Weekly update from the National Housing Conference
News from Washington | By Luke Villalobos
Sandra Thompson confirmed as FHFA director

The Senate confirmed Sandra Thompson as Director of the Federal Housing Finance Agency (FHFA) on Wednesday. Thompson has been leading FHFA as Acting Director for almost a year, and President Biden officially nominated Thompson in December. As Acting Director, Thompson reversed the controversial adverse market fee, called for Equitable Housing Finance Plans from Fannie Mae and Freddie Mac, solidified a new focus on closing the racial homeownership gap, and raised the minimum cap for equity purchases, among a host of other changes. Housing leaders have shown broad support for Thompson, noting her ability to balance safety and soundness with equity issues. 

The National Housing Conference issued a press release on Thursday that congratulated Thompson on the confirmation. 

“Since her appointment at FHFA Acting Director last June, Ms. Thompson has repeatedly demonstrated her commitment to an equitable housing finance system,” said NHC President and CEO David M. Dworkin. “In less than a year, she has led the rewrite of Fannie Mae and Freddie Mac’s Duty to Serve plans to expand the Enterprises’ activity in underserved markets and created a new Equitable Housing Finance framework to increase lending in markets not covered by the Duty to Serve program. I have every confidence that she will continue to prioritize sustainably expanding racial equity and access to affordable housing now that she has been confirmed.”
Fannie Mae makes Home Price Index public

Fannie Mae announced last week that it would make its Home Price Index public after nearly half a century of internal use. The index, which tracks the average, quarterly price change for all single-family properties in the United States, excluding condos, currently shows single-family home prices above $300,000 for the first time in its history.

“We’re pleased to begin sharing the Fannie Mae Home Price Index with external audiences. We have long used this index within the company, including as part of our quarterly financial disclosures,” said Fannie Mae Senior Vice President and Chief Economist Doug Duncan. “We believe it will be a highly accurate, timely indicator for measuring home price growth for both economists and housing industry stakeholders alike.”
HOME coalition supports Housing Supply Action Plan

Last week, the HOME Coalition sent a letter to the White House commending the Administration for its newly published Housing Supply Action Plan and the specific goals for modernizing the HOME Investment Partnerships (HOME) program. The Coalition is a group of national and regional organizations that are stakeholders in the HOME program, ranging from government officials to owners of affordable housing and housing advocates.

The letter notes the critical need for addressing the affordable housing supply shortage and HOME’s role in increasing housing production. It offers the Coalition’s support in finding consensus regulations for modernizing HOME and a positive outlook for improving the program. 
Members of Congress call for expedited final rule on income averaging

On Thursday, a bipartisan group of lawmakers sent a letter to the Treasury Department and IRS urging the expedited release of a final rule on income averaging under the LIHTC program. Noting LIHTC’s role as “the most important federal tool for creating affordable housing,” the lawmakers asked IRS to release a rule that addressed stakeholders’ concerns about the agency’s 2020 proposal.

Income averaging allows developers to meet affordability goals by taking the average income of a LIHTC property’s residents rather than requiring all residents to have incomes below the same threshold. However, the letter notes that “stakeholders from across the affordable housing community have raised concerns that implementing IRS’s proposed regulations will be highly complex and risky compared to the LIHTC program’s existing set-aside tests. In fact, since the publication of the proposed rule, few investors have been willing to invest in average income test properties due to the risk associated with that structure, contradicting congressional intent to broaden the program in this manner.”

Sens. Michael Bennet (D-Colo.), Todd Young (R-Ind.), Rob Portman (R-Ohio), Ron Wyden (D-Ore.), and Mike Crapo (R-Idaho), and Reps. Suzan DelBene (D-Wash.), Jackie Walorski (R-Ind.), Don Beyer (D-Va.), and Richard Neal (D-Mass.) signed the letter.
Freddie Mac announces automatic income, asset, and employment verification

Freddie Mac announced Thursday that it would begin allowing lenders to automate the verification of key underwriting information using borrower-approved bank account data. Lenders will be able to start automatic verification of criteria including income, assets, and employment using Freddie Mac’s asset and income modeler in Freddie Mac Loan Product Advisor beginning June 1.

In recent years, Freddie Mac and Fannie Mae have faced increasing calls to streamline the mortgage application process to make low- and moderate-income homebuyers more competitive in an increasingly hot housing market. Last year, FHFA announced that Fannie Mae would begin to account for rental payment history in its risk assessment process, a move NHC President and CEO David M. Dworkin called “a major innovation to expand homeownership.” Freddie Mac Single-Family COO Andy Higginbotham said the company took Thursday’s action in the same spirit of expanding homeownership opportunities. “This industry-first innovation supports our mission of making sustainable homeownership more affordable and accessible,” he said.
OCC presents bank charter to minority depository institution

On Monday, OCC presented a full-service community national bank charter to a minority depository institution (MDI) for the first time in 15 years. The charter went to Agility Bank, N.A., a woman-owned and led bank in Houston, TX. MDIs serve economically challenged and traditionally underserved communities. MDIs can qualify for their status by meeting several requirements, including having 51 percent or more voting stock owned by minority individuals, having a majority of the board of directors be minorities, and serving a predominant minority community. The OCC has a workstream dedicated to promoting MDIs. 

