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Weekly update from the National Housing Conference
In this issue
June 14, 2020 I Issue 89-22

  • Carson, Calabria testify before Senate Banking Committee
  • House Financial Services subcommittee holds hearing on eviction crisis
  • IRS delays Opportunity Zone deadline
  • Number of renters paying rent on time slightly decreases
  • FHFA extends loan processing flexibilities through July
  • Chart of the Week: Mortgage lenders’ demand expectations fall significantly
Find the information you need at NHC's COVID-19 Housing Resource Center
Racial justice and the GSE capital rule. Yes, they are related.


Dear Friend,

There are few areas of housing policy more complex, arcane and confusing than capital rules. Yet, they can be more impactful than almost any other regulatory action. Requiring too little capital can cause systemic crises, like the Savings and Loan Crisis and the financial crisis that caused the Great Recession. Requiring too much capital can restrict investment, hurt economic growth, and disincentivize efforts to lend and invest in underserved communities.

We don’t want another bailout of the financial industry and if we continue to help our fellow Americans hurt by the COVID-19 pandemic, we won’t have to. We also must act to address the racial injustice that continues to sicken our country. After the “Long Hot Summer” of 1967 and 1968, a government commission studied the underlying causes of the unrest and found the primary causes were “bad policing practices, a flawed justice system, unscrupulous consumer credit practices, poor or inadequate housing, high unemployment, voter suppression, and other culturally embedded forms of racial discrimination,” according to an article in Smithsonian Magazine. Sound familiar? It’s not history yet.

Government programs, like those in the 1968 Housing and Urban Development Act that were advocated for by groups like the National Housing Conference (NHC) and the National Urban League, are part of the solution. Regulatory actions are equally impactful not just because they ensure our financial institutions are safe and sound, but also because they require those institutions to support and create markets that serve all of the people, not just those with generational wealth and who are disproportionately white. You may not feel like a “trust fund baby,” but if you got help with your down payment, or even just advice on buying your first home from your parents, you have benefited from multi-generational wealth. It’s a privilege that all parents would like to pass on, but not everyone can.

Markets that serve everyone and help create a new generation of first time homebuyers are the essence of why getting the capital rule right for Fannie Mae and Freddie Mac is so important – and why the version released by the Federal Housing Finance Agency (FHFA) is so bad. As a first step, NHC is working with a diverse group of housing industry and advocacy groups asking FHFA to extend the comment period from 60 to 120 days. Limiting the time to respond to a highly technical 424 page rule to 60 days in the midst of a pandemic and economic crisis does not indicate much willingness to consider any alternate views, and suggests the rule may be ideologically driven.

News from Washington I By Quinn Mulholland
Carson, Calabria testify before Senate Banking Committee

On Tuesday, the Senate Banking Committee held an oversight hearing for federal housing regulators and featured testimony from Department of Housing and Urban Development (HUD) Secretary Ben Carson and Federal Housing Finance Agency (FHFA) Director Mark Calabria. At the hearing, Calabria said FHFA will announce a decision on whether it will extend its moratorium on foreclosures and evictions for single-family homes, hinting that he supports extending the moratorium. Calabria also said that forbearance requests for loans backed by Fannie Mae and Freddie Mac have started to stabilize, saying, “Within the GSE portfolio, you see as many borrowers canceling their forbearance programs as you see rolling on.” Several members of the committee questioned Carson on whether Deferred Action for Childhood Arrival (DACA) recipients were eligible for Federal Housing Administration (FHA) backed loans, which Carson said they were. Prior to the hearing, however, HUD records were released showing that HUD had been blocking DACA recipients from getting FHA loans, leading a group of Democratic lawmakers including Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) to send a letter to the HUD Inspector General requesting an investigation into whether the agency violated the law in its decision to deny these loans to DACA recipients.

HUD also recently announced that the agency has allocated the remaining $2.96 billion in Emergency Solutions Grants authorized by the CARES Act to support individuals experiencing homelessness and those at risk of becoming homeless.
House Financial Services subcommittee holds hearing on eviction crisis

On Wednesday, the House Financial Services Subcommittee on Housing, Community Development, and Insurance held a hearing on the eviction crisis created by the COVID-19 pandemic, with witnesses from the Louisiana Fair Housing Action Center, Up for Growth, the Center on Budget and Policy Priorities, and the Brookings Institution. “Now is one of the worst times for families to lose their homes to eviction,” Subcommittee Chairman Lacy Clay (D-Mo.) said in his opening statement, adding that “many low-income families were already struggling to pay their housing costs pre-pandemic.” The hearing came as advocates across the country are warning of a spike in evictions as moratoriums end in many states. Several states and cities, including California, Chicago and Detroit, are considering measures to provide relief to tenants facing eviction as a result of the economic impacts of the pandemic, and housing industry leaders, including most recently the National Association of REALTORS®, are urging Congress to pass similar measures at the federal level.
IRS delays Opportunity Zone deadline

