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NCSHA Washington Report | December 8, 2023

Published on December 8, 2023

Web Washington Report Graphics - December 8, 2023

The U.S. Department of Veterans Affairs has been in the news for its housing efforts.

The week of Thanksgiving, various outlets reported the VA was “pausing” foreclosures on homes with agency-backed mortgage insurance through the end of May 2024. In fact, the VA announced it would be “calling on mortgage servicers” to do that, while it acted to extend one of its Covid-era relief programs for struggling borrowers.

The VA’s move followed press reports that thousands of vets were at risk of losing their homes because servicers were unwilling to use available federal tools to help avoid that outcome. Industry analysts pointed out the VA’s main mortgage relief program had expired a year prior, and many participants had been calling on Congress and the VA to extend it for months. (NCSHA was among them — and noted HFAs’ ability through their Homeowner Assistance Fund programs to provide additional help to VA borrowers.)

The Mortgage Bankers Association said that, while a permanent insurance relief option “needs to be part of the VA’s long-term plans to assist borrowers facing hardships,” the association’s members “have significant concerns on the implementation of the voluntary foreclosure moratorium.”

On another front, last week, the VA reported the agency, for the second year in a row, had met its goal of providing permanent housing to 38,000 veterans experiencing homelessness. The milestone is part of a longer-running success story: Veteran homelessness has been reduced by 55 percent since 2010, as a result of federal leadership and public-private partnerships at the state and local levels.

The result is especially remarkable in light of the significant challenges affordable housing developers and owners face in serving this group. A Novogradac analysis last year of greater Los Angeles, arguably the epicenter of veteran homelessness in America, found it takes much longer to lease-up Housing Credit units for those experiencing homelessness, especially veterans, than for eligible renters overall “despite the evidence of continued and overwhelming demand.”

One reason may be the acute mental health challenges among so many unhoused vets, plus the likelihood they may be more likely to experience other serious illness as a result of their housing instability. A study published this week found that, since “[m]any Veterans experiencing homelessness are aging and have complex co-occurring medical, psychiatric, and substance use disorders,” they are at much greater risk for Alzheimer’s disease and related dementias.

While only a handful of state Housing Credit programs provide explicit set-asides for veterans housing, 19 states prioritized those developments to varying degrees in their competitive application processes as of 2022, according to a review by the National Coalition of Homeless Veterans. The Affordable Housing Credit Improvement Act would enable the program to serve many more veterans, including those experiencing homelessness.Stockton-Williams-Washington-Report

Stockton Williams | Executive Director

State HFA Emergency Housing Assistance

In This Issue

NCSHA Urges Federal Agencies to Facilitate VAWA Guidance for Housing Credit Program 
This week, NCSHA sent a letter to the U.S. Departments of the Treasury, Housing and Urban Development (HUD), and Justice (DOJ) and the Internal Revenue Service (IRS) urging the agencies to enter a memorandum of understanding (MOU) on the application of the Violence Against Women Act (VAWA) to the Housing Credit program. Though the Housing Credit program has been a “covered program” under VAWA since 2013, IRS and Treasury have never provided guidance to state agencies and other program participants. In its letter, NCSHA suggested a VAWA MOU could be modeled after the MOU Treasury, HUD, and DOJ are party to relating to the Fair Housing Act’s application to the Housing Credit program, which is the basis for Treasury/IRS guidance. In the absence of guidance, state Housing Credit agencies have used their qualified allocation plans and other tools to compel housing providers to comply with the law, and NCSHA’s Recommended Practices in Housing Credit Administration set forth procedures on VAWA implementation. Despite these efforts, the lack of federal direction leaves certain aspects of VAWA implementation and enforcement ambiguous.

Governors, Former Congressmen and Cabinet Secretaries Press Congress to Pass Housing Credit, Neighborhood Homes Legislation
Over the last several weeks, important thought leaders including governors, former members of Congress, and former senior administration officials from both parties have sent letters to tax committee leaders or written op-eds in support of the Affordable Housing Credit Improvement Act (AHCIA) and the Neighborhood Homes Investment Act (NHIA).

