NCSHA Washington Report | August 13, 2021
An avalanche of missed payments that buries borrowers of color deepest. A burdensome legacy of debt that denies affordable housing opportunity. An expensive policy problem that divides Democrats on the cusp of passing an historic expansion of the social safety net.
The eviction crisis?
No (or not only). Student loans.
The $1.7 trillion in student loan debt held by more than 42 million Americans is about the size of the entire Canadian economy. Millions have fallen behind on their payments during the pandemic. According to the Research Institute for Housing America, “Total missed student loan payments were estimated to be as much as $32.9 billion for the second quarter of 2021 and $155 billion since the second quarter of 2020.”
Brandeis University researchers in 2019 reported, “Black students are more likely than their White peers to take on student debt, to take larger amounts of loans, and to have debt decades after pursuing higher education.” They found that, 20 years after starting college, the typical Black borrower still owes 95 percent of the debt, while the typical white student owes just 6 percent.
Analysts have long noted the impacts of student loan debt on the housing market. A Federal Reserve Bank study in 2014 concluded “roughly 20% of the decline in homeownership among young adults can be attributed to their increased student loan debts since 2005.” More recently, the Fed said, “A $1,000 increase in student loan debt…causes a 1 to 2 percentage point drop in the homeownership rate for student loan borrowers during their late 20s and early 30s.”
High student loan balances can increase debt-to-income ratios, reduce credit scores, and make it harder to amass savings for a down payment for borrowers generally. Blacks were more likely than other groups to delay purchasing a home because of student loan debt, according to a recent study.
The Biden – Harris Administration’s moratorium on federal student loan payments through January 2022 is far short of what some congressional progressives are pushing: unilateral cancellation of student loan debt, a policy that “would exceed cumulative spending on many of the nation’s major antipoverty programs over the last several decades,” according to the Brookings Institution.
Administration officials have been studying the issue for months. “Though the results of the inquiry haven’t yet been released publicly, other legal experts have already tackled the question — with fundamental disagreement between them on the limits of the president’s power,” according to a report published this week.
In June, the Federal Housing Administration announced a technical but important policy change — recommended by NCSHA, the Mortgage Bankers Association, and many other housing groups — that HUD Secretary Fudge said would “make it easier for borrowers with student loan debt to qualify for a federally insured mortgage.” State HFAs in Illinois and Maryland have developed innovative programs to help borrowers burdened with student loan debt become homeowners, and others are considering similar efforts.
The tools of housing finance can and should be applied more vigorously on student loan debt burdens.
Stockton Williams | Executive Director
State HFA Emergency Housing Assistance
In This Issue
- Young Takes Helm at Delaware State Housing Authority
- NCSHA Urges IRS and Treasury to Extend Housing Credit COVID-19 Relief
- NCSHA Asks Ginnie Mae for Relief from Net Worth and Liquidity Standards
- Senate Passes Infrastructure Bill and FY 2022 Budget Resolution
- HUD Releases FY 2022 Fair Market Rents
- Lawmakers Introduce Disaster Programs Reform Bill
- HUD Provides $30 Million in Grants for Senior Homeowners to Age in Place
- NCSHA in the News
- Looking Ahead
Young Takes Helm at Delaware State Housing Authority
Eugene Young Jr. has stepped into his new role as director of the Delaware State Housing Authority. Young previously served as president and CEO of the Metropolitan Wilmington Urban League. He founded the grassroots organizing nonprofit Network Delaware and was an aide in the Delaware General Assembly and to former mayor and current U.S. Senator Cory Booker.
NCSHA Urges IRS and Treasury to Extend Housing Credit COVID-19 Relief
NCSHA sent the Internal Revenue Service and U.S. Department of the Treasury a letter this week urging them to extend certain temporary Housing Credit relief provisions in light of the COVID-19 pandemic’s continuing disruption of development and construction activities and the ongoing operation of Housing Credit properties. More information can be found in NCSHA’s blog.
NCSHA Asks Ginnie Mae for Relief from Net Worth and Liquidity Standards
NCSHA on Monday submitted a comment letter asking Ginnie Mae to rescind changes to its eligibility requirements for single-family issuers outlined in a Request for Input (RFI) posted last month. In the letter, NCSHA argued the proposed standards could be burdensome for HFAs, hinder HFAs’ ability to issue Ginnie Mae securities, and reduce low- and moderate-income home buyers’ access to government loan insurance programs. NCSHA also expressed concern that Ginnie Mae has not shared the underlying data it used to develop the new requirements and intends to implement them at a time when HFAs and other Ginnie Mae issuers and servicers are already dealing with heavy challenges caused by the pandemic. NCSHA urged Ginnie Mae to rescind the standards contained in the RFI and to develop new standards through an open and collaborative process.
