NCSHA Washington Report | March 25, 2022

Sarah Bloom Raskin’s withdrawal last week of her nomination to become vice chair of the Federal Reserve due to Senate Banking Committee Republicans’ and Senator Manchin’s objections to Raskin’s interests in “integrating climate change risk analysis into the U.S.’s top financial regulatory institution” shouldn’t distract attention from a full-scale regulatory greening of the financial system gaining steam across the federal government.

Last fall, the White House announced Treasury, HUD, USDA, and the VA “are each working to enhance their federal underwriting and lending program standards to better address the climate-related financial risks to their loan portfolios, while ensuring the safety and security of communities most impacted by climate change.”

In December, the Office of the Comptroller of the Currency issued “draft principles designed to support the identification and management of climate-related financial risks by banks with more than $100 billion in total consolidated assets.”

Also that month, the Federal Housing Finance Agency said since “climate change poses a serious threat to the U.S. housing finance system,” Fannie, Freddie, and the Federal Home Loan Banks “have an important leadership role to play in addressing this issue.” FHFA said it plans to “hold the Enterprises accountable for ensuring resiliency to climate risks.”

This week, the U.S. Securities and Exchange Commission proposed new rules that would require all U.S. public companies to report on their climate-related issues, how they are managing them, and their impacts on companies’ business strategies and consolidated financial statements. SEC registrants would be responsible for reporting on their own greenhouse gas emissions as well as emissions from energy they buy and “emissions from upstream and downstream activities in [their] value chain.”

The policy foundation of these efforts is a report from last October by the Financial Stability Oversight Council (FSOC), which put forward a raft of recommendations for how “financial regulators can both promote the resilience of the financial system and help it support an orderly, economy-wide transition toward the goal of net-zero emissions.”

There’s wide agreement among real estate and financial services industry groups that extreme weather events can, as the Mortgage Bankers Association said recently, “result in unexpected costs to borrowers or losses to income, and can reduce the value of the property, all of which increase credit risk.” The questions of what to do about it and who pays will generate fierce lobbying fights (and probably more contested presidential appointments) for months and years to come.

State HFAs and other financiers of affordable housing will need to balance the well-documented fact climate disruptions disproportionately hurt many of the households and communities they serve with an inconvenient truth the FSOC report acknowledges: “Certain actions to address climate-related financial risks could impact financially vulnerable communities in the form of higher insurance and credit costs or the inability to obtain insurance or credit.”

It may be the case that “the paths of climate policy with housing policy have become obviously and inextricably intertwined,” as Harvard’s Carlos Martin argues in a new essay. Shaping their direction is the next frontier.

Stockton Williams | Executive Director 

State HFA Emergency Housing Assistance

In This Issue

• Adams Announces at LegCon Bipartisan Legislation to Align Fiscal Recovery Fund and Housing Credit
• Biden Signs FY 2022 Spending Bill, Plans to Release FY 2023 Budget March 28
• Treasury Reallocates $1 Billion in ERA 1 Funding to States, Localities, Tribes
• Bipartisan Group of Senators Writes Treasury on ERA 2 Reallocation Policy
• Senate Banking Committee Advances Thompson’s FHFA Nomination
• HUD Awards $2.6 Billion to HFAs, Others for Homelessness Assistance
• CFPB Blog Calls on Servicers to Participate in HAF
• Biden Administration Releases Action Plan for Reducing Biases in Home Appraisals
• IRS Issues 2022 Population Figures for Private Activity Bond, Housing Credit Volume Caps
• IRS Provides Permanent Authority to Conduct Telephonic Public Hearings for Tax-Exempt Bonds, Housing Credit QAPs
• Labor Department Proposes Rulemaking to Update Davis-Bacon Act Regulations
• NCSHA in the News
• Looking Ahead

Adams Announces at LegCon Bipartisan Legislation to Align Fiscal Recovery Fund and Housing Credit
Last week, during NCSHA’s Legislative Conference, Representative Alma Adams (D-NC) announced the introduction of the bipartisan LIHTC Financing Enabling Long-Term Investment in Neighborhood Excellence (LIFELINE) Act (H.R. 7078), which would allow states and localities to use Coronavirus State and Local Fiscal Recovery Fund (SLFRF) resources to make long-term loans to Housing Credit developments. Representative David Rouzer (R-NC) is the Republican lead on the legislation, and Representative Carolyn Maloney (D-NY), who chairs the House Committee on Oversight and Reform which has jurisdiction over SLFRF, joined Adams and Rouzer as an original cosponsor. The bill is a high priority for NCSHA. We expect Senator Patrick Leahy (D-VT) to introduce companion legislation soon. For more information, see our blog.