  • On November 21, the chair and vice chair of the Western Governors’ Association, Governors Mark Gordon of Wyoming (R) and Michelle Lujan Grisham of New Mexico (D), sent letters to Senate Finance Committee Chair Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID) and House Ways and Means Committee Chair Jason Smith (R-MO) and Ranking Member Richard Neal (D-MA) urging them to expand the 9 percent Credit and reduce the bond financing test to 25 percent for 4 percent Credit developments as set forth in the AHCIA.
  • On November 30, members of the Bipartisan Policy Center’s Advisory Committee of the J. Ronald Terwilliger Center for Housing Policy, including former Senator Scott Brown (R-MA), former HUD Secretaries Henry Cisneros (Clinton Administration) and Shaun Donovan (Obama Administration), and former Congressmen Carlos Curbelo (R-FL) and Steve Stivers (R-OH), sent a letter to the chairs and ranking members of the Senate Finance and House Ways and Means committees urging them to enact the AHCIA and NHIA.
  • On December 3, former Senate Finance Committee member and AHCIA lead sponsor Rob Portman (R-OH) and former Clinton Administration Treasury Secretary Robert Rubin published an op-ed in The Hill urging Congress to pass the AHCIA and enact the NHIA.

As the end of the year approaches, tax writers are trying to come to an agreement on a tax bill that Congress could consider either later this month or in early January, so these letters and opinion pieces are timely and critical to our advocacy. With pressure to minimize overall revenue losses associated with a tax bill, we need to make sure our priorities are not left behind. NCSHA urges HFAs and their partners to keep up the pressure on members of Congress by asking cosponsors of our priority legislation to tell their leadership and the tax committee leads to include the Housing Credit and the Neighborhood Homes credit if they are able to advance a bill. This is also an ideal time to place op-eds or letters to the editor about the need for more affordable housing in local press where members of Congress will see them. For help, contact NCSHA’s Jennifer Schwartz.

Treasury Amends Fiscal Recovery Fund Obligation Rules to Provide Additional Flexibility
The Treasury Department has issued an interim final rule to amend the definition of ‘obligation’ set forth in Coronavirus State and Local Fiscal Recovery Fund (SLFRF) regulations and to give additional flexibility and clarity to recipients to support their use of SLFRF funds. The rule does not alter the eligible use categories described in the 2022 SLFRF final rule or the 2023 interim final rule and does not alter existing SLFRF obligation or expenditure deadlines. Recipients must obligate SLFRF funds by December 31, 2024, and expend obligated funds by December 31, 2026.

While the term ‘obligation’ continues to mean an order placed for property and services and entry into contracts, subawards, and similar transactions that require payment, the interim final rule provides that a recipient also is considered to have incurred an obligation by December 31, 2024, if SLFRF funds are used to cover costs related to reporting and compliance requirements, including subrecipient monitoring; single audit costs; record retention and internal control requirements; property standards; environmental compliance requirements; or civil rights and nondiscrimination requirements. The rule also clarifies that subrecipients are not subject to the December 31, 2024, obligation deadline. The obligation deadline applies to the recipient of SLFRF funds, and a cost is considered to have been incurred once a recipient enters into a subaward or contract that obligates the recipient to cover that cost. Treasury also published a quick reference guide to provide an overview of the interim final rule. While the provisions in the rule are effective immediately, Treasury is accepting comments on it until December 20.

Senate, House Housing Leaders Introduce Workforce Housing Tax Credit Bill to Finance Rental Housing for Middle-Income Households
On December 7, Senate Finance Committee Chair Ron Wyden (D-OR), Senator Dan Sullivan (R-AK), and House Ways and Means Committee members Representatives Jimmy Panetta (D-CA) and Mike Carey (R-OH) introduced the Workforce Housing Tax Credit Act, which would establish a new Middle-Income Housing Tax Credit (MIHTC) modeled on the Low Income Housing Tax Credit (Housing Credit) to incentivize private-sector investment in rental housing for households earning between 60 and 100 percent of area median income (AMI). The bill is an updated version of the MIHTC proposal Senator Wyden introduced earlier this year as part of his Decent, Affordable, Safe Housing for All Act.

