Weekly update from the National Housing Conference
News from Washington | By Luke Villalobos
NHC joins FHFA roundtable on closing racial homeownership gap
NHC joined a group of housing and racial equity experts for a roundtable discussion titled Communities of Color and Closing the Racial Homeownership Gap hosted by the FHFA. The conversation covered topics such as identifying FHLBanks’ role in supporting housing and homeownership in diverse communities to promote equity, affordability, and sustainability. In addition, the roundtable solicited recommendations from market participants for the FHLBanks to support communities of color and address the racial homeownership gap.
Panelists included: David Dworkin, National Housing Conference; Hope Atuel of Asian Real Estate Association of America; Rev. Luis Cortes, Jr. of Esperanza; Bryan Greene of NAR; Rian Hargrave of Onyx Development; Jason Riveiro of the National Association of Hispanic Real Estate Professionals; and Glenn Wilson of Communities First, Inc.
The discussion is part of a series exploring FHLBanks’ role in housing, community and economic development, affordability, and related issues across the country. FHFA announced in August that it is conducting a comprehensive review of the FHLBank System beginning in fall 2022. Additional roundtables are expected in 2023.
NHC welcomes Patenaude's return to the Board of Governors

NHC appointed Pamela Hughes Patenaude to its Board of Governors this week. “NHC’s Board brings the best and the brightest of housing professionals and Pam is the best person to continue to grow our network,” said Steve O’Connor, Chair of the Board of Governors. “Pam’s broad range of leadership experience in housing policy, real estate, and disaster recovery will make a significant contribution to our work.”

Patenaude served as the Deputy Secretary of HUD, where she managed the $52 billion agency’s day-to-day operations while overseeing disaster relief in Puerto Rico, Texas, Florida, Hawaii, U.S. Virgin Islands, California, North Carolina, and South Carolina.

Patenaude is an Independent Director of loanDepot, Inc. (NYSE: LDI) and a member of the Audit Committee. Patenaude is an Independent Director for Target Hospitality, Corp. (NASDAQ: TH) and is Chair of the Nominating and Corporate Governance Committee and a member of the Audit Committee. Additionally, Patenaude serves on the Board of Directors for Habitat for Humanity International as well as the Board of Directors for the Bipartisan Policy Center. Patenaude is a Trustee and Vice Chairman of the Home Builders Institute (HBI). Patenaude is also a Social Impact Advisory Board member for the Center Creek Housing Funds. Patenaude is the Principal of Granite Housing Strategies, LLC, serving as a strategic advisor for clients engaged in real estate development, affordable housing, and disaster recovery management. She also serves as Co-Chair of NHC’s National Advisory Council and is a recipient of the 2022 Housing Visionary Award.

“The National Housing Conference has been instrumental in formulating effective solutions to address the nation’s housing needs for more than nine decades,” said Patenaude. “I am honored to rejoin the NHC Board of Governors and look forward to making meaningful contributions to the critical housing policy debates.”
“We are excited to have Pam Patenaude rejoin our board of governors,” said David M. Dworkin, president and CEO of NHC. “As Deputy Secretary of Housing and Urban Development, Pam was a highly respected voice whose collaborative leadership style was recognized by members on both sides of the aisle. Throughout her distinguished career, Pam has built bipartisan coalitions to achieve sustainable solutions to America’s affordable housing and community development needs. We are grateful to have her back,” Dworkin stated.
FHFA announces new multifamily housing goal methodology

FHFA issued a final rule for Fannie Mae and Freddie Mac (the Enterprises) that establishes benchmark levels for their multifamily housing goals for 2023-2024. The newly issued levels use a new percentage-based methodology outlined in the agency’s proposed rule, published in August. Rather than measuring the multifamily goals by the total number of affordable units in each project financed by the Enterprises, the new rule considers the percentage of each Enterprise’s annual multifamily loan purchases that are affordable to each income category.
FHFA set the percentages at 61 percent for low-income, 12 percent for very low-income, and 2.5 percent for small multifamily low-income properties. These are properties consisting of 5-50 units. FHFA said these goals help ensure that the Enterprises responsibly promote equitable access to affordable rental housing across the county.
“The new methodology will make the multifamily housing goals more responsive to market conditions and better position the Enterprises to fulfill their affordable housing mission requirements each year,” said FHFA Director Sandra Thompson.
Mortgage borrowers report increased interest rate awareness

