FHFA focuses on FHLBank liquidity

The Federal Housing Finance Agency (FHFA) has proposed a new rule aiming to expand access to liquidity for Federal Home Loan Banks (FHLBanks), the first of a series of planned proposed rulemakings and guidance notices according to a blog post. This proposal, which amends the current rule on Unsecured Credit Limits, seeks to improve the FHLBanks' ability to provide liquidity to their members by aligning the treatment of interest-bearing deposit accounts and other authorized overnight investments with Federal Funds sales. The proposal continues FHFA’s engagement campaign with the FHLBanks through their FHLBank System at 100: Focusing on the Future​​​ comprehensive review.

"The Federal Home Loan Banks have played a key role in helping homeowners and renters obtain affordable, sustainable housing for over 90 years," said FHFA Director Sandra Thompson. "These modernizations will create more flexibility for the FHLBanks in their liquidity management, which will allow them to better serve their members, particularly during periods of market stress."

In a recent letter from the presidents of the FHLBanks to Treasury Department, the presidents emphasize the role of the banks as the largest source of privately capitalized housing support in the nation, and offer alternative strategies that the group believes to be more appropriate to amplify impact for housing affordability.

“The liquidity provided by each of the FHLBanks to its members stands as the cornerstone supporting the largest source of private capital for affordable housing and community development initiatives in the country…It is important to preserve the value proposition of the FHLBanks and we seek to avoid changes to the FHLBank System that would reduce net income and result in less funding for affordable housing and community development activities,” the letter reads. “Regulatory flexibility is necessary to address the current and future challenges to America’s housing finance system and as we address local and regional housing market needs and differences.”   

Ryan Donovan, president and CEO of the Council of Federal Home Loan Banks, has said that the bank system is supportive of enhancements that provide more liquidity, and concurs with FHFA that the proposed rule would further the agency’s effort to modernize the FHLBanks' ability to meet the liquidity needs of members.

Comments on the new proposal are due by December 2.

Days prior, FHFA issued an Advisory Bulletin to the FHLBanks providing detailed guidance on expectations for evaluating and assessing a member’s creditworthiness when providing liquidity. It further provides instructions for the FHLBanks to coordinate with members’ primary regulators.

“Today’s Advisory Bulletin on member credit risk management promotes the FHLBank System’s ability to fulfill its function as a reliable source of liquidity throughout the economic cycle,” said FHFA Director Sandra Thompson. “This guidance provides clarity for the FHLBanks’ effective management of credit risk and coordination with other financial regulators so that member institutions can maintain the ability to access liquidity when needed.”

2023 American Housing Survey released with new monthly update plan 

The U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau released its 2023 American Housing Survey (AHS), an analysis of the nation’s housing inventory conducted every two years that provides data and insights for researchers across the housing landscape. This release marks the 50^th anniversary of the survey, and included an announcement that HUD and the Census Bureau will begin collecting data on a continuous basis to be updated monthly starting in May 2025. The increase in frequency will enable policymakers to focus on housing issues in a more pressing manner.

“For 50 years, the American Housing Survey has been the premier data source on our nation’s housing quality and costs. On behalf of the Census Bureau, it is our privilege to work in support of HUD providing our statistical, methodological and field expertise in the production of this benchmark product,” said Robert Santos, Census Bureau director. “Housing is a fundamental human need. The Census Bureau is proud to support HUD in providing reliable, high-quality statistics that guide informed decision-making and enhance urban and economic planning.”

Key findings of this year’s AHS highlight that: homeowners have been making energy efficient improvements, with over 3 million consumers installing solar panels since 2019; since 2021 homeowners saw increases in home values while median renter housing costs surpassed median owner cost; and one in ten homeowners are first-generation with many of Hispanic origin. There were also notable increased in housing quality and decreases in exposure to tobacco smoke. Further information is available on topics such as housing insecurity, extreme heat, power outages, health and safety characteristics, perceptions of urbanization, first generation homeownership, householder generation, and sexual orientation and gender identity.

Mortgage groups advocate to end abusive trigger leads 

The Mortgage Bankers Association (MBA) is leading advocacy efforts to curb the abusive use of trigger leads for loan applicants. Trigger leads, which are marketing products utilized when a consumer is applying for a mortgage, create a “trigger” notice for credit reporting agencies that a consumer is interested in financing, and is sold to other agencies without the knowledge or approval of the applicant. This often can cause a barrage of outreach to the consumer via phone, text, and mail that causes extreme frustration and confusion. As MBA President and CEO Bob Broeksmit outlines in a recent blog post, trigger leads are also rife with deceptive practices and fraud.  

To end this practice, groups are pushing for a bipartisan and bicameral bill called the Homebuyer Privacy Protection Act. The act would enable consumers to only be contacted by companies they know, such as their lender, their servicer, and their depository institution. Currently, there is an amendment to the Senate’s version of the National Defense Authorization Act (NDAA) that would mirror the bill’s provisions if the language is enacted when the NDAA bill is passed. The changes are supported by MBA, the Independent Community Bankers of America and the National Association of Mortgage Brokers.

