November 14, 2017

In Case You Missed It: A Look at Recent National Housing Policy News

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Federal Tax Legislation

Hawkins Advisory on Tax Advantaged Bond Provisions in House and Senate Tax Bills

This advisory from Hawkins Delafield & Wood LLP provides a concise side-by-side summary of the House and Senate private activity bond provisions.

New Legislation Aims to Address Affordable Housing Needs

The 9% Low-Income Housing Tax Credit (LIHTC) program escaped change in both the House and Senate tax reform bills.  In light of continuing support for LIHTCs, Senator Kaine has joined Senator Maria Cantwell of Washington and Senator Orrin Hatch of Utah as a sponsor of the Affordable Housing Credit Improvement Act of 2107.  This bill would expand and enhance the LIHTC program to better address the nation’s substantial shortage of affordable rental housing.


HUD/FHA Administrative Challenges

FHA Losing Customers Rapidly as Premiums Spur Refinancing

FHA’s high insurance premiums and life-of-loan coverage requirements are spurring a substantial run-off of quality loans from its homeownership portfolio due to prepayments.  This is driving efforts to reduce the FHA premium (rumored to happen soon) and/or repeal of the life-of-loan coverage requirement (see October 31, 2017 postings).

HUD Not Data Act Compliant, Underreported Billions of Dollars, Report Says

HUD continues to struggle in replacing/upgrading its legacy IT systems and processes that put the administration of its programs at risk.  This article summarizes the findings of a recent Inspector General report finding HUD in noncompliance with the federal Digital Accountability and Transparency Act’s required reporting deadline.

Fannie Mae Expected to Soon Introduce New Construction Loan Program

Lack of adequate affordable home purchase inventory poses a challenge to Fannie Mae and other affordable housing lenders, including VHDA, in meeting first-time homebuyer needs.  In response, Fannie Mae is considering a new pilot single family construction loan program to help address some of the challenges faced by buyers seeking both construction and permanent financing.

J.D. Power Reveals Top Mortgage Originators in Consumer Satisfaction

J.D. Power’s 2017 U.S. Primary Mortgage Origination Satisfaction Survey revealed that the mortgage industry’s promise of technology creating a faster and easier mortgage origination process does not appear to be fully recognized,  as customer satisfaction fell due to perception of slower loan processing.

November 7, 2017

In Case You Missed It: A Look at Recent National Housing Policy News

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Federal Tax Bill Summaries

The following two articles briefly summarize the initial provisions of the House tax reform legislation that directly impact housing and the initial housing industry reaction to them.

GOP Tax Plan Met With Caution and Concern

A brief overview of industry reaction to provisions curtailing the mortgage interest deduction and related changes impacting the homeownership market.

House Tax Reform Bill Eliminates Private Activity Bonds and Historic and New Market Tax Credits

A brief summary of provisions impacting affordable housing programs, especially those supporting affordable rental development.

MBA President Stevens:  Only Congress Can Provide Legitimacy, Public Confidence to Housing Reform

This article summarizes testimony by MBA President David Stevens outlining MBA’s position on GSE reform that recommends recasting the GSE’s current charters and allowing a multiple-Guarantor model that features at least two entities and preferably more.

A Broke, and Broken, Flood Insurance Program

In October, the National Flood Insurance Program, which has been in the red since Hurricane Katrina in 2005, exhausted its $30 billion borrowing capacity and had to get a bailout just to keep paying current claims. Congress must decide by December 8 whether to keep the National Flood Insurance Program going.

Trump Team Targets Special 'QM' Status for GSEs

The 2013 CFPB mortgage underwriting rule exempted GSE and other governmental loans from the “Qualified Mortgage” (QM) requirements including the debt-to-income (DTI) limitations set on QM loans.  As the GSE and FHA share of mortgages has grown, and as DTI ratios for governmental loans have steadily increased above the QM limits, pressure has grown on the CFPB to align QM DTI standards with current GSE underwriting practices.