Biden Signs FY 2022 Spending Bill, Plans to Release FY 2023 Budget March 28
On March 15, President Biden signed into law the Fiscal Year (FY) 2022 spending bill (P.L. 117-103). The bill provides $65.7 billion for HUD programs and activities, an increase of $5.3 billion from FY 2021, including $1.5 billion for the HOME Investment Partnerships program, the highest level of funding HOME has received in more than a decade. The bill also includes increases for key USDA rural housing programs over FY 2021 enacted levels. For more information on FY 2022 funding levels, see NCSHA’s blog and budget chart.

The president is expected to release his FY 2023 budget as early as March 28. As rents and home prices continue to rise across the country, driving inflation, NCSHA and many others eagerly await the budget release to see whether it includes substantial federal investments in affordable housing programs needed to address the current crisis.

Treasury Reallocates $1 Billion in ERA 1 Funding to States, Localities, Tribes
Last week, the Treasury Department announced the second round of reallocations from the Emergency Rental Assistance (ERA) program. Treasury redistributed just over $1 billion in funds to states, localities, and tribes that have ongoing needs and have obligated most, if not all, of their ERA funding. Of the total reallocated, nearly half was voluntarily transferred from grantees to other grantees in the same state. The reallocations come from the ERA 1 program (the initial $25 billion program authorized in the Consolidated Appropriations Act of 2021).

Bipartisan Group of Senators Writes Treasury on ERA 2 Reallocation Policy
Treasury has not yet announced how it will conduct reallocation of funds from ERA 2 (the $21.55 billion program authorized in the American Rescue Plan Act). Senators Joe Manchin (D-WV), Shelley Moore Capito (R-WV), and 10 others wrote Treasury this week saying, “every state and locality that has a plan to expend this funding by the statutory deadline in 2025 should have access to the full funding levels initially allocated by Congress.” The letter says Treasury “may seek to reallocate funding from states who have demonstrated the need and the ability to utilize all federally directed funding.”

Senate Banking Committee Advances Thompson’s FHFA Nomination
The Senate Banking Committee on March 16 voted to favorably report Sandra Thompson’s nomination to serve as director of the Federal Housing Finance Agency (FHFA). Thompson has served as acting director of FHFA since Mark Calabria stepped down in June 2021. President Biden nominated her to serve a full term as director in December. The committee advanced Thompson’s nomination by a nearly party-line vote of 13 – 11, with all Democrats voting in support and all but one Republican, Mike Rounds of South Dakota, voting in opposition. Thompson’s nomination will now be sent to the full Senate. It is not yet known when the Senate will consider the nomination.

At the same session, the committee also voted to favorably report the nominations of Jerome Powell to serve another term as chair of the Federal Reserve, Lael Brainard to serve as vice chair of the Federal Reserve, and Lisa Cook and Phillip Jefferson to serve on the Federal Reserve Board.

HUD Awards $2.6 Billion to HFAs, Others for Homelessness Assistance
On March 14, HUD announced more than $2.6 billion in Fiscal Year 2021 Continuum of Care (CoC) Competition Awards to 7,000 local homeless housing and service programs across the country, including many run by state HFAs. The CoC program is designed to promote communitywide commitments to ending homelessness and is the largest source of federal grant funding for homeless service and housing programs. The FY 2021 awards reflect the administration’s commitment to equity and evidence-based solutions to address homelessness. FY 2021 grants were directed specifically toward programs and projects that use a Housing First approach; reduce unsheltered homelessness and the criminalization of homelessness; foster partnerships between housing and health agencies, including to leverage and coordinate American Rescue Plan resources; advance racial equity and address racial disparities in homelessness; and engage people with lived experience of homelessness in decision-making. Read the list of CoC competition awards.

CFPB Blog Calls on Servicers to Participate in HAF
On March 14, the Consumer Financial Protection Bureau (CFPB) issued a blog that strongly encouraged servicers to participate in Homeowner Assistance Fund (HAF) programs as a way to prevent avoidable foreclosures. Furthermore, CFPB encouraged servicers to provide HAF training and information to their customer service representatives and reminded servicers to provide accurate information about the loss mitigation process to borrowers. CFPB reminded servicers they are responsible for maintaining policies and procedures reasonably designed to ensure the proper evaluation of loss mitigation applications. The blog linked to CFPB’s March 31, 2021, compliance and policy guidance in Bulletin 2021-02, which communicated CFPB will be paying particular attention to how mortgage servicers respond to borrower requests for loss mitigation assistance and process loss mitigation applications.

