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Washington Report | August 17, 2018

Published on August 17, 2018

Washington-Report-August-13-2018New Mexico Mortgage Finance Authority (MFA) executive director Jay Czar and his senior team convene the agency’s board annually for a retreat to report on progress implementing current strategy, explore new business opportunities, and assess demographic and political trends in the state and nationally that bear on the agency’s direction. The opportunity to join this year’s meeting was too good to pass up and a learning experience on several levels.

We heard an especially rich set of presentations from MFA partners working in Native American and other rural areas. One in 10 New Mexicans is Native American — the second highest percentage in the country, after Alaska — and more than 30 percent of the state’s residents live in largely rural areas, according to an analysis by MFA’s Monica Abeita and Laura Chavez.

We heard how delivering affordable housing solutions in remote, historically underserved areas often characterized by low incomes and high rates of poverty requires innovation at every turn: design (Pueblo of Acoma Housing Authority’s newest development integrates open and community space based on the original settlement), construction (San Felipe Pueblo Housing Authority uses Pueblo-based work crews to cut costs), and financing.

On the latter, New Mexico MFA has also shown that traditional tools of affordable housing finance are viable in Native American communities, including Housing Credits and homeownership mortgage lending. A recently revised comprehensive guide to homeownership programs on tribal lands produced by Enterprise Community Partners in collaboration with the agency makes this critical point: “While federal and tribal resource dollars may be able to build some housing, the demand for affordable homeownership will never be met without the infusion of private financing into tribal communities in the form of mortgage loans.”

There is no denying that Native American households and communities face some of the most acute affordable housing needs in the country. The first-ever national survey of American Indian and Alaska Native (AIAN) households in tribal areas, published by HUD last year, found that “housing conditions are substantially worse among AIAN households than among all U.S. households, with overcrowding in tribal areas being especially severe.”

Housing challenges persist for Native Americans outside tribal lands as well. A companion HUD study, also released in 2017, noted that in urban areas Native Americans “on average occupy worse housing.” The researchers “found very few providers specialized to serve Native Americans and did not find any funding sources dedicated to supporting AIAN housing services in off-reservation” metro areas.

Discrimination is a major part of the problem. A 2003 study by the Urban Institute for HUD found that Native Americans in the metropolitan areas of New Mexico, Montana, and Minnesota “consistently receive less favorable treatment than similarly qualified whites when inquiring about the same advertised rental unit” and were more likely to experience discrimination than African Americans, Hispanics, or Asians.

HUD’s release this week of an Advanced Notice of Proposed Rulemaking seeking comments on potential revisions to its regulations for Affirmatively Furthering Fair Housing, discussed more below, is an enormously important opportunity to ensure states and localities can do their part most effectively in completing what Fair Housing Act co-sponsor former Vice President Walter Mondale has appropriately called “unfinished business.”


Stockton Williams | Executive Director

In This Issue

Edwin King Testifies at House Financial Services Subcommittee Field Hearing

On August 16, the House Financial Services Subcommittee on Housing and Insurance held a field hearing entitled, “The Role of Federal Housing and Community Development Programs to Support Opioid and Substance Use Disorder Treatment and Recovery” in Lexington, Kentucky. Edwin King, Executive Director and CEO of the Kentucky Housing Corporation (KHC), joined six other local witnesses to testify about their experiences surrounding substance-abuse treatment and to explore modifications to existing federal programs to facilitate this work. King highlighted KHC’s Recovery Kentucky program,  discussed the need to adequately fund the HOME Investment Partnerships Program and Section 8 Housing Choice Vouchers, and proposed several regulatory changes to improve the effectiveness of these and other federal programs. Following recent House passage of the Transitional Housing for Recovery in Viable Environments Demonstration Program (THRIVE) Act (HR 5735), Subcommittee Chairman Sean Duffy (R-WI) led the hearing, with THRIVE Act sponsors Representative Andy Barr (R-KY) and Representative Brett Guthrie (R-KY) also attending.

