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NCSHA Washington Report | February 3, 2023

Published on February 3, 2023

Web Washington Report Graphics - February 3, 2023

Even as President Biden announced on Monday that the federal government will end in May the broad national and public health emergency declarations related to Covid-19, the contours of the administration’s “post-pandemic” national housing policy are already coming into focus.

On the homeowner side of the equation, the thrust of the administration’s approach is to make mortgage payment relief options initially envisioned as temporary supports for Covid-impacted households available to many more struggling owners.

Last month, the CFPB informed mortgage servicers that it expected them to offer payment forbearance and other relief initially allowed under the bureau’s “temporary flexibilities” for Covid hardships to other borrowers. “We expect servicers to continue to utilize all the tools at their disposal — including, if available, streamlined deferrals and modifications that meet the conditions of the CFPB’s COVID-19 related mortgage servicing rules — in their efforts to keep consumers in their homes,” CFPB said.

This week FHA extended and expanded its Covid-related loss mitigation tools along the same lines. “FHA’s COVID-19 forbearances and streamlined COVID-19 loss mitigation options have successfully helped millions of struggling borrowers in the last two fiscal years alone,” FHA Commissioner Julia Gordon said. “Our action today lets us capitalize on what we have learned through the pandemic to continue helping borrowers avoid foreclosure, regardless of the nature of their hardship.”

The administration also intends to be expansionary on rental housing policy. The White House’s recent announcement of actions across five federal agencies to “increase fairness” and “further principles of fair housing” includes a continuing federal commitment to support effective Covid-era practices to reduce evictions — plus a new array of potential regulations and enforcement actions on rent setting, renter screening, and communications between property managers and renters.

Regrettably, the end of Covid emergency declarations in May probably means regulatory relief for affordable rental housing developers and owners the administration granted in response to advocacy by NCSHA and others may not be extended. One example: The Treasury Department has given developments allocated Housing Credits in 2018 through 2021 more time to come online. Projects allocated credits in 2022 and beyond will likely have to comply with the tighter pre-Covid timetable.

For the new Republican majority in the House, “post-pandemic” housing action will start with oversight hearings. The House Financial Services Committee this week confirmed its intention to “examine federal agencies’ administration and implementation of its [Emergency Rental Assistance] programs and federal grantees’ use of ERA funds.”

It’s well established that ERA helped keep millions of vulnerable people housed during the depths of the pandemic, especially the neediest renters and communities. The 28 state HFAs that administer ERA have been vigilant in their oversight. Many have successfully blocked efforts to rip off their programs, even in the absence of clearer federal guidance states and localities have sought since 2021 and as recently as December.

Welcome to the next chapter in national affordable housing policy.

Stockton-Williams-Washington-Report

Stockton Williams | Executive Director

State HFA Emergency Housing Assistance

In This Issue

Serviss Appointed Director of Arizona Department of Housing
Governor Katie Hobbs has appointed Joan Serviss director of the Arizona Department of Housing. Joan served for more than 10 years as the executive director of the nonprofit Arizona Housing Coalition, a statewide organization leading in the efforts to end homelessness by advocating for affordable homes. While leading another statewide homelessness association, she successfully led a merger with the Arizona Housing Alliance to form the combined Arizona Housing Coalition. Joan previously served as executive director for the Arizona Alliance for Retired Americans and as a research analyst for the County Supervisors Association.

FHA Expands Loss Mitigation Options
On January 30, the Federal Housing Administration (FHA) released Mortgagee Letter 2023-02, which expands its loss mitigation options to help borrowers struggling to make payments on FHA-insured mortgages. NCSHA advocated for some of these options in our October 20 letter to FHA. HUD’s press release on the new policies says the enhancements extend FHA’s Covid loss mitigation options to all eligible borrowers who fall behind on their mortgage payments, regardless of the cause of their delinquency. Provisions of note include increasing the Covid Recovery Partial Claim from 25 to 30 percent of a borrower’s unpaid principal balance, expanding options for all borrowers in default or in “imminent default,” and providing servicers incentives. NCSHA’s letter urged FHA to consider ways homeowners receiving Homeowner Assistance Fund help and in imminent default could access the Covid loss mitigation options. We also asked FHA to increase the Covid partial claim to 30 percent. The changes FHA announced this week become effective April 30; servicers may implement the changes earlier.

Treasury Says New Global Minimum Tax Guidance Will Protect Housing Credit Investment
On February 2, the U.S. Treasury Department announced that all 142 countries and jurisdictions, including the United States, participating in the Organization for Economic Cooperation and Development (OECD) and Group of Twenty’s (G20) effort to establish a new 15 percent global minimum tax (GMT) — also referred to as “Pillar Two” — have come to a consensus and released guidance on the GMT’s implementation worldwide. The Treasury press release says the guidance provides certainty on several key issues, including protecting investment in the Housing Credit program. The GMT is part of the OECD/G20’s reform to international taxation rules (also known as the Global Anti-Base Erosion Model Rules) to ensure multinational corporations pay at least an effective income tax rate of 15 percent, regardless of where they are based, as many multinational corporations have based themselves in low-tax countries to avoid paying taxes in other higher tax countries in which the companies do business.

