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Weekly update from the National Housing Conference
News from Washington | By Luke Villalobos
Fannie and Freddie to back mortgages of up to nearly $1 million

On Tuesday, the Federal Housing Finance Agency (FHFA) announced that the Enterprises’ 2022 Conforming Loan Limits would rise to nearly $1 million. The limits restrict Fannie Mae's and Freddie Mac's purchase of expensive mortgage loans, though FHFA allows for some flexibility in high-cost areas where properties routinely value over $1 million.

Acting FHFA Director Sandra Thompson said that the increase was driven by rapid increases in home prices in the United States due to low levels of supply. “The 2022 Conforming Loan Limits represent a significant increase due to the historic house price appreciation over the last year,” she said. “While 95 percent of U.S. counties will be subject to the new baseline limit of $647,200, approximately 100 counties will have conforming loan limits approaching $1 million. FHFA is actively evaluating the relationship between house price growth and conforming loan limits, particularly as they relate to creating affordable and sustainable homeownership opportunities across all communities." FHFA's House Price Index, updated in conjunction with Tuesday’s announcement, showed home prices rising 18.5%, the largest increase since the metric was introduced.
Buchanan and Kind introduce bill to make mortgage insurance premium deduction permanent

Reps. Vern Buchanan (R-Fla.) and Ron Kind (D-Wisc.) introduced a bill to make the mortgage insurance premium deduction permanent on Thursday. In addition to permanently adding the credit to the tax code, the bill would expand eligibility for the credit from households making less than $100,000 to those making less than $200,000.

Congress first enacted the credit on a temporary basis in 2006 and has renewed it every few years thereafter. However, housing finance stakeholders including NHC have long advocated making the deduction permanent, arguing that the credit helps make homeownership more affordable by lowering closing costs. U.S. Mortgage Insurers president Lindsey Johnson endorsed the bill, saying,“affordability remains a persistent barrier to homeownership across the country, particularly for first-time homebuyers. [The mortgage insurance premium deduction] helps to sustainably bridge the down payment gap by helping families secure financing when they are unable to put 20 percent down.”
Biden nominates Powell for Fed Chair, Brainard for Vice Chair

President Biden announced last Wednesday that he would nominate Jerome Powell for another term as Chair of the Federal Reserve Board of Governors, and that he would nominate Lael Brainard to be Vice Chair. Powell, a Donald Trump appointee who enjoys support among both Republicans and Democrats, was widely considered a favorite to keep the job, though in recent weeks some progressives agitated for his replacement by the more liberal Brainard. Instead, Brainard, who has served on the Board since 2014, will replace Vice Chair Richard Clarida, whose term expires in January.

Biden’s announcement noted that he expects to fill the Board’s three other vacancies – left by Clarida, outgoing Vice Chair for Supervision Randal Quarles, and Treasury Secretary Janet Yellen – early this month. Biden did not express any ideological preferences for the new Board members, but he did say that he is “committed to improving the diversity in the Board’s composition.”
HUD announces grants

Last week, HUD announced $20 million in inaugural grants through its Eviction Protection Grant Program, which supports legal service providers who assist low-income tenants at risk of eviction. HUD also announced $3.6 million in grants for comprehensive neighborhood revitalization plans for severely distressed HUD-assisted housing in Annapolis, Maryland; Augusta, Georgia; Brownsville, Texas; Jackson, Michigan; Las Vegas, Nevada; Los Angeles, California; McKees Rocks, Pennsylvania and Richmond, Virginia.

On Monday, HUD announced an award of $10 million for the Self-Help Homeownership Opportunity Program to support Habitat for Humanity, the Housing Assistance Council, and Community Frameworks’ work to create homeownership opportunities for low-income communities. On Wednesday, HUD awarded $41 million in Housing Opportunities for Persons with AIDS (HOPWA) grants to 20 local governments and nonprofits. And on Thursday, HUD announced an additional $5.7 million of American Rescue Plan grants available to its Fair Housing Initiatives Program to fight housing discrimination related to the COVID-19 pandemic. 
Treasury releases October ERA data

The Treasury Department released new data on the Emergency Rental Assistance (ERA) program on Monday. In October, assistance was provided to more than 521,000 renters and landlords, bringing the total number to more than 2.5 million payments and $2.8 billion in funds paid through ERA programs.

