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Weekly update from the National Housing Conference
News from Washington | By Luke Villalobos
FHA overhauls manufactured housing program

The Federal Housing Administration (FHA) announced Tuesday an overhaul of its Title I mortgage insurance program for manufactured housing titled as personal property. FHA said the changes would make the program easier to use and expand the households eligible for the program. Changes to the program include implementing a sales comparison approach to property valuation, expanding eligible sources of income for applicants, and altering student loan debt calculations to bring them in line with FHA’s real property program, Title II. The overhaul also consolidates over 120 Title I policy documents into a single source, removing a significant source of administrative burden from lenders.

FHA framed the changes as part of the Biden administration’s push to increase manufactured housing use in response to the nationwide housing shortage. “This nation is in an affordable housing crisis, and manufactured housing will be a key part of the solution,” said Principal Deputy Assistant Secretary for Housing and the Federal Housing Administration Lopa P. Kolluri. “Our new and updated Title I policies will not only expand access to credit for borrowers seeking loans for quality and affordable personal property manufactured homes, but will also make it to easier for lenders to offer financing through the Title 1 program.”

FHA will require mandatory compliance with the changes starting on May 9 of next year.
Regulation X reinstated

A group of federal agencies led by the Federal Reserve and Consumer Financial Protection Bureau announced Wednesday that they would resume enforcement of Section 1024 of the Real Estate Settlement Procedures Act, known as Regulation X, which protects consumers from abuses by mortgage servicers. In April of last year, the agencies suspended enforcement of certain Regulation X deadlines citing the pandemic’s impact on servicers’ administrative capacity. However, in Wednesday’s announcement, they said that the pandemic had abated enough to reinstate them.

“While the COVID-19 pandemic continues to affect consumers and mortgage servicers, the agencies believe the temporary flexibility described in the April 2020 Joint Statement is no longer necessary because servicers have had sufficient time to adjust their operations by, among other things, taking steps to work with consumers affected by the COVID-19 pandemic and developing more robust business continuity and remote work capabilities,” they said.

In its statement on the move, CFPB argued reinstatement of the rules was needed to protect the more than one million homeowners who remain in forbearance due to the pandemic. “Failures by mortgage servicers and regulators worsened the impact of the economic crisis a decade ago,” said CFPB Director Rohit Chopra. “Regulators have learned their lesson, and we will be scrutinizing servicers to ensure they are doing all they can to help homeowners and follow the law.”
HUD awards Section 4 grants to Enterprise, Habitat and LISC

On Tuesday, the U.S. Department of Housing and Urban Development announced $36 million worth of Section 4 capacity-building grants for 250 communities. The funds support three national organizations, Enterprise Community Partners, Local Initiatives Support Corporation (LISC), and Habitat for Humanity International. These organizations will utilize the grants to produce approximately 8,000 affordable housing units and increase the overall economic impact of community development efforts. 
The grants are expected to stimulate $150 million in total investment based on HUD’s minimum three-to-one private/public match for capacity grants. 

“I am pleased to announce these funds to build affordable housing and make communities stronger,” said HUD Deputy Secretary Adrianne Todman during a virtual press call announcing the awards. “With this innovative pot of funds, we are building the capacity of local organizations to really solve the problems their communities are facing in the affordable housing and community development space.” 
HUD announces $74 million in grants to tribes

HUD announced on Wednesday that it would commit nearly $74 million in grants to 68 tribal communities for use, shoring up access to safe housing through construction and renovation projects. The grants, made using Indian Community Block Grant funds provided through the American Rescue Plan, varied in size from $300,000 for the Mesa Grande Indian Housing Authority to renovate 22 housing units to $3.45 million for the Cherokee Nation to construct 30 single-family homes.

HUD said that the funds would help bolster health outcomes in Native communities following the COVID-19 pandemic. “HUD understands its responsibility to Indigenous communities. These awards will provide critical funding to Tribes to help them prevent, prepare for, and respond to COVID-19,” said HUD Deputy Secretary Adrianne Todman. “These awards reiterate the Biden-Harris Administration’s commitment to working together to meet urgent housing and community development needs in Tribal communities.”
Quarles to step down from Fed role

This week, the Fed announced that Randal Quarles will step down from his position on the Federal Reserve’s Board of Governors at the end of the year. Quarles, first appointed to the Fed in 2017, served as the Board’s first Vice Chair for Supervision and oversaw a rollback in Great Recession-era banking regulations during his tenure.

