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Weekly update from the National Housing Conference
News from Washington | By Luke Villalobos
NHC endorses OCC's rescission of 2020 CRA rule

NHC submitted its response to the Office of the Comptroller of the Currency’s (OCC) proposed rescission of the controversial 2020 Community Reinvestment Act (CRA) regulation on Thursday. NHC endorsed OCC’s decision to reverse the 2020 rule, which would have departed from the traditional regulatory framework that was unified across the three CRA regulators and, NHC and other advocates argued, severely harm credit access for marginalized communities.

NHC’s comment letter outlined the four requirements it has maintained a modernized CRA regulation must adhere to. These are increasing investment to underserved communities; benefitting more low- and moderate-income people, especially people of color, living in those communities; ensuring that banks’ CRA investment does not fuel displacement; and making the evaluation process more transparent and predictable.

NHC also emphasized the centrality of CRA in the push to increase racial equity in housing, with NHC President and CEO David Dworkin arguing in a statement that regulators should work to enforce the law more in spirit with its intent when it was passed in 1977. “CRA was passed in direct, explicit response to redlining, a practice that targeted people of color regardless of income or credit risk to deny them the same wealth-building opportunities afforded to White Americans,” he said. “NHC has always maintained that in order to be faithful to that original purpose, a modernized CRA regulation must incent financial institutions to lend not only in low- and moderate-income communities, but in communities of color specifically.”
FHFA issues NPR on Enterprise Regulatory Capital Framework

On Wednesday, the Federal Housing Finance Agency (FHFA)  announced a notice of proposed rulemaking to introduce new disclosure requirements for the Enterprise Regulatory Capital Framework (ERCF). The ERCF was enacted in response to the 2008 Housing and Economic Recovery Act mandating that the Enterprises establish risk-based capital requirements.

FHFA is seeking public comment on the current proposal. If enacted, the rule would require additional standardized public disclosure from Fannie Mae and Freddie Mac, the Enterprises, every quarter. The disclosures would include information on regulatory capital instruments, risk-weighted assets calculated under the ERCF’s standardized approach, and risk management policies and procedures.

The notice states, “By allowing market participants to assess key information about an Enterprise’s risk profile and its associated levels of capital, FHFA believes the proposed rule would encourage sound risk management practices and foster financial stability both during and after conservatorship.” FHFA Acting Director Sandra Thompson cites transparency from the Enterprises as another driver for the proposal.
New York set to expand CRA to non-banks

New York's legislature is currently considering a bill that would expand Community Reinvestment Act (CRA) requirements to non-bank lenders. The bill now with Governor Kathy Hochul has ten days to be approved and is likely to be enacted. Non-bank lenders do not accept deposits and take up a substantial part of the mortgage market.

The new law would require these lenders to reinvest back in the communities where they exist, just as is required of normal banks under CRA. The mortgage industry has expressed opposition to the law, arguing that because non-bank lenders do not accept deposits, they cannot reinvest in the community. The Mortgage Bankers Association gave a statement explaining their opposition. “Instead, the independent mortgage banks business model takes funds gathered from global capital markets and reinvests them in local New York communities, with a focus on LMI and minority households,” the statement said. 

Both Massachusetts and Illinois already have similar laws in place. 
Housing organizations respond to FHFA racial equity RFI

On Monday, the housing industry collectively submitted responses to the FHFA’s request for input (RFI) on their proposed Equitable Housing Finance PlansNational Housing Conference joined 45 other organizations in responding to the RFI. Responses outlined various strategies for the Enterprises to help close the racial homeownership gap.

Popular topics within the comment letters submitted were reforming loan-level price adjustments, utilizing new technology for credit analysis, encouraging pilot programs, data sharing, homeownership counseling, mortgage servicing, and down payment assistance. The Enterprises must submit their plans to FHFA by December 31, 2021, and the plans will go into effect on January 1, 2022. 
NHC welcomes new members!

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HUD announces disaster relief for Mississippi and Delaware

HUD announced disaster relief measures this week for residents of southern Mississippi and northern Delaware who were affected by Hurricane Ida last month. The measures follow President Biden’s declaration of federal disasters in both states due to floods and wind damage caused by the hurricane.

HUD’s relief provides foreclosure relief to residents of federally-backed properties, as well as mortgage and home rehabilitation insurance available to all impacted residents. It also provides flexibility to local agencies whose administrative capacity was negatively affected by the hurricane.
Biden nominates Blatchford for OMB post

President Biden nominated NHC board member Laurel Blatchford to be the Office of Management and Budget’s (OMB) controller of the Office of Federal Financial Management.

Blatchford is currently managing director at Blue Meridian Partners, a nonprofit focused on improving upward mobility among children and families. She has also held posts at Enterprise Community Partners, HUD, and in New York City’s Michael Bloomberg administration.
Chart of the week
Chart of the week: Poll finds that reconciliation package's housing provisions enjoy widespread support

A September poll by the Bipartisan Policy Council and Morning Consult found widespread support for the housing provisions included in proposed Reconciliation packages, with almost every provision above water among both Democrats and Republicans. Republican support wavered only for proposals to add additional housing vouchers and incentivize inclusive zoning by localities.
What we're reading
report from JP Morgan Chase Institute offers insight into how landlord’s fared during the COVID-19 pandemic. The analysis shows that cash balances of landlords grew during the pandemic, likely for two reasons. First, although landlords lost rental revenues during the pandemic, they also cut their expenses by more, resulting in higher balances. Second, direct cash support to families from the federal government likely allowed tenants to keep up with their rent payments to a greater degree than they would have otherwise been able to.

working paper from the National Bureau of Economic Research argues that the extent to which credit shocks determine home prices depends on how easy it is to convert rental units to owner-occupied ones. When conversions are easy, landlords respond to decreased mortgage rates by selling rental housing to owner-occupants, increasing the homeownership rate while keeping prices stable. However, when converting rental units is difficult, most often because rental housing is scarce, decreasing mortgage rates lead to housing bubbles as homeowners bid up the price of a limited stock of owner-occupied housing. The authors find that credit availability explains 35-54% of home price increases during the 1997-2006 housing boom, suggesting a high level of difficulty in executing rent-to-own conversions.

The Asbury Park Press covers the consequences of source-of-income discrimination in New Jersey, which is widespread and often free of consequences despite being illegal under state law. “Voucher holders and housing advocates complain that the state is a paper tiger in enforcement of income discrimination, largely waiting for victims unaware of their rights to bring complaints to investigators,” the author writes. “Further, the plodding complaint process often offers no immediate relief for tenants facing discrimination — in a market where available rentals are snatched up within days.”
The week ahead
Monday, November 1
Tuesday, November 2
MBA: MAA quarterly webinar, 3 – 4 p.m. ET
Wednesday, November 3
NAHRO: Ethics for management, 1:30 – 4 p.m. ET
Thursday, November 4
Friday, November 5
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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