NCSHA Washington Report | December 15, 2023

State housing finance agencies are projected to provide $29 billion in affordable home loan financing this year, up 11.5 percent from 2022, according to Moody’s Investors Service, and HFA-backed mortgages currently have much lower rates of serious delinquency than the market overall or the FHA-insured share of it, according to S&P Global Ratings.

The Homeowner Assistance Fund program, run by the HFA in 42 states, Puerto Rico, and the Virgin Islands, delivered 28 percent more funding in the second quarter of this year than the first and had helped nearly 400,000 economically vulnerable homeowners avoid foreclosure as of mid-summer, the Treasury Department reports.

Twenty-three state HFAs were part of this year’s launch of the HFA1 Affordable Homeownership Lender Toolkit, developed by the members of NCSHA and the Mortgage Bankers Association to expand opportunities for lenders to more efficiently utilize state HFA programs and down payment assistance in their outreach to first-time and low-income home buyers.

Even as affordable apartment development faced an unprecedented confluence of “higher costs for materials and labor, stricter lending practices, rising interest rates and supply chain hiccups” in 2023, its most important source of financing, the Housing Credit, generated consistently strong investment, according to monthly tracking surveys, with median net equity prices reaching 12-month highs entering this month.

NCSHA’s Recommended Practices in Housing Credit Administration, comprehensive consensus standards that have bolstered state flexibility for 30 years, were substantially revised to reflect the economic and social forces buffeting the industry, based on recommendations from agencies, advocates, owners, and capital providers.

Six state HFAs forged new strategic partnerships with hospitals and other health system organizations to increase financing for affordable rental housing development, and several others got involved in innovative efforts in their states to tap Medicaid funding for rental assistance and other housing aid.

A national survey of state-level investments in affordable housing in 2023 by the Mercatus Center at George Mason University concluded, “The politics of housing supply continue to defy the crushing gravity of contemporary American partisanship,” as Republicans and Democrats worked together to pass dozens of pro-housing bills in every region of the country.

The Affordable Housing Credit Improvement Act this year became the most cosponsored tax bill in the House of Representatives that has support from both parties, reaching 200 this week, including nine committee chairs and three-quarters of the tax-writing Ways and Means Committee.

Recent announcements by HUD and the Department of Veterans Affairs that more than 132,000 people experiencing homelessness or at grave risk of it received resources to become stably housed this year reminded us that “the only thing keeping us from having homelessness overall decreased dramatically is the political will to assign the resources to do it.”

If you are reading this newsletter, you probably had something to do with some of this. From all of us at NCSHA, thank you — and best wishes for the rest of the holiday season.

Stockton Williams | Executive Director

Washington Report will return January 5.

State HFA Emergency Housing Assistance

In This Issue

• NCSHA Welcomes New Members
• Housing Credit Bill Reaches 200 House Cosponsors; Congress Continues Talks on Major Tax Legislation
• NCSHA Recommends Improvements to HUD’s Payment Supplement Proposal
• Congress Still Struggling with FY24 Funding
• CDFI Fund Accepting Applications for Assistance
• PRRAC Releases Report on Social Housing Goals in State Housing Allocation Policies
• Looking Ahead

NCSHA Welcomes New Members
NCSHA has welcomed these organizations as Affiliate members since November: Bangor Housing Authority, Housing Consultants of America, Loudoun County Department of Housing and Community Development, and Riverside Charitable Corporation. If you work with a partner interested in becoming a member, please contact Phaedra Stoger.

Housing Credit Bill Reaches 200 House Cosponsors; Congress Continues Talks on Major Tax Legislation
This week, the Affordable Housing Credit Improvement Act (AHCIA; H.R. 3238) achieved a major milestone: 200 House cosponsors, split evenly between the parties. Few bills ever attain that level of support. Fewer still get there with equal backing from both parties. The AHCIA has more cosponsors than any other bipartisan tax bill in the House. With 79 percent of the Ways and Means Committee cosponsoring, the bill has exceptionally high support from House tax writers. While not official cosponsors — as is traditional in their roles — both the committee chair and ranking member have stated publicly their support for the bill. The AHCIA also boasts the support of the majority whip and the chairs of the House Committees on Administration, Agriculture, Financial Services, Oversight and Accountability, Rules, Small Business, Transportation and Infrastructure, Veterans’ Affairs, and Intelligence. Its Senate counterpart, S. 1557, is also one of the most-cosponsored tax bills in that chamber, with 30 bipartisan cosponsors including the chair of the Finance Committee. 

This impressive level of support is all the more important at this crucial time with tax writers actively negotiating the outline of a tax package that could move early next year. NCSHA and our Housing Credit advocacy partners are working with committee staff to ready legislative language that would implement provisions from the AHCIA and other NCSHA Housing Credit priorities so that, if this bill comes together, the parts important to housers will be ready to go. Whether we are successful depends on tax writers reaching a deal on other aspects of the bill, if enough revenue is available to cover the costs of our priorities, congressional leadership’s willingness to take up a tax bill, and the existence of a vehicle to carry the tax package. 

