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Weekly update from the National Housing Conference
News from Washington
In Memoriam
James A. Johnson

It is with great sadness that I write about the passing of James A. Johnson, the former president and CEO of Fannie Mae. He was a leader and mentor who influenced the lives and careers of a generation of housing industry leaders, and pursued a strategy of doing well by doing good that propelled Fannie Mae into an nationwide leader of affordable housing. During his tenure, he also turned the company into an economic powerhouse, growing its annual net income over 300 percent.

As Chairman of the John F. Kennedy Center for the Performing Arts, he created the Kennedy Center Millennium Stage, which offers free performances every night of the year. He considered this his most important legacy. He also served as Chairman of the Board of the Brookings Institution.

I’ll never forget my first week at Fannie Mae, when my boss took me to a meeting of the company’s Operating Committee to introduce me to the senior officers I would be working with in my new role. He drew a map of the conference table on a sheet of paper, writing down the name and title of each of the participants while Jim went around the table for his weekly update. The diversity of the team blew me away. I never had seen anything like, and unfortunately haven’t seen anything like it since. The Vice Chair and EVP for Multifamily were Black men, the Treasurer and EVP for Single Family were women, the chief credit risk officer was a Hispanic man, and – most impactfully – two traditionally minority roles, HR and Affordable Housing, were White guys. All of them were among the most brilliant minds in the housing industry. I remember thinking, “this is what diversity looks like. This is what it looks like when the CEO gets it.” Today, there are few executive teams in every facet of mortgage finance that don’t include an alumni of Jim Johnson’s Fannie Mae.

His family has noted that “over the last few days, we’ve received hundreds of messages from friends, family, former colleagues, and mentees. We’ve read letters to him at his bedside relaying stories of the life-changing advice he gave, generous favors he bestowed, and impactful contributions to his city, country, and world. Each message brought him joy.”

Memories of Jim, and more information on his tremendous legacy, may be shared here.
Despite some progress, another week passes without stimulus deal

This week saw another series of updates related to the passage of a new stimulus package. House Speaker Nancy Pelosi (D-Calif.) resumed talks with Treasury Secretary Steven Mnuchin. The pair continues to refine the terms of a deal, ranging from $1.8 trillion to $2.2 trillion, that both House Democrats and the White House would support. Democratic leadership in the House remains critical of the White House’s position, with House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) and House Appropriations Committee Chairwoman Nita Lowey (D-N.Y.) expressing concern over issues such as rental relief, Paycheck Protection Program (PPP) funding and the national testing strategy.

Much of the back and forth this week between the House, Senate and administration revolved around these issues. Speaker Pelosi and Secretary Mnuchin negotiated terms around the country’s strategic testing plan. In an interview with CNBC on Thursday, Secretary Mnuchin said the administration was “not going to let the testing issue stand in the way” of getting a deal done. Just one day prior, however, Secretary Mnuchin acknowledged that “at this point getting something done before the election and executing on that would be difficult.”

Despite the White House’s apparent openness to a $1.8+ trillion package, the Senate GOP has maintained its $500 billion ceiling on any new stimulus. During remarks in his home state on Thursday, Majority Leader Mitch McConnell (R-Ky.) said, “My members think half a trillion dollars, highly targeted, is the best way to go.”

Majority Leader McConnell has indicated his priority will be passing new PPP funding. “When the full Senate returns on Oct. 19, our first order of business will be voting again on targeted relief for American workers, including new funding for the PPP,” he said in a statement this week. Sunday Morning on This Week with Georg Stephanopoulos, Speaker Pelosi said the White House has less than two days to finalize a deal with Democrats to have any chance of muscling through a trillion-dollar-plus bill before the election.
41% of homeowners in COVID-related forbearance have exited the program

As the CARES Act forbearance program hits the six-month mark, the number of homeowners in forbearance plans has continued to steadily decline. The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey reports that as of the week of Oct. 4, 3.2 million homeowners were in a forbearance plan, representing 6.3% of all mortgages currently being serviced. The rate of forbearance among loans backed by the GSEs (4%) has remained consistently lower than those backed by Ginnie Mae (8.2%). The declines in program participation may not, however, represent diminishing need for mortgage relief, but rather administrative hurdles.

“Many borrowers saw their forbearance plans expire because they did not contact their servicer. Another reason for expirations was that borrower information needed to determine an appropriate loss mitigation option was not yet in place," said MBA Senior Vice President and Chief Economist Mike Fratantoni. "As of now, some borrowers are exiting forbearance without making contact or without a plan in place. Servicers are making outreach efforts to attempt to work with these borrowers to determine the best options for them, including an extension."

