Make plans to attend: NCSHA's Annual Conference & Showplace Learn more.

NCSHA Washington Report | July 26, 2024

Published on July 26, 2024

Web Washington Report Graphics - July 26, 2024
The emergence of high housing costs as a central issue in a presidential election, arguably for the first time ever, led both campaigns to make comments recently that perplexed many economists and housing industry participants.

President Joe Biden, days before he left the race, proposed a nationwide rent control regime, going very big on an idea that, in the words of the Obama Administration’s chief economist Jason Furman, “has been about as disgraced as any economic policy in the tool kit.”

Senator J.D. Vance, shortly before becoming the Republican nominee for vice president, suggested mass deportation of undocumented immigrants, as proposed by the Trump – Vance campaign, “will absolutely make housing more affordable for American citizens.” But the most robust economic study on the subject suggested the more likely impacts are “large and persistent reductions in construction workforce, residential homebuilding, and increases in home prices.”

We’ll give each campaign a housing policy mulligan and encourage them to build out a platform from a foundation of existing programs that are proven to directly reduce housing costs.

Like state- and locally-issued Mortgage Revenue Bonds. These long-running tax-exempt instruments generate capital for home mortgage loans that in today’s housing market are often 50 – 100 basis points below the typical rate. That lower-cost mortgage means MRB-assisted home buyers — who must by law be lower-income and first-time — save thousands of dollars over the course of their mortgages compared to the alternatives.

State HFAs issued more than $16 billion in MRBs to finance around 76,000 loans last year, amounting to about half of their total homeownership production. HFAs would issue more if they had more bond authority, which both campaigns should call on Congress to provide to the states.

Another way to directly reduce housing costs for aspiring home buyers is down payment assistance, which HFAs provide alongside most of their MRB mortgages. The agencies delivered $1.6 billion in DPA, at an average amount of $12,000, last year.

Of course, millions of lower-income families who already own their homes are facing unsustainably higher housing costs of different kinds. As a group, they have $57 billion in home repair needs, according to the Federal Reserve Bank of Philadelphia. Mortgage Revenue Bonds can and do finance home improvements — but only up to $15,000 per home, due to an egregiously outdated statutory provision. That’s not nearly enough to cover critical health and safety improvements millions of homes need.

The bipartisan Affordable Housing Bond Enhancement Act, sponsored by Senators Cortez Masto (D-NV) and Cassidy (R-LA), would update the limit to meet current costs. The bill also would enable MRBs to fund mortgage refinance loans, which would give lower-income owners another way to lower their housing costs when mortgage rates eventually fall in a sustained manner, as most economists predict will occur in the next year.

The ultimate proof that state HFA MRBs + DPA = lower housing costs is in who benefits from their assistance: home buyers earning a median income of $68,000. Who happen to be some of the folks both campaigns are competing hardest for.

Stockton-Williams-Washington-ReportStockton Williams | Executive Director

In This Issue

NCSHA Testifies at FHFA Duty to Serve Listening Session 
NCSHA called on Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency (FHFA) to expand Housing Credit investment, affordable housing preservation, and other activities in testimony last week during an FHFA listening session on Fannie Mae’s and Freddie Mac’s 2025 – 2027 Duty to Serve Plans. Both firms currently are developing their plans for the upcoming three-year cycle. During the session, NCSHA expressed appreciation that both Fannie Mae and Freddie Mac proposed to remain active in the Housing Credit market despite economic and regulatory challenges. NCSHA urged FHFA to work with the U.S. Treasury Department to resolve the outstanding issue of whether Fannie and Freddie qualify as tax-exempt controlled entities, which has hindered the firms’ involvement in the Housing Credit market, and to allow the firms to receive Duty to Serve credit for Housing Credit investments in affordable housing preservation. NCSHA also asked Fannie Mae and Freddie Mac to look for ways to preserve affordable rural housing and to work with HFAs to expand homeownership opportunities in rural areas.

FHFA will be seeking written comments on the Duty to Serve Plans until August 12. Please send Greg Zagorski any feedback by August 2.

Senate Appropriations Committee Passes FY25 HUD Appropriations Bill
On Thursday, the Senate Appropriations Committee approved Fiscal Year (FY) 2025 legislation to provide $78.2 billion for the U.S. Department of Housing and Urban Development (HUD), offset by $8.4 billion in receipts, for a net funding level of $69.8 billion. The legislation, which passed the committee by a vote of 28 – 1, would fund a number of NCSHA priorities, as follows:

  • $35.3 billion for Housing Choice Vouchers, including funding for 3,000 new incremental vouchers for youth aging out of foster care and veterans at risk of experiencing homelessness, a $2.9 billion increase over FY24 and $2.5 billion higher than the President’s Budget Request.
  • $16.7 billion for Project-Based Rental Assistance, a $644 million increase above FY24 and equal to the President’s Budget Request.
  • $1.425 billion for the HOME Investment Partnerships program, $175 million higher than the FY24 enacted level and the President’s Budget Request.
  • $4.32 billion for Homeless Assistance Grants, an approximately $270 million increase above FY24 and the President’s Budget Request.
  • $100 million for Pathways to Removing Obstacles Housing grants to remove state and local barriers to affordable housing, equal to the FY24 enacted level and the President’s Budget Request.

The bill also includes a provision similar to one in last year’s Senate HUD funding bill authorizing HUD to select new project-based rental assistance contract administrators through a notice of funding opportunity solicitation to award cooperative agreements to public housing agencies, including state HFAs, on a state-by-state basis.

The text, the committee report, and a summary of the Transportation, Housing and Urban Development funding bill, including highlights of funding for various HUD programs, can be found here.