Homeownership Stuck in Neutral as Rents Rise

Third quarter homeownership rate estimates show homeownership trending up from its recent low in 2016, but at an anemic rate of increase.  This articles summarizes current trends in homeownership along with trends in rents and home prices.

Black Knight: Housing Remains Affordable Despite Price Acceleration

Black Knight’s look at trends in “payment-to-income” ratio for home purchase concludes that while home prices continue to rise, U.S. housing remains more affordable than long-term benchmarks.

NAR forecasts existing home sales to rise to post-crisis high in 2018

NAR forecasts home sales to continue rising in 2018, but acknowledges the headwinds the market faces, especially for first-time buyers, and the challenges to market growth posed by current tax reform proposals.

November 1, 2017

In Case You Missed It: A Look at Recent National Housing Policy News

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Freddie Mac Finds 'Widening' Affordable Rental Shortfall

A new research report released by Freddie Mac finds that the already-acute shortfall of affordable rental apartments has widened "considerably" over the past six years.  The report looked at loans Freddie Mac Multifamily financed multiple times between 2010 and 2016. It found 11.2 percent were affordable to very low-income households--those with incomes no greater than 50 percent of area median income--at the first financing.   At the second financing, rents had increased so significantly that just 4.3 percent of the same units were affordable to very low-income households. This represented a 60-plus percent reduction in the number of units deemed affordable to very low-income households.  Freddie Mac Multifamily said increasing rents and stagnant household incomes are behind the problem, which it said could become worse unless the affordable apartment supply grows to match increasing demand from lower-income renters.  Previous Freddie Mac research found rising costs of land and construction have also widened the supply gap.

Three Market Updates from the MBA Annual Convention:




Urban Wire:  America Isn’t in a Housing Bubble, but Some Cities Might Be

Are we in a housing bubble?  We think of a housing bubble as house price growth that isn’t sustainable because it isn’t consistent with underlying fundamentals, like income and job growth. To determine whether a bubble exists, we must look at both factors: the change in house price levels and the underlying fundamentals.  Nationally, over the past five years, the increase in house prices has outpaced inflation by 34 percent cumulatively since 2012. Though noteworthy, the increase is less than half the pace seen between 1997 and 2006, which saw house price growth outpace inflation by 87 percent.  This study reviewed data from the 37 largest metro areas.  The Washington MSA compares favorably with other large metro areas and shows little risk of a price bubble.

Bill Introduced to Eliminate FHA Life of Loan Insurance Premium

A bill, entitled the Making FHA More Affordable Act, has been introduced by Rep. Maxine Waters, D-Calif., the ranking member on the House Financial Services Committee.  The bill would repeal the life of loan requirement and reinstate the FHA’s previous policy of requiring borrowers to pay mortgage insurance premiums until the outstanding principal balance reaches 78% of the original home value.  The FHA changed its policy and instituted the life of loan policy back in 2013, as part of an effort to improve the health of the FHA’s flagship fund, the Mutual Mortgage Insurance Fund.  Now, with the MMI Fund on better footing, Waters is pushing for the elimination of the life of loan policy to benefit low and moderate income homebuyers.  The bill is supported by the National Association of Realtors (NAR) and several other industry groups.

The Hill:  Stevens Will Step Down as Head of Mortgage Bankers Group Next Year

David Stevens, who is recovering from cancer, announced that he will step down as head of MBA in September 2017.

MBA President:  GSE Reform is Within Reach

At the end of the Mortgage Bankers Association (MBA) national convention in Denver, President David Stevens made a surprise announcement that he would retire effective Sept. 30, 2018.  Prior to this, however, he fielded questions from VantageScore President Barrett Burns and MBA members during a Q&A breakout session. Stevens answered several questions covering a range of issues, but much of the discussion focused on reform of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, a pressing issue in the mortgage industry at this time.