This week, FHFA and the CFPB jointly published loan-level data for public use through the National Survey of Mortgage Originations (NSMO) that showed strong borrower interest rate awareness. This update includes nationally sampled data from 2013 to 2020 on mortgage performance and credit information of borrowers. The survey information collected by FHFA and the CFPB gathers data based on borrowers’ experiences, mortgage market perceptions, and expectations to reveal housing and mortgage trends.
Key findings reveal the pandemic’s impacts on borrowers, who reported the importance of digital processes and interruptions in mortgage closings. For example, in 2020, 69 percent of borrowers rated themselves as “very familiar” with available interest rates, an increase of 14 percent from 2019. The share of borrowers who said they were satisfied they received the lowest qualifying rate also increased from 67 percent to 75 percent between 2019 and 2020.

Additionally, those who refinanced in 2020 had higher household incomes and owned more stocks, bonds, and mutual funds than those who refinanced in 2019.
“This data should be helpful to analysts and policymakers in understanding the complete experience of mortgage borrowers and identifying what challenges may still exist in mortgage lending,” said Saty Patrabansh, FHFA Associate Director for the Office of Data and Statistics.
Hochul, Newsom ask Pelosi, Schumer to support affordable housing policy changes

On Monday, Governors Kathy Hochul (NY-D) and Gavin Newsom (CA-D) sent a letter to U.S. House Speaker Nancy Pelosi (CA-D) and U.S. Sen. Majority Leader Chuck Schumer (NY-D) encouraging them to support policies to increase affordable housing production. Newsom and Hochul asked Pelosi and Schumer to expand state housing board programs and to lower the “50 percent test” to 25 percent to increase the number of state-issued, bond-financed affordable housing projects. The governors also asked the federal government to restore the Low-Income Housing Tax Credit (Housing Credit) that expired at the end of 2021 to 12.5 percent.

"Our housing affordability challenges are surmountable, but only with meaningful intergovernmental collaboration and long-term, sustainable investments," the letter reads. "California and New York have developed robust housing plans informed by data, the scaling of innovative programming, and collaboration with our partners at the federal and local levels of government."
Mortgage performance improves 1.6 percent YoY

The Office of the Comptroller of the Currency (OCC) published its OCC Mortgage Metrics Report, Third Quarter 2022, showing first-lien mortgage performance improved last quarter. The report comprises 22 percent of all outstanding U.S. residential mortgage debt. It showed that 97.2 percent of mortgages were current and performing at the end of Q3 2022, an improvement from 95.6 percent the previous year. Also, the percentage of seriously delinquent mortgages declined from 3.1 percent in Q3 2021 to 1.3 percent this year. That’s down from 1.5 percent in Q2 2022. In total, servicers initiated 9,835 foreclosures during the quarter. While that’s below Q2 2022’s volume, it’s higher than the previous year. Still, Q3 2022’s new foreclosure volume is lower than before the COVID-19 pandemic.
Housing coalitions urge Congress to act on housing supply now

Last week, a group of 13 housing coalitions sent a letter to the chairperson and ranking members of the U.S. House Ways and Means and Senate Finance Committees asking for meaningful investments in housing production as part of any end-of-year spending package. The letter requests two updates to the Low-Income Housing Tax Credit (Housing Credit) program. First, the group would like an extension of the 12.5-percent increase to the 9-percent Housing Credit that expired in 2021. Secondly, they want to lower the “50 percent test” to 25 percent to allow states to produce and preserve more bond-financed developments. These two provisions would create an estimated 1.5 million affordable units to help address the 3.8-million-unit shortage of affordable homes in the U.S.
“This is not an insurmountable problem,” the letter reads. “Congress right now has the opportunity to unlock vital financing for affordable housing developments that will produce and preserve high-quality, below-market-rate homes for years to come.”
HUD awards more than $13 million in HOPWA funding

HUD announced it’s awarding more than $13 million in Housing Opportunities for Persons with AIDS (HOPWA) Permanent Supportive Housing (PSH) Renewal and Replacement Grants to 13 cities, states, and nonprofits. Awardees include the City and County of San Francisco, Kentucky Housing Corporation, the City of Baltimore, and the Rhode Island Office of Housing and Community Development. You can see the complete list of awardees here.
These awards provide tenants with rental assistance, supportive services, and additional resources to support housing sustainability. This round of funding is the second of two available grant rounds.
States highlight land-use reforms during White House meeting

