NCSHA Washington Report | June 9, 2023
Doubters of bipartisanship’s vitality in a polarized Congress had a rough week at the hands of Republicans and Democrats who jointly introduced two new bills that would lower costs for struggling homeowners and home buyers while attracting wealth-building investment in homes and neighborhoods they live in.
Senator Cortez Masto (D-NV) and Senator Cassidy (R-LA) are proposing the most significant statutory improvements to Mortgage Revenue Bonds in decades. Their Affordable Housing Bond Enhancement Act makes this longtime linchpin of affordable home mortgage financing — the first MRB was issued a half-century ago by Virginia Housing — more responsive to the needs of lower-income buyers and owners in the current, and coming, housing market.
The bill increases the size of home improvement loans HFAs can fund with MRBs, to $50,000, and indexes the limit to inflation. Recognizing lower-income buyers have hardly benefitted from the surge in home repair activity over the last few years, and understanding the broad-based health and wealth benefits improvements can deliver, HFAs in Iowa, Illinois, Michigan, and other states have rolled out new approaches the bond enhancement act could catalyze.
The legislation also allows MRBs to fund mortgage refinances. With refis picking back up and projected to bounce back further next year with an anticipated drop in mortgage rates, new opportunities for more lower-income owners to lock in significant long-term cost savings can help ensure the next refi wave is more equitable than the last one.
The Affordable Housing Bond Enhancement Act also makes time- and cost-saving efficiency improvements to the Mortgage Credit Certificate program, which uses the same bond authority as MRBs. NCSHA is working with House leaders on companion legislation.
It will be a bipartisan bill, like the Neighborhood Homes Investment Act, reintroduced in the House this week by Representative Kelly (R-PA) and Representative Higgins (D-NY). Their proposal, like the bipartisan version introduced in the Senate in March, creates a new federal tax credit to spur construction and rehab of affordable for-sale homes in areas dealing with disinvestment, weak housing values, and low homeownership rates.
HFAs can tell you there are places in most states where people want to live, and in some cases, where employers want to locate, where it’s actually affordable to build needed new starter homes or fix up existing properties, but not financially feasible to do so because of market perceptions of value.
In Georgia, Ohio, Maine, and other states, HFAs are experimenting with incentives to fix the problem. A federal credit available nationally would inject new equity investment to scale up promising approaches more widely.
The Affordable Housing Bond Enhancement Act and Neighborhood Homes Investment Act ought to be the pillars of the homeownership title of a bipartisan affordable housing tax incentive bill this year.
Stockton Williams | Executive Director
Washington Report will return June 23.
Stockton Williams | Executive Director
State HFA Emergency Housing Assistance
In This Issue
- NCSHA Asks Treasury, IRS to Issue Guidance on Housing Credit, Bond Programs
- Cortez Masto, Cassidy Introduce Legislation to Strengthen MRBs, MCCs
- Kelly, Higgins Introduce Neighborhood Homes Investment Act
- HUD Awards $45 Million to PHAs, HFAs to Help Those Experiencing or At Risk of Homelessness
- NCSHA in the News
- Looking Ahead
NCSHA Asks Treasury, IRS to Issue Guidance on Housing Credit, Bond Programs
On June 9, NCSHA submitted a letter to the Internal Revenue Service (IRS) and the U.S. Department of the Treasury encouraging them to include guidance on various issues related to the Housing Credit and Housing Bonds in their 2023–24 Priority Guidance Plan. The Priority Guidance Plan is an annual document that identifies guidance projects Treasury and IRS will work on during the 12-month period beginning July 1 through June 30.
NCSHA’s letter urges IRS and Treasury to finalize the Housing Credit compliance monitoring regulations; modify and finalize the temporary regulations related to Average Income Test record-keeping and reporting; make changes to existing guidance related to restoration after a casualty loss; and develop new guidance related to the treatment of existing tenants in acquisition/rehabilitation properties undergoing syndication, implementation of the Violence Against Women Act, nonprofits’ right of first refusal, planned foreclosures, and Housing Credit disaster relief.
NCSHA also asked IRS and Treasury to provide for more flexible use of carryforward private activity bond (PAB) authority for affordable housing purposes, issue final guidance on PAB record retention requirements, amend existing regulations to change how mortgage fees are considered when calculating an MRB mortgage’s effective interest rate, and amend the Yield and Valuation of Purpose Investment regulations to address covered investments.