October 24, 2017

In Case You Missed It: A Look at Recent National Housing Policy News

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Fannie Mae: Tax Reform Poses Positive Risk to Economy in 2018

The recent hurricanes did not cause a major shift in the outlook on economic growth in 2017 or beyond, according to the Fannie Mae Economic and Strategic Research Group’s October 2017 Economic and Housing Outlook. The GSE explained that going into 2018, Fannie Mae predicts economic growth will moderate to 1.8%. While it sees an upside risk from potential tax reform, this is offset by the potential downside risk from restrictive trade policy and geopolitical tensions. During the third quarter, the report explained consumer spending growth likely weakened, and residential investment declined sharply. However, this was partially offset by increases in business equipment investment, inventory investment and trade. But despite all these changes, Fannie Mae kept its full-year economic growth forecast unchanged at 2.2%.

MBA: 2016 Multifamily Lending Up 8% 

Multifamily lending rose by 8 percent year over year in 2016, with nearly 3,000 different multifamily lenders providing a record $269.2 billion in new mortgages for apartment buildings with five or more units, the Mortgage Bankers Association reported. MBA Vice President of Commercial Real Estate Research Jamie Woodwell said the MBA Annual Report on Multifamily Lending reflected strong lending fundamentals. "In 2016, strong property performance, rising property values and low mortgage rates all meant greater access to mortgage credit for apartment property owners," Woodwell said. "The $269 billion in lending that took place shows the breadth of the market--with loans ranging in size from tens of thousands of dollars to hundreds of millions and the largest lender closing more than 7,500 loans while 61 percent of active lenders closed five or fewer loans. Market momentum has continued in 2017, with strong demand from borrowers and a strong appetite to lend by lenders, especially of loans going to government-related entities."

U.S. Senate: Credit Bureaus Data Security and Equifax

The U.S. Senate Committee on Banking, Housing, and Urban Affairs met in an open session titled “Consumer Data Security and the Credit Bureaus” to address how credit bureaus intend on protecting consumer data—specifically in light of the recent Equifax data breach. U.S. Senator Mike Crapo (R-Idaho), Chairman of the committee delivered the opening remarks. “As a follow-up to our hearing on the Equifax data breach, we will receive testimony on the protection of consumer data at credit bureaus,” Sen. Crapo said. At the Equifax hearing, Crapo said that members expressed interest in better understanding how credit bureaus are regulated, how they protect consumer data, and whether there are gaps that Congress needs to fill. “It is critical that personal data is protected, consumer impact in the event of a breach is minimized, and consumers’ ability to access credit is not harmed,” Sen. Crapo said. “Credit bureaus play a valuable role in our financial system by helping financial institutions assess a consumer’s ability to meet financial obligations, and also facilitating access to beneficial financial products and services.

Homebuyers Want Online Mortgage Resources, but Still Prefer a Personal Touch

Although homebuyers are relying more and more on online resources to get information, a new study from Fannie Mae shows they still place more faith in real estate professionals and other personal interactions. With the market moving more toward fully digital mortgages, it may appear as though consumers would like more digital interaction and less person-to-person. A new report from the Fannie Mae Economic and Strategic Research Group shows buyers do, indeed want more online resources during their mortgage-shopping experience. A survey showed respondents want to use mobile devices nearly twice as often in the future. However, that does not mean they place less value on real estate professionals and other person-to-person interactions, the survey showed.

EXCLUSIVE: Nation's Top Mortgage Lenders Reveal Their Secrets to Success

What makes these companies tick? We asked, they answered

The top mortgage lenders of 2016 are sharing their secrets to success, explaining what pushed them into a position in the top 10. The latest Home Mortgage Disclosure Act data from the Federal Financial Institutions Examination Council shows which lenders are dominating the mortgage origination market. The No. 1 originator’s advice to small lenders just starting their journey? “Focus on your company’s culture,” Walters said. “Whether it’s a good culture or a bad culture, every company has one and it will affect your business.”