White House Calls for Temporary Cap on Rent Increases, Increased Access to Federal Lands for Housing
On July 16, President Biden announced he will ask Congress to pass legislation requiring landlords with more than 50 units to limit annual rent increases on existing units to no more than five percent for the next two years. The policy would not apply to new construction or properties undergoing rehabilitation. Under the proposal, landlords who do not institute those limits would not be eligible for accelerated depreciation of those properties for tax purposes. The proposal would require congressional action and is unlikely to garner sufficient support in Congress to pass.

The White House also declared it is calling on all federal agencies to assess surplus federal land that could be repurposed to build more affordable housing. The announcement notes several federal agencies, including the Bureau of Land Management, U.S. Forest Service, and U.S. Postal Service, already are working to identify land that could be used for affordable housing production. The White House noted HUD, the Department of Health and Human Services, and the General Services Administration are poised to release a final rule facilitating Title V of the McKinney-Vento Homeless Assistance Act, which allows underutilized and surplus federal properties to be developed as housing for people experiencing homelessness. NCSHA has advocated for improvements to the Title V requirements to optimize its potential and fulfill congressional intent.

HUD Holds Summit on Rising Insurance Costs
On July 18, HUD convened government officials, industry executives, nonprofits, and academics to address the impact of recent increases in property insurance costs. At the summit, HUD Acting Secretary Adrianne Todman and other senior HUD officials reviewed departmental actions to address increases in insurance premiums and deductibles, reductions in coverage, and withdrawals of insurance companies from certain markets. These actions include updates to multifamily insurance deductibles to address the rising costs of wind and storm coverage, development of a new Federal Flood Risk Management Standard, and revised methodology for calculating how contract rents are set in Section 8 project-based rental housing to better account for rising insurance costs.

Additional GRRP Awards Announced by HUD
On Tuesday, HUD announced an additional $19 million in new grant and loan awards under its Green and Resilient Retrofit Program (GRRP) for energy efficiency and climate resilience upgrades in 32 HUD-assisted properties across 18 states. This brings the total GRRP assistance awarded to date to $773.4 million in grants and surplus cash loans across 171 properties and more than 20,700 affordable rental homes. You can read about the most recent awards here and learn more about the GRRP program, including upcoming application deadlines, here.

$175 Million Available for CoC Housing Construction, HUD Announces
On July 19, HUD issued a notice of funding opportunity for approximately $175 million in one-time Builds awards for the development of new units of permanent supportive housing (PSH) through the Continuum of Care program. HUD plans to make approximately 25 awards for the construction, acquisition, or rehabilitation of new PSH units. HUD says it intends for the funding to help increase the supply of PSH units for individuals and families experiencing homelessness where one household member has a disability and for states with populations of less than 2.5 million. Applications are due November 21; learn more here.

$325 Million in Choice Neighborhood Grants Awarded
HUD announced last week that cities in Alabama, Florida, Nevada, New Jersey, New York, Tennessee, and Texas will receive more than $325 million in Choice Neighborhood Implementation Grant funding to redevelop distressed housing; provide residents with services focused on income, health, and education; and attract private investment to drive economic development. An additional $19.5 million is designated for previous Choice Neighborhood grantees in Arizona, Louisiana, Maine, New Jersey, North Carolina, Ohio, and Virginia to continue their neighborhood investment goals. The seven new grantees will develop more than 6,500 new mixed-income units, including replacing 2,677 severely distressed public housing units. Summaries of the seven new communities’ awards are available here.

Housing Subcommittee Considers Impact of Regulations on Housing Affordability
The House Financial Services’ Housing and Insurance Subcommittee on Wednesday held a hearing to consider the impact regulations have on the availability of affordable housing. In his opening statement, Subcommittee Chair Warren Davidson (R-OH) argued regulations are one of the primary drivers of housing unaffordability and often provide no benefit to consumers. To demonstrate his point, he showed a chart he said demonstrated how difficult it is for building owners to participate in the Housing Choice Voucher program. HUD leadership, he contended, was further contributing to the problem by pursuing new regulations and mandates, some of which do not relate to housing. Congresswoman Sylvia Garcia (D-TX), who acted as ranking member for the hearing, said the most burdensome regulations were established by states and localities. She criticized Republicans for not recognizing the Biden Administration’s efforts to support affordable housing and said the best thing the federal government can do is provide adequate resources.

House Financial Services Committee Discusses AI and Housing
The House Financial Services Committee on Tuesday held a hearing exploring the impact innovations in artificial intelligence (AI) could have on housing and financial services markets. The hearing followed last week’s release of the committee’s Bipartisan Working Group on Artificial Intelligence staff report. In his opening remarks, Committee Chair Patrick McHenry (R-NC) predicted generative AI advances would significantly impact the financial services industry and become embedded in everyday life. He argued federal financial regulations should remain technology neutral and any new legislation or regulations to oversee AI in financial services and housing should be targeted carefully so as to not hinder innovation. Committee Republicans largely agreed with McHenry on the need for a light regulatory approach. Ranking Member Maxine Waters (D-CA) said expanding the use of AI could expand access to credit for consumers but steps must be taken to ensure such technology does not contribute to bias in the lending markets.

Looking Ahead

Legislative and Regulatory Activities

NCSHA, State HFA, and Industry Events

Newsroom

HFA Communities

Connect with your HFA peers for best practices, advice, and solutions.

Join the Conversation

Upcoming Events

event

View Event

Membership

Login

Get NCSHA Updates

Stay informed about the issues, legislation, and regulations important to state HFAs.

Subscribe