Though Quarles’ role as Vice Chair for Supervision expired last month, the Fed’s rules would have allowed him to retain his position on the Board until 2032. His resignation will give President Biden yet another opportunity to influence the country’s monetary policy in the new year. In addition to replacing Quarles, he will also be responsible for nominating a new Fed Chair after Jerome Powell’s term expires in February, replacing outgoing Vice Chair Richard Clarida, and filling the vacant seat left by Treasury Secretary Janet Yellen.
FHA makes accelerated multifamily applications virtual

FHA announced on Wednesday that it would begin to require Multifamily Accelerated Processing (MAP) lenders to use the online portal FHA Catalyst to submit mortgage insurance applications on November 26. The move is part of a years-long effort to modernize FHA’s applications process. FHA has already begun to require lenders to use FHA Catalyst for other transactions, including reporting delinquent single-family mortgages insured through FHA’s Title II program. FHA has also announced that it will require some other transactions, such as appraisal submissions, to be done through FHA Catalyst next year.

FHA’s announcement, made in a HUD mortgagee letter, details resources the agency has prepared to support lenders making the transition, including training sessions and a platform access and user guide.
Altoro appointed as Rural Housing Service administrator

The U.S. Department of Agriculture (USDA) announced key staff appointments on Monday.  Joaquín Altoro was appointed Administrator of the Rural Housing Service within Rural Development, having previously served as CEO and Executive Director for the Wisconsin Housing and Economic Development Authority. Altoro also served on the Board of Directors for the National Council of State Housing Agencies.

“The nation’s rural communities will benefit greatly from Joaquín’s expertise in housing and economic development and his commitment to racial equity,” said NCSHA Executive Director Stockton Williams. 
Coalition urges inclusion of NMTC in Build Back Better bill

The New Markets Tax Coalition sent a letter to the White House on Monday urging the inclusion of the New Markets Tax Credit (NMTC) enhancements in Build Back Better legislation. NMTC is a financing resource for distressed urban and rural communities to stimulate investment in underserved areas. The letter, which had signatures from 400 community development stakeholders and included National Housing Conference, asks leadership to make the $5 billion annual allocation of the NMTC permanent and include further improvements to the program. 

According to the coalition, the NMTC has delivered more than $110 billion to rural and urban communities and financed more than 6,000 businesses in these areas. The proposed expansions in the letter are estimated to produce 700,000 new jobs. 
Chart of the week
Chart of the week: Build Back Better bill would increase LIHTC allocations by more than 10%

Novogradac visualizes the effect of the Build Back Better bill’s Low Income Housing Tax Credit (LIHTC) provisions, which would see annual state allocations of the 9% credit increase by 10% plus inflation in 2022-2024. Novogradac notes that the allocation increases would expire at the end of 2024, creating a cliff that would see state allocations fall by more than a dollar per capita starting in 2025.
What we're reading
HUD’s online policy and development magazine The Edge featured an article on NHC’s panel on artificial intelligence (AI) and the future of housing equity. The panel, which met at NHC’s recent Tech & Housing symposium, discussed the restrictions of traditional credit scoring and the possibilities of utilizing AI and machine learning. The article notes that “AI tools can remake the mortgage lending space responsibly and play a transformative role in addressing persistent racial and gender inequities in credit access and homeownership.” 

Brookings released a new diagnostic tool for policy as a “housing policy matchmaker” that local governments can utilize when shaping policy decisions. The matchmaker pairs local problems with recommended solutions based on common housing issues. While each community is unique and requires individual policymaking, the tool seeks to “serve as a triage assessment that can refer local officials to the appropriate treatment or specialist.” 
The week ahead
Monday, November 15
Tuesday, November 16
NCRC: Ending the year off strong, 2 – 3:30 p.m. ET
Wednesday, November 17
Thursday, November 18
NCRC: HCN November huddle up, 2 – 3:30 p.m. ET
Friday, November 19
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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