October 18, 2017

In Case You Missed It: A Look at Recent National Housing Policy News

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Written Testimony of Dr. Ben Carson, Secretary of Housing and Urban Development Before the House Financial Services Committee

Chairman Hensarling, Ranking Member Waters, and members of this Committee, thank you for inviting me to discuss the work we do at the Department of Housing and Urban Development (HUD), and my plans for fulfilling our mission with fidelity to our Congressional mandate and the best interests of the American people.
First, please know that, right now, HUD is involved in the federal response to Hurricanes Harvey, Irma, and Maria that damaged and devastated areas of Texas, Florida, Georgia, Puerto Rico, and the U.S. Virgin Islands. On a daily basis, in our interagency leadership role as the Coordinating Department for the Housing Recovery Support Function, HUD’s team is coordinating with our Federal, State, territorial, and local agency partners in the field, providing temporary and long-term housing solutions for survivors, and helping HUD-assisted clients and FHA-insured mortgage borrowers. In the long-term, HUD will play a key role in the recovery efforts in these disaster impacted regions as they rebuild. Helping the impacted communities in the aftermath of these storms is and will remain a priority for me and this Administration.

Treasury Report Calls for Extensive Regulatory Relief to Finance Industry

The U.S. Department of the Treasury released its second of four reports which called for sweeping financial reform, including changes that would weaken the Dodd-Frank Act. Back in February, President Donald Trump signed an executive order directing the Treasury Secretary Steven Mnuchin to examine the nation’s financial laws. Now, the Treasury published its findings in a 232-page report, the second of a total of four reports. It released its first report back in June this year. The report claims regulations enacted after the Great Recession made it more difficult for financial institutions to recover, and made for one of the weakest economic recoveries in U.S. history.

Can Your Home Make You Healthier — if it’s Designed Right? 

Aria Apartments in Denver is a new kind of affordable housing project. And if “affordable housing” brings to mind dimly lit, dilapidated high-rises, then tweak the mental picture and visualize a project that consists of 72 two-story walk-ups paired with 13 market-rate town houses, all of them brightly colored and spacious with a sleek, modern design. A daylit fitness room in the on-site community center looks out onto a grassy walkway where residents sit, stroll and play. Renters and owners alike can plant and pick their own produce at the 1-acre garden or buy it at a pay-what-you-can food stand. On the ground floor of each unit is bike storage, which gives residents the affordable and calorie-burning option of cycling to school or work.

Senators Ask - What's the Cost of Not Addressing America's Affordable Housing Problems?

A bipartisan group of Senators sent a letter to the U.S. Government Accountability Office, asking them evaluate America’s “troubling” housing market.  And, to figure out where the government is letting down the American people in the housing market. The group of Senators includes Lindsey Graham, R-S.C., Susan Collins, R-Maine, Tim Scott, R-S.C., Johnny Isakson, R-Ga., Christopher Coons, D-Del., and Michael Bennet, D-Colo. The GAO, a nonpartisan agency that works for Congress, investigates how the federal government spends taxpayer dollars. By sending the letter, the senators are requesting the agency to figure out how much it would cost taxpayers to fix affordable housing. In the letter to Gene Dodaro, comptroller general and head of the GOA, it asks him to assess, “What is the cost of inaction?” Or, in other words, “What is the long-term impact of failing to respond to the current conditions in the housing market with effective public-policy interventions?” As it stands, the current states of the single-family and rental sectors are “troubling,” the letter said.

Rental Market Finally Starts Cooling Down

The national average rent held steady for the fourth consecutive month in September, indicating the market may be starting to cool off, according to the latest report from RENTCafé. This lack of growth over the past four months represents the longest period of stagnation in recent history and the slowest annual growth rate in six years, according to the report, compiled by the nationwide internet listing service that enables renters to find apartments and houses for rent throughout the U.S.

Who is the New Face of American Homeownership?

