NCSHA Washington Report | September 17, 2021

During a week when historic housing legislation advanced in Congress, HUD announced it “will begin obligating” billions for homeless housing relief to states and cities, and FHFA continued its overhaul of Fannie and Freddie’s regulatory regime, the “partisan fireworks” over cryptocurrency in the Senate Banking Committee may have escaped notice.

The committee was hearing from SEC Chairman Gary Gensler, who has made crypto regulation a centerpiece of an agenda “some experts say would amount to the most significant revamp of U.S. securities law in decades,” according to the Wall Street Journal.

Even if you agree with Warren Buffett that crypto “has no unique value at all,” you also can agree with Larry Summers that it’s “probably here to stay as a form of digital gold,” because, as David Rubenstein argues, “People in the market want something other than just the traditional currencies that we’ve had.”

Many of those Rubenstein refers to are core constituencies of affordable housing finance: the young and people of color.

“There has been a long history of discrimination in investments and that could be why we have seen a wide demography of interest and inclusivity in crypto — because it’s new, open, and seemingly has fewer barriers to entry,” Harris Poll CEO John Gerzema said. A survey his firm did with USA Today found 23 percent of Blacks and 17 percent of Hispanics own cryptocurrency, compared to 11 percent of Whites.

“This idea of bypassing the traditional financial institutions is quite intriguing for a segment of the population that’s largely not welcome in our traditional centralized finance,” said Duke professor Campbell Harvey.

Last month, United Wholesale Mortgage, the second-largest mortgage lender in the country, announced plans to accept cryptocurrency for home loans, “in what is being billed as a first for the national mortgage industry,” according to CNBC. Could it be “not only are the boundaries of the traditional real estate market being expanded by this technology, but new innovations have complicated what it means to truly ‘own’ real estate”?

It’s an understatement to say, “Regulators and other mortgage entities are only just beginning to put out guidelines for how to gauge the soundness of crypto assets.” They need to hurry. “Today, few technologies are more potentially transformative and disruptive — and more potentially susceptible to abuse — than cryptocurrency,” according to a report by the Justice Department last year.

If it seems somewhat far afield, consider that fintech firms, which may be especially well positioned to benefit from crypto’s growth, are now, according to a new paper from the Philadelphia Federal Reserve Bank, “much more likely” to offer FHA loans than banks and “more likely to target consumers who have been denied credit in the recent past and marginally more likely to target consumers in areas with fewer bank branches.”

If, as James Poulos of the Claremont Institute argues, “consumer finance is becoming irreversibly embedded in digital technology,” keeping an eye on crypto isn’t just of interest for affordable housers. It’s a necessity.

Stockton Williams | Executive Director 

State HFA Emergency Housing Assistance

In This Issue

• • NCSHA Asks Treasury for Additional HAF Guidance
  • HUD Issues HOME-ARP Guidance
  • Ways and Means Committee Advances Legislation with Key NCSHA Tax Priorities
  • Financial Services Committee Reports Reconciliation Legislation Increasing Funding for HOME, Housing Trust Fund, Down Payment Assistance
  • House Committee Passes ERA Reform Legislation
  • FHFA and Treasury Suspend Elements of GSE Preferred Stock Purchase Agreements
  • White House Nominates McCargo to Ginnie Mae, Jemison to Public Housing
  • HUD Announces Funding Availability for Housing Counseling Program
  • Treasury Announces Funding for CDFI Capital Magnet Fund Assistance
  • NCSHA in the News
  • Looking Ahead

NCSHA Asks Treasury for Additional HAF Guidance
NCSHA sent the Treasury Department a letter this week requesting additional guidance for state agencies administering the Homeowner Assistance Fund (HAF). NCSHA asked Treasury to give states the maximum flexibility permitted by statute to address the specific needs in their states. The letter asked for additional guidance on whether HAF program administrators may recycle HAF funds, keep and reuse HAF funds repaid after the program expires, the tax status of benefits received through HAF, and Treasury’s program reporting requirements.