“MDIs like Agility are critically important for communities that have limited access to capital, credit, and responsible financial services. Today marks a small, but important step in increasing diversity in bank leadership and ownership,” said Acting Comptroller Michael Hsu. 
CFPB clarifies credit denial guidance

On Thursday, the CFPB issued a confirmation of federal anti-discrimination laws stating that companies must provide specific credit denial reasons to applicants, even when relying on complex models and algorithms. The so-called “black box” model of credit approval utilizes complex computational methods when making credit decisions, giving an output to creditors. Due to the complexity of the models, some creditors do not know the rationale behind a denial. CFPB has stated that under the Equal Credit and Opportunity Act, creditors cannot justify non-compliance based on the complications of the algorithms. 

“Companies are not absolved of their legal responsibilities when they let a black-box model make lending decisions,” said CFPB Director Rohit Chopra. “The law gives every applicant the right to a specific explanation if their application for credit was denied, and that right is not diminished simply because a company uses a complex algorithm that it doesn’t understand.”
Senate committee examines rural housing

On Wednesday, the Senate Committee on Banking, Housing, and Urban Affairs held a hearing titled Examining the U.S. Department of Agriculture’s Rural Housing Service. The hearing included a single witness, Xochitl Torres Small, Under Secretary for Rural Development. Torres Small’s testimony outlined rural housing’s unique challenges and the Rural Housing Service’s core programs. In addition, the testimony notes several critical concerns for the agency, including the declining number of Multifamily 515 loans alongside growing tenant rental assistance, the increasing cost of maintaining contracts, expiring affordability standards, staffing needs, and increasing costs of construction and building materials. 

“The Rural Housing Service has the tools to be a partner with these communities—helping an elderly individual repair a family home, supporting a family to purchase their first home, or providing affordable farm labor housing in agricultural communities,” said the Under Secretary. “These tools cannot be fully deployed without additional resources and authorities to modernize the Rural Housing Service.”
HUD announces grants for Indian country, disaster assistance for Kansas

HUD announced Thursday that it would make 83 grants totaling $147 million for affordable housing and community development projects primarily benefiting low- and moderate-income American Indians and Alaska Natives. HUD made the grants through the Indian Housing Block Grant and Indian Community Development Block Grant programs for projects including the construction of elder housing, rental units on tribal lands, and the construction and rehabilitation of community facilities.

Also Thursday, HUD announced that it would make disaster relief available to communities in central Kansas affected by a bout of severe winter storms in March. Measures include foreclosure relief, mortgage insurance, ramped-up fair housing enforcement to protect residents, and administrative relief for agencies whose capacity was affected by the storms. 
State housing agencies partner with local hospitals

Last week, the National Council of State Housing Agencies (NCSHA) launched a new partnership called Healthy Housing, Healthy Communities (H3C). The new initiative aims to leverage the role of housing finance agencies to attract health system involvement in addressing the housing affordability crisis. 

The initiative includes grant funding for six state HFAs- Colorado, Illinois, Nebraska, Pennsylvania, Rhode Island, and Washington. The grants will allow the HFAs to identify commitments with health institution partners to build and preserve affordable housing and produce a Housing, Health, and Equity Partnership Plan to develop and maintain affordable housing that improves community health and advances social and racial equity. 
Chart of the week
Higher numbers of remote workers associated with higher housing prices during the pandemic

working paper from the National Bureau of Economic Analysis finds that while larger numbers of remote workers were associated with slightly lower housing prices before the COVID-19 pandemic, they were strongly correlated with higher housing prices after its onset. The areas most exposed to remote work saw house prices grow by twice as much [during the pandemic] as areas at the bottom of the distribution,” the paper’s authors find, though “even the areas least exposed to remote work saw house prices grow by about 15%.”
What we're reading
The White House released a fact sheet report titled Advancing Equity Through the American Rescue Plan. The fact sheet covers 32 American Rescue Plan (ARP) programs that sought to spur an equitable economic recovery. The data examines employment rates, credit card delinquencies, income growth, and more. It shows that ARP disproportionately helped rural communities, helped frontline workers, increased minority entrepreneurship, and contributed to equitable housing recovery, among other outcomes. 

An article in Forbes calls for greater use of Accessory Dwelling Units (ADU) and Detached Accessory Dwelling Units (DADU) in addressing the affordable housing crisis. Both ADUs and DADUs offer smaller, alternative housing options that are more affordable than traditional options. Zoning codes often discourage the smaller dwellings and prevent them from being built on the land of existing homes, but both are gaining popularity in some markets. 

Time Magazine covers Afghan refugees’ difficulty finding permanent housing in the United States, a phenomenon experts say is fueled as much by the country’s decimated social safety net as by high housing costs. Heba Gowayed, an assistant sociology professor at Boston University and author of a book on refugee policy, told Time it is ironic that the United States is struggling to provide basic services to a refugee population it helped create. “Admitting people into American poverty is no one’s salvation,” she cautions.
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.
Defending Our American Home since 1931
Copyright © 2022. All Rights Reserved.