NCSHA Washington Report | May 13, 2022

Five years after the federal Opportunity Zones program’s debut, reviews still generate more heat than light, with opinions on its effectiveness sharply divided and hard evidence of its impact and beneficiaries mostly anecdotal. Everybody agrees the program needs a major tune-up to fully achieve its goals — and probably to survive beyond its currently authorized expiration at the end of 2026.

A few weeks ago, a group of Senators and House members introduced legislation to improve the targeting and transparency of OZ investment activities and give the program more time to deliver the community-serving results its original authors — who are also behind the reform bill — always envisioned.

The effort is a legitimate example of bipartisan cooperation, led by Senators Scott (R-SC) and Booker (D-NJ). Their new bill seems consistent with principles in President Biden’s campaign platform, which included an improved OZ program as part of his agenda for “advancing racial equity across the American economy.”

A number of media outlets have reported examples of OZs benefitting investors and activities that wouldn’t seem to need public subsidy, while some have documented impacts apparently in the public interest. OZ proponents argue the bad headlines are outliers, the likes of which would be eliminated with policy guardrails they have long advocated. Critics say the program is too structurally flawed to be worth trying to salvage.

Most affordable housers have been casually interested observers of OZs, at most, so far. Hopes that the tax savings would attract additional capital to affordable housing in general and Housing Credit-financed properties in particular have largely fizzled. Still, with too few federal tools available as it is for community development, casting aside one in hand, however flawed, before trying to fix it is not a decision to be taken lightly.

Once upon a time, another well-intended real estate incentive tucked into a big tax cut bill signed into law by a Republican president fell short of its social policy potential out of the gate, as investors made windfall returns while some questionable projects received financing with little public accountability.

The Low Income Housing Tax Credit might have expired for good in 1989, as originally authorized, but for significant reforms that year through bipartisan action in Congress, led by Senators Mitchell (D-ME) and Danforth (R-MO), that reflected commitment by all the new program’s stakeholders to deepening its low-income benefit and public accountability.

Those reforms laid the foundation for the program’s permanence in 1993 and endurance since then as the linchpin of affordable housing development in the country. “Really, the 1989 legislation created what we have today,” remembers Bobby Rozen, who as Mitchell’s aide was the key congressional staff member working on the credit.

Are OZ advocates and their congressional allies similarly willing to go all-in on real reform that ensures the places and projects that most need investment get it? The answer may determine OZs’ future.

Stockton Williams | Executive Director

State HFA Emergency Housing Assistance

In This Issue

• Senate LIFELINE Bill Introduced
• Gordon Confirmed as HUD Assistant Secretary for Housing–Federal Housing Commissioner
• Fudge Addresses HUD Spending Plan at House, Senate Appropriations Hearings
• Cabinet Secretaries Ask Loan Servicers, HAF Administrators to Prevent Foreclosures
• FHA Clarifies Foreclosure Hold Policy for HAF Loans
• FHA Establishes Exclusive Listing Period for Priority Post-Foreclosure Buyers
• HUD Provides $20 Million to Expand Eviction Protection Program
• HUD Publishes FY 2022 HOME, HTF Homeownership Value Limits
• NCSHA in the News
• Looking Ahead

Senate LIFELINE Bill Introduced
This week, Senators Patrick Leahy (D-VT) and Susan Collins (R-ME) introduced the LIHTC Financing Enabling Long-term Investment in Neighborhood Excellence (LIFELINE) Act (S. 4181), which would allow state, local, territorial, and tribal governments to use Coronavirus State and Local Fiscal Recovery Funds (FRF) to make long-term loans to Housing Credit developments. The bill is companion legislation to the House version of the LIFELINE Act (H.R. 7078) introduced by Representatives Alma Adams (D-NC) and David Rouzer (R-NC) in March. NCSHA worked closely with the Senators and House members to develop the bills. We encourage Housing Credit stakeholders to ask their members of Congress to cosponsor them and to urge congressional leadership to pass the LIFELINE Act as soon as possible. If your organization would like to be listed as an endorser of the LIFELINE Act, contact Jennifer Schwartz. For more information, see our blog.

Gordon Confirmed as HUD Assistant Secretary for Housing–Federal Housing Commissioner
The Senate Wednesday evening approved Julia Gordon’s nomination to serve as Federal Housing Commissioner and Assistant Secretary for Housing at the Department of Housing and Urban Development (HUD). This is a key position that oversees most of HUD’s single-family and rental housing financing and asset management programs, as well as performance-based Section 8 contract administration. The nomination was approved by a partyline 50–50 vote, with all Democrats in support and all Republicans opposed. Vice President Kamala Harris broke the tie to approve the confirmation. Gordon is expected to be sworn in soon. Until recently, Gordon was the president of the National Community Stabilization Trust; she previously worked at the Center for American Progress, the Federal Housing Finance Agency, and the Center for Responsible Lending. NCSHA supported Gordon’s nomination throughout her long confirmation process.

