Weekly update from the National Housing Conference
News from Washington | By Luke Villalobos
Housers testify across hearings

Several Senate committees hosted hearings this week centered on housing policy. Each hearing opened with recognition of skyrocketing housing costs throughout the nation, partly related to rising inflation and a severe shortage of affordable housing.
The Senate Committee on Finance held a hearing on Wednesday titled The Role of Tax Incentives in Affordable Housing. Witnesses were: Andrea Bell, Executive Director for Oregon Housing & Community Services; Jerry Konter, Founder and President for Konter Quality Homes and Chairman of the Board for the National Association of Homebuilders; Lee Ohanian, Hoover Institute Senior Fellow and Distinguished Professor Of Economics at the University of California; Buzz Roberts, President and CEO for the National Association of Affordable Housing Lenders; and Dana Wade, Chief Production Officer, Real Estate Finance at Walker & Dunlop. The hearing focused on the Low Income Housing Tax Credit, a successful tool in affordable housing production.
“The bottom line is, when it comes to housing, the U.S. needs to build and build some more. The Finance Committee plays an important role in helping get shovels in the ground. That’s because much of housing policy deals with tax policy, and there are a lot of ideas in this room,” stated Chairman Ron Wyden in his opening remarks. He referenced a slew of proposed legislation to help achieve this goal, including the DASH Act (Decent, Safe, and Affordable Housing for All), the Affordable Housing Credit Improvement Act (AHCIA), the Neighborhood Homes Investment Act (NHIA), and the LIFELINE Act. NHC strongly supports AHCIA and NHIA.
On Wednesday, FHFA Director Sandra L. Thompson testified before the House Committee on Financial Services for a hearing titled Housing in America: Oversight of the Federal Housing Finance Agency. Director Thompson’s testimony reviewed the challenges facing housing today, discussing the safety and soundness of Fannie Mae and Freddie Mac (the Enterprises), providing liquidity in underserved areas, housing supply and affordability, climate risk and natural disasters, and the role of the Federal Home Loan Banks.
The Senate Committee on Banking, Housing, and Urban Affairs held a hearing on Tuesday titled Opportunities and Challenges in Addressing Homelessness. Witnesses for this hearing were: Ann Olivia, CEO of the National Alliance to End Homelessness; Kathryn Monet, CEO of the National Coalition for Homeless Veterans; Cathy ten Broeke, Assistant Commissioner and Executive Director for the Minnesota Interagency Council on Homelessness; Isabel McDevitt, Co-Founder and Board President for Work Works America; and Jamie Kirsch, Board Member for Journey On.
The same Committee also held a hearing on Thursday titled Priced Out: The State of Housing in America. Witnesses included: Dr. Lawrence Yun, Chief Economist and Senior Vice President for Research at the National Association of REALTORS®; Dr. Douglas Holtz-Eakin, President of American Action Forum; and Peggy Bailey, Vice President for Housing Policy at the Center on Budget and Policy Priorities. Dr. Yun estimated that interest rate increases raised the median monthly mortgage payment by $800, and a buyer needs an income of $125,000 a year to afford most homes on the market. Bailey’s testimony called for more significant investments in subsidizing rent, removing barriers to homeownership, and improving the LIHTC program to bring down the overall cost of housing and help extremely low-income renters and socially disadvantaged groups.
FHFA announces Office of Financial Technology

The FHFA announced the creation of a new Office of Financial Technology on Monday. According to the announcement, the Office will serve as a central source of information for addressing emerging risks and priorities related to adopting and deploying financial technology (fintech). In addition, the Office will support FHFA in developing strategies for the regulated entities to advance fintech safely and soundly, engage with market participants and groups to facilitate the sharing of best practices and innovation, establish ongoing outreach through the regulated entities to promote understanding and awareness of fintech, facilitate interagency collaboration, and serve as a general agency resource.
“When used responsibly, fintech has the potential to improve borrowers’ experiences with the mortgage process by reducing barriers, increasing efficiencies, and lowering costs,” said FHFA Director Sandra Thompson. “The new office will help advance effective risk management as FHFA evaluates applications of fintech in housing finance, as well as in compliance, and regulatory activities.”
FHFA is also soliciting responses to a Request for Information (RFI) on technology’s role in housing finance. The RFI seeks insight into the mortgage lifecycle and related processes, risks, and opportunities. Comments are due by Oct. 16, 2022. 
Freddie Mac publishes climate resiliency research

Freddie Mac Multifamily published a new report called Climate Resiliency Incentives in LIHTC Qualified Allocation Plans as part of their Duty to Serve plans on Thursday. The report examines how climate resiliency efforts are built into the LIHTC program and applied through each state’s Qualified Allocation Plan. According to the report, states have implemented various mitigation measures for properties that utilize the LIHTC program, ranging from flood proximity requirements to set-asides for disaster recovery. In total, 32 states have hazard-resistant provisions, 27 have recovery provisions, and 17 have both provision types.
“Our research shows the varying approaches states are taking to make affordable housing more resilient and quick to recover. Our findings highlight a variety of property-level measures that may help multifamily properties mitigate disaster risk and improve recovery,” said Corey Aber, Vice President of Mission, Policy & Strategy for Freddie Mac Multifamily. 
The report concludes that proactive improvements may reduce the need for expensive recovery efforts. However, such hazard resiliency commitments require an upfront investment that often makes projects unaffordable for LIHTC developers.
The published research builds off of a similar report released last year. 