Senate Passes Infrastructure Bill and FY 2022 Budget Resolution
On Tuesday, the U.S. Senate passed the Infrastructure Investment and Jobs Act by a bipartisan vote of 69–30. The bill authorizes $1.2 trillion in funding for “hard infrastructure” needs, such as roads, mass transportation, and rural broadband. To help cover the costs of these investments, the legislation would extend through 2032 a 10-basis-points fee Fannie Mae and Freddie Mac charge lenders for each loan the enterprises guarantee. The fee is currently set to expire at the end of the year.
Immediately following passage of the infrastructure package, the Senate passed by a party-line vote a Budget Resolution for fiscal year 2022 that would authorize historic levels of funding for housing, community development, and other federal programs. The resolution directs nearly every congressional committee to advance legislation by September 15 that will authorize new amounts of federal spending, including for the HOME Investment Partnerships program, the Housing Trust Fund, the Community Development Block Grant, rental assistance, down payment assistance, and tax incentives for housing. NCSHA summarized the Budget Resolution in more detail here. House Democratic leaders announced this week the House will return from its recess on August 23 to consider a House version of the FY 2022 Budget Resolution, which is expected to be very similar to the Senate version.
HUD Releases FY 2022 Fair Market Rents
HUD recently published its FY 2022 Fair Market Rents (FMRs), which will take effect October 1 unless a request for reevaluation is made by September 30. The Federal Register notice announcing the FMRs includes the procedure for reevaluation requests. FMRs are used to determine payment standards for a number of housing assistance programs, including the Housing Choice Voucher, the Moderate Rehabilitation Single Room Occupancy, and the project-based voucher programs, as well as other programs that require location-specific economic data.
Lawmakers Introduce Disaster Programs Reform Bill
Senator Brian Schatz (D-HI) and Representative Al Green (D-TX) recently introduced identical bills (S. 2471 and H.R. 4707) to amend and permanently authorize HUD’s Community Development Block Grant ‒ Disaster Recovery (CDBG-DR) program. The proposed amendments would allow HUD to issue regulations to reduce unnecessary delays and unpredictability that stem from the current CDBG-DR funding allocation and disbursement processes, create a disaster recovery fund that enables HUD to assist disaster-stricken communities without waiting for Congress to act on each event, and authorize quick release of funds to support grantees’ capacities to disburse CDBG-DR funds right after natural disasters hit their jurisdictions.
HUD Provides $30 Million in Grants for Senior Homeowners to Age in Place
Last Friday, HUD announced it had awarded $30 million in grants to 32 nonprofits, state and local governments, and public housing authorities to fund programs that allow aging homeowners to stay in their homes. The grants, distributed through HUD’s Older Adults Home Modification Program, will be used to install home accessibility modifications — grab bars, railings, and adaptive equipment for showers and/or stairs — in nearly 5,500 homes. The Maine State Housing Authority was granted the maximum $1 million to renovate a proposed 308 homes.
NCSHA in the News
Kankakee Daily Journal, 8.11.21, ‘Great period of uncertainty’ as eviction bans face expirations, court challenges
Legislative and Regulatory Activities
- August 24 | Comments Due | HUD Proposed Rule on Reinstatement of HUD’s Discriminatory Effects Standard
NCSHA, State HFA, and Industry Events
- August 18 – 20 | Arizona Housing Forum | Tucson, AZ
Jennifer Schwartz will speak at this event. - August 27 | Discounted Early Registration Deadline and Room Block Closes | NCSHA’s 50th Annual Conference
- August 30 | EXTENDED Entry Deadline | ACTION Campaign Housing Credit Video Contest
- September 1 | Special Purpose Credit Programs ‒ A Virtual Forum
- September 7 – 8 | 2021 HousingIowa Conference | Cedar Rapids, IA
Stockton Williams will speak at this event. - September 26 – 28 | NCSHA’s 50th Annual Conference | Detroit
- October 4 ‒ 6 | The 28th Annual Washington State Affordable Housing Conference | Virtual
Garth Rieman will speak at this event. - October 20 – 21 | 2021 Maine Affordable Housing Conference | Virtual
Stockton Williams will speak at this event.
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