The legislation would provide states with the greater of $1 per capita or $1.5 million in 2024, adjusted for cost of living thereafter, with the intention for the program to be administered by each state’s Housing Credit agency. States that finance properties in rural areas would receive an additional five percent of their annual credit amount to be used for these developments. MIHTC developments that do not use private activity tax-exempt multifamily housing bonds would be eligible for a five percent credit rate. MIHTC properties financed with tax-exempt multifamily bonds instead would receive a two percent credit rate, but those credits would not reduce the state’s MIHTC authority ceiling. The bill provides agencies the ability to elect to transfer all or a portion of their MIHTC authority to be used as Housing Credit authority should they determine that is a better use of those resources. Moreover, the MIHTC program is designed to work with the Housing Credit such that developers could finance a property with both credits. Under this scenario, units designated for households up to 60 percent of AMI would be financed with the Housing Credit and units designated for households between 60 and 100 percent of AMI would be financed with MIHTC.

Fannie Mae, Freddie Mac Announce Release of Standardized Subordinate Mortgage Documents
Last week, both Fannie Mae and Freddie Mac released standardized subordinate mortgage documents state and local housing finance agencies can utilize with their down payment assistance programs. In doing so, Freddie Mac and Fannie Mae launched new webpages where lenders and HFAs can access these documents as well as other down payment assistance-related resources. Standardized subordinate lien documents have been created for 16 states: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Idaho, Illinois, Iowa, Massachusetts, Minnesota, New Mexico, South Dakota, Tennessee, Virginia, and Washington. Additional state-specific standardized subordinate mortgage documents will be created over time.

HUD Proposes 30-Day Notice Requirement for Rent Nonpayment Before Eviction Filing
On December 1, HUD published a 30-Day Notification Requirement Prior to Termination of Lease for Nonpayment of Rent Notice of Proposed Rulemaking in the Federal Register for public comment. Under this proposed rule, when tenants who reside in public housing or in properties receiving project-based rental assistance face eviction for nonpayment of rent, public housing agencies and owners need to provide those tenants with written notification at least 30 days before the commencement of a formal judicial eviction procedure for lease termination. Comments on the proposed rule are due January 30. Please email any feedback to Robert Henson by January 16 to inform NCSHA’s comments.

House Housing Subcommittee Hearing Discusses Housing Affordability
The House Housing and Insurance Subcommittee held a hearing Wednesday on potential policy solutions for increasing affordable housing. In his opening statement, Subcommittee Chair Warren Davidson (R-OH) argued most government housing programs have made the housing shortage worse by increasing costs. Congress, he said, needs to consider market-based solutions. Davidson and several other subcommittee Republicans criticized a proposed rule from federal banking regulators to increase capital standards for large banks, which they said would increase mortgage lending costs and make homeownership more expensive for working families. Subcommittee Democrats agreed more needs to be done to support affordable housing but disputed that government programs had contributed to the problem. Representative Andrew Garbarino (R-NY) used a portion of his question time to declare his support for the Affordable Housing Credit Improvement Act.

NCSHA in the News
Scotsman Guide, 12.6.23, Freddie Mac Debuts New, Standardized Downpayment Assistance Documents
National Mortgage Professional, 12.6.23, Freddie Mac Leads Effort to Standardize, Streamline Down Payment Assistance Programs
Novogradac, 12.5.23, Six NCSHA LIHTC Recommended Practices That Will Shape Affordable Housing
RISMedia, 12.5.23, Freddie Mac Announces New Down Payment Assistance Program
Mortgage Professional America, 12.5.23, Freddie Mac Releases Standardized Down Payment Assistance Documents for Lenders
Housing Wire, 12.4.23, Freddie Mac Announces Standardized Mortgage Documents for DPA Programs
Yahoo Finance, 12.4.23, Freddie Mac Announces Action to Make Down Payment Assistance Programs More Accessible for Individuals and Families Across the Nation
Mortgage Orb, 12.4.23, Freddie Mac Introduces New Documents That Help Lenders Increase Clarity on DPA Programs
SFGate, 12.2.23, How to Buy a Home Without a 20% Down Payment

Looking Ahead

Legislative and Regulatory Activities

NCSHA, State HFA, and Industry Events

  • December 13, 12:00 – 5:30 p.m. ET | NCSHA’s AI and Affordable Housing: A National Symposium | Virtual
  • January 7 – 12 | NCSHA’s HFA Institute 2024 | Washington, DC
  • January 18 – 19 | Novogradac 2024 Affordable Housing Developers Conference | Fort Lauderdale, FL
    Jennifer Schwartz will speak at this event.
  • January 24 – 25 | Affordable Housing Tax Credit Coalition Annual Conference | Charleston, SC
    Jennifer Schwartz will speak at this event.

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