Housing Credit Legislation Continues Cosponsorship Gains Thanks to Tennessee Progress

It may be the August Congressional recess, but cosponsorship momentum continues for the Affordable Housing Credit Improvement Act (H.R. 1661). Just this week, two Tennessee House members cosponsored the legislation — Representatives John Duncan (R-TN) and Phil Roe (R-TN) — bringing our total to 162 House members. Congratulations to Tennessee HDA Executive Director Ralph Perrey and his team for their advocacy work. NCSHA is continuing the press for cosponsors over the recess, taking advantage of the down time many staff have while their bosses are in their home districts to educate them on the details of the bill. We encourage you to similarly use the recess to raise the importance of this legislation with your members while they are home. Increasing our cosponsorship numbers is the best way to position the bill for potential action later this year if Congress is able to move tax legislation, most likely after the election. Reach out to NCSHA’s Jennifer Schwartz if you need help or to update her on your efforts.

NCSHA Recommends Clarification to HUD Disparate Impact Rule

On August 16, NCSHA submitted comments to HUD on the agency’s 2013 Disparate Impact Final Rule, which implements the Fair Housing Act’s discriminatory effects standard. HUD had requested public comments on the rule because it is considering modifying it in light of the Supreme Court’s 2015 decision in Texas Department of Housing and Community Affairs vs. Inclusive Communities Project, Inc. In Texas DHCA vs. ICP, the Court found that disparate impact claims are cognizable under the Fair Housing Act. However, the majority opinion provides greater context on the standard that those claims must meet to be successful in litigation. NCSHA’s letter encourages HUD to modify the Disparate Impact Rule to ensure that plaintiffs must demonstrate a robust causality between the challenged policy or policies and the disparity and to clarify that policies should be considered legally justified if they are not artificial, arbitrary, and unnecessary. The clarifications NCSHA suggests would ensure greater consistency between the Disparate Impact Rule and the Court’s decision in this case.

NCSHA Attends HUD Conference for State HFAs and Other Counseling Intermediaries

HUD’s Office of Housing Counseling on Wednesday held its 4th annual Education and Networking Conference for state HFAs and other HUD-approved Housing Counseling intermediaries. Staff from 13 HFAs (18 HFAs currently serve as intermediaries in HUD’s Housing Counseling program), as well NCSHA’s Greg Zagorski and Glenn Gallo, participated. This year’s event featured a session looking back on the Housing Counseling program’s first 50 years and how it can continue to succeed in the future. Attendees also explored a number of key issues impacting HUD’s Housing Counseling program, including data collection, expanding rental housing counseling, promoting HUD certification for counselors, and the role of housing counseling in assisting disaster victims. Assistant Secretary for Housing and FHA Commissioner Brian Montgomery delivered opening remarks in which he thanked attendees for their hard work and called the Housing Counseling program vital to HUD’s mission.

HUD Seeks Public Comment on Affirmatively Furthering Fair Housing Regulation

HUD issued on August 13 a press release stating its intention to reopen for public comment its 2015 final rule on Affirmatively Furthering Fair Housing (AFFH) and made available a pre-publication version of an Advance Notice of Proposed Rulemaking, which HUD will soon officially publish in the Federal Register. HUD states that, since issuing the final rule, it has concluded the approach taken in the AFFH final rule “is not fulfilling its purpose to be an efficient means for guiding meaningful action by program participants.” HUD is specifically soliciting comments on changes that will minimize regulatory burden; make the process more results oriented; provide for greater local control and innovation; encourage housing choice, including through greater housing supply; and more efficiently utilize HUD resources. Comments will be due to HUD 60 days from formal publication of the Advance Notice of Proposed Rulemaking. NCSHA will submit comments on behalf of our members and welcomes your input. Contact NCSHA’s Jennifer Schwartz with questions or your feedback.

