Washington Report | June 21, 2024
The Federal Housing Finance Agency (FHFA) this week held a daylong symposium to explore how Federal Home Loan Banks can — and why they should — work more with Community Development Financial Institutions (CDFIs).
The session was part of FHFA’s continuing review of the effectiveness of the Bank system and its assessment of what else its members can and should do to support affordable housing and community development. It was a useful discussion.
Now, FHFA should devote similar attention to another national network of mission-focused financing institutions with even broader reach: state housing finance agencies.
In fact, the Banks and HFAs have worked together for decades. At least 20 HFAs have received Bank advances to provide liquidity to their affordable homeownership housing bonds and mortgage-backed securities. Bank Affordable Housing Program funds often support multifamily housing development financed by HFAs, too.
Last month, the Des Moines FHLBank and one of its member institutions, BND Capital, jointly invested in the North Dakota HFA’s proven statewide delivery system, because as BND President Todd Steinwald said, “Rather than creating a new grant funding mechanism, it made good sense to partner with NDHFA so they could serve more people through their established programs.”
In February, the FHLBank of Chicago coordinated greater support for housing counseling organizations serving minority and low-income home buyers through the Illinois Housing Development Authority and Wisconsin Housing and Economic Development Authority. The Topeka FHLB pioneered its innovative electronic note transfer process in partnership with the Colorado HFA. There are lots of similar examples.
Still, the Banks as a system are barely scratching the surface of what they could accomplish with HFAs. FHFA should actively encourage and provide for greater collaboration as HFAs continue their direct engagement in their regions.
For instance, FHFA wants the Banks to establish “mission-oriented” collateral programs that would enable CDFIs and credit unions to secure advances on a similar basis as conventional banks. The agency should also give the Banks more flexibility to accept new forms of collateral from HFAs and to price the collateral in a manner that reflects both their mission impact as well as their demonstrably stellar underwriting, strong balance sheets, and high independent financial ratings.
Likewise, every Bank supports local efforts providing down payment assistance to aspiring lower-income buyers, almost always in the form of grants to member institutions and community-based groups. HFAs, which generate more than $1 billion in DPA annually, could offer channels to achieve greater scale through financing partnerships with the Banks.
Unlike FHFA’s worthwhile efforts to explore how some mission-focused organizations might gain better access to the vast resources of the FHLB system through new policies, and perhaps new regulations, around a broader framing of its mission, state HFAs are already there.
According to the agency, “FHFA regulations define the mission of the FHLBanks as providing to their members and housing associates [emphasis supplied] financial products and services that assist the financing of housing and community lending.” HFAs are, by law and regulation, the Banks’ housing associates.
It’s time to activate the full potential of that relationship.
Stockton Williams | Executive Director
In This Issue
- NCSHA Urges IRS to Reject Proposed New Methodology for MRB Safe Harbors
- HUD Awards $51 Million to HFAs, Other Agencies to Address Youth Homelessness; Announces Additional $72 Million Available
- HFAs, Other Agencies Receive $10 Million for Housing Counseling
- Harvard’s JCHS 2024 “State of the Nation’s Housing” Report Highlights Affordability, Production, Preservation Concerns
- GSEs’ Proposed 2025 – 2027 Duty-to-Serve Plans Released
- House Appropriations Subcommittee Approves FY25 Rural Housing Funding Bill
- FHFA Releases Annual Report to Congress
- NCSHA in the News
- Looking Ahead
NCSHA Urges IRS to Reject Proposed New Methodology for MRB Safe Harbors
NCSHA last Friday sent the U.S. Treasury Department a letter urging it not to go forward with a proposed change in how the Internal Revenue Service (IRS) calculates the purchase price limit safe harbors for Mortgage Revenue Bond (MRB) and Mortgage Credit Certificate (MCC) programs. The letter responds to IRS Revenue Procedure 2024-21, which proposes to change the data set used to establish the MRB/MCC purchase price safe harbors from the Federal Housing Administration’s loan limits to median home price data collected by the U.S. Department of Housing and Urban Development. As IRS acknowledges, and an NCSHA analysis confirmed, the new methodology would cause significant, widespread reductions in the MRB/MCC safe harbors and, consequently, the MRB/MCC purchase price limits for most areas of the country. NCSHA’s letter notes purchase price limits are redundant and unnecessary, because MRBs and MCCs are subject to well-targeted income restrictions; therefore, IRS should ensure purchase price limit decreases don’t needlessly cut off access to MRB and MCC programs. NCSHA will continue to express our concerns about the proposed new methodology to IRS and the Treasury Department. Please email Greg Zagorski with any questions or input.
HUD Awards $51 Million to HFAs, Other Agencies to Address Youth Homelessness; Announces Additional $72 Million Available
On June 6, the U.S. Department of Housing and Urban Development (HUD) announced $51.1 million in Youth Homelessness System Improvement grants to 38 communities across 26 states, Puerto Rico, and Guam; recipients include the Idaho Housing and Finance Association and the Indiana Housing and Community Development Authority. Additionally, HUD released a $72 million notice of funding opportunity for the FY23 Youth Homelessness Demonstration and supportive services programs. The funds may be used for rapid rehousing, permanent supportive housing, transitional housing, host homes, and wrap-around services such as education, health, and workforce support to help youth access and maintain housing.
