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Weekly update from the National Housing Conference
In this issue
August 30, 2020 I Issue 89-31

  • FHFA delays adverse market refinance fee
  • Opportunity Zones generated an estimated $75 billion in 2019 investment
  • Affordability crisis worsens in the current housing market
  • FHFA and HUD extend foreclosure moratoriums
  • FHFA and HUD extend COVID-related flexibilities
  • Less than 10% of rental units are affordable for low-income renters
  • Chart of the Week: Black households continue to experience a high degree of housing segregation
Find the information you need at NHC's COVID-19 Housing Resource Center
Guest Feature: How state HFAs are responding to today’s housing crises
by Stockton Williams, National Council of State Housing Agencies (NCSHA)

Dear Friend,

State housing finance agencies (HFAs) have been at the center of the affordable housing financing system for more than 50 years. In 2019, they provided nearly $32 billion in financing for 161,000 mortgage loans to borrowers with an average income of roughly $56,000 and over $10 billion in financing for the development and rehabilitation of more than 150,000 rental units.

State HFAs are deeply engaged in developing new solutions to some of the most urgent and complex challenges in the country today.

Providing emergency housing assistance during the pandemic. Governors and legislatures have long turned to their state HFAs in times of crisis ― from foreclosures and floods, to wildfires and opioids ― and COVID-19 is no different. State HFAs are the largest source of statewide housing aid to renters and homeowners facing dire housing circumstances during the coronavirus recession. Thirty agencies have delivered a combined $1.3 billion in support to date, with several other states considering additional programs.

It’s hard and often thankless work: quickly standing up brand-new programs to meet overwhelming needs under intense public and political scrutiny in the midst of a pandemic that has challenged all aspects of regular business operations. The state HFAs in Arizona, Delaware, Iowa, and Maine are among those that have already made enhancements and expanded programs in response to changing needs in communities.

Expanding housing opportunity for people of color. For most of the past couple of decades, state HFAs have matched or beaten the home mortgage industry overall in serving minority homebuyers ― and recognize today that much more must be done to redress systemic racism in the housing system. The agencies as a group are the largest provider of down payment assistance for low-income and minority households, which research suggests is essential for helping more Black and Brown families become homeowners. State HFAs are working with other industry leaders who share their commitment to a more inclusive housing market, as epitomized by initiatives in Kentucky, Minnesota, Ohio, and Tennessee, among many other states.

State HFAs are also increasingly using their authority to award Low-Income Housing Tax Credits (LIHTC) to stimulate new affordable development in more opportunity-rich neighborhoods, while continuing to support neighborhood revitalization and housing preservation where it is needed.

Advancing a new vision for healthier affordable housing. COVID-19 is deepening health and housing disparities in the United States and shining a painful light on well-established linkages between health and housing, especially for households and communities of color.

With funding from the Robert Wood Johnson Foundation, NCSHA’s Affordable HEALTH (Housing Equity and Long-Term Health) Initiative is building on state HFA leadership ― ranging from New Jersey’s groundbreaking partnerships with hospitals to Louisiana’s cutting-edge use of Medicaid waivers ― and engaging other industry innovators to create new financing and policy tools to make multifamily affordable housing healthier.

On these initiatives, and in an array of federal advocacy efforts, state HFAs are working with NHC and many of its members to advance solutions.

Stockton Williams is executive director of NCSHA.
News from Washington
FHFA delays adverse market refinance fee 

On Tuesday, the Federal Housing Finance Agency (FHFA) announced its decision to delay the effective date of the adverse market refinance fee, recently proposed by Fannie Mae and Freddie Mac, until Dec. 1.
 
Originally scheduled to become effective on Sep. 1, the new fee drew criticism from housing stakeholders concerned that it would increase mortgage interest rates for thousands of refinance borrowers. NHC recently joined a diverse group of housing organizations, led by the Mortgage Bankers Association (MBA), to issue a joint statement urging FHFA to withdraw the “misguided directive.”
 
Following FHFA’s Tuesday announcement, NHC President and CEO David Dworkin issued a statement of support. “NHC applauds FHFA’s decision to delay the effective date of the new refinance fee to Dec. 1. We look forward to working with FHFA and the GSEs to avoid any increase in the cost of refinancing for homeowners,” said Dworkin.

“Fannie Mae and Freddie Mac play a critical role in preserving liquidity and safely serving mortgage consumers, especially important during this pandemic. We appreciate the decision to delay this policy change, which will allow more households to take advantage of historically low interest rates to reduce their monthly payment. It’s never been more important for homeowners to reap the financial benefits and savings of low interest rates. Now is the time to encourage refinancing – not make it harder.”
 