Fannie Mae Unveils Process to Streamline PMI Claims

Fannie Mae earlier this week announced its “MI Factor” initiative to simplify mortgage insurance (MI) claims for Fannie Mae-guaranteed loans. Through MI Factor, participating private mortgage insurers will use an algorithm based on 13 years of loan data to determine the claim payment servicers should receive for expenses associated with foreclosure and property management, instead of reviewing the expenses for each claim individually. While such expenses represent by far the smallest portion of a claim (around five percent), they often require the most time and resources to determine as the private mortgage insurer reviews each expense and will often request supplemental claims. Fannie Mae says that MI Factor will eliminate the need for supplemental claims and create more certainty, as servicers will no longer be subject to disallowances or curtailments of their claims. So far, MGIC, Genworth, and ARCH have signed up to participate in MI Factors, which will be effective for claims filed on or after October 1, 2018. Fannie Mae believes most private mortgage insurers will eventually join the initiative.

Urban Institute Releases Progress Report on Single GSE Security and Platform

The Urban Institute’s Housing Finance Policy Center recently released a report examining efforts by the Federal Housing Finance Agency (FHFA) and the Government-Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac to create a common securitization platform (CSP) and establish a common mortgage-backed security (MBS) for loans backed by the GSEs. The report finds that FHFA and the GSEs are largely on track with the timeline for the project, with Freddie Mac currently utilizing the CSP to sell its MBS. Fannie Mae is expected to join the CSP, and both firms begin issuing the common MBS, by June 2019. The report notes several additional steps that need to be taken to secure additional implementation, including further guidance from other federal regulators on how the new common MBS will be treated under various federal rules and helping the industry to prepare for the transition.

Essent Publishes Study on First-Time Homebuyers

Based on responses from 3,036 new and potential homeowners age 40 or younger, private mortgage insurer and NCSHA affiliate member Essent Guaranty, Inc., recently published a study that finds these first-time homebuyers rely heavily on technology and digital tools for navigating the home-buying and mortgage process. The study also finds that first-time homebuyers communicate effectively with real estate agents through social media and are more likely to work with companies offering online mortgage applications and procedures. The Essent study shows a significant percentage of first-time homebuyers are unaware of low down payment purchase options, noting more than half believe they need to provide at least a 10 percent down payment to buy a home. The study recommends real estate and mortgage professionals expand the use of digital tools to meet first-time homebuyers’ needs, leverage advance listing features to attract new buyers, use social media to reach first-time homebuyers, and understand the importance of both low interest rates and quality customer service to young consumers.

Looking Ahead…

NCSHA and State HFA Events

  • August 21 – 22 | Oklahoma State Housing Conference
    Garth Rieman will participate in this event.
  • September 5 – 7 | Housing Iowa Conference
    Jennifer Schwartz will participate in this event.
  • September 6 | Delaware 2018 Governor’s Conference on Housing
    Stockton Williams will participate in this event.
  • September 12 – 14 | New Mexico Housing Summit
    Stockton Williams will participate in this event.
  • September 14 | Discounted Early Registration Deadline for the 2018 Annual Conference & Showplace
  • September  17 | Midwest Housing Collaborative Meeting
    NCSHA will participate in this event.
  • October 1 – 2 | Southeast States Regional Roundtable
    Jim Tassos will participate in this event.
  • October 2 – 4 | Housing Washington Conference
    Jennifer Schwartz will participate in this event.
  • October 4 | New Hampshire Housing and the Economy Conference
    Stockton Williams will participate in this event.
  • Stockton Williams will participate in this event
  • Jennifer Schwartz will participate in this event.
  • October 13 – 16 | 2018 Annual Conference & Showplace | Austin, TX
  • October 24 – 25 | North Carolina Affordable Housing Conference
    Stockton Williams will participate in this event.
  • October 24 – 25 | Affordable Housing Investors Council – Affordable Housing Summit
    Jim Tassos will participate in this event.

Legislative and Regulatory Activity