NCSHA Washington Report | April 29, 2022
The primary policy to prevent mass homeowner distress during the pandemic was mass mortgage forbearance, provided through acts of Congress and moves by various federal agencies. Allowing so many borrowers to put off payments for so long without suffering penalties and hardship they otherwise would have was an unprecedented experiment.
It worked.
A new, must-read Brookings Institution review of the federal economic policy response to Covid concludes “pandemic-era forbearance worked well in reducing foreclosures and delinquencies, better than the mortgage modification programs of the Great Recession, both because there were fewer restrictions and because the economic environment was so different.”
While 8.5 million homeowners were in forbearance at some point, the number now is 630,000, a more than 90 percent reduction, according to the Federal Reserve Bank of Philadelphia. But, as the bank’s latest analysis shows, not everybody is out of the woods.
Hundreds of thousands of borrowers more than 90 days behind on their mortgages were never in forbearance plans, and many are not in a loss mitigation arrangement with their loan servicer. “Unless mortgage servicers can successfully execute home-retention options in the coming months,” writes the bank, “many borrowers face the prospect of selling their homes or losing them to foreclosure.” Foreclosures, by the way, are back to their pre-pandemic level.
Federal agencies have responded recently on two fronts.
The first is FHA’s 40-year-term loan modification and partial claim option, announced April 18. The policy aims to help homeowners reach a targeted 25 percent reduction on the monthly principal and interest portions of their mortgage payments when other Covid recovery loss mitigation options are unable to do so. It includes a critical exemption for Mortgage Revenue Bond-backed loans, in response to NCSHA’s recommendation to the agency.
The second recent step to shore up at-risk homeowners is FHFA’s April 6 directive to mortgage servicers to “suspend foreclosure activities for up to 60 days if the servicer has been notified that a borrower has applied for assistance under the Department of the Treasury’s Homeowner Assistance Fund (HAF).” (FHA has not followed suit.)
We and other industry stakeholders are still assessing the implications of these policies. Areas of common concern — and potential disagreement — are how well each serves at-risk borrowers and when and how to tap the HAF among the expanding menu of homeowner relief options.
In fact, Congress and the federal government’s trust in the states to optimize HAF, working closely with servicers as well as counselors, is quietly bearing fruit. More to come in a future column.
Stockton Williams | Executive Director
State HFA Emergency Housing Assistance
In This Issue
- Hollins Named Louisiana Housing Corporation Executive Director
- NCSHA Welcomes New Members
- New Fannie, Freddie Plans Include Increased Housing Credit Investment and Manufactured Housing Lending
- NLIHC Report Finds Gap in Affordable Housing
- NCSHA in the News
- Looking Ahead
Hollins Appointed Louisiana Housing Corporation Executive Director
The Board of Directors of the Louisiana Housing Corporation (LHC) has named Joshua G. Hollins as the agency’s new executive director. Hollins comes to LHC from Stifel, Nicolaus & Company where he served as the vice president of public financing. Previously, he was the executive counsel and chief of staff of the Louisiana Department of Transportation and Development.
NCSHA Welcomes New Members
These organizations joined NCSHA as affiliate members in April: Council for Native Hawaiian Advancement; MACO Development Company, LLC; MG Housing Strategies; Prevailing Wage Consulting, LLC; and US Housing Consultants. If you work with a partner interested in joining NCSHA, please contact Phaedra Stoger.
New Fannie, Freddie Plans Include Increased Housing Credit Investment and Manufactured Housing Lending
The Federal Housing Finance Agency (FHFA) on Wednesday published Fannie Mae’s and Freddie Mac’s Underserved Market Plans for 2022–24. The plans outline how each firm intends to meet its obligations under FHFA’s Enterprise Duty-to-Serve Rule. In their plans, Fannie Mae and Freddie Mac have increased their rural Housing Credit investment goals. Fannie Mae intends to make 78 such investments in 2022 and 70 in 2023 and 2024, compared to 65 such investments in 2020 and 52 in 2021. Freddie Mac pledges to make 20 such investments in 2022, 22 in 2023, and 24 in 2024, compared to an average of 15 from 2018 to 2020. Freddie Mac also intends to increase its Housing Credit investments to support housing in high-needs rural areas. Both firms’ plans pledge to increase manufactured housing home loan purchases. Fannie Mae and Freddie Mac initially submitted their 2022–24 plans in May 2021, but FHFA rejected both plans in October, saying they did not sufficiently support affordable housing activities.
NLIHC Report Finds Gap in Affordable Housing
Last week, the National Low Income Housing Coalition released The Gap, its annual report on the shortage of housing for extremely low-income households (defined in the report as households with incomes below 30 percent of the area median or the poverty level). The report found the United States has a shortage of seven million rental homes that are both affordable and available to renters with extremely low incomes. Additionally, no state has an adequate supply of affordable housing options for extremely low-income households, who account for 25 percent of all U.S. renters. The report recommends increasing funding for the Housing Trust Fund, public housing, and Housing Choice Vouchers.
NCSHA in the News
Pew Stateline, 4.25.22, Rising Construction Costs Stall Affordable Housing Projects
Route Fifty, 4.25.22, Rising Construction Costs Stall Affordable Housing Projects
Legislative and Regulatory Activities
- May 2 | Comments Due to NCSHA | HUD Proposed Rule on Increased 40-Year Term for Loan Modifications
- 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
- May 31 | Comments Due | HUD Proposed Rule on Increased 40-Year Term for Loan Modifications
NCSHA, State HFA, and Industry Events
- 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. - May 23 | NCSHA’s Housing Credit Connect: Last Day for Registration and Hotel Discounts | Chicago
- May 25 – 27 | ABA Forum on Affordable Housing and Community Development Law Annual Conference | Washington, DC
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
Back to NCSHA Washington Report
Only members receive NCSHA Blog and Washington Report.