Biden Administration Releases Action Plan for Reducing Biases in Home Appraisals
Vice President Kamala Harris joined HUD Secretary Marcia Fudge and White House Domestic Policy Advisor Susan Rice on Wednesday to announce the Biden Administration’s action plan for advancing equity in the home appraisal process. The plan was developed by the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE), which the administration formed last June to examine the issue. PAVE is composed of representatives from the White House and 13 federal housing and banking regulators and co-chaired by Fudge and Rice. The task force’s plan includes five major steps its member agencies will undertake: developing legislation to improve oversight of the appraisal industry; issuing new guidance to better allow consumers to challenge appraisals, including protections against discrimination in an upcoming rule on automated valuation models; increasing diversity in the appraisal profession by limiting unnecessary job requirements; and better leveraging available federal data on appraisals. The task force will continue to meet to measure its progress on achieving these goals.

The Senate Banking Committee held a hearing the next day to further evaluate how to strengthen oversight and equity in the home appraisal process.

IRS Issues 2022 Population Figures for Private Activity Bond, Housing Credit Volume Caps
On March 21, the Internal Revenue Service issued Notice 2022-12 providing the resident population figures needed to determine the 2022 private activity bond (PAB) volume cap and the population-based component of the Low Income Housing Tax Credit ceiling. Last November, IRS issued Revenue Procedure 2021-45, which establishes the PAB volume cap at the greater of $110 per capita or $335,115,000 and the population component of the Housing Credit ceiling at the greater of $2.60 per capita or $2,975,000. 

IRS Provides Permanent Authority to Conduct Telephonic Public Hearings for Tax-Exempt Bonds, Housing Credit QAPs
On March 18, IRS issued Revenue Procedure 2022-20, providing permanent authority to conduct telephonic public hearings for tax-exempt private activity bonds. IRS provided temporary authority to conduct telephonic public hearings several times during the pandemic, with the most recent authority expiring at the end of this month. NCSHA has repeatedly urged IRS to authorize telephonic public hearings permanently, and this new ruling adopts our recommendation. The ruling also permanently allows Housing Credit agencies to conduct Qualified Allocation Plan (QAP) public hearings under the same rules allowed for private activity bond hearings. In Notice 2022-05, IRS extended the ability to conduct telephonic QAP hearings through March 31, 2022, by cross reference to the private activity bond rules. The new permanent authority to conduct telephonic tax-exempt bond public hearings applies automatically to Housing Credit QAP public hearings.

Labor Department Proposes Rulemaking to Update Davis-Bacon Act Regulations
On March 18, the U.S. Department of Labor published a Notice of Proposed Rulemaking (NPRM) as it considers updating the regulations that implement the Davis-Bacon Act to reflect better the needs of construction industry workers and planned federal construction investments. Labor’s press release announcing the NPRM says the proposal seeks to speed up prevailing wage updates, creating several efficiencies in the current system and ensuring prevailing wage rates keep up with actual wages. It also says many of the proposed regulatory changes will improve the department’s ability to administer and enforce labor standards more effectively and efficiently. Comments on the NPRM are due May 17. To help inform NCSHA’s comments, please contact Garth Rieman by May 6.

NCSHA in the News
Affordable Housing Finance, 3.18.22, Rising Costs Hit Affordable Housing Projects
The Charlotte Observer, 3.17.22, Bipartisan bill would let NC, other states use COVID relief for affordable housing
The Mortgage Reports, 3.16.22, What is a Mortgage Credit Certificate and how does it work?

Looking Ahead…

Legislative and Regulatory Activities

• May 6 | Comments Due to NCSHA | Labor Department Proposed Rulemaking to Update Davis-Bacon Act Regulations
• May 17 | Comments Due | Labor Department Proposed Rulemaking to Update Davis-Bacon Act Regulations

NCSHA, State HFA, and Industry Events

• March 29 – 30 | Nebraska Investment Finance Authority 2022 Housing Innovation Marketplace | La Vista, NE
  Jim Tassos will speak at this event.
• March 30 | National Housing Conference: Solutions for Affordable Housing Communications Convening | Washington, DC
  Jennifer Schwartz will speak at this event.
• March 31 | ABA Forum on Affordable Housing and Community Development Law: American Rescue Plan Act Programs | Webinar
  Jennifer Schwartz will speak at this event.
• April 28 – 29 | Novogradac Affordable Housing Conference | San Francisco and Online
  Jennifer Schwartz will speak at this event.
• May 2 – 4 | Mountain Plains HFA Summit | Billings, MT
  Garth Rieman will speak at this event.
• May 11 – 12 | Outside the Box: 2022 PHFA Housing Forum | Harrisburg, PA
  Jennifer Schwartz will speak at this event.
• June 8 – 9 | CAHEC Partners Conference | Greensboro, NC
  Stockton Williams will speak at this event.
• June 21 – 24 | NCSHA’s Housing Credit Connect | Chicago

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