HFAs, Other Agencies Receive $10 Million for Housing Counseling
On Monday at the Pennsylvania Housing Finance Agency, HUD announced $10 million in grant funding has been awarded to 23 HUD-approved housing counseling agencies, including five HFAs. These Homeownership Initiative grants will be used to prepare prospective home buyers in historically underserved communities with culturally and linguistically appropriate pre- and post-purchase housing counseling services. The Connecticut Housing Finance Authority, Georgia Department of Community Affairs, Louisiana Housing Corporation, Pennsylvania Housing Finance Agency, and Washington State Housing Finance Commission will receive a total of nearly $1.8 million in funding through these awards.
Harvard’s JCHS 2024 “State of the Nation’s Housing” Report Highlights Affordability, Production, Preservation Concerns
Harvard University’s Joint Center for Housing Studies (JCHS) released Thursday its State of the Nation’s Housing 2024 report. The report shows millions of potential home buyers have been priced out of the market by high home prices and interest rates, while the number of cost-burdened renters has hit an all-time high. JCHS’s findings indicate a surge in new multifamily rental units is slowing rent growth and increasing single-family construction is starting to lift for-sale inventories. Still, the report says, addressing the country’s housing crisis — including increased homelessness, the inadequate housing safety net, and climate change — will require contributions from the private and nonprofit sectors as well as policymakers at all levels of government.
JCHS hosted a webinar yesterday to discuss the report’s findings, moderated by NPR National Desk Correspondent Jennifer Ludden and featuring MassHousing CEO Chrystal Kornegay, JCHS Managing Director Chris Herbert, National Housing Trust CEO Priya Jayachandran, JCHS Senior Research Associate Daniel McCue, and Sheryl Palmer, chair and CEO of Taylor Morrison.
GSEs’ Proposed 2025 – 2027 Duty-to-Serve Plans Released
The Federal Housing Finance Agency has released Fannie Mae’s and Freddie Mac’s proposed 2025 – 2027 Duty-to-Serve Underserved Market Plans and a request for input on the plans, with a comment deadline of August 12. The plans outline how each firm intends to carry out its statutory obligations to support manufactured housing, affordable housing preservation, and rural housing. Both Fannie Mae and Freddie Mac commit in their plans to continue making equity investments in Housing Credits that fund affordable housing development in rural areas and to purchase loans funding Housing Credit projects. NCSHA is reviewing the plans in detail and will submit comments on behalf of HFAs; please email Greg Zagorski any input by August 2. On July 15 – 17 FHFA will hold listening sessions to hear feedback on the proposed plans; register here to participate.
House Appropriations Subcommittee Approves FY25 Rural Housing Funding Bill
On June 11, the House Appropriations Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Subcommittee marked up and approved the Fiscal Year 2025 Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations bill. The bill would provide $25.9 billion to the agencies and programs it covers, a $335 million decrease from the FY24 enacted levels and $2.69 billion less than the President’s Budget Request released in March. More information about the bill’s funding levels for rural housing programs and future action on it is available in NCSHA’s blog.
FHFA Releases Annual Report to Congress
On June 14, FHFA published its 2023 Report to Congress. Required by statute, the report outlines the actions FHFA took last year to carry out its authority to supervise the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac and the Federal Home Loan Banks (FHLBs). The report finds the GSEs continue to effectively manage their financial risk and build up capital and notes FHFA reviewed 10 new GSE activities and determined three qualify as new products requiring public input. The report proposes several legislative recommendations for Congress, including advancing housing finance reform legislation to determine the GSEs’ structure and purpose post-conservatorship, authorizing FHFA to examine the GSEs’ third-party service providers to identify and remedy potential risks to the firms, increasing each FHLB’s minimum contribution to their Affordable Housing Program from 10 percent of revenue to 20 percent, and harmonizing FHLB membership requirements for all types of financial institutions.
NCSHA in the News
Planetizen, 6.11.24, New Updates on PD&R Edge: Preserving Owner-Occupied Affordable Homes
Legislative and Regulatory Activities
- June 26 | House Financial Services Subcommittee on Housing and Insurance | Housing Oversight: Testimony of the HUD and FHFA Inspectors General
- June 27 | House Appropriations Subcommittee | Markup of FY25 Transportation, Housing and Urban Development, and Related Agencies Bill
- June 28 | Comments Due to NCSHA | FHFA Request for Input: FHLBank System Mission
- July 10 | House Appropriations Committee | Markup of FY25 Agriculture and HUD Funding Bills
- July 15 – 17 | FHFA Listening Sessions on Fannie Mae’s and Freddie Mac’s Underserved Market Plans for 2025 – 2027
NCSHA, State HFA, and Industry Events
- July 22 – 24 | 2024 Texas Housing Conference | Austin, TX
Jennifer Schwartz will participate in this event. - September 28 – October 1 | NCSHA’s 2024 Annual Conference & Showplace | Phoenix
