NCSHA Washington Report | September 6, 2024

A couple of weeks ago, HUD commemorated the 50th anniversary of the Housing and Community Development Act of 1974. Even among housing scholars, the law seems underappreciated, generating less attention than the sweeping housing acts of the ’30s, ’40s, and ’50s and less analysis than more recent large-scale legislative responses to the subprime mortgage crisis and Covid. But it was a big deal.

HUD’s acknowledgement focused on the law’s establishment of the Community Development Block Grant and Housing Choice Voucher and Project-Based Rental Assistance programs, which remain vital today. The rental assistance program originally provided various forms of financial support for existing affordable apartments and for the construction of new properties. It was a break from what had been done before, and it reflected the first serious advocacy effort by a start-up trade association called the Council of State Housing Agencies.

The 26 state housing finance agencies in existence at the time had formalized their collaboration in early 1974 on the advice of lawyer Chuck Edson. He later recalled the group’s “furious lobbying,” with the National Association of Home Builders and others, to capitalize on an opportunity for HFAs to expand the reach of their tax-exempt funding for multifamily developments by harnessing long-term federal financing Congress would authorize in what became Section 8 of the bill.

Soon after the Housing and Community Development Act became law, the council convinced HUD to reserve a share of subsidy for HFA-backed properties, expedite applications for funding, and align contract financing with HFA bond terms. The program proved catalytic for the nascent HFA network: 14 states and Puerto Rico created agencies shortly after its enactment to capitalize on the new program. HFAs would finance 38 percent of all the Section 8 units built and rehabbed during the 1970s, upwards of 400,000 units.

By the time Congress repealed the authority to fund new construction with Section 8 financial contracts in 1983, as part of the Reagan Administration-led retrenchment in federal support for housing production, state HFAs had scaled their bond financing capacity and created hundreds of additional programs to support apartment construction and preservation. The HFA-financed multifamily portfolio today consists of roughly 25,000 properties containing 1.9 million homes, and the agencies will finance 60,000 more this year.

Housing scholar R. Allen Hays observed that the Section 8 program, created by the Housing and Community Development Act of 1974, marked “the beginning of substantial state involvement in assisted housing production, a role that would continue to be vital in the ensuing decades.” State HFAs’ first organized advocacy effort on Capitol Hill through their professional association would show similar vitality over the following 50 years as well.

We’ll celebrate some of that history and look forward to what’s next for housing finance agencies during NCSHA’s annual conference in a few weeks. There’s still time to register to join us in Phoenix.

Stockton Williams | Executive Director

In This Issue

• NCSHA Unveils Housing Credit Model Compliance Forms
• Fannie Mae, Freddie Mac Publish Framework for New Tenant Protection Standards
• HUD Updates Homeownership Value Limits for HOME, HTF
• FHLB Presidents Object to 20 Percent AHP Assessment; Outline Ideas for Work with HFAs
• Mainstream Voucher Program Changes Announced
• Justice Department Sues RealPage Over Its Pricing Algorithm
• NCSHA in the News
• Looking Ahead

NCSHA Unveils Housing Credit Model Compliance Forms
On August 28, NCSHA released new and updated model forms for state Housing Credit agency use in Low-Income Housing Tax Credit program compliance. The model forms, which include an updated Tenant Income Certification and new Asset Self Certification, reflect modifications to income determination and asset certification rules under the Housing Opportunities Through Modernization Act and have been adjusted for consistency with NCSHA’s most recent update to its Recommended Practices in Housing Credit Administration, released in late 2023. More information is available in NCSHA’s blog.

Fannie Mae, Freddie Mac Publish Framework for New Tenant Protection Standards
Fannie Mae and Freddie Mac on August 28 released additional information about the new tenant protections owners of multifamily properties backed by the government-sponsored enterprises must provide for their residents. Announced by the Federal Housing Finance Agency (FHFA) in July, the lease standards require a five-day grace period for rent payments, a 30-day notice for rent increases, and a 30-day notice of lease expirations. The policy will apply to new loans beginning in February 2025. The policy framework posted by Fannie Mae and Freddie Mac includes information about implementation, monitoring, and enforcement provisions. The enterprises also published identical FAQs. Additional details will be provided in early 2025.

