NCSHA Washington Report | August 4, 2023

The Federal Housing Finance Agency received nearly 3,500 responses to its request for input on potential tenant protections for multifamily properties backed by Fannie Mae and Freddie Mac, as the agency tries “to identify tangible solutions for mitigating the challenges tenants are facing nationwide, particularly among underserved communities.”

Fannie and Freddie hold a large share of multifamily debt and support 40 percent of all multifamily rental units — about eight million apartments — according to the Mortgage Bankers Association. The companies are required by law to support affordable housing.

For renter advocates, Fannie and Freddie’s market share and mission are the basis for wide-ranging new policies. “Tenants, especially low-income tenants, desperately need the federal government to provide a floor of minimum protections,” argues the National Housing Law Project. “Relying on state and local landlord-tenant law to protect tenants is unrealistic and naive given the seismic shifts in the rental housing market — especially in the aftermath of the Great Recession, through the pandemic, and into the present day.”

Apartment industry representatives, such as the National Multifamily Housing Council and National Apartment Association, say such measures would exceed FHFA’s legal authority. “Moreover,” they write, “the consequences of such broad application would undoubtedly negatively impact the multifamily and related secondary mortgage market in several ways including, but not limited to, disinvestment in affordable housing, increased operational confusion, reduced property revenue and increased expenses or uncollected debt and an overall decrease in borrower interest and willingness to use [Fannie and Freddie’s] products.”

The divergence of views and complexity of the underlying issues suggest FHFA’s determination of what, if any, new requirements can and should be imposed on apartment operators should be based on continued stakeholder engagement and careful agency analysis. In the meantime, FHFA can direct Fannie and Freddie to provide meaningful additional protections to hundreds of thousands of at-risk renters through actions advocates and industry can both get behind.

First, through more aggressive action to preserve the affordability of existing affordable units. More than 500,000 apartments affordable to extremely low-income renters were lost during the past few years, according to Moody’s. The National Housing Preservation Database projects 327,000 subsidized units will reach the end of their required affordability periods by 2025.

The circumstances that create preservation needs — expiring subsidy commitments and rent protections, aging building systems and accruing repair needs — put whole buildings of low-income tenants at risk. And when properties cannot be preserved as affordable, entire communities can be affected.

NCSHA has provided detailed recommendations to FHFA on how Fannie and Freddie should increase financing for preservation, avoid regulatory pressures that would cause them to pull back, and help crack down on abusive practices undercutting long-term affordability.

We also recommend Fannie and Freddie do more to support “eviction mitigation” partnerships of state and local agencies, court systems, renter aid groups, and apartment owners. The programs, which are endorsed by advocates and industry, are addressing root causes of housing instability that work for all parties — and maybe building consensus for tackling tougher issues in the future.

Stockton Williams | Executive Director

State HFA Emergency Housing Assistance

In This Issue

• Olson Named South Dakota Housing Director
• NCSHA Welcomes New Members
  
• White House Council on Environmental Quality Publishes NEPA Proposed Rule
• DOE Announces Energy Rebate Plans
  
• FHA Publishes Proposed Rule to Modernize Engagement with Borrowers in Default
• HUD Publishes NOFO to Study Office-to-Residential Conversions
• Looking Ahead

Olson Named South Dakota Housing Director
Chas Olson has been appointed executive director of South Dakota Housing. He has served as interim director since April and previously as the director of rental housing development and a housing development officer. Before joining the agency in 2014, Olson worked in various roles for a national bank.

NCSHA Welcomes New Members
These organizations have joined NCSHA as affiliate members since June: AffordableHousing.com, Capital Real Estate Consultants, and Indigo Real Estate Services. If you work with a partner interested in becoming a member, please contact Phaedra Stoger.

White House Council on Environmental Quality Publishes NEPA Proposed Rule
On July 28, the White House Council on Environmental Quality published a proposed rule to implement new permitting efficiencies that were included in legislation passed in June to suspend the debt ceiling. That legislation made a series of statutory changes to the National Environmental Protection Act (NEPA), which the proposed rule would implement, including clarifying the appropriate level of NEPA review and the role of each agency when multiple agencies must participate in an environmental review, codifying existing practices related to the use of categorical exclusions (CEs), allowing agencies to rely on CEs from other agencies, and setting deadlines and page limits to help ensure timely completion of environmental reviews. The proposed rule is open for public comment through September 29.

DOE Announces Energy Rebate Plans
On July 27, the U.S. Department of Energy (DOE) announced it is accepting applications from states for funding for two new home energy rebate programs created by the Inflation Reduction Act: the Home Efficiency Rebate and the Home Electrification and Appliance Rebate. DOE also published detailed guidance for program implementation and application instructions. Applications are due by January 31, 2025.

In addition, DOE has published lists of state rebate funding allocations and federal programs that qualify households for categorical eligibility for the rebates, including the Low Income Home Energy Assistance Program, privately-owned buildings receiving project-based rental assistance or housing residents receiving tenant-based rental assistance, and the Low Income Housing Tax Credit.

FHA Publishes Proposed Rule to Modernize Engagement with Borrowers in Default
On Monday, the U.S. Department of Housing and Urban Development (HUD) published in the Federal Register a proposed rule that, if finalized, would allow servicers to use electronic and other remote communication methods for conducting interviews with borrowers to satisfy the Federal Housing Administration’s early default intervention requirements and eliminate the requirement that servicers make at least one trip to the mortgaged property to schedule a meeting with the borrower. Notably, the proposed rule, if adopted, also would expand the meeting requirement to include borrowers who do not reside in the mortgaged property or who have a mortgaged property that is not within 200 miles of their mortgagee, its servicer, or a branch office. Comments on the proposed rule are due to HUD by September 29.

HUD Publishes NOFO to Study Office-to-Residential Conversions
HUD’s Office of Policy Development and Research has announced a new funding opportunity to study recent efforts to convert downtown office buildings into properties with residential units. Research supported by this NOFO will compile case studies on conversion projects undertaken since the start of the pandemic, improve understanding of the financing limitations associated with conversions and the policy reforms and subsidies that can make projects more economically viable, propose metrics to evaluate conversions on housing affordability and other outcomes, and develop a guide for local leaders and practitioners. HUD will award up to $860,000 under the NOFO. Proposals are due by October 12.

Looking Ahead…

Legislative and Regulatory Activities

• August 10 | Comments Due to NCSHA | HUD Request for Comment on Improving Access to Public Benefit Programs
• August 14 | Comments Due | HUD Request for Comment on Improving Access to Public Benefit Programs
• September 29 | Comments Due | Council on Environmental Quality Proposed Rule on National Environmental Policy Act Implementing Regulations Revisions Phase 2
• September 29 | Comments Due | HUD Proposed Rule on Modernization of Engagement with Mortgagors in Default

NCSHA, State HFA, and Industry Events

• August 21 – 23 | U.S. Bank 2023 HFA Symposium | St. Louis, MO
  Rosemarie Sabatino and Greg Zagorski will participate in this event.
• September 6 – 8 | Housing Iowa Conference | Cedar Rapids, IA
  Stockton Williams is speaking at this event.
• September 18 | Discounted Early Registration Deadline | NCSHA’s 2023 Annual Conference & Showplace | Boston
• September 24 – 26 | Louisiana Housing Conference | Baton Rouge, LA
  Stockton Williams is speaking at this event.

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