Treasury said that the new data indicates that approximately $25 to $30 billion of the combined ERA1 and ERA2 funds will be spent or obligated by the end of the year, crediting new flexibilities adopted in recent months with helping to disburse the funds quicker. Some states, including New York, Oregon and Texas, have already obligated their total allocation or anticipate doing so based on pending applications. 
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Affordable Housing Resources is a Nashville-based NeighborWorks® affiliate dedicated to building partnerships with families, community leaders and others who care about and invest in Middle Tennessee.

FHA announces 2022 Title II and HECM loan limits

The Federal Housing Administration (FHA) announced Wednesday new single-family loan limits for its Title II Forward and Home Equity Conversion Mortgage (HECM) programs, which set the maximum value of FHA-eligible mortgages in each county. The limits increased significantly this year, reflecting significant home price appreciation as the country struggles to build enough housing to meet demand.

2022 single-family loan limits for the Title II Forward mortgage program range from $420,680 in low-cost areas to $970,800 in high-cost ones. The loan limit for the HECM program, which does not vary across the country, was set at $970,800. Both limits will come into effect for FHA mortgages assigned case numbers on or after January 1 of next year.
Fed and OCC update HPML exemption threshold

The Federal Reserve Board of Governors and Office of the Comptroller of the Currency (OCC) announced Wednesday that they would raise the maximum value of higher-priced mortgage loans (HPMLs) exempt from appraisal requirements under the Dodd-Frank Act from $27,200 to $28,500.

Under Dodd-Frank, mortgages categorized as HPMLs (mostly those with interest rates higher than the prevailing rate) are subject to additional appraisal requirements on top of what is required for standard mortgages. However, Dodd-Frank exempted HPMLs on properties worth less than $25,000 from these requirements. Wednesday’s announcement updates the threshold at which HPMLs are exempt from the requirements to reflect inflation.
Chart of the week
Chart of the week: Racist housing discrimination remains widespread

A paper from the National Bureau of Economic Research finds that anti-Black and anti-Hispanic housing discrimination remains widespread. The study, which submitted applications to view rental units under stereotypically White, Black and Hispanic names, found that White-coded applicants received responses 60% of the time, compared with 57.2% for Hispanic-coded applicants and 54.4% for Black-coded ones. Response rate differentials were highly variable across the country; in some cities, response rates for Black- and Hispanic-coded applicants were up to 36% lower than they were for applicants with stereotypically White names. The study also investigated who ended up leasing properties whose managers failed to respond to Black- and Hispanic-coded applicants, finding that non-response corresponded with a 40.2% decrease in the likelihood that a family of color would lease the unit.
What we're reading
ProPublica investigates Reno, Nevada’s enabling of a wealthy investor to buy up and demolish housing to make room for a new entertainment district, displacing hundreds of low-income residents in the process. That displacement combined with Reno’s extreme housing shortage to push many of those residents into homelessness, even while the new owner continues to benefit from municipal tax breaks and other favors.
Vox op-ed argues that though rent control doesn’t address supply issues that push up housing prices, the benefits it confers onto tenants, especially low-income ones, make it worthwhile anyway. “Without rent control, the losers [of a tight housing market] are people with less money,” it argues. “Rent control gives policymakers a chance to redistribute the pains of scarcity in the near term. Even research that concludes rent control is on net harmful to tenants in the long term concedes that it reduces displacement for current tenants.”

blog post from Housing Perspectives complicates the narrative that more people moved during the COVID-19 pandemic, using American Community Survey data to show that moves were concentrated among young people and most often temporary. The post argues that while many people seem to have moved to take advantage of the flexibility of remote work or to flee high-transmission areas, the “'stickiness' of pre-pandemic trends [...] demonstrates that mobility is a multifaceted behavior that responds to a host of different factors—of which a world-upending pandemic is only one.”

report from Fannie Mae on the impact of closing costs for low-income and first-time homebuyers shows that closing costs represent a major barrier preventing disadvantaged families from accessing homeownership. The report finds that “as a share of sale price, closing costs [...] are more burdensome for first-time homebuyers and low-income first-time homebuyers, even though in dollar terms the median closing costs net of credits are lower for these two groups than for all buyers,” meaning that they represent a major regressive force in the housing market.
The week ahead
Monday, December 6
NLIHC: Tenant talk live, 6 – 7 p.m. ET
Tuesday, December 7
Wednesday, December 8
ULI: ULI OnPoint, noon – 3 p.m. ET
NCRC: Legislative/regulatory call, 1:30 – 2:30 p.m. ET
Thursday, December 9
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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