Weekly update from the National Housing Conference
February 13, 2019
President's Message I By David M. Dworkin
Dear Friend,

This week, NHC has contacted Joseph Otting, acting director of the Federal Housing Finance Agency and the Treasury Department’s Counselor Craig Phillips to urge them to support this year’s allocation of funds for the Capital Magnet Fund (CMF) and national Housing Trust Fund (HTF). As you know better than most, the United States is facing a growing affordable housing shortage of historic proportion. The CMF and HTF are effective tools in creating affordable housing supply and are funded by a de minimis fee on new business, currently 4.2 basis points and not through federal appropriations. These programs have broad bipartisan support and failure to continue to fund them is likely to result in an even greater need for government spending to address the shortage of affordable housing in the future.

Fannie Mae and Freddie Mac have been accruing CMF and HTF dollars on a quarterly basis during 2018 and any suspension of the distribution will result in the dollars being “swept” by the U.S. Department of the Treasury, where it will never be spent for housing – or anything other than making a miniscule interest payment on the deficit. The GSEs were profitable in FY 2018 and leaving the CMF and HTF dollars to be allocated as intended by Congress will have no impact on their financial condition. Furthermore, the fees imposed on the GSEs are designed to ensure that they make a contribution to segments of the market that are underserved since they often struggle to reach these communities through their normal business. 

The CMF was created in the Housing and Economic Recovery Act of 2008 and is funded through a small annual assessment on new business purchases by Fannie Mae and Freddie Mac. It’s a competitive program administered by the U.S. Department of the Treasury open to community development financial institutions and nonprofit housing organizations to develop, preserve, rehabilitate, or purchase affordable housing, as well as related economic development activities such as day care centers, community health clinics and workforce development centers. CMF recipients are required to attract at least $10 of outside capital for each dollar awarded, although in practice they have attracted in excess of $27 for every dollar awarded. 

The CMF provides funding that nonprofit developers and lenders often cannot find elsewhere—funding to do pre-development work, create revolving loan funds, establish loan loss reserves, and provide loan guarantees—all critical pieces of affordable housing and community development. In all, three rounds of funding have gone out for a total of $291 million, which has or will help to attract over $8 billion in other capital into these projects. CMF awards are supporting the creation of over 41,000 rental units and over 6,000 single- family homes in 47 states, the District of Columbia and Puerto Rico. Projects supported by the CMF in the 2010 and 2016 rounds have created nearly 33,000 jobs. In every award round, more than 20 percent of recipients are investing the majority of their funds in rural areas.

In the first three years of the HTF, $659.8 million has been allocated to states. Because the HTF is administered as a block grant, each state has the flexibility to decide how to best use HTF resources to address its most pressing housing needs. Most states have chosen to use their HTF investment to build and preserve affordable rental housing for extremely low income veterans, seniors, people with disabilities or special needs, and people experiencing homelessness. 

If you would like to sign onto a formal letter on behalf of these funds, please contact me asap at [email protected].

I also want to take a moment to remember one of the great American leaders of the 20 th  century, former House Energy and Commerce Committee Chairman John D. Dingell, Jr., who passed away last week. NHC shares our sincere condolences with Rep. Debbie Dingell (D-Mich.) and the entire Dingell family. "Mr. D," as many of us knew him, was the last of the Old Bulls of the House, who led the Energy and Commerce Committee for a generation. Wise and witty in private, he was a force to be reckoned with anytime he had a gavel in his hand. His leadership style was brutally effective. Under his leadership, Congress created landmark legislation on nearly every major domestic policy issue including the passage of Medicaid, Medicare, the Endangered Species Act and the Clean Air Act. As the Chairman used to say, “if it moves, it’s energy, if it doesn’t, it’s commerce.” 

Perhaps none in Congress knew him as well as his Republican counterpart, Rep. Fred Upton (R-Mich.), who also served as Chairman and Ranking Minority Member of the Energy and Commerce Committee. “John was enormous in stature, integrity, and accomplishments. When he put his hand on your shoulder and spoke, you listened. With John you always knew where you stood. If you disagreed, you better have a damn good reason why. Simply reverting to rhetoric or the party line would not fly because he knew the issues ‘inside and out’ and always did his homework. John would outthink, outwork and outfox nearly everyone.”

His memory will be a blessing to all who knew and loved him, but his legacy will continue to impact the lives of millions more he never met but faithfully served.

David M. Dworkin
President and CEO
National Housing Conference
News from Washington I By Tristan Bréaux
National Association of REALTORS® release vision for GSE reform

Last week, on the heels of Senate Banking Chairman Mike Crapo’s newly released plan to reform the housing finance system, the National Association of REALTORS® unveiled its proposal to overhaul Fannie Mae and Freddie Mac at a NAR conference on housing finance policy. Under the proposal, the two GSEs would become federally-chartered, private utilities with an enhanced regulatory structure to ensure they adhere to their original mission. As NAR President John Smaby remarked, "ultimately, ensuring the GSEs continue providing liquidity and stability in the mortgage market remains NAR's priority during these discussions.” The conference also featured several other stakeholders, including bank industry leaders and elected officials, who spoke about the need for GSE reform.
Ellie Mae announces it will be acquired by Thoma Bravo