On June 4, the Internal Revenue Service (IRS) issued Notice 2020-39, relaxing some regulations around the Opportunity Zones program created by the Tax Cuts and Jobs Act of 2017. The notice, which came after many Opportunity Zones stakeholders requested relief due to the COVID-19 pandemic, extended the deadline for Opportunity Zones investors to roll over their capital gains into an Opportunity Zone fund and begin construction on projects, among other relief measures. In an earlier webcast hosted by Politico, Sen. Tim Scott (R-S.C.), who helped ensure the program was included in the Tax Cuts and Jobs Act, touted Opportunity Zones as a way to promote certain industries as the U.S. recovers from the COVID-19 pandemic.
Number of renters paying rent on time slightly decreases

NHC member the National Multifamily Housing Council (NMHC) released its latest data from its Rent Payment Tracker, which found 80.8 percent of apartment households made a full or partial rent payment by June 6 in its survey of 11.5 million units of professionally managed apartment units across the country. This is a 0.7-percentage point decrease in the share who paid rent through June 6, 2019 and compares to 80.2 percent that had paid by May 6, 2020.

In a news release NMHC President Doug Bibby, stated “These are trying times for the country, and we are reminded on a regular basis how crucial safe and secure housing is during a period of uncertainty and upheaval, so we are glad to see that residents who live in professionally managed properties continue to pay their rent.”

NMHC’s data encompass a wide variety of professionally managed market-rate rental properties across the U.S., which can vary by size, type and average rental price.
FHFA extends loan processing flexibilities through July

FHFA announced on Thursday that the agency is extending through July 31 several loan origination flexibilities currently offered by Fannie Mae and Freddie Mac designed to help borrowers during the COVID-19 pandemic. These flexibilities include alternative appraisals on purchase and rate term refinance loans, alternative methods for verifying employment before loan closing, expanding the use of power of attorney and remote online notarizations to assist with loan closings, and authority to purchase mortgages in forbearance.

FHFA also recently issued its quarterly Prepayment Monitoring Reports with data through the first quarter of 2020, detailing how Fannie Mae and Freddie Mac’s Unified Mortgage Backed Securities (UMBS) contribute to the efficiency and liquidity of the secondary mortgage market. As part of the release, FHFA directed the Fannie Mae and Freddie Mac to further align their practices for evaluating seller and servicer prepayment related activities.
Chart of the Week
Mortgage lenders’ demand expectations fall significantly

According to Fannie Mae's latest  Mortgage Lender Sentiment Survey®, mortgage lenders’ expectations of consumer demand for purchase mortgages fell significantly in the second quarter of 2020, to their lowest levels since 2018. Overall, however, a plurality of lenders remained confident that purchase demand would rise, and expectations for refinance demand remained high as well.
What we're reading
In an article published Monday, Politico examined the threat posed to the U.S. mortgage market by climate change. Federally-backed mortgages in areas that are likely to experience more frequent and severe natural disasters due to climate change, according to the article, may lead to a hefty bill for taxpayers. Read the article here.

In an op-ed for USA Today, presumptive Democratic presidential nominee Joe Biden called for addressing systemic racism in response to the recent police killings of Breonna Taylor and George Floyd and the ensuing protests. One aspect of this systemic racism, Biden wrote, is racial injustice in the housing system, which has resulted in a larger gap between black and white homeownership now than in the 1960s. Read the op-ed here.

Business Insider recently interviewed Brookings Institution fellow Andre Perry on the devaluation of black homes across the country. In Minneapolis, for example, where protests erupted after the police killing of George Floyd, a black owner-occupied home was worth $33,000 less than a white one, according to Perry’s research. Read the full interview here.

The Appeal recently published an in-depth article on the use of eviction by many cities in West Virginia to respond to the opioid epidemic. The article highlighted the story of a couple in Martinsburg who were evicted from their home by the police after one of them experienced a drug overdose, leading to a downward spiral of economic hardship. Read the article here.

In a recent article, The Wall Street Journal highlighted the grim toll of the COVID-19 pandemic on large, crowded households in rural America. The virus’s disproportionate impact on these households counters the narrative that the most dense cities are most vulnerable to the pandemic, and instead points to household size and crowded conditions at home as risk factors. Read the article here.
The week ahead
Monday, June 15

Tuesday, June 16

Wednesday, June 17

Thursday, June 18

Friday, June 19
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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