HUD Issues HOME-ARP Guidance
The Department of Housing and Urban Development (HUD) published on September 13 Notice CPD-21-10 and related implementation fact sheets providing guidance on how HFAs and other program administrators may use the $5 billion provided under the American Rescue Plan Act through the HOME Investment Partnerships program (HOME-ARP) for housing and services primarily for households experiencing or at risk of homelessness. The guidance provides much of the flexibility and waivers NCSHA asked for in correspondence and meetings as HUD drafted the program rules, including permission to use HOME-ARP funds for operating subsidies, suspension of standard HOME per-unit subsidy limits, and the ability to use master leases. The notice is effective immediately. Read more about the HOME-ARP program and HUD’s guidance in NCSHA’s blog.

Ways and Means Committee Advances Legislation with Key NCSHA Tax Priorities
This week, the House Ways and Means Committee advanced infrastructure and community development sections of the Build Back Better Act in a near party-line vote of 24‒19. As detailed in our blog earlier this week, the historic legislation includes a number of NCSHA’s priorities, including a roughly 60 percent increase in Housing Credit authority, reduction of the tax-exempt bond financing threshold from 50 to 25 percent, and new Neighborhood Homes Investment Credit. House Ways and Means Committee Chairman Richard Neal (D-MA) and Housing Credit champions Suzan DelBene (D-WA) and Don Beyer (D-VA) expressed strong support for the Housing Credit during the four-day hearing. DelBene submitted for the record a letter from NCSHA and 22 other members of the ACTION Campaign Steering Committee. NCSHA also led a sign-on effort in support of provisions in the bill to address the qualified contract loophole and challenges to the nonprofit right of first refusal allowed under the tax code. The legislation, which will be combined with the reconciliation language reported by other House committees, will undergo consideration by the House and Senate as it advances toward potential enactment.

Financial Services Committee Reports Reconciliation Legislation Increasing Funding for HOME, Housing Trust Fund, Down Payment Assistance
The House Financial Services Committee Tuesday voted to favorably report legislation that would appropriate more than $300 billion in funding for affordable housing programs, including historic investments in HOME and the Housing Trust Fund. The bill also would create a new program, the First-Generation Downpayment Fund, through which states and nonprofits would provide first-time home buyers whose parents did not own homes with grants for down payment assistance. The committee’s bill is intended to be included as part of a larger package, which also will include the Ways and Means-reported legislation (see related article), that could provide up to $3.5 trillion in new federal spending and tax expenditures, which Congress authorized in a Budget Resolution passed last month. House leaders intend to combine this bill with those passed by other committees into one piece of legislation for House consideration. The final committee bill contained several changes advocated by NCSHA. We summarized the bill in more detail in our blog.

House Committee Passes ERA Reform Legislation
The House Financial Services Committee on September 14 reported the Expediting Assistance to Renters and Landlords Act of 2021 (H.R. 5196). The bill includes numerous Emergency Rental Assistance (ERA) program amendments for which NCSHA has advocated, including streamlining ERA 1 eligibility requirements to align with ERA 2, providing safe harbors for grantees, allowing landlords to apply for assistance without a tenant’s affirmative consent, extending the maximum number of months households can receive ERA assistance, providing more flexibility for housing stability services, and increasing to 15 percent the amount of ERA 1 funds grantees may devote to administrative expenses. For more information, see our blog, written in advance of the markup. 

FHFA and Treasury Suspend Elements of GSE Preferred Stock Purchase Agreements
On Tuesday, the Federal Housing Finance Agency and the Treasury Department suspended certain provisions added to the Preferred Stock Purchase Agreements with Fannie Mae and Freddie Mac (the Enterprises) on January 14, in the last days of the prior administration. The suspended provisions established limits on the Enterprises’ cash window purchases, multifamily lending, second home and investment property purchases, and loans with higher risk characteristics. This latter provision had been particularly problematic, because it restricted Enterprise purchases of single-family mortgage loans having two or more characteristics typical of first-time home buyer mortgage loans: a combined loan-to-value ratio exceeding 90 percent, a debt-to-income ratio exceeding 45 percent, and a borrower credit score below 680.

White House Nominates McCargo to Ginnie Mae, Jemison to Public Housing
On Monday, President Biden nominated Alanna McCargo to be President of the Government National Mortgage Association and Arthur Jemison to be HUD Assistant Secretary for Public and Indian Housing. McCargo most recently has been serving as the HUD Secretary’s senior advisor for housing finance. She previously worked at the Urban Institute, CoreLogic, JP Morgan Chase, and Fannie Mae.  Jemison has served since January 2021 as the Principal Deputy Assistant Secretary for HUD’s Office of Community Planning and Development. Prior to joining the administration, he was group executive for planning, housing, and development for the City of Detroit and deputy undersecretary and deputy director for the Massachusetts Department of Housing and Community Development, an NCSHA associate member. NCSHA strongly supports both nominations. We expect the Senate Banking Committee to schedule hearings for both nominations soon.