Industry responds to Hurricane Helene

The mortgage and housing industry are collectively responding to the devastating impacts of Hurricane Helene through partnerships, donations, and disaster relief efforts. The Federal Deposit Insurance Corporation, the Federal Reserve Board, the National Credit Union Administration, the Office of the Comptroller of the Currency, and state financial regulators also issued an interagency statement acknowledging the serious impact that the hurricane has had on communities and the operations of financial institutions. The statement notes the impact that the disaster can have on many facets of financial services, including lending, temporary facilities, publishing requirements, regulatory reporting requirements, and investments, and offer a list of guidance documents that can be used to help navigate disaster recovery.  

The Mortgage Bankers Association has kept a running list of various mortgage providers aiding relief efforts, including: Fairway Independent Mortgage Corp., Madison, Wis., putting together a $1 million relief fund; Wells Fargo, San Francisco, donating more than $1 million to relief funds; Truist Foundation, Charlotte, N.C., increasing its relief and recovery support to $1 million; USAA, San Antonio, Texas, sending “Catastrophe Mobile Units” to the area to help its members file insurance claims; and Regions Bank, Birmingham, Ala. announcing a series of disaster-recovery financial services to help those impacted, among others. The Federal Home Loan Bank of New York also announced $500 million in disaster relief loans to help rebuilding communities.

“Many of the communities we serve are experiencing historic and catastrophic flooding and millions are still without power and access to everyday essentials,” said Truist Foundation President Lynette Bell. “Truist Foundation is supporting trusted partners who are on the ground in the hardest hit areas, tirelessly working to restore power, cell service and clear roadways. We are committed to putting our purpose into action with additional funds to help those in impacted communities get connected – digitally and physically – as soon as possible.”

Fannie Mae and Freddie Mac also issued reminders of immediate relief options for those impacted by the Hurricane once they are back on their feet, including forbearance for up to 12 months without incurring late fees or penalties.

HUD updates weatherization and retrofitting resources, plans multifamily handbook update

HUD published a new technical assistance guide and updated its funding navigator tool to help practitioners take advantage of federal funds to weatherize and retrofit affordable housing stock. The new Build for the Future Retrofit Guide aims to leverage funds from the Bipartisan Infrastructure Law (BIL) and Inflation Reduction Act (IRA) to preserve affordable housing, protect residents from climate hazards, and reduce housing and energy costs for families through clean energy initiatives and resiliency to extreme weather events. It includes efficiency, renewable energy, climate resilience and transit-oriented development as four categories of opportunity and identifies existing tax credits and grants for property owners. Further, HUD launched a major update of its Funding Navigator resource that helps users identify and sort potential funding opportunities from IRA and BIL. Based on consumer feedback, the update focused on simplifying search fields, prioritizing funding opportunities, clarifying applicant requirements, and streamlining applications.

HUD also announced that it will undertake the first comprehensive update of its Multifamily Asset Management and Project Servicing Handbook since 1992. The handbook will include hundreds of policy documents in a single location with new digital features, and will provide property owners and managers with tools necessary to administer multifamily rental assistance programs. The process is being kicked off with the first chapter titled Bifurcating Section 8 Contracts being made available on the Multifamily Housing Policy Drafting Table.

“We understand the unique challenges of managing HUD-assisted multifamily properties and we welcome the input of all our program participants into this update of our guidance,” said Deputy Assist Secretary of Multifamily Housing Programs Ethan Handelman. “The pending handbook updates not only provide property owners and managers with the tools needed to improve the management of these properties but are part of how HUD ensures that renters living in HUD-assisted properties have a decent, safe, and affordable place to call home.”

Mortgage delinquencies remain low, ICE reports

According to new data from Intercontinental Exchange’s (ICE) monthly First Look Report, mortgage delinquencies have remained low despite a modest year-over-year increase. The national delinquency rate fell 3 basis points in August, a drop of 0.9% for the month but up 5.1% when comparing to last year. Foreclosure starts also fell by 9% from the month prior and remain 32% below 2019 levels. Active foreclosures also improved with a marked second-lowest level of the share of mortgages in foreclosure on record when discounting the COVID-19 pandemic. Further, the number of borrowers past due by one payment dropped by 26,000, while 60-day delinquencies rose marginally.

HUD announces new GRRF funding awards

HUD announced $279 million in new awards under the Green and Resilient Retrofit Program (GRRP) to improve energy efficiency and climate resilience in over 3,500 homes across 23 states and territories. These grants and loans aim to enhance water and energy efficiency, reduce climate pollution, promote the use of green building materials, and make homes more resilient to climate hazards. The GRRP, established by the IRA, has now allocated over $1.12 billion to 225 properties, impacting nearly 26,000 rental homes.

This funding will particularly benefit low-income households, seniors, and people with disabilities, aligning with the Biden Administration’s Justice40 initiative, which ensure that 40% of certain federal investments benefit disadvantaged communities. The latest awards are the largest yet, including upgrades for properties in HUD’s Section 202 and 811 programs for low-income seniors and persons with disabilities.

Assistant Secretary Julia Gordon highlighted, “this is the largest set of Green and Resilient Retrofit Program awards to date, reinforcing our continued commitment to large-scale rehabilitation measures that ensure the safety and security of the low-income residents who call HUD-assisted housing home.”

This round of funding also marks the first awards for properties in Hawaii, South Dakota, and Nebraska, with further announcements expected in the coming months.