Weekly update from the National Housing Conference
News from Washington | By Luke Villalobos
FHFA to review Federal Home Loan Banks

Last week, FHFA announced a comprehensive review of the Federal Home Loan Bank System (FHLBank). The review begins this fall and will include two public listening sessions and a series of roundtable discussions evaluating the banks' mission, eligibility requirements, and operational efficiencies.
"FHFA plays a vital role in supporting affordable, equitable, and sustainable access to mortgage credit," said FHFA Director Sandra Thompson. "FHFA's regulated entities function as a reliable source of liquidity and funding for housing finance and community investment. As the Federal Home Loan Banks approach their centennial, FHFA will conduct a comprehensive review to ensure they remain positioned to meet the needs of today and tomorrow." 
The announcement listed six specific areas of interest for FHFA: the FHLBanks' general mission and purpose in a changing marketplace; FHLBank organization, operational efficiency, and effectiveness; FHLBanks' role in promoting affordable, sustainable, equitable, and resilient housing and community investment; addressing the unique needs of rural and financially vulnerable communities; member products, services, and collateral requirements; and membership eligibility and requirements.
FHFA will hold the first listening session, "FHLBank System at 100: Focusing on the Future," on Sep. 29 from 12:30 to 4:00 p.m. The agency is also accepting written comments until Oct. 21 through its website.
The Mortgage Bankers Association applauded the decision to review the banks. "We have long supported the responsible expansion of FHLB membership eligibility to better reflect the diverse providers of single-family and multifamily housing finance throughout the country," said MBA President and CEO Bob Broeksmit. He further noted, "there's a need for an FHLB system that better reflects today's housing finance market — not one from the 1930s."
Critics have accused FHLBanks of mission drift, saying its current activities span beyond its original purpose to support mortgage lending. Some have called for expanding membership to nonbanks, like real-estate investment trusts, that play a crucial role in housing finance. Others have criticized the notion that the Federal Home Loan Bank system is archaic. "That is a shortsighted view that would be akin to removing your furnace in the summer," said Julieann Thurlow, vice chair of the American Bankers Association. "Trust me, no matter how hot it might get in Boston in July, you're going to need that furnace come December."
NHC will be consulting closely with its membership as it develops comments on the review.

Underserved Mortgage Markets Coalition releases GSE scorecard

The Underserved Mortgage Market Coalition (UMMC) released its scorecard outlining improvements to the Enterprises' latest Duty to Serve plans. The UMMC is a coalition of 21 national housing groups working to hold GSEs accountable to their Duty to Serve obligations in manufactured housing, affordable housing preservation, and rural housing. 
The new scorecard analyzes the GSE's 2022-2024 Duty to Serve plans. The analysis recognizes significant improvements in the updated plans compared with the proposed versions released last year. FHFA rejected the draft plans. The scorecard also acknowledges that Fannie Mae and Freddie Mac failed to implement most of the UMMC recommended improvements in its Blueprint for Impactful Duty to Serve Plans, released earlier this year.
Among some of the industry's most vocal critiques is that neither entity increased its commitment to helping manufactured housing homeowners obtain real property loans. Fannie Mae additionally did not invest in a chattel loan pilot program after much investment and research in the program. Fannie Mae is increasing loan purchases for borrowers of shared equity homes. Both entities committed to researching flexible loan products for low- and moderate-income borrowers in high-needs rural regions, though it's unclear what the specific products will be.  
Ultimately, the UMMC scored Fannie Mae at ten and Freddie Mac at 13, with the highest possible score being 21.
HUD publishes Fair Market Rents

HUD published its fiscal year 2023 Fair Market Rents (FMRs) on Thursday, showing an average national increase of 10.4 percent. FMRs estimate the money needed for renters to cover rent and utility costs in their cities. In addition, they are used to determine the maximum amounts covered for Housing Choice Vouchers.
Some markets saw significant increases. For example, Phoenix's FMRs rose 33 percent, Tampa's went up 23 percent, Atlanta's FMRs increased 20 percent, and Miami's went up by 15 percent. The update to FMR comes during ongoing conversations about record-breaking rent increases across the nation. In a fact sheet released alongside the new FMRs, HUD notes that higher FMRs will help to enable voucher holders to keep up with rent increases in the private market.
HUD also noted that due to data limitations caused by the COVID-19 pandemic, the department could not use the Census Bureau's 1-year American Community Survey as it had in previous years. Instead, HUD used private data sources from RealPage, Moody's Analytics, CoStar Group, CoreLogic, ApartmentList, and Zillow.
The new FMRs go into effect on Oct. 1. 