On Thursday, the White House announced that White House officials from the National Economic Council, Domestic Policy Council, and Office of Intergovernmental Affairs met with legislative leaders from ten states to discuss housing affordability. The meeting comes two months after the Administration shared updates about President Biden’s Housing Supply Action Plan, which included increased partnerships between the federal government and state and local governments.
During this week’s meeting, legislative leaders from California, Oregon, and Maine shared their progress with passing land-use reform policies. In addition, other states disclosed plans for advancing their reforms in 2023. Other topics from the meeting included reducing regulatory barriers to affordable housing, increasing funding for affordable housing, protecting tenant rights, ensuring fair housing access, and addressing homelessness
FOMC raises target federal funds rate by 50 basis points

The Federal Reserve Board’s Federal Open Market Committee (FOMC) raised its benchmark rate by 50 basis points after meeting last week. The FOMC raised its rate from 4.25 percent to a 4.5 percent target range. The announcement came after new Bureau of Labor Statistics data on Tuesday showed the Consumer Price Index rose 0.1 percent in November. Shelter contributed the most to this inflationary increase, rising 7.1 percent over the last year. According to the announcement, shelter accounted for nearly half of the total price increase in all items except food and energy.

“Housing supply deficits, made worse by increased interest rates, are likely to blunt the anti-inflationary impact of the Fed’s rate hike as the housing supply continues to shrink, offsetting the impact of interest rate-driven reductions in demand,” NHC said in a September press release.
CDFI Fund updates NMTC guidance

The Community Development Financial Institutions (CDFI) Fund updated its New Markets Tax Credit (NMTC) allocation application frequently asked questions document. The updates include new guidance in response to questions about CDFI Fund’s Award Management Information System, such as how applicants should discuss how their NMTC investments would benefit low-income families and communities. Applications for 2022 NMTC allocations are due by Jan. 26.
Chart of the week
Data shows 14 years' worth of massive housing underproduction

NAR released its Real Estate Forecast for 2023. The forecast includes an economic and real estate outlook for next year and an analysis of historical data. For example, data over the past 60 years shows the long-term average of housing starts is about 1 million starts a year. But, between 2007 and 2021, housing starts fell significantly below that mark. Housing starts rose to about 1.7 million in 2021 before returning to below 1 million starts in 2020. Such underproduction resulted in the country’s current massive housing shortage. NAR Chief Economist Lawrence Yun called for a significant increase in housing production and the conversion of empty commercial buildings into residential dwellings to avoid worsening the housing shortage. 
What we're reading
An op-ed by former U.S. Congressman Rick Lazio in Affordable Housing Finance calls on lawmakers to tackle inflation by bolstering the Low-Income Housing Tax Credit (Housing Credit) as part of any federal spending package. Lazio calls investing in the Housing Credit program a no-brainer. “It is a smart, historically successful investment, which places the responsibility and risk on the private sector; it’s also a critical investment in the families and working Americans who’ve been through extraordinary financial pain in recent years,” Lazio writes.
A new Urban Institute report titled Improving the Availability of Small Mortgage Loans addresses prospective buyers’ barriers to small-dollar mortgages. The report uses updated property records to determine that in 2020, 13.1 percent of homes sold for less than $100,000. Buyers purchased about one-third of those with a mortgage. The report offers recommendations for the FHA to help first-time homebuyers access the supply of low-cost homes.
A Wall Street Journal article highlights how the current volatile housing market brewed for years. The story notes the rising concern that affordable housing availability is an issue in many people’s neighborhoods. The article highlights underproduction between 2006 and 2010, as well as lack of supply paired with surges in demand, as reasons for the current housing affordability crisis.
An article in The Atlantic tries to debunk the narrative that homelessness results from a person’s choices. Instead, the story argues rent prices and housing availability play significant roles in whether someone experiences homelessness. The article uses a musical chair metaphor to explain the homelessness crisis. A shortage of chairs means someone must lose the game. So, in a country with a lack of affordable housing, it’s guaranteed that someone will become homeless.
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.