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Weekly update from the National Housing Conference
News from Washington | By Luke Villalobos
Community Reinvestment Act modernization moves forward

On Tuesday, the Office of the Comptroller of the Currency released a statement announcing a forthcoming proposal to rescind the May 2020 Community Reinvestment Act (CRA) rule. The statement expressed a commitment that the OCC will work together with the Federal Reserve Board of Governors (FRB) and the Federal Deposit Insurance Corporation (FDIC) on developing a joint rule that will modernize CRA, a policy priority for NHC. 

CRA requires banks to invest in underserved low-income communities where they have physical locations. The last time the CRA regulations were rewritten was in 1995, prior to the proliferation of interstate banking as well as online and mobile banking.

The OCC’s controversial May 2020 rule was enacted without the support of either the Federal Reserve or FDIC, and caused a “regulatory split” in which different banks were subject to different sets of rules. Further, the rule allowed banks to satisfy their CRA requirements through large investments rather than smaller ones that may better meet the needs of underserved communities. 

NHC President and CEO David M. Dworkin issued a statement supporting OCC’s decision. NHC has advocated for a unified CRA that must:
  1. Increase investment in communities that are currently underserved;
  2. Extend benefits to more low- and moderate-income people, particularly people of color, who live in those communities;
  3. Ensure that CRA lending and investment does not lead to displacement of the very people it is meant to help; and
  4. Make both bank performance and government enforcement more transparent and predictable.
NHC, other stakeholders, submit comments on Duty to Serve plans

NHC joined dozens of other housing organizations in submitting comments to the Federal Housing Finance Agency (FHFA) on Fannie Mae’s and Freddie Mac’s (the Enterprises) plans to meet their obligations under the Duty to Serve program to increase liquidity in underserved markets. The comments were submitted in response to FHFA’s May 18 request for information on the Enterprises' plans and generally reflected housing groups’ desire to see Fannie Mae and Freddie Mac increase their activity in the three markets identified in the Duty to Serve regulation: manufactured housing, multifamily housing preservation, and housing in rural areas.

NHC’s comments expressed a desire to see the Enterprises’ increase their involvement in each of these markets, as well as for the Enterprises and FHFA to make it easier for stakeholders across the housing industry to engage with the Duty to Serve plans. NHC also provided the Enterprises with concrete recommendations on working to close racial disparities in homeownership, noting that the NHC-led Black Homeownership Collaborative’s goal of adding three million net new Black homeowners by 2030 “cannot succeed… without the serious and sustained participation of Fannie Mae and Freddie Mac.”

Comments on the plans were submitted in the wake of former FHFA Director Mark Calabria’s interim replacement by acting Director Sandra Thompson. NHC noted the need for FHFA to reexamine the impact of its Loan Level Price Adjustments, capital rule requirements, and limitations on the Enterprises’ use of pilots as especially important for ensuring the Enterprises are able to meet their Duty to Serve obligations.

Submitted comments are available for download on FHFA’s website.
White House announces additional foreclosure prevention measures

On Friday, the White House announced a slate of new measures offering enhanced protections to homeowners at risk of losing their homes due to financial shocks caused by the COVID-19 pandemic. The measures, which aim to bring loss mitigation efforts for federally backed mortgages more in line with those offered to Fannie Mae and Freddie Mac mortgages, provide monthly payments of up to 25% to borrowers with Federal Housing Administration (FHA), Department of Agriculture (USDA), or Department of Veterans’ Affairs (VA) loans.

FHA detailed the new steps it would take in a statement issued in conjunction with the White House that described a new COVID-19 recovery waterfall that allow for interest-free monthly payments for those who can afford them and reduced payments for those who cannot. FHA also reiterated that funding through the Homeowners Assistance Fund (HAF), the creation of which NHC advocated prior to the passage of the American Rescue Plan, can be used to assist FHA-insured mortgages. The White House’s announcement describes similar actions to be taken to support USDA and VA loans.

The measures are part of an administration effort to reduce risk to borrowers as pandemic-era protections sunset, which includes the Treasury Department’s administration of HAF and Ginnie Mae’s offering of a new mortgage-backed security containing modified mortgages with terms extended to 40 years.
NAAHL/NHC circulate letter in support of Gordon for FHA commissioner

The National Association of Affordable Housing Lenders (NAAHL) and NHC are circulating a letter urging leaders in the Senate to confirm National Community Stabilization Trust (NCST) President Julia Gordon as FHA commissioner. The letter notes Gordon’s experience as FHFA’s single-family policy manager and her extensive knowledge of housing finance and market dynamics during periods of stress.

Gordon is “the right person at the right time”, NHC stated in a letter written by 18 members of its Board of Governors, sent to Senate leadership earlier this month. That letter emphasized Gordon’s fitness for leading FHA’s effort to protect homeowners in the wake of the COVID-19 pandemic and her ability to bridge the public and private sectors thanks to her extensive experience in both government and advocacy roles.

If your organization is interested in signing the NAAHL/NHC letter, please contact Director of Policy and Research Luke Villalobos at no later than COB Wednesday, July 28th.
Treasury data shows just 6.5% of ERA funds distributed

States and localities have distributed less than a tenth of federal Emergency Rental Assistance (ERA) funding since the Congress created the program last year, according to data released by the Treasury Department on Wednesday. Though Treasury reported that state and local grantees disbursed more ERA funds in June than in the previous three months combined, the total amount distributed still hovers around $3 billion. That is just over 6.5% of the $46.5 billion Congress allocated for the program.

