Federal / Agency News Category Archives

HUD Temporarily Extends FFB Risk Share FFB Initiative

HUD has announced it will be extending its Multifamily risk-sharing initiative with the Federal Financing Bank (FFB) for eligible Housing Finance Agencies (HFAs) through December 31, 2018. The initiative was originally scheduled to cease accepting new applications for commitments from HFAs on September 30, 2018, but will now accept new applications for commitments under this initiative through the end of the year, up to the current program maximum of $3 billion.

FHA intends to review the program’s effectiveness, and whether market conditions justify its continued operation. The results of this review will determine whether and in what form FHA would continue the program beyond December 31, 2018. If the program is extended for a limited time period beyond 2018, HUD would identify the parameters under which it would be phased out.

The FFB Risk Share Initiative was started in 2015 to stimulate affordable housing production in response to tightening bond markets and lack of private sector funding and liquidity that followed the financial crisis. The initiative is designed so that FHA and HFAs share in the risk of the mortgage, and works as follows:

  • Participating HFAs enter into contracts with HUD that provide for reimbursement to HUD for a portion of any insured loss; 
  • HFAs use their own underwriting standards and assume at least 50 percent of the risk of loss; and
  • “A” rated HFAs have access to capital funds provided by the FFB, a government corporation that purchases the obligations of federal agencies. The HFAs then lends those funds to private developers for projects that meet certain affordability criteria.

 

 

Senator Warren Introduces Expansive Affordable Housing Legislation

On September 25, 2018 Sen. Elizabeth Warren (D-Mass.), introduced the American Housing and Economic Mobility Act of 2018 which would dramatically expand funding for the for affordable housing.

The measure aims to use federal funding as  leverage to build up to 3.2 million new housing units for lower-income and middle-class families – bringing down rents by 10% and creating 1.5 million new jobs according to an independent analysis from Moody’s Analytics. This bill will help address the shortage of millions of affordable homes nationwide by:

  • Investing $445 billion in the Housing Trust Fund to build, rehabilitate, and operate up to 2.1 million homes for low-income families, including in rural areas and in Indian country where housing quality is especially poor.
  • Investing $25 billion in the Capital Magnet Fund, which will be leveraged 10:1 with private capital, to build more than 835,000 new homes and develop vibrant communities for lower-income and middle-class families.
  • Investing $4 billion in a new Middle-Class Housing Emergency Fund, which supports construction of homes for middle-class buyers and renters where there’s a supply shortage and housing costs are rising faster than incomes.
  • Investing $523 million in rural housing programs to create 380,000 rentals and help 17,000 families buy homes.
  • Investing $2 billion in the Indian Housing Block Grant to build or rehabilitate 200,000 homes on tribal land.

Additionally, the measures seeks to reduces the cost of housing across America by creating incentives for local governments to eliminate unnecessary land use restrictions that drive up costs. Local land use rules can significantly increase construction costs, making it unattractive to build housing for anyone but the richest Americans. The bill puts $10 billion into a new competitive grant program that communities can use to build infrastructure, parks, roads, or schools. To be eligible, local governments must reform land use rules that restrict construction of new affordable housing.  The measure also seeks reforms to the Community Revitalization Act (CRA), provides funding for down-payment assistance and addresses voucher mobility.

Click here for the legislative text

Click here for Senator Warren’s summary of the measure

Click here to read additional coverage in the Atlantic.

 

 

 

 

, legislation that would invest $445 billion in the Housing Trust Fund, $523 billion in rural housing programs and strengthen provisions in the Community Reinvestment Act to hold more financial intuitions accountable and strengthen sanctions for failure to follow rules. The legislation also limits zoning laws that make housing expensive and includes investment in the Capital Magnet Fund, the Indian Housing Block Grant program and creates a new Middle-Class Housing Emergency Fund. A summary of the legislation says it would fund as many as 3.2 million new housing units for lower- and middle-income families.

