NCSHA Washington Report | February 23, 2024
In early 1974, the burgeoning national network of the 27 state housing finance agencies in existence at the time was at a crossroads.
Moody’s had recently changed its methodology for rating HFA bonds, saying investors should no longer look solely at a state’s “moral obligation” to back bond reserves — the original basis of the HFA business model — and should instead rely “first and primarily” on an analysis of the revenue sources securing the bonds. The statement “sent shock waves through the financial community and led investors to make their own revaluations, with the consensus being even more skeptical than Moody’s,” wrote Nathan Betnun in his analysis of HFAs at the time.
A report on U.S. housing policy by the Nixon Administration cast another shadow, concluding: “Despite the rapid growth and initial achievements of state housing finance agencies, their future expansion is not completely assured, and some serious problems eventually will have to be confronted.” Another assessment surmised: “[A] projection of [HFAs’] collective impact on the national housing picture in the coming decade will likely not be very great.”
The agencies responded on the business front by structuring their loan programs more conservatively, with higher reserves and longer terms, and they began to move away from issuing moral and general obligation bonds in favor of tax-exempt financing, which became the bedrock of their operations and their value proposition in the housing system for a generation. A longer story for another day.
The HFAs’ response in the advocacy arena was no less consequential. Having collaborated informally for several years, they incorporated in 1974 a professional trade association to share best practices and influence federal policy: the Council of State Housing Agencies. Housing lawyer Chuck Edson, who was instrumental in the startup, later recalled the new organization’s “furious lobbying” with other industry groups to ensure federal legislation that passed that year included a multifamily development program — HUD Section 8 New Construction — that would augment HFA financing.
The council convinced HUD to set aside a share of Section 8 subsidies for HFA-financed projects, establishing an enduring precedent in federal-state partnership. The move marked “the beginning of substantial state involvement in assisted housing production, a role that would continue to be vital in the ensuing decades,” wrote urban policy scholar R. Allen Hayes. And the beginning of NCSHA’s advocacy for the states’ central role in the nation’s affordable housing policy.
It’s fitting then that the commencement of our 50th year coincides with a legislative and regulatory environment ripe with opportunity and challenge.
The best chance in years to significantly expand Housing Credit and Housing Bond financing. An urgent need to secure stable HOME funding and solidify the HFA role as HUD’s primary partner in Section 8 project-based contract administration. Openings to increase affordable mortgage financing through the housing government-sponsored enterprises and Treasury’s Federal Financing Bank.
It’s all on our agenda at NCSHA’s Legislative Conference early next month. All hands on deck.
Stockton Williams | Executive Director
In This Issue
- Karnai to Be Nominated Delaware State Housing Authority Director
- AHCIA Achieves Cosponsorship Milestone
- NCSHA Joins Letter Asking Biden Administration to Extend FFB Risk-Sharing Program
- HUD Finalizes Payment Supplement Loss Mitigation Option
- HUD Awards $73.5 Million Under Green and Resilient Retrofit Program
- NCSHA in the News
- Looking Ahead
Karnai to Be Nominated Delaware State Housing Authority Director
Governor John Carney announced on Tuesday he intends to nominate Cynthia Karnai to serve as director of the Delaware State Housing Authority (DSHA). If confirmed by the Senate, Karnai would replace Director Eugene Young, who will step down next month. Karnai was named deputy director in 2022 and previously served 16 years as DSHA’s chief operating officer and director of housing finance.
AHCIA Achieves Cosponsorship Milestone
The Affordable Housing Credit Improvement Act (AHCIA; H.R. 3238) has reached a major cosponsorship milestone: With the addition of Representatives Morgan McGarvey (D-KY) and Carlos Gimenez (R-FL), 218 members of the House — more than half of that chamber — are now AHCIA cosponsors. Cosponsorship remains evenly split with 109 Democrats and 109 Republicans. The level and bipartisan nature of the cosponsor make-up demonstrate the strong support for this bill.
NCSHA Joins Letter Asking Biden Administration to Extend FFB Risk-Sharing Program
On February 16, NCSHA, the National Association of Affordable Housing Lenders, and several other leading affordable housing groups sent key Biden Administration officials this letter urging them to extend indefinitely Federal Financing Bank (FFB) funding for FHA-HFA Multifamily Risk-Sharing program loans. The program allows HFAs to access full Federal Housing Administration mortgage insurance to help them finance the production and preservation of affordable rental housing. The FFB program’s current authority expires October 1.
HUD Finalizes Payment Supplement Loss Mitigation Option
On Wednesday, the U.S. Department of Housing and Urban Development (HUD) released Mortgagee Letter (ML) 2024-02 establishing the new Payment Supplement loss mitigation option, which combines a standalone partial claim to bring a mortgage current with a new monthly principal reduction payment. This new option will reduce a borrower’s monthly mortgage payment for three years without requiring a mortgage modification. To support the Payment Supplement, HUD also released an Annual Payment Supplement Disclosure; Final Payment Supplement Disclosure; and Payment Supplement Agreement Rider, Promissory Note and Security Instrument, and Calculation Worksheet. The provisions of ML 2024-02 must be implemented no later than January 1, 2025. Additionally, ML 2024-02 extends the Covid recovery options through April 30, 2025.
HUD Awards $73.5 Million Under Green and Resilient Retrofit Program
Yesterday, HUD announced it is awarding $73.5 million in new loans and grants under the Green and Resilient Retrofit Program (GRRP). These awards are intended to increase safety, energy efficiency, and climate resilience at 10 HUD-assisted multifamily properties. HUD has made more than $368 million in GRRP awards to support renovations at 84 multifamily properties that will improve more than 9,000 homes for very low-income households, seniors, and people with disabilities. HUD encourages property owners to continue to submit applications for GRRP funds and expects to announce awards regularly throughout 2024.
NCSHA in the News
Delaware News, 2.20.24, Governor Carney Announces Delaware State Housing Authority Nomination
EDGE PD&R | HUD User, 2.24, Using AI to Promote Equitable and Affordable Housing
Legislative and Regulatory Activities
- February 27 | Webinar: Capital Magnet Fund Application Process Webinar
- March 13 | FHFA Multifamily Property Insurance Symposium | In-Person and Virtual
NCSHA, State HFA, and Industry Events
- March 4 – 6 | NCSHA’s 2024 Legislative Conference | Washington, DC
- March 6 – 8 | National Affordable Housing Management Association’s Winter Conference on Top Issues in Affordable Rental Housing | Washington, DC
Jennifer Schwartz will speak at this event. - April 15 – 17 | Nebraska Investment Finance Authority Innovation Expo | Lincoln, NE
Jennifer Schwartz will speak at this event.