The slow pace of ERA distribution is especially concerning given the imminent expiration of the Centers for Disease Control and Prevention’s (CDC) eviction moratorium, which advocates have noted is one of the few things standing between the 7.4 million renters nationwide behind on rent and eviction. A full list of state and local ERA programs is available on NHC's COVID-19 Housing Resource Center.
HUD announces $19 million to fight pandemic-related housing discrimination

HUD announced on Wednesday that it would make $19 million available to fair housing organizations to fight housing discrimination connected to the COVID-19 pandemic. The funds are available for use by participants in HUD’s Fair Housing Initiatives Program (FHIP), with a maximum grant size of $75,000, $125,000 and $350,000 respectively for small, medium and large organizations. HUD intends for the grants to be used to fund fair housing enforcement and education, including testing, that protects low-income and disabled people, and people of color.

HUD characterized the funding as a preemptive measure designed to equip its partners with resources to combat discrimination they may encounter in the wake of the pandemic. “The funding we’re announcing today will give our fair housing partner organizations the financial resources they need to address various forms of discrimination that may occur as a result of rental and sales practices, as well as changing credit and real estate operations, related to the pandemic,” said Jeanine Worden, HUD’s acting assistant secretary for fair housing and equal opportunity. Grant applications are due August 18.
HUD announces Eviction Protection Grant funding opportunity

On Wednesday, HUD announced a new program called the Eviction Protection Grant Program. The notice of funding opportunity says it is intended to combat upcoming evictions for the estimated 7.4 million renters who are behind on rent or at risk of eviction, especially groups who were disproportionately impacted by the COVID-19 pandemic, including people of color, people with disabilities, and low-income families. Funds are available for nonprofit organizations or governmental entities that offer eviction legal services at no cost. Entitles eligible to receive funds include public defender offices, law school clinical programs, state bar associations, and legal aid organizations. 

There is approximately $20,000,000 of total funding available, with minimum award amounts of $1,000,000 and maximum awards of $3,000,000. The application deadline is September 8, 2021. 
NHC signs letter discouraging Senators from using g-fees to offset spending

NHC joined 19 other housing finance stakeholders to urge Senators Kyrsten Sinema (D-Ariz.) and Rob Portman (R-Ohio), the chief Senate negotiators for the bipartisan infrastructure package, to refrain from using Fannie Mae and Freddie Mac guarantee fees to offset potential infrastructure spending in a letter sent Thursday. Guarantee fees, or g-fees, are levied on mortgage-backed securities (MBS) sold by Fannie Mae and Freddie Mac in order to cover the risk associated with guaranteeing those securities. According to the letter’s signers, “increasing g-fees for other purposes [than risk management] effectively taxes potential homebuyers” by making GSE-issued MBS more expensive, something they argue is unacceptable at a time of unprecedented housing costs.

The letter comes a week after Senator Mark Warner, another key player in infrastructure negotiations, indicated that an eventual infrastructure bill would not increase deficit spending, meaning that lawmakers will likely be in search of funding sources to cover the cost of the $3.5 trillion package. Congress has increased g-fees once before, to offset a two-month tax holiday at the height of the Great Recession. That increase of 10 basis points expires this September, and there has been talk of extending it in order to pay for measures in the infrastructure package. While the letter’s signers expressed their sympathy for lawmakers’ desire to minimize deficit spending, they characterized a hypothetical increase in g-fees as inappropriate and tantamount to using Fannie Mae and Freddie Mac as the “nation’s ‘piggybank’”.
Chart of the week
Chart of the week: Multifamily PABs reached record high

Novogradac reported on Tuesday that according to data from the Council of Development Finance Agencies, housing agencies issued a record $16.4 billion in multifamily private activity bonds (PABs) in 2019. They further explore which states are reaching or close to reaching their total PAB cap and the potential impacts of lowering the 50% test on availability of PAB financing for affordable development. 
What we're reading
HousingWire covers the waning prospects for the inclusion of housing in an infrastructure bill, due to some lawmakers’ skepticism that housing counts as infrastructure. NHC’s David Dworkin pushed back on that argument, asking, “How is housing not infrastructure? It’s a physical asset that is part of a community that is supported by the government, deteriorates over time, and has a direct impact on the quality of life and economy of an area.”

Ed Brady, president and CEO of the Home Builders Institute, argues in The Hill that access to good jobs is crucial to fighting increasing crime – and that homebuilding can be a significant source of those jobs. “Improvement in labor market conditions is associated with a decrease in crime rates,” he says. “Imagine the difference it would make when thousands more at-risk youth gain access to certification programs and job placement in trade jobs such as carpentry, electrical, plumbing, building construction, HVAC, masonry, and solar installation.”

The National Alliance to End Homelessness released a series of case studies on hotel to housing initiatives in California, Oregon, and Vermont. Each state utilized federal CARES Act funding to help ensure that people experiencing homelessness could be safe and secure during the COVID-19 pandemic and beyond. The reports were written in conjunction with Mary Tingerthal, who presented her work during a recent NHC webinar series on hotel and motel conversions.

NBC News explored the phenomenon of all-cash offers outcompeting families in the single-family home market. One way such firms do that is by waiving their appraisal contingency, something NHC President and CEO David M. Dworkin says can contribute to bubbles. "The appraisal is one of the controls we have on markets' overheating above their value,” he said. “The reason we have appraisals is to ensure the market isn't overbidding homes beyond what they're worth.”
The week ahead
Monday, July 26

Tuesday, July 27
WHF: AI and Machine Learning, 12 – 1 p.m. ET
MBA: Ordinance or law insurance, 2 – 3:30 p.m. ET
Wednesday, July 28
Thursday, July 29
MBA: MAA quarterly webinar, 2 – 3 p.m. ET
Friday, July 30
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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