Fudge Addresses HUD Spending Plan at House, Senate Appropriations Hearings
This week HUD Secretary Marcia Fudge testified on the administration’s FY 2023 HUD budget request before the House and Senate Appropriations housing subcommittees, making the case for increased HUD funding. During the Senate hearing, Senator Christopher Coons (D-DE), who led the congressional sign-on letter requesting $2.1 billion for the HOME Investment Partnerships program, spoke in support of HOME, calling it one of the most important foundations of the federal-state-local partnership to provide affordable housing through flexible funding that meets local needs. Republicans in both chambers criticized HUD for not spending CARES Act and American Rescue Plan dollars quickly enough. Secretary Fudge pointed out these new laws required HUD to launch new programs, which takes time, but she anticipates resources will begin to flow more quickly. The hearing recordings are available online: House Hearing | Senate Hearing

Cabinet Secretaries Ask Loan Servicers, HAF Administrators to Prevent Foreclosures
Last Friday, the Secretaries of Treasury, HUD, Veterans Affairs, and Agriculture issued a joint statement calling on federally backed mortgage servicers to make every effort to ensure no individual or family experiences unnecessary hardship or foreclosure while assistance is available under the Homeowner Assistance Fund (HAF). They specifically urged servicers to pause foreclosure proceedings when they are notified by a HAF program administrator of a pending HAF application to avoid harm to vulnerable homeowners.

FHA Clarifies Foreclosure Hold Policy for HAF Loans
Last Friday, the Federal Housing Administration (FHA) issued updated Homeowner Assistance Fund Frequently Asked Questions, adding language to “strongly encourage” mortgagees to suspend foreclosures under any of three circumstances: when the mortgagee receives notification from the state HAF program that the borrower has applied for HAF funds (I Record); the mortgagee is notified the borrower has received final approval for HAF funds (A Record); or a state HAF program requires a foreclosure action to be suspended. To receive extensions of normal servicing deadlines, mortgagees must request approval through the Extensions and Variances Automated Requests System.

FHA Establishes Exclusive Listing Period for Priority Post-Foreclosure Buyers
Last week, FHA published Mortgagee Letter (ML) 2022-08, “Expanding Affordable Housing Supply Through FHA’s Claims Without Conveyance of Title (CWCOT) Process,” which adds an initial 30-day exclusive sales period for buyers who are owner-occupants, HUD-approved nonprofits, and governmental entities. Through the exclusive sales period, these specified buyers may bid on properties foreclosed through the CWCOT post-foreclosure process before investors have an opportunity to do so. The ML also extends the mortgagee’s conveyance timeline to provide these buyers additional time to obtain financing and complete the sale.

HUD Provides $20 Million to Expand Eviction Protection Program
On May 9, HUD announced $20 million in grants for its Eviction Protection Grant Program, doubling the amount originally allocated when the program was launched last November. The funds will be distributed to 11 nonprofit organizations and government entities in grants ranging from $1 million to $2.4 million. HUD provided the grants to legal service providers serving areas with high rates of eviction or prospective evictions, including rural areas. The Eviction Protection Grant Program is designed to support families recovering from the public health and economic impacts of the Covid-19 pandemic.

HUD Publishes FY 2022 HOME, HTF Homeownership Value Limits
HUD this week issued 2022 homeownership value limits for the HOME Investment Partnerships program and Housing Trust Fund (HTF), effective June 1. Under these limits, the initial purchase price or after-rehabilitation value of homeownership units assisted with HOME or HTF funds cannot exceed 95 percent of the area median purchase price for single-family housing. The 2022 limits and the methodologies HUD used to determine them are available on HUD Exchange.

NCSHA in the News
NBCRightNow.com, 5.9.22, Homeowners Assistance Fund
Inside Mortgage Finance, 5.12.22, Feds Ask Servicers to Pause Foreclosure of HAF Applicants

Looking Ahead…

Legislative and Regulatory Activities

• 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
• July 11 | Comments Due to NCSHA | Joint Agency Proposed Community Reinvestment Act Regulations
• August 5 | Comments Due | Joint Agency Proposed Community Reinvestment Act Regulations

NCSHA, State HFA, and Industry Events

• May 18 | Padget Law Group Webinar on the Homeowner Assistance Fund
  Rosemarie Sabatino and Greg Zagorski 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.

Learn more about membership here.