Other housing organizations welcomed the delay, including MBA President and CEO Bob Broeksmit who said, “We understand that the pandemic and the associated borrower assistance measures the GSEs have instituted impose significant costs on the GSEs and on mortgage servicers, and we are gratified that the revised guidelines also reflect the need to lessen the impact on borrowers with modest incomes or low loan amounts.” 

House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) called on FHFA to remove the fee altogether. “While this delay will buy homeowners looking to refinance some time, at the end of the day, the vast majority of homeowners will still pay the penalty and homeowners in higher cost areas like Los Angeles will disproportionately be excluded from the narrow exemptions provided,” Waters said in a statement.  
Opportunity Zones generated an estimated $75 billion in 2019 investment, according to report

The White House Council of Economic Advisers (CEA) published a report on the impact of Opportunity Zones in 2019. The report says Opportunity Zone tax cuts “spurred a large investment response,” raising an estimated $75 billion in private capital in 2019. According to the report, Opportunity Zone areas are expected to see an 11% reduction in the local poverty rate.
 
Department of Housing and Urban Development (HUD) Secretary Ben Carson celebrated the findings, saying, “Opportunity Zones have created half a million jobs, generated billions in economic investment, and reduced our country’s poverty rate-and is just the beginning. President Trump’s bold leadership is providing families with new opportunities to break the cycle of poverty and local leaders with a tool to assist them in breathing new life into communities that have been forgotten for far too long.”

While the additional investment in distressed communities is welcomed, NHC has expressed concern with the program’s lack of competition and absence of targeted benefits to low-income households, especially when compared to LIHTC and the New Markets Tax Credit (NMTC).  

The Wall Street Journal reported on CEA’s findings, noting that the program has generated “significant interest” from investors and real estate developers. “The initial idea had bipartisan support, but Democrats have increasingly soured on it,” the article states, adding that Democratic presidential candidate Joe Biden has proposed stronger oversight of Opportunity Zones and greater disclosure from developers.

This week, President Trump also issued an executive order instructing government agencies to prioritize federal development in Opportunity Zones. A statement from the White House noted that agencies have been historically “instructed to give first consideration to locating facilities in central business districts.” The statement continues, “These districts were often the most expensive areas of urban centers, both costing taxpayers more dollars and sinking Federal investment into areas that were often not in need of the economic development. Meanwhile, Opportunity Zones and other distressed communities offer lower costs and are in need of the investment that a government site location can bring.”
Affordability crisis worsens in the current housing market 

Sustained low inventory continues to drive competition in the housing market. HUD and the Census Bureau reported July home sales were up more than 36% over July 2019 and current inventory on the market only represents a four-month supply. These factors are driving home prices up; FHFA’s House Price Index reported a 5.4% increase in home prices year-over-year in the second quarter of 2020.
 
Conditions in the housing market are worsening the affordability crisis that existed prior to the onset of the pandemic. As part of its coverage of the Republican National Convention, The Hill convened a virtual event, sponsored by Enterprise Community Partners, to discuss affordable housing and the challenges many households face in accessing affordable homeownership.
 
During the event, Miami Mayor Francis Suarez said, “Our cities are exploding in terms of growth, which means that it’s becoming more and more difficult for the market to provide the kind of affordable housing that is needed. It’s another pandemic, if you will — this need for affordable housing, this need for economic equity in our community.”
 
Responding to President Trump and HUD Secretary Carson’s Wall Street Journal op-ed, Chuck Fowke, chairman of the National Association of Home Builders (NAHB),  said, “If local officials reduce regulatory barriers, housing affordability would be enhanced across the spectrum. With the nation facing a shortfall of about one million homes, policymakers at the state and local level can help builders expand production,
 
In a Forbes article this week, NHC's David Dworkin called on policymakers to support the residential housing sector. “Housing construction has led every economic recovery in every single recession except for the housing crisis in 2008,” he said. “Housing is jobs and jobs are housing. Right now, housing construction is falling off a cliff. We need to change that immediately.” 
FHFA and HUD extend foreclosure moratoriums

On Thursday, FHFA and HUD announced the extension of their moratoriums on foreclosures and evictions through Dec. 31. Originally set to expire on Aug. 31, the moratoriums apply to single family mortgages insured by the Federal Housing Administration (FHA) or backed by the GSEs.
 
“This extension provides an additional four months of housing security to homeowners, as they will not fear losing their homes as they work to recover financially from the adverse impacts of the pandemic,” HUD’s announcement states. “With this third extension, FHA has now provided more than nine months of foreclosure and eviction relief to FHA-insured homeowners.”
 