Our job now is to do everything in our power to make it happen. The decision-makers — congressional leadership and the chairs and ranking members of the House Ways and Means and Senate Finance committees — must hear from rank-and-file members of Congress that expanding the Housing Credit is a top priority for them. Those rank-and-file members need to hear from stakeholders in their states and districts about how important it is for them to weigh in on this matter. They need to hear from you. If Congress doesn’t act now to expand the Housing Credit, we likely won’t get another shot until the end of 2025. Contact affordable housing supporters in your delegation, including those among the 200 House and 30 Senate AHCIA cosponsors, and ask them to make our priorities their priorities and urge their leadership to get this done now.

NCSHA Recommends Improvements to HUD’s Payment Supplement Proposal
On Tuesday, NCSHA provided comments to the Federal Housing Administration (FHA) on the draft Mortgagee Letter 2023-XX, Payment Supplement. Developed with the input of the state HFAs servicing FHA mortgage loans, the comments ask the Department of Housing and Urban Development for a longer implementation period, increased incentive payments, and augmented borrower disclosures. NCSHA also recommended FHA clarify borrowers can re-access partial claim amounts previously repaid and adjust the tier rating system to reflect the current loss mitigation waterfall.

Congress Still Struggling with FY24 Funding
With barely more than a month until the January 19 funding deadline for HUD, Agriculture, and some other federal agencies — and only slightly longer until the February 2 deadline for Defense and several other agencies — congressional leaders have been trying to reach an agreement on total spending limits that will enable negotiations on specific bills for different agencies to move forward. However, talks over such an agreement remain stalled, and no agreement seems imminent. To date, the House has passed seven of its 12 spending bills (Defense, Energy and Water, Homeland Security, Interior and Environment, Legislative Branch, Military Construction-Veterans Affairs, and State-Foreign Operations), while the Senate has passed three (Agriculture, Military Construction-Veterans Affairs, and Transportation-HUD). To keep the agencies running, the House and Senate must come to an agreement on a topline spending number so they can find common ground on spending amounts for individual programs to pass appropriations legislation before the current funding agreement expires. Absent such a deal, they would need to extend government funding through another continuing resolution (CR). House Speaker Mike Johnson (R-LA) has already stated he does not plan to pass another short-term CR, which means that, if Congress cannot pass final FY24 bills by the January and February deadlines, they will need to pass a CR extending through the end of the fiscal year or federal agencies will cease all non-essential functions when their funding expires.

CDFI Fund Accepting Applications for Assistance
Last Friday, the Treasury Department’s Community Development Financial Institutions Fund (CDFI Fund) announced it is accepting applications for FY24 funding. Nearly $462 million will be awarded through six separate categories: $302.8 million in CDFI Program Financial and Technical Assistance awards, $43.7 million in NACA Program Financial and Technical Assistance awards, $47.5 million in Persistent Poverty County-Financial Assistance awards, $48 million for Healthy Food Financing Initiative-Financial Assistance awards, and $20 million in Disability Funds-Financial Assistance awards. The awards will be granted to CDFIs serving low-income communities and populations that lack access to credit, capital, and financial services. The application deadline is February 15 at 5:00 pm ET. The CDFI Fund will host webinars on December 19 and 20 to go over the application process. More information is available here.

PRRAC Releases Report on Social Housing Goals in State Housing Allocation Policies
The Poverty & Race Research Action Council (PRRAC) has published a report, Social Housing Goals in State Housing Allocation Plans, analyzing how state Housing Credit, HOME program, and national Housing Trust Fund policies contribute to social housing principles. PRRAC generally defines ‘social housing’ as a vision of housing that is community owned and controlled, permanently affordable, and resident centered. The report provides examples of state policies that elevate long-term affordability, nonprofit ownership, tenant or community acquisition, tenant protections, democratic residential control over housing resources, tenant cooperative models, community land trusts, and support for tenant organizing and/or engagement.

PRRAC’s report concludes state housing agencies have significant discretion in the administration of these programs and housing advocates should work with their state agencies to expand social housing policies. PRRAC also published a companion policy brief, What Can the Treasury Department Do to Expand Public and Community Ownership of Rental Housing?, outlining actions the organization believes Treasury should take to further social housing goals in its oversight of the Housing Credit, including securing the right of first refusal, incentivizing nonprofit ownership, and encouraging best practices in qualified allocation plans. The policy brief also explores actions Treasury could take relative to community development financial institutions, the Capital Magnet Fund, and Opportunity Zones.

Looking Ahead

Legislative and Regulatory Activities

• December 15 | Comments Due to NCSHA | Federal Reserve, FDIC, and OCC Notice of Proposed Rulemaking Establishing New Capital Standards for Large Banks
• December 19 and 20 | Webinars | FY24 CDFI and NACA Program Application Round
• December 20 | Comments Due | Treasury Department Interim Final Rule to Amend the Definition of ‘Obligation’ in SLFRF Regulations
• December 26 | Comments Due | HUD Housing Counseling Services Proposed Rule
• January 15 | Comments Due | Federal Reserve, FDIC, and OCC Notice of Proposed Rulemaking Establishing New Capital Standards for Large Banks
• January 16 | Comments Due to NCSHA | HUD 30-Day Notification Requirement Prior to Termination of Lease for Nonpayment of Rent Notice of Proposed Rulemaking
• January 30 | Comments Due | HUD 30-Day Notification Requirement Prior to Termination of Lease for Nonpayment of Rent Notice of Proposed Rulemaking
• February 15 | Application Deadline | FY24 CDFI Program and NACA Program Application Round

NCSHA, State HFA, and Industry Events

• 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.