggling to pay their rent, only $3 billion has reached renters as of June. CFPB created the site to help more renters benefit from the assistance before they face eviction.
John Oliver covers housing discrimination on HBO

Comedian John Oliver covered the history of housing discrimination in the United States on his show, Last Week Tonight. (Please note that the segment includes frequent profanity and crude metaphors.)
Fannie Mae tells appraisers to avoid loaded language

The June issue of Fannie Mae’s property appraisal newsletter advised appraisers to avoid language that can communicate bias in favor of more straightforward descriptions of properties and their neighborhoods. Fannie Mae offered four examples of “problematic phrases” it says appraisers should avoid: “desirable neighborhood,” “crime-ridden area,” “affordable neighborhood,” and “integrated community.” Fannie Mae recommended offering neutral descriptions of a property’s or neighborhood’s amenities, though it also advised that language pertaining to neighborhood composition should never be included in appraisals.

The guidance comes several months after a leading appraisal industry group acknowledged the pervasive nature of racial discrimination in property appraisals. Fannie Mae said its recommendations are intended to protect appraisers from liability associated with bias, which it says can occur even when appraisers are unbiased if their language provokes consumer prejudice. An image accompanying the guidance depicted several other phrases appraisers should avoid, including “pride of owners,” “his and her bathroom,” “undesirable location,” and several terms explicitly describing a neighborhood’s ethnic composition.
Chart of the week
Chart of the week: Cumulative housing supply deficit reaches nearly 5 million units

The Urban Institute finds that the cumulative net shortage of housing units has reached nearly 5 million units when accounting for the market’s failure to create units for new households and those currently overpaying for housing. Urban’s analysis also shows that 2020 was the 12th year in a row in which demand for housing outstripped supply.
What we're reading
A 2013 City University of New York Law Review paper charts the consequences of New York City’s campaign against single-room occupancy (SRO) housing, which the paper’s authors say has contributed heavily to the city’s “permanent” housing crisis. “The number of units affordable to low-income residents is fully one-third lower than it would have been had SRO housing been preserved,” the paper’s authors find. NHC recently convened two webinars on the conversion of vacant hotels into SRO housing in partnership with member organization National Alliance to End Homelessness, which recently released several case studies on the topic.

HUD’s National Housing Market Summary for the first quarter of 2021 provides a snapshot of the housing market at the end of an unexpectedly strong year. HUD finds mixed indications of the market’s direction, with construction starts for single-family homes down from the previous quarter but up for multifamily projects and falling sales for both new and existing homes.

The Harvard Joint Center for Housing Studies released an interactive map with a corresponding report on how pandemic pressures differ across the nation. The map, released in conjunction with their State of the Nation’s Housing 2021 report, shows financial pressures on households varying drastically by state. Most income losses in 2020 were in states with high employment in the service industry and states with stringent shutdowns.
The week ahead
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