FHFA Director Mark Calabria said the actions would “help keep borrowers in their homes during the pandemic” and protect more than 28 million homeowners with a GSE-backed mortgage. Notably, FHFA’s eviction moratorium only applies to multifamily properties acquired by the GSEs through foreclosure or deed-in-lieu of foreclosure. 

In a statement following the announcements, NHC's David Dworkin said, “NHC appreciates FHFA and HUD’s work to keep individuals and families in their homes during this unprecedented time, but recognizes the overdue need for congressional action to support struggling renter households."

"We look forward to continuing to work with FHFA and HUD to ensure the financial well-being of American homeowners, while maintaining the health of the housing market, and are hopeful that members of Congress can reach agreement on rental assistance when they return to Capitol Hill," he continued.
FHFA and HUD extend COVID-related flexibilities

This week, FHFA and HUD extended temporary policies enacted at the onset of the pandemic to support homeowners and mortgage lenders. Originally scheduled to expire on Aug. 31, FHFA’s policies will remain in effect until Sep. 30 and HUD’s policies will remain in effect until Oct. 31.
 
HUD’s temporary provisions allow lenders to use more flexible methods of reverification of employment and exterior-only or desktop-only appraisals. FHFA’s temporary provisions include Fannie Mae and Freddie Mac’s continued purchasing of loans in forbearance, appraisal alternatives, flexibility verifying income and employment and expanded use of power of attorney in closings.
 
“Extending these COVID-19 flexibilities helps keep the mortgage market moving and borrowers safe during the pandemic," said FHFA Director Calabria. Housing organizations, including MBA, NAHB and the National Association of REALTORS®, supported the extension as households continue to experience the negative financial effects of COVID-19.
Less than 10% of rental units are affordable for low-income renters

A report published by Freddie Mac this week examines the persistent lack of affordable rental options for low-income renters. Freddie Mac explains that as the rental market evolves and more high-income households opt to rent it is becoming increasingly difficult to accurately gauge affordability. Instead of using the standard median family income, the report relies on median renter income, which is significantly lower. “Although prior analyses have shown strong income growth among renters in recent years, the report finds those numbers have been skewed by the introduction of high-income households to the pool of renters and an increase in the number of wage earners living in renter households,” the report states.
 
The report estimates that fewer than 10% of rental units are affordable for renters earning 50% of the median renter income (MRI). The findings contradict studies that suggest household incomes are improving relative to rental costs. Freddie Mac, instead, asserts, “households are not better off as the availability of affordable housing for individual households has not improved in the past decade.” 
 
Steve Guggenmos, Freddie Mac vice president of Multifamily Research and Modeling, said in an announcement of the report findings, “Rental affordability continues to be a major issue as demand remains high and supply of affordable housing is both insufficient and more likely to decline than it is to grow. Our research demonstrates the need to focus on and understand the complexities of rental affordability as we continue to address the affordable housing crisis in this country.”
Chart of the Week
Black households continue to experience a high degree of housing segregation

A recent article from the Boston Globe tracks the history of systematic racism in the development of American suburbs. As the chart illustrates, despite some improvement over the decades, Black, Hispanic and Asian households remain segregated from White households, with Black households continuing to experience a high degree of segregation. 
What we're reading
An op-ed in The Tennessean from Eddie Latimer, CEO of Affordable Housing Resources – a nonprofit serving Tennessee homeowners – warns that although mortgage forbearance programs are helping homeowners that need “immediate relief,” they are a “ticking time bomb once the grace period is over.” Latimer calls for additional support to “stop the nearing threat of foreclosures.” Affordable Housing Resources’ COVID-19 Mortgage Forbearance Program was recently featured as a best practice on NHC’s COVID-19 Housing Resource Center.
 
The New York Times examined discriminatory appraisal practices and their impact on Black homeowners in a new article this week. Although appraisers are prohibited by law from discriminating against minority households, the article highlights the experience of Black households that have received below-market appraisals.
 
Recent analysis from Brookings reveals which demographics may have had a harder time accessing Economic Impact Payments provided by the CARES Act. Brookings suggest that the decision to administer payments through the Internal Revenue Service “meant that people who didn’t file their taxes in 2018 or 2019 – who were often elderly or had low incomes – had to take extra steps to receive their payments.” 
The week ahead
Monday, August 31
 
Tuesday, September 1
 
Wednesday, September 2
 
Thursday, September 3
 
Friday, September 4
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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