NCSHA Washington Report | November 9, 2023

A day earlier than usual in light of tomorrow’s Veterans Day holiday.

One challenge in getting a handle on what ‘artificial intelligence’ may mean for affordable housing is distinguishing the term from practices that have been commonplace in the industry — with many positive and some seriously negative effects — for decades: automated underwriting and machine learning, to name two.

In a seminal new report released this week, Michael Neal and his colleagues at the Urban Institute suggest AI encompasses those and other domains that combine computer science and big data to solve problems. This framing aligns with President Biden’s sweeping executive order of last week, which defines AI broadly as “a machine-based system that can, for a given set of human-defined objectives, make predictions, recommendations, or decisions influencing real or virtual environments.”

For the Urban Institute researchers, “Theory and research suggest that AI, often using machine learning, can improve efficiency within the mortgage process. But racial bias may undermine its use in practical settings.” The president’s executive order shares the concern, directing the CFPB, HUD, and FHFA variously to “combat unlawful discrimination enabled by automated or algorithmic tools used to make decisions about access to housing and in other real estate-related transactions,” including underwriting, valuation, appraisal, tenant screening, and advertising of housing, credit, and other real estate-related transactions.

While many tech companies and business trade groups generally welcomed the administration’s action, some expressed concerns it could stifle innovation by smaller firms. That could be a risk to progress on affordable housing if it impedes creative new efforts to put the technology to work for low-income renters and would-be buyers.

For instance, Phebe Vayanos, co-director of the University of Southern California’s Center for Artificial Intelligence in Society, is designing algorithms to help unhoused youth access housing and services in Los Angeles. Two finalists for the 2023 Ivory Prize for housing innovation are using AI applications to lower costs of production to deliver more affordable homes. Some “proptech” venture capitalists have reported success in funding AI-driven start-ups with affordable housing missions.

The National Fair Housing Alliance, which arguably has done more than any other organization to document and push back on discriminatory effects of AI applications in the mortgage market, believes they can, if properly designed and regulated, also be the basis of a better, fairer housing finance system. Michael Akinwumi, who leads the alliance’s tech initiative, sees the potential for AI to reduce bias and discrimination.

However you define it, AI is probably already so powerful, and poised to become so pervasive, it’s incumbent on all of us in the industry to support that outcome.

Neal, Vayanos, Akinwumi, along with federal officials and equity-minded AI investors and innovators, are all part of NCSHA’s AI and Affordable Housing Symposium December 13.

Stockton Williams | Executive Director

State HFA Emergency Housing Assistance

In This Issue

• FHFA Releases Report on Federal Home Loan Banks
• HUD Releases New PBCA Management and Occupancy Review Guidance
• HUD Publishes Build America, Buy America Guidance
• HUD Announces Funding for Section 811 Supportive Housing for Persons with Disabilities
• DOT to Hold Webinars on Transit-Oriented Development, Including Residential
• FHFA Requests Input on GSEs’ Proposed Duty-to-Serve Plan Changes
• Looking Ahead

FHFA Releases Report on Federal Home Loan Banks
After a year-long, comprehensive review of the Federal Home Loan Bank (FHLB) system and its role in the housing market, the Federal Housing Finance Agency (FHFA) Tuesday released its report FHLBank System at 100: Focusing on the Future. The report says FHFA will advance several regulatory proposals to ensure the FHLBs remain a source of reliable housing liquidity and support affordable housing and community development. The report also says FHFA will ask Congress to enact legislation increasing each FHLB’s contribution to its Affordable Housing Program (AHP) from 10 percent of its revenues to 20 percent and urge the FHLBs to voluntarily increase funding for their AHPs. FHFA also intends to amend AHP regulations to streamline the program by adjusting income limits and other compliance requirements. FHFA’s review included stakeholder roundtables, virtual listening sessions, and public comments. NCSHA and several HFAs submitted comments and participated in roundtables. This fact sheet from FHFA summarizes the report.

HUD Releases New PBCA Management and Occupancy Review Guidance
The U.S. Department of Housing and Urban Development (HUD) recently issued this memorandum for internal audiences and Performance-Based Contract Administrators with new guidance on management and occupancy reviews (MORs). Specifically, the guidance requires MORs scheduled on or after January 1, 2024, to be conducted on site, ending the practice of remote MORs established during the Covid-19 pandemic.