Recent data from Black Knight reveals 41% of the 6.1 million homeowners that have participated in the COVID-related forbearance program have exited their forbearance plan. Black Knight reports that “the vast majority” of the 2.4 million homeowners that have moved out of a forbearance plan are performing and that “of those who remain past due, 267,000 are in active loss mitigation with their lenders.”
Climate events impact coastal housing markets

Housing markets in areas hard hit by hurricanes year-after-year are starting to see steady declines in home sales and home prices, according to a recent New York Times article. The article examines the case of one emblematic Florida coastal town, Bal Harbour, which saw home sales cut in half from 2013 to 2018 and home prices fall by 7.6% from 2016 to 2020. The New York Times cites the findings of a new paper, “Housing Markets, Mortgage Lending and Sea Level Rise,” released by the National Bureau of Economic Research, which concluded that the erosion of the housing markets in these coastal regions has occurred because “prospective buyers have become more pessimistic about climate change risk.”

In response to recent hurricanes, the Department of Housing and Urban Development (HUD) announced $1.3 billion in funding for the state of Florida to support Hurricane Michael recovery efforts. Funds are available through both the Community Development Block Grant (CDBG) Mitigation Program and the CDBG Disaster Recovery Program. HUD Secretary Ben Carson said, "The great people of Florida and the state leadership continue to show their resilience as they persevere through the recovery process of rebuilding their homes, restoring their businesses, and repairing their critical infrastructure.”

In response to the recent landfall of Hurricane Delta in Louisiana, Freddie Mac and Fannie Mae reminded homeowners and mortgage servicers of the assistance options available to properties damaged by natural disasters.
Ginnie Mae MBS issuances hit record high

Ginnie Mae securitized a record high volume of mortgage-backed securities (MBS) in the 2020 fiscal year. Ginnie Mae announced the $748 billion record this week, which far exceeds the previous record of $504 billion in 2017, and includes $30.7 billion in multifamily loans. Ginnie Mae MBS, which includes loans insured by the Federal Housing Administration (FHA), the Department of Veterans Affairs and the U.S. Department of Agriculture, have steadily gained market share since 2008 and accounted for 28.4% of all MBS as of July 2020, according to the Urban Institute’s latest Housing Finance At-A-Glance Monthly Chartbook. Within the nonbank origination market, Ginnie Mae represents an even larger portion of the market, hitting 91% in August. "Record-low mortgage rates encouraged borrowers to refinance and for first-time homebuyers to enter the market,” Ginnie Mae told National Mortgage News. And with interest rates likely to remain at record lows well into 2021, Ginnie MBS issuance is likely to remain strong in FY 2021.

“2020 is a year that will stand out in the record books for Ginnie Mae,” said Ginnie Mae Principal Executive Vice President Seth Appleton in a statement. “We attracted record capital to support affordable homeownership and rental housing opportunities for millions of American households, advanced key modernization initiatives, and responded swiftly to the COVID-19 National Emergency, all while operating in a remote environment.”
FHA unveils new technology capabilities for multifamily lenders

HUD continues to build out capabilities under the FHA Catalyst platform – a $40 million multi-year technology modernization project. While the initial capabilities launched on the platform were single-family focused, including digital submissions for claims, case binders and property valuations, HUD announced new digital tools for multifamily lenders this week.

The new FHA Catalyst Multifamily Applications Module allows lenders to submit applications for multifamily loans electronically. “This technology will eliminate time-consuming process steps, so that Multifamily lenders and FHA can remain focused on providing safe and affordable rental housing for the nation,” said Assistant Secretary for Housing and Federal Housing Commissioner Dana Wade.

HUD outlined its progress and plans for further technology modernization in its 2021 Annual Performance Plan.
Chart of the Week
Chart of the week: COVID-19 is shifting community and transportation preferences

The National Association of REALTORS® published the findings of its 2020 Community and Transportation Preference Survey. At a time when both community life and transportation have been upended by the pandemic, the survey found that features such as access to public transportation and satisfaction with quality of life have declined. The survey also reported a growing interest in suburban living with more than 50% of respondents indicating they’d prefer a bigger yard and larger home in a less densely populated area.
What we're reading
A new MIT study shines a light on the unequal cost of homeownership for Black households compared to their White cohorts. The study breaks down the “Black tax” on homeownership, finding that Black households pay on average an extra $743 in mortgage interest payments, $550 in mortgage insurance premiums and $390 in property taxes each year, resulting in an added cost of more than $13,000 over the life of the loan.

CalMatters profiled the experience of several tenants who worked with the Oakland Community Land Trust in California to purchase the dilapidated rental property they lived in. The land trust has begun renovations of the property and plans to have tenants “manage the building’s maintenance and live cooperatively,” while also preserving the property’s affordable rents. The project was backed by the city and $500 million+ Bay’s Future Fund.

A recent study conducted by the Federal Reserve Bank of Richmond examines how different policy and safety measures, including social distancing and the availability of testing kits, influence the spread of COVID-19 within localities. The new statistical model introduced in the study and developed based on epidemiological research offers a roadmap for assessing the progression of COVID-19 over time in different states across the country.
The week ahead
Monday, October 19

Tuesday, October 20

Wednesday, October 21

Thursday, October 22

Friday, October 23
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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