House passes THUD bill

The house passed a six-bill government funding package on Wednesday, including the 2023 Transportation, and Housing and Urban Development, and Related Agencies funding. The package includes robust investment in housing and community development totaling nearly $63 billion, including an increase of HUD funding by $9 billion over FY22.
“The 2023 T-HUD bill represents a continued commitment in our nation’s affordable housing and infrastructure,” Transportation, and Housing and Urban Development, and Related Agencies said Chairman David Price. “It will benefit rural and urban communities throughout America by growing opportunities for homeownership and rental assistance while also creating tens of thousands of jobs to repair and expand our airports, highways, transit, passenger rail, and port systems. This legislation provides expansive funding for safe, well-maintained, and innovative public housing, including substantial investments in manufactured housing, and transportation, supporting vulnerable populations and addressing existing inequity.”
The Senate has not yet released its appropriations bill. NHC has co-signed a letter with the Campaign for Housing and Community Development Funding urging Congress to invest in affordable housing and community development for FY23.
HUD looks to update manufactured housing standards

HUD announced its proposed updates to the Manufactured Home Construction and Safety Standards, or HUD Code. The updates intend to support manufactured housing expansion as part of the broader effort to increase affordable housing. The update is the most extensive set of changes to the HUD Code in over two decades and will bring the Code in line with modern industry standards.
Key provisions of this update include materials that facilitate modern design and improved quality, ridge roof designs; multi-unit manufactured homes up to three units, open floor plans, truss designs, and specifications for attics, accessibility improvements; modern and energy-saving appliances, and additional process efficiencies that allow for time and cost savings.
“Manufactured homes are an important element of the nation’s affordable housing supply,” said HUD Assistant Secretary for Housing Julia Gordon. “These proposed updates, when final, will help to expand the availability of safe and affordable homes that align with current design trends and construction methods.”
HUD announces Justice40 programs

Last Friday, HUD announced a list of 24 covered programs included in the Justice40 Initiative that seeks to deliver 40% of the overall benefits of climate, clean energy, affordable and sustainable housing, clean water, and other investments to disadvantaged communities.
The programs selected align with the Administration’s goals of achieving environmental justice in communities that have historically been left behind. The program list includes Housing Choice Vouchers, Project-Based Rental Assistance, the Housing Trust Fund, Choice Neighborhoods, Community Development Block Grants for Disaster Recovery and Entitlement/Non-Entitlement Grants, HOME grants, and more.
These programs create affordable and sustainable housing and serve communities impacted by disasters or overburdened by pollution and impacts of climate change. 
Chart of the week
Expansive vs. expensive growth

In Up for Growth’s recently published Housing Underproduction in the U.S. 2022 Report, the relationship between expansive vs. expensive housing growth is examined across cities that saw population growth from 1990-2010. Cities like Las Vegas, Boise, and Austin all experienced population increases and were able to expand housing outward in sprawling patterns and maintain affordability throughout those two decades. On the other hand, cities like San Francisco, Seattle, and New York, with expensive growth patterns due to natural boundaries, saw affordability challenges. By 2020, expansive cities were also beginning to see affordability challenges that trend sharply upward even in the markets that had been healthy.
What we're reading
An article in Shelterforce discussed the mixed reviews that the Community Reinvestment Act (CRA) notice of proposed rulemaking is receiving from housing organizations. While much of the update is receiving a positive response, some housers are calling for a more explicit focus on race and fundamental reforms to the rule. Many have said that a lack of clear race-based policy is a missed opportunity for closing the racial homeownership and wealth gap, especially since CRA was initially enacted as a counter to redlining communities.
An article in the New York Times discusses how the COVID-19 pandemic crushed the senior housing market at a time when the baby boomer generation is aging into needing specialized housing for older Americans. Housing developers are exploring nontraditional models with multigenerational features, shared green spaces, and volunteers to help reduce costs. Many baby boomers’ strong preference to age-in-place remains a roadblock for people moving into senior housing. Still, a renewed focus on social interaction and wellness in senior communities after years of isolation during the pandemic could attract new interest.

Senator Sherrod Brown (D-OH) issued a recap on his focused questions during the Senate Finance Committee hearing. He spoke of his bipartisan legislation, the Neighborhood Homes Investment Act. The NHIA creates a federal tax credit that covers the cost between building or renovating a home in a distressed neighborhood and would help existing homeowners to renovate and stay in their homes.

An article in Marketplace discusses how housing affordability continues to worsen for Americans. NHC President and CEO David Dworkin is quoted, along with NHC members NAAHL and National Low Income Housing Coalition. The article notes that renters and buyers are being impacted, and about half of Americans say that housing affordability is a major problem in their community.
An article in American Banker outlines the reforms proposed for the CRA focused on investing in Native American communities. Federal Reserve Vice Chair Lael Brainard spoke at a webinar with Native organizations, noting that the proposed rule provides new incentives to invest in Native lands by allowing CRA credit to be given outside of branch-based assessment areas, meaning lands that activities on lands that do not have bank branches will no longer be excluded from receiving credit. 
The week ahead
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