FHFA announces new Federal Advisory Committee

FHFA announced an intent to establish a new Federal Advisory Committee on Affordable, Equitable, and Sustainable Housing (Committee). According to the announcement, the committee's goal is to provide advice and input on affordable, equitable, and sustainable housing needs and identify barriers to access and long-term sustainability. The agency seeks members from diverse backgrounds, including fair housing and civil rights leaders, single-family and multifamily lending and development groups, tenant advocates, academics, and others. FHFA will solicit applications in a subsequent Federal Register notice.
"Today's announcement exemplifies our commitment to transparency, ongoing dialogue with stakeholders and the public, and thoughtful policymaking that connects equitable access with safety and soundness," said FHFA Director Sandra Thompson.

FHA increases surplus cash distributions for borrowers

FHFA announced Wednesday it would increase the frequency of allowed distributions of surplus cash for FHA-insured multifamily mortgages. The current rule allows for two times per accounting year, and the increase will allow monthly distributions for eligible borrowers to free up capital for future multifamily development.
"This much-needed change better aligns FHA-insured mortgage financing with other capital sources, helping to maintain FHA's products as competitive offerings to finance the rental housing that so many communities need," said Deputy Assistant Secretary for Multifamily Housing Programs Ethan Handelman. 

HUD invests in HBCUs, healthy homes

On Tuesday, HUD announced two new investment initiatives. First, the department is making $5.5 million available for historically Black colleges and universities (HBCUs) to establish or fund existing Centers of Excellence that research housing and community development. The grants will provide HBCUs with the capital needed to research the needs of housing, community, and economic development in underserved communities. Applications for the funding are due by midnight on Dec. 22.
HUD also announced $40 million to protect families from home health safety hazards through the Healthy Homes Production Grant Program. The funding will help fix older housing, preserve affordable housing, and improve community health. The program builds on HUD's efforts to find and eliminate health and safety hazards, especially for older adults and persons living with disabilities, conduct educational outreach, and develop a workforce trained in assessing healthy homes. Applications for this grant are due by Oct. 18.
OCC releases Strategic Plan

On Tuesday, the Office of the Comptroller of the Currency (OCC) released its Strategic Plan for FY 2023-2027. The plan outlines three primary strategic goals to fulfill its vision: agility and learning, credibility and trust, and leadership. Specifically, the OCC seeks to learn and adapt effectively, be considered highly credible and consistently trusted, and lead on supervision as the banking system evolves. These goals will help the OCC fulfill its overarching mission of ensuring banks operate safely, sound, and equitably and complies with laws and regulations. 
"To achieve these goals, we need to invest in our people and enrich the agency's culture through increasing diversity and widening our perspective, attracting new skills and expertise, and expanding our networks. We must also modernize and invest in our operations, technology platforms, processes, and support systems to achieve our strategic goals," the plan states.

Reps. Williams and Timmons introduce bill to expand broadband access

On Thursday, U.S. Rep. Nikema Williams (D-GA) and U.S. Rep. William Timmons (R-SC) introduced a bipartisan bill titled Home Internet Accessibility Act. The bill seeks to gather information on federally assisted housing properties that cannot support broadband service and tasks HUD with producing a plan to retrofit those properties for service and close broadband gaps across the country. NHC joined a wide range of housing organizations in endorsing the bill.
"Over the last few years, we've seen how vital high-speed broadband is for our daily lives. But too many coverage gaps exist, hurting marginalized communities. I recently hosted a broadband roundtable and my constituents were loud and clear: it’s too tough simply getting their homes connected. Congress must close the digital divide but first we must know where connectivity gaps exist,” Williams said. “The Home Internet Accessibility Act is an important step to ensure every home is connected to broadband and everyone can unlock the opportunity at our fingertips—no matter your ZIP Code, no matter your bank account.”   
U.S. Reps. Nydia Velázquez (D-NY), Madeleine Dean (D-PA), Stephen Lynch (D-MA), and Al Green (D-TX) cosponsored the bill.