NCSHA and others in the affordable housing industry had raised concerns with the Biden Administration about how the GMT could affect corporate demand for Housing Credit equity investments. In general, the concern raised was that, depending on the accounting methods used in the GMT’s implementation, companies using the Housing Credit or other tax credits to lower their effective tax rate could still end up having to pay the 15 percent minimum, essentially negating some of the credits’ benefits. This could cause these investors to stop making new investments and sell off their existing investments. More information about the GMT and the concerns raised by affordable housing advocates is detailed in this Novogradac blog post, which also suggested how GMT guidance could mitigate negative consequences to credit investment. NCSHA will consult with accounting experts to better understand the extent to which the guidance issued this week alleviates the industry’s concerns, as Treasury maintains it should. 

HUD Awards $116 Million to PHAs, HFAs for Family Self Sufficiency Program
Last week, the Department of Housing and Urban Development (HUD) announced it had awarded $116 million to more than 700 public housing authorities (PHAs) under the FY22 Family Self Sufficiency (FSS) Program. More than $109 million was awarded to 682 PHAs and HFAs that had received funding in previous years, and $6 million was awarded to 32 PHAs and 38 project-based rental assistance (PBRA) owners that are new to the program. This round of funding marked the first time in FSS’s history that PBRA owners were eligible to apply for funding. FSS is a voluntary program that offers financial coaching and local service referrals to families living in HUD-assisted housing to help them achieve economic independence. Eleven HFAs received nearly $6 million of the FY22 funding. View the lists of new and renewing award recipients.

HUD Publishes HOTMA Final Rule “Preview”
On January 31, HUD posted a “preview” of its final rule implementing certain provisions of the Housing Opportunity Through Modernization Act (HOTMA). HOTMA includes provisions related to income and asset calculations for beneficiaries of a variety of HUD Community Planning and Development (CPD) programs, including the HOME Investment Partnerships, Housing Trust Fund, Community Development Block Grant, and Housing Opportunities for Persons with AIDS programs. Two key sections of the rule include:

  • Section 102 revises the definitions and calculations of annual and adjusted incomes and addresses how income and eligibility are determined, including the frequency of income reviews. It also creates a safe harbor to allow the use of an income eligibility determination of another provider of federal public assistance, increases the threshold for certain deductions made when calculating adjusted income, creates financial hardship exemptions for adjusted income, and eliminates the use of the Earned Income Disallowance.
  • Section 104 defines net family assets; establishes an asset limitation for families based on the value of net family assets and property ownership; and provides exceptions for certain investments, including retirement savings and modest increases in income.

Of note, HUD has posted the rule only as a “preview” to give grantees time to understand its implications before full implementation. It will not take effect until the rule is published in the Federal Register at a later date. Grantees may email inquiries about these changes or other aspects of HOTMA to HUD at HOTMAquestions@hud.gov.

Energy Department Announces $22 Million in Buildings Upgrade Prizes
The Department of Energy (DOE) recently announced the availability of more than $22 million in cash prizes and technical assistance for efforts to implement energy efficiency and building electrification upgrades. The Buildings Upgrade Prize, known as Buildings Up, is intended to provide cash and technical assistance for eligible entities focused on delivering upgrades to low- and moderate-income homes and other eligible buildings. Community-based organizations, state and local governments, Indian tribes, and others are encouraged to apply for Phase 1 awards beginning February 18.

HUD Solicits Input on Standardizing Rental Assistance Program Regulations
HUD published February 1 an advance notice of proposed rulemaking (ANPRM) to launch the potential development of a standardized regulation for Section 8 project-based rental assistance programs. Currently, HUD issues several different renewal contracts, subject to different regulations. To reduce regulatory complexities, HUD plans to work with owners, tenants, and other program stakeholders to develop a single Section 8 program regulation and single contract form for Section 8 contract renewals. The ANPRM poses 11 specific questions and solicits general comments on this idea. Comments are due April 3. To help NCSHA develop a response to the ANPRM, please send your input to Robert Henson by March 20.

USDA Proposes Changes in Section 538 Guaranteed Multifamily Loan Selection
On Tuesday, the U.S. Department of Agriculture (USDA) published a proposed rule that would amend current regulations for the Section 538 Guaranteed Rural Rental Housing Program to better align it with the Housing Act of 1949. Current regulations define priority projects as: “in smaller rural communities, in the neediest communities having the highest percentage of leveraging, having the lowest interest rate, having the highest ratio of 3-to-5-bedroom units to total units, or on tribal lands.” USDA believes some of the regulatorily required priorities are no longer relevant. By aligning the regulatory priorities with the Housing Act of 1949, USDA believes the program will be better equipped to respond to rural communities’ housing market demands. Comments on the proposed rule are due April 3. To inform NCSHA’s comments, please email your input to Glenn Gallo by March 24.