Ellie Mae announced yesterday that it has entered into an agreement to be acquired by the private equity investment firm Thoma Bravo for $3.7 billion. The agreement is subject to approval by Ellie Mae’s stockholders and regulators, and is expected to close in the second or third quarter of this year. “With the investment and support from Thoma Bravo, we will remain committed to our customers’ success, innovation and growth of the Encompass Digital Lending Platform while maintaining our position as a best place to work,” Ellie Mae President and CEO Jonathan Corr said.
Puerto Rico housing nonprofits receive assistance from new network

Last month, Enterprise Community Partners, NeighborWorks® America and the Puerto Rico Community Foundation launched a new network to help housing nonprofits in Puerto Rico with raining, networking and funding. According to Enterprise President Laurel Blatchford, the new network “will provide training and expertise that can significantly increase nonprofits’ ability to advance affordable housing and other avenues to opportunity for Puerto Ricans.” Puerto Rico is still recovering from the devastating effects of Hurricane Maria, which decimated the island’s homes. Last week, HUD Secretary Ben Carson met with Puerto Rico Governor Ricardo Rosselló to discuss rebuilding efforts.
Senator Cortez Masto introduces bill to strengthen mortgage data reporting requirements

Senator Catherine Cortez Masto (D-Nev.) introduced a bill last week that would require banks and mortgage lenders to make lending data public. The bill would restore a Dodd-Frank rule that was repealed last year by congressional Republicans, which required banks and lenders that issued more than 25 mortgage loans per year to release data about the loans to the Consumer Financial Protection Bureau. This rule was aimed at preventing practices that disproportionately harm homebuyers of color, like redlining and steering. As Sen. Cortez Masto told CityLab, “There was a reason for the rule—because [discrimination] was happening. Why aren’t we ensuring that we’re guarding against it and putting those data criteria in place, so we can have the accurate information to ensure against any type of discrimination or redlining?”
USDA launches rural broadband connectivity resource guide amid leadership changes

The U.S. Department of Agriculture (USDA) announced a new toolkit last week to help support the expansion of high-speed broadband in rural communities. The toolkit features 27 USDA programs that support broadband deployment. In a recent New York Times op-ed, University of Virginia Assistant Professor Christopher Ali called for a national rural broadband policy that would designate USDA Office of Rural Development’s Rural Utilities Service as the primary coordinator for rural broadband. USDA Rural Development has undergone some leadership changes recently, with former Assistant to the Secretary for Rural Development Anne Hazlett leaving USDA to join the White House Office of National Drug Control Policy as a senior adviser for rural affairs. Hazlett will be replaced by Acting Assistant to the Secretary for Rural Development Joel Baxley until Secretary of Agriculture Sonny Perdue nominates a new candidate for the role.
New ULI report on the impact of climate change on real estate

A new report from the Urban Land Institute (ULI) and Heitman LLC warns that climate change poses enormous risks for the real estate industry, including increased environmental catastrophes and regulatory changes. In fact, our perpetual struggle to deal with the National Flood Insurance Program would be moot, but for the dramatic increase in climate-related natural disasters over the past 10 years. Climate change is no longer a debate about cause, it is an imperative to deal with effect. As the ULI report makes clear, more than 24 percent of the National Council of Real Estate Investment Fiduciaries Property Index value in the United States is in metropolitan areas whose central cities are among the 10 percent of cities that are most exposed to sea-level rise, which the report estimates are valued at more than $130 billion. A 2015 study published by the Royal Institution of Chartered Surveyors modeled the potential for increased costs of running a building in eight European Union countries if commercial buildings there are not retrofitted to address climate risks. The potential cost by 2050 – nearly $600 billion. This is why one of the five subject areas of NHC’s initiative to create a national housing policy for the 21st century will include Disaster Relief.

If you are interested in becoming involved in this subject area, please contact Nathan Park to become a part of the Disaster Relief Working Group.
BB&T buys SunTrust in the biggest bank merger in a decade

BB&T and SunTrust announced they were merging last week, forming a new bank that would be the sixth-largest in the country. As Compass Point Policy Research Director Isaac Boltansky told the New York Times, regulators’ reaction to the merger “will be a meaningful gauge of regulatory comfort with bank mergers.” In a statement on the merger, House Financial Services Chairwoman Maxine Waters criticized the deal, saying it “deserves serious scrutiny” and blamed congressional Republicans’ deregulation of the banking industry last year.
Representatives Cleaver and Duffy re-introduce bill to establish voucher demonstration program

Representatives Emanuel Cleaver ( D-Mo.) and Sean Duffy (R-Wis.) re-introduced the Housing Choice Voucher Mobility Demonstration Act of 2019 on Friday. The bill, which was first introduced last congressional session, would authorize HUD to create a demonstration program to allow families receiving Section 8 Housing Choice Vouchers to move to lower-poverty areas. As Rep. Cleaver said, “By allowing families to relocate to low-poverty areas with better job prospects, we can help end the cycle of poverty that has ensnared far too many American families for too long.” In the 115 th Congress, the bill was passed in the House but was not put to a vote in the Senate.
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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