HUD Updates Homeownership Value Limits for HOME, HTF
HUD has published new purchase price limits for homeownership activities using HOME Investment Partnerships program (HOME) and Housing Trust Fund (HTF) grant funds. The new limits, which govern the maximum purchase price of a home that may receive homeownership assistance from the HOME and HTF programs, took effect September 1. Of note, HUD has updated the methodology it uses to produce these limits, which may have the effect of making it easier to use HOME and HTF funds to support homeownership in rural markets. Specifically, the new limits use the greater (rather than lesser) of the state non-metropolitan and U.S. non-metropolitan median sales price as the minimum value for calculating the homeownership limit, which will allow for the use of more local- and state-level data where the previous methodology may have underestimated the average home price in an area. You can find the new limits here: HOME homeownership limits and HTF homeownership limits.

FHLB Presidents Object to 20 Percent AHP Assessment; Outline Ideas for Work with HFAs
The heads of each of the Federal Home Loan Banks (FHLBs) last week sent a pair of letters to Treasury Deputy Secretary Wally Adeyemo following up on a July 31 meeting the banks held with Adeyemo. In one letter, the FHLB board chairs object to a request Adeyemo made during the meeting for the FHLBs to increase contributions to their Affordable Housing Programs (AHPs) from 10 percent of revenue to 20 percent. Such an increase, the FHLBs argue, would not effectively address the housing crisis, could risk the financial health of the FHLBs, and should be determined by Congress. The letter notes the FHLBs have all agreed voluntarily to contribute 15 percent of their revenues this year to AHPs and other affordable housing programs.

The second letter lays out the FHLB presidents’ proposals for enhancing their support for affordable housing. One specific suggestion is for the FHLBs to increase their support for HFAs and other housing associate members. The FHLB presidents tell Adeyemo they will convene with HFAs to discuss how they can better work together. The banks also urge FHFA to enhance the collateral eligibility regulations for housing associates, allow HFAs and housing associates to access the FHLBs’ Community Investment Cash Advance programs, open a portion of the AHP to HFAs, and allow the FHLBs to acquire participation interest in HFA multifamily loans.

NCSHA has reached out to FHFA and the Council of Federal Home Loan Banks to discuss these proposals further.

Mainstream Voucher Program Changes Announced
The U.S. Department of Housing and Urban Development (HUD) recently announced several policy changes intended to provide additional flexibility and utility for its Mainstream Voucher program, which provides funding to housing agencies for rental assistance for adults with disabilities transitioning out of institutional care or otherwise at risk of experiencing homelessness. The new guidance contained in Notice PIH 2024-30 includes new waivers and alternative program requirements, such as extending the minimum initial search term for available units from 60 to 120 days, requiring public housing agencies (PHAs) to approve all initial 90-day extension requests, and allowing PHAs to adopt separate Mainstream Voucher waiting lists and prioritize direct referrals from eligible health care and disability agencies. The new guidance incorporates findings from a report recently published by HUD’s Office of Policy Development and Research.

Justice Department Sues RealPage Over Its Pricing Algorithm
The U.S. Department of Justice recently announced it has filed an antitrust lawsuit, along with a number of state attorneys general, against RealPage Inc., a major property management software company, alleging the company unlawfully allowed landlords using its platform to share material, nonpublic information about apartment rental pricing resulting in unnaturally high rents in certain markets. The lawsuit also alleges that RealPage has used the data it collects from its customers to establish and maintain a monopoly in the market for residential real estate revenue management software. The complaint in the suit, filed in the Middle District of North Carolina, may be found here.

NCSHA in the News
Novogradac News and Analysis, 8.28.24, NCSHA Releases New, Updated Model Forms for State Agencies to Use in LIHTC Compliance

Looking Ahead

Legislative and Regulatory Activities

• September 6 | Feedback Due to NCSHA | Draft HUD Mortgagee Letter on Modernization of Engagement with Borrowers in Default
• September 10 – 11 | FHFA Advisory Committee on Affordable, Equitable, and Sustainable Housing Meeting | In Person in Washington, DC, and Virtual
• September 13 | Feedback Due | Draft HUD Mortgagee Letter on Modernization of Engagement with Borrowers in Default
• September 20 | Comments Due | HUD Drafting Table Edits to HUD Guidance on Qualified Contract Loophole in the Low-Income Housing Tax Credit Program

NCSHA, State HFA, and Industry Events

• September 19 | Ballard Spahr’s 2024 Housing Authority Summit | Washington, DC
  Jennifer Schwartz will participate in this event.
• September 24 – 26 | Oklahoma Housing Conference 2024 | Midwest City, OK
  Stockton Williams will speak at this event.
• September 26 – 27 | Novogradac 2024 Housing Tax Credit and Bonds Conference | New Orleans
  Jennifer Schwartz will participate in this event.
• September 28 – October 1 | NCSHA’s 2024 Annual Conference & Showplace | Phoenix