House Financial Services Committee Schedules GSE Reform Hearing on Sept. 27

The Committee on Financial Services will hold a hearing entitled “Oversight of the Federal Housing Finance Agency’s role as conservator and regulator of the Government Sponsored Enterprises” on Thursday, September 27, 2018, at 10:30 a.m. in room 2128 of the Rayburn House Office Building. This will be a two-panel hearing with the following witnesses:

Panel One:

  • The Honorable Laura Wertheimer, Inspector General, Federal Housing Finance Agency

Panel Two:

  • The Honorable Melvin Watt, Director, Federal Housing Finance Agency
  • Mr. Timothy Mayopoulos, CEO, Federal National Mortgage Corporation (Fannie Mae)
  • Mr. Donald Layton, CEO, Federal Home Loan Mortgage Corporation (Freddie Mac)

The Housing and Economic Recovery Act (“HERA”) of 2008 created the Federal Finance Housing Agency (“FHFA”). FHFA is an independent agency charged with the supervision, regulation, and oversight of Fannie Mae, Freddie Mac and the Federal Home Loan Bank System, which includes the 11 Federal Home Loan Banks. On September 7, 2008, then-FHFA Director, James Lockhart, used the statutory authority provided by HERA to place both Fannie Mae and Freddie Mac into conservatorship.

This hearing will examine the FHFA’s performance as the regulator and conservator of the Government Sponsored Enterprises, which include Fannie Mae, Freddie Mac and the Federal Home Loan Banks. Specifically, the Committee will examine FHFA’s policies and procedures used to supervise Fannie Mae and Freddie Mac, the FHFA’s structure, and the need to reform the housing finance system in the United States.

RAD Program Converts 100k Public Housing Units

NH&RA congratulates the US Department of Housing & Urban Development and on achieving an important milestone — the conversion and preservation of 100,000 public housing units through the Rental Assistance Demonstration (RAD) Program! HUD Secretary Ben Carson, Assistant Secretary for Housing Brian Montgomery, and Multifamily Office of Recapitalization Director Tom Davis were joined by the Housing Authority of the City of Austin and additional officials in Austin, Texas, to celebrate this momentous occasion.

Read More

IRS Submits Opportunity Zone Regulation to OMB for Review

The Internal Revenue Services submitted regulatory guidance for the Qualified Opportunity Zone Program to the Office of Information and Regulatory Affairs, a division of the White House Office Management of the Budget (OMB) on Wednesday September 12.  This proposed rule is expected to clarify several issues relating to the incentive.  The specifics of the proposed regulatory language is not yet public and will likely take at least ten days, if not longer for review and potential approval by OMB.  NH&RA will provide a summary of the analysis when it becomes available.

House Members Introduce Bipartisan GSE Reform Measure

On September 6, the tenth anniversary of the federal government’s takeover of Fannie Mae and Freddie Mac, retiring House Financial Services Committee chair Jim Hensarling (R-TX) released a discussion draft for the Bipartisan Housing Finance Reform Act. The measure is co-sponsored by Reps. John Delaney (D-MD) and Jim Himes (D-NY) and would eliminate Fannie Mae and Freddie Mac, moving most of their functions into Ginnie Mae.  Billed as a “grand bargain” the measure would codify an explicit government Mortgage Backed Securities (MBS) guarantee into law, coupled with an affordability program in exchange for placing the taxpayer in a catastrophic loss position only diffusing the credit risk beyond two GSEs, and creating market competition.

While, in Hensarling’s estimation, comprehensive market-based reform which he prefers is not currently achievable, the new bill, proposes using a relationship between the private sector and Ginnie Mae in place of the current GSEs to guarantee qualified privately insured mortgage-backed securities. According to the press announcement, the new process would “allow qualified mortgages backed by an approved private credit enhancer with regulated, diversified capital resources to access the explicit, full government securitization guarantee provided by Ginnie Mae.”

Loan originators would have to acquire coverage from an approved “credit enhancer,” or private mortgage credit guarantor, to use the Ginnie Mae system. That would function as a private capital buffer on the loan, which could then be securitized by any of Ginnie Mae’s more than 400 approved issuers with an explicit, full government guarantee of mortgage-backed securities.

Hensarling warned that if the political will to enact reform stalls, the Trump Administration, which plans to announce a new Federal Finance Housing Agency director in January, can institute the reforms administratively.  “And I call on them to do so,” Hensarling concludes.

Given the short amount of time left in the current legislative session, it is unlikely that the measure will be enacted before 115th session of Congress concludes this winter.  However, additional hearings and debate is possible and the measure could serve as a starting point for GSE reform in the 116th Congress.  Click here for a section by section summary of the legislation.