HUD Publishes Build America, Buy America Guidance
On November 3, HUD’s Office of Community Planning and Development (CPD) issued Notice CPD-23-12 providing implementation guidance for Build America, Buy America (BABA) domestic sourcing requirements for CPD programs, including the HOME Investment Partnerships program and Housing Trust Fund. Among other information, Notice CPD-23-12 provides guidance on implementation schedule, frequently asked questions, examples of when BABA applies to CPD grantees, and sample language to use in agreements. Read more about BABA implementation at HUD.

HUD Announces Funding for Section 811 Supportive Housing for Persons with Disabilities
HUD recently announced the availability of $212 million for the Section 811 Supportive Housing for Persons with Disabilities program, which helps develop, subsidize, and provide supportive services for housing for very low- and extremely low-income persons with disabilities. Specifically, HUD issued notices of funding opportunity for two components of the Section 811 program: Section 811 Capital Advance/Project Rental Assistance Contracts (PRAC), for the development of permanent supportive rental housing for very low-income persons with disabilities, and Section 811 Project Rental Assistance (PRA), which provides project-based rental operating assistance for extremely low-income persons with disabilities. Property sponsors and owners are eligible applicants for Section 811 PRAC funding, while states, including state HFAs, are the intended audience for Section 811 PRA funding.

DOT to Hold Webinars on Transit-Oriented Development, Including Residential
Beginning November 13, the U.S. Department of Transportation will host a series of webinars for audiences interested in the potential use of the Railroad Rehabilitation and Improvement Financing (RRIF) and Transportation Infrastructure Finance and Innovation Act (TIFIA) programs to finance transit-oriented development (TOD) projects, including commercial-to-residential conversions. The Fixing America’s Surface Transportation Act recently expanded RRIF and TIFIA program eligibility to include TOD projects and related infrastructure. Learn more and register for webinars.

FHFA Requests Input on GSEs’ Proposed Duty-to-Serve Plan Changes
FHFA last week issued a request for input soliciting feedback on changes Fannie Mae and Freddie Mac have proposed to their Duty-to-Serve Underserved Market Plans. Both firms propose several changes to various loan and equity purchase targets for 2023 to reflect declining market activity. Freddie Mac also proposes to broaden its efforts to develop flexible financing sources to help Housing Credit-financed properties remain affordable after their mandatory affordability periods expire. Fannie Mae requests to lower its 2023 loan purchase targets for manufactured housing loans titled as real property, resident-owned manufactured housing communities, and single-family shared equity loans. FHFA will accept comments on the modifications until December 6. To inform NCSHA’s comments, send feedback to Greg Zagorski by November 29.

Looking Ahead

Legislative and Regulatory Activities

• November 13 | DOT Webinar on Transit-Oriented Development, Including Residential Development
• November 14 – 15 | Federal Housing Finance Agency Property Insurance Symposium
• November 15 | Letters of Intent Due | HUD-HHS Housing and Services Partnership Accelerator
• November 16 | CDFI Fund Webinar on New Markets Tax Credits
• November 29 | Applications Due | HUD Housing Counseling Training Funding Opportunity
• November 29  | Comments Due to NCSHA | FHFA Request for Input on Fannie Mae, Freddie Mac Duty-to-Serve Plan Changes
• December 1 | Applications Due | HUD-HHS Housing and Services Partnership Accelerator
• December 6 | Comments Due | FHFA Request for Input on Fannie Mae, Freddie Mac Duty-to-Serve Plan Changes
• December 11 | Comments Due to NCSHA | HUD Housing Counseling Services Proposed Rule
• December 15 | Comments Due to NCSHA | Federal Reserve, FDIC, OCC Notice of Proposed Rulemaking Establishing New Capital Standards for Large Banks
• December 26 | Comments Due | HUD Housing Counseling Services Proposed Rule

NCSHA, State HFA, and Industry Events

• November 16 – 17 | National Association of Home Builders Mortgage Roundtable | New York, NY
  Stockton Williams is participating in this event.
• December 13, 12:00 p.m. – 5:30 p.m. ET | NCSHA’s AI and Affordable Housing: A National Symposium | Virtual