HUD Announces Funding Availability for Housing Counseling Program
On Tuesday, HUD’s Office of Housing Counseling (OHC) announced $51 million is available for HUD-approved housing counseling agencies and intermediaries. The grants, made available through a new Notice of Funding Opportunity, are for counseling agencies to maintain and expand their services, with additional incentives to advance “racial equity in homeownership, support disaster relief and recovery counseling, and help seniors age in place.” OHC will provide $3 million of the $51 million for grants to organizations partnering with historically black colleges or universities, tribal colleges or universities, or other minority-serving institutions. OHC will also prioritize applications that provide emergency preparedness and/or disaster recovery counseling and give additional incentives to agencies conducting Home Equity Conversion Mortgage foreclosure prevention counseling. Applications will be accepted through October 14.

Treasury Announces Funding for CDFI Capital Magnet Fund Assistance
Treasury announced last Thursday it is accepting applications for the FY 2021 round of Capital Magnet Fund (CMF) grants. The CMF provides competitive grants to Community Development Financial Institutions, HFAs, and other eligible nonprofit organizations to support the development, rehabilitation, purchase, and preservation of affordable housing. Recipients also may use awards to finance related economic development and community service facilities, such as daycare centers and health clinics. A total of $380.2 million is expected to be awarded to this year’s recipients. The application deadline is November 9, with certain requirements to be met before October 12. More information is available here. In FY 2020, five state HFAs received a little more than $23 million in CMF funding. 

NCSHA in the News
Law 360, 9.14.21, Housing Groups Ask IRS to Extend Housing Credit Relief
Notes from Novogradac, 9.13.21, Historic Expansion of Housing, Community Development and Green Energy Tax Incentives Included in $1.2 Trillion House Ways and Means Committee Reconciliation Legislation

Looking Ahead…

Legislative and Regulatory Activities

• September 28 | USDA Meeting on Housing Resources for Rural America, including the Emergency Rental Assistance Program | Virtual
  Stockton Williams and Jennifer Schwartz will speak at this event.
• September 28 | FHFA Listening Session on Fannie Mae’s and Freddie Mac’s Equitable Housing Finance Plans
• October 11 | Comments Due to NCSHA | FHFA Request for Input on Fannie Mae’s and Freddie Mac’s Equitable Finance Plans
• October 11 | Comments Due to NCSHA | FHFA Proposed Affordable Housing Goals for Fannie Mae and Freddie Mac
• October 25 | Comments Due | FHFA Request for Input on Fannie Mae’s and Freddie Mac’s Equitable Finance Plans
• October 25 | Comments Due | FHFA Proposed Affordable Housing Goals for Fannie Mae and Freddie Mac
• November 16 | Application Deadline | FR-6500-N-25, Notice of Funding Opportunity FY 2021 Continuum of Care Competition

NCSHA, State HFA, and Industry Events

• September 20 – October 8 | Up for Growth 2021 Virtual Summit for Housing Changemakers | Virtual
• September 21 | #HousingDC21 | Virtual
  Stockton Williams and Garth Rieman will speak at this event.
• September 22 | Registration Closes | NCSHA’s 50^th Annual Conference | Virtual
• September 23 | Affordable Housing Tax Credit Coalition 2021 Fall Meeting | Washington, DC
  Jennifer Schwartz will speak at this event.
• September 26 – 29 | NCSHA’s 50^th Annual Conference
• October 4 ‒ 6 | The 28th Annual Washington State Affordable Housing Conference | Virtual
  Garth Rieman will speak at this event.
• October 19 – 22 | National Affordable Housing Management Association’s Fall Conference | Virtual
  Jennifer Schwartz is speaking at this event.
• October 20 – 21 | 2021 Maine Affordable Housing Conference | Virtual
  Stockton Williams will speak at this event.
• November 9 | Manufactured Housing Institute NCC Fall Leadership Forum | Chicago
  Jennifer Schwartz will speak at this event.
• November 9 | ProLink Solutions Annual User Conference | Virtual
  Jennifer Schwartz will speak at this event.

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