The ACTION Campaign, which NCSHA co-chairs with Enterprise Community Partners, also submitted comments on the Priority Guidance Plan related to the Housing Credit.
Cortez Masto, Cassidy Introduce Legislation to Strengthen MRBs, MCCs
Senators Catherine Cortez Masto (D-NV) and Bill Cassidy (R-LA) Tuesday introduced the Affordable Housing Bond Enhancement Act (S. 1805). This legislation, which NCSHA has worked on closely with the senators’ offices, would expand HFAs’ ability to provide affordable homeownership by strengthening the Mortgage Revenue Bond (MRB) and Mortgage Credit Certificate (MCC) programs. Many of NCSHA’s long-standing priorities for improving housing bonds are included, such as increasing the MRB home improvement loan limit, allowing MRBs to be used for refinancing loans, providing HFAs additional flexibility in how they use housing bond authority, and simplifying how a borrower’s MCC benefit is calculated. For more information, see NCSHA’s blog and a summary and section-by-section analysis of the bill.
Kelly, Higgins Introduce Neighborhood Homes Investment Act
Earlier today, Representatives Mike Kelly (R-PA) and Brian Higgins (D-NY) introduced the Neighborhood Homes Investment Act (H.R. 3940). The legislation, one of NCSHA’s top priorities, seeks to increase the supply of affordable for-sale housing through a new tax credit. Senators Ben Cardin (D-MD) and Todd Young (R-IN) introduced identical legislation (S. 657) in March. The bill establishes the Neighborhood Homes Credit (NHC) to promote new construction or substantial rehabilitation of affordable, owner‐occupied housing located in distressed neighborhoods. Modeled after the Housing Credit, the NHC would authorize states to administer the program and direct them to develop allocation plans. With the NHC, project sponsors could claim a credit to cover the difference between the costs to rehabilitate a home in a distressed neighborhood, or build a new home on an empty lot, and the price for which the home is sold. For more information, please see NCSHA’s blog.
HUD Awards $45 Million to PHAs, HFAs to Help Those Experiencing or At Risk of Homelessness
On Monday, HUD announced it will provide $45 million to 135 PHAs, HFAs, and partnering Continuum of Care communities for programs to address homelessness among people in unsheltered settings and in rural communities. Grantees will use the funding to create 3,379 “stability vouchers” to assist households experiencing or at risk of homelessness; those fleeing or attempting to flee domestic violence, dating violence, sexual assault, stalking, or human trafficking; and veterans and families that include a veteran family member who meets one of the preceding criteria. HUD awarded 10 HFAs a total of almost $3 million in this announcement. See the full list of award recipients.
NCSHA in the News
WTHI-TV, 6.8.23, Illinois increases home buying access with new program
National Mortgage News, 6.8.23, First-time home buyer program reform is the focus of new legislation
U.S. Department of Agriculture, 6.7.23, U.S. Department of Agriculture Announces Key Staff Appointments
Kiowa County Press, 6.7.23, Affordable housing in Colorado mountain towns could get boost from Neguse proposals
Colorado Newsline, 6.6.23, Affordable housing in Colorado mountain towns could get boost from Neguse proposals
Legislative and Regulatory Activities
- June 9 | Comments Due | Treasury/IRS Priority Guidance Plan
- June 19 | Comments Due | IRS MRB and MCC Purchase Price Limits and Safe Harbors Revenue Procedure
- June 23 | Comments Due to NCSHA | HUD Proposed Payment Supplement Partial Claim
- June 26 | Comments Due | FHFA Proposed Rule on Fair Lending, Fair Housing, and Equitable Housing Finance Plans
- June 30 | Comments Due | HUD Proposed Payment Supplement Partial Claim
- June 30 | Comments Due to NCSHA | Notice of Preliminary Determination on Adoption of Energy Efficiency Standards for New Construction of HUD- and USDA-Financed Housing
- July 17 | Comments Due to NCSHA | FHFA RFI on Multifamily Property Tenant Protections
- July 31 | Comments Due | FHFA RFI on Multifamily Property Tenant Protections
NCSHA, State HFA, and Industry Events
- June 13 – 16 | NCSHA’s Housing Credit Connect & Marketplace | Seattle, WA
- June 21, 11:30 a.m. ET | Joint Center for Housing Studies’ Webcast: State of the Nation’s Housing 2023 Release | Registration
Back to NCSHA Washington Report
Only members receive NCSHA Blog and Washington Report.