FHFA Releases Revised Duty-to-Serve Plans for Fannie, Freddie
The Federal Housing Finance Agency (FHFA) announced last month that both Fannie Mae and Freddie Mac had modified their Underserved Market Plans for 2022 – 24. The plans outline how each firm intends to meet its obligations under the Duty-to-Serve rule to support manufactured housing, affordable housing preservation, and rural housing. The firms are allowed to propose amendments to their plans, which were approved in 2021, to reflect market developments. Notable changes to Fannie Mae’s plan include adjustments to purchase goals for certain manufactured housing loans, changing the purchase goal for HUD Rental Assistance Demonstration loans so that it is measured by the number of housing units supported rather than the total number of loans, and exploring a potential equity investment in a Native Community Development Financial Institution to support more mortgage lending for Native Americans. Freddie Mac’s adjustments include increasing its 2022 purchase goals for certain manufactured housing loans and reducing 2023 and 2024 purchase goals for Section 515 loans. 

Enterprise, Urban Institute, Others Publish Best Practice Principles for Property Management
Enterprise Community Partners and the Urban Institute, with the support of the Stewards for Affordable Housing for the Future and Housing Partnership Network, published on February 1 a new framework of principles and practices that minimize evictions and improve the stability of residents. The report, “Preventing and Mitigating Evictions After the COVID-19 Crisis,” recommends owners and managers remove barriers for tenants in their housing search and use transparent processes when establishing tenancy; clearly and consistently communicate with tenants in a culturally appropriate way from lease-up through all stages of tenancy; proactively connect tenants to resources and encourage communities of support to help tenants stay stable throughout their tenancy; allow flexibility in terms, processes, and payments for renters to reduce the likelihood of eviction; and create and commit to procedures and policies that prioritize eviction diversion options in the case of non-payment or late payment.

NCSHA participated in a working group that helped the authors develop their recommendations. Other members of the working group included the National Association of Housing and Redevelopment Officials, NeighborWorks America, Council of Large Public Housing Authorities, Local Initiatives Support Corporation, National Housing Trust, National Church Residences, and The Community Builders.

NCSHA in the News
Affordable Housing Finance, 1.27.23, What’s Next for the Capital Markets
The Casper Star Tribune, 1.21.23, Lawmakers Propose $5 Million for Housing Infrastructure Grant

Looking Ahead…

Legislative and Regulatory Activities

NCSHA, State HFA, and Industry Events

  • February 8 | NeighborWorks America Symposium, Advancing Equity for People of Color: Local Solutions for Housing Stability | Washington, DC
    Garth Rieman will speak at this event.
  • February 9 | Habitat for Humanity’s Habitat on the Hill Conference | Washington, DC
    Garth Rieman will speak at this event.
  • February 22 – 23 | Yardi Executive Briefing | Austin, TX
    Stockton Williams and Jennifer Schwartz will speak at this event.
  • February 22 – 23 | Mortgage Bankers Association’s Servicing Solutions Conference & Expo 2023 | Orlando, FL
    Rosemarie Sabatino will speak at this event.
  • February 28 | Noon – 5:45 p.m. ET | NCSHA’s Toward a Racially Just Housing System: Continuing Steps | Virtual
  • February 28 | SAHF Webinar: Tools & Approaches for Resident-Centered Outcomes Measurement in Affordable Housing
  • March 1 | Discounts End on Early Registration, Hotel Rates for NCSHA’s 2023 Legislative Conference
  • March 6 – 9 | NH&RA Annual Meeting | Bonita Springs, FL
    Stockton Williams will speak at this event.
  • March 8 – 10 | National Affordable Housing Management Association’s Biannual Top Issues in Affordable Housing Conference | Washington, DC
    Stockton Williams and Jennifer Schwartz will speak at this event.
  • March 15 | National Housing Conference’s “Solutions for Housing Communications” | Washington, DC
    Stockton Williams will speak at this event.
  • March 27 – 29 | NCSHA’s 2023 Legislative Conference | Washington, DC
  • March 30 | National Community Reinvestment Coalition Just Economy Conference 2023 | Washington, DC
    Garth Rieman will speak at this event.
  • April 12 | E&A Team’s Annual Accessibility Summit | Virtual
    Jim Tassos will speak at this event.
  • April 17 – 19 | Nebraska Investment Finance Authority’s 2023 Annual Conference | Lincoln, NE
    Jennifer Schwartz will speak at this event.
  • April 25 – 27 | Affordable Housing Investors Council’s 2023 Spring Meeting | Baltimore, MD
    Stockton Williams will speak at this event.

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