Lumber tariffs reduced by half

In early August, the Department of Commerce issued a third administrative review to reduce duties on Canadian softwood lumber by more than half, cutting the duties from 17.99 percent to 8.59 percent. The new lumber tariff took effect in late August. Canada has since requested a dispute settlement in reaction to the reduced tariffs, citing obligation through the U.S.-Mexico-Canada Agreement.
Lumber costs are a long-term issue for homebuilders and affordable housing developers as both rising costs, and supply chain issues create more uncertainty and slow housing production. In addition, many housing advocates are concerned about lumber costs as the affordable housing gap widens.
U.S. Sens. John Thune (R-SD) and Bob Menendez (D-NJ) sent a letter in July urging U.S. Department of Commerce Secretary Gina Raimondo and U.S. Trade Representative Katherine Tai to prioritize lumber tariff relief and to begin negotiations with Canada regarding a softwood lumber agreement. NHC has been calling for a softwood lumber agreement for over a year, as tariffs rise and fall without a negotiated agreement.
“The sharp increase in softwood lumber prices, on top of high inflation and supply chain challenges, has only further added to residential construction costs,” the letter stated. “Addressing lumber trade inefficiencies would help reduce unnecessary financial pressures on the U.S. housing market, and we urge the U.S. trade representative to prioritize a new softwood lumber agreement between America and Canada.”
Bill to increase PBV cap introduced

U.S. Rep. Jimmy Panetta (D-CA) introduced legislation, the Housing Access Improvement Act, that would increase the statutory cap of Project Based Vouchers (PBVs) from 20 percent to 50 percent. The increase would allow housing agencies to make housing vouchers redeemable at more locations, potentially helping increase affordable housing production by providing a stable income source for completed developments.
“Ensuring that families do not have to sit on waitlists for an exorbitant amount of time is critical to securing housing for vulnerable populations locally and nationwide,” said Linda Mandolini, President of Eden Housing, who endorsed the bill. “We too often see families being turned away from affordable housing because of discrimination and a lack of availability. This piece of legislation would provide an ongoing and permanent source of affordable housing for those in-need and push forward the construction of housing projects.”
U.S. Reps. Salud Carbajal (D-CA), Judy Chu (D-CA), Barbara Lee (D-CA), Zoe Lofgren (D-CA), Anna G. Eshoo (D-CA), Ted W. Lieu (D-CA), and Eric Swalwell (D-CA) cosponsored the legislation.

Chart of the week
High housing costs leads to doubling up behavior

The Center on Budget and Policy Priorities released a blog post this week identifying an estimated 3.7 million people living in doubled-up households. The research used American Community Survey data from 2019 to determine the estimate and identified 2.2 million doubled-up households as renters. The numbers portray an “often-hidden but widespread crisis in housing” where families with incomes at or below the poverty line live with others due to economic hardship or housing loss, which often results in new stressors on both families. In addition, the post finds that people of color experience higher rates of doubled-up households due to racial disparities in housing. Doubling-up is especially prevalent in Southern states, with New Mexico, Mississippi, Florida, and Louisiana having the highest rates. 
What we're reading
An article in Bloomberg discusses the challenges construction and labor costs have placed on affordable housing developers. All aspects of housing development are taking longer due to supply chain disruptions, inflation, and a constriction worker shortage. These issues call for more needed funding, which inevitably complicates the process. Each of these challenges leads to fewer units being produced, a substantial consequence when the U.S. already faces an undersupply of 3.8 million units.
An article by NPR examines the new pilot special purpose credit program launched by Bank of America to increase the Black and Latino homeownership rate. The pilot will forgo a down payment requirement, closing costs, minimum credit score, and mortgage insurance for select first-time homebuyers in some Black or Latino neighborhoods in five cities. The article discussed how the new program can benefit these homebuyers and what issues might remain despite the effort.
An article by Vox outlines the housing market slowdown, using seven key charts showing trends in mortgage rates, single-family home sales, home purchases, rents, and construction. Many buyers are priced out as rates increase and home prices skyrocket. According to Zillow economist Nicole Bachaud, the market appears scary compared to where we’ve been, but the turmoil is necessary for rebalancing to get to a normal market.
The week ahead
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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