The U.S. homeownership rate remains lower than it has been for more than 20 years, even though housing markets have largely recovered from the Great Recession (U.S. Census Bureau 2017). Most of the drop in homeownership is due to fewer renters choosing to purchase first homes than prior to the crisis. Researchers and policymakers have posited several possible reasons for the apparent shift in behavior, including:

  1. Increased regulation of mortgage lending and stricter underwriting criteria.
  2. Weak labor markets for young workers, leading them to delay household formation and homeownership;
  3. Millennials’ lower preferences for owning rather than renting; and
  4. High levels of student loan debt among younger households.

October 17, 2017

VirginiaHousingSearch.com - The Housing Search Site That Provides Landlords With Big Benefits

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“Having a ‘live person’ you can talk to, who is friendly and helpful, versus trying to deal with the frustrations of an automated system, is why so many landlords tell us they love the VirginiaHousingSearch.com Call Center,” said Crystal Kirby, director of outreach and regional support for Social Serve, the non-profit organization that hosts and maintains this service sponsored by VHDA.

Virginia Housing Search graphic

Since its 2009 launch, this free online housing search site has become a key resource for Virginians seeking rental housing. Currently there are 135,000 rental units listed on the site, which receives an average of 23,000 monthly visits.

Maximum landlord benefits

In addition to useful tools that let potential tenants search for rental homes by preference — such as size and location — the site also provides big benefits for landlords. At the top of the list is the toll-free bilingual Call Center that assists landlords who want to advertise their properties on the site. The VirginiaHousingSearch.com Call Center is open from 9 a.m. to 9 p.m. Monday through Friday and provides landlord support that includes:

  • Adding photos and maps to listings and checking for typos.
  • Taking calls from potential renters when the landlord is unavailable. 
  • Providing timesaving tips for managing multiple properties. 
  • Helping create wait-lists to prevent unwanted calls. 
  • Offering tools that make it easy to advertise rental units on other online classified services.
  • Developing reports to see how often listings have been viewed, and how they compare to others in the area. 
  • Regularly checking in with landlords to verify that listed properties are still available and making any needed listing adjustments.
  • Re-activating listings. 

Here’s how to find out more 

To learn more about everything this free marketing service has to offer landlords, visit VirginiaHousingSearch.com or call toll-free 877-428-8844.

October 9, 2017

In Case You Missed It: A Look at Recent National Housing Policy News

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MBA Preliminary Analysis of 2016 HMDA Data

The 2016 Home Mortgage Disclosure Act data were released, along with a separate Federal Reserve analysis of the data. Here are some initial highlights:

In the newly released HMDA data for mortgage activity during calendar year 2016, there were 6,762 reporting institutions, a 2 percent decrease from 6,913 institutions in 2015. This was significantly lower than the peak of 8,886 institutions in the industry during 2006 and relative to that year, the number of HMDA reporters was down by 24 percent.  Both home purchase and refinance originations increased in 2016. Purchase originations saw a 14 percent increase, to $1 trillion in 2016 from $876 billion in 2015. Refinance volume increased 24 percent to $949 billion in 2016 from $768 billion in 2015, as 30 year fixed rates stayed below the 4 percent mark for most of 2016 (9 out of 12 months), averaging 17 basis points lower than in 2015.

Five Things that Might Surprise you About the Fastest-Growing Segment of the Housing Market


  1. Single-family rental is the fastest-growing segment of the housing market.
  2. Changing demographics and housing market conditions will continue to fuel the rental growth.
  3. Institutional investors are tiny players in the single-family rental market.
  4. The geographic focus of institutional investing in SFRs has shifted.
  5. Future growth of institutional investors in SFRs is still up in the air.


Managing Mortgage Product Development Risk

The Mortgage Bankers Association's Research Institute for Housing America has released a new special report, Managing Mortgage Product Development Risk.

"Mortgage banking is a highly cyclical business, prone to expansion and contraction as market conditions change," Rossi said. "Mortgage product innovation is healthy for the industry and consumer so long as product risks and process quality are well understood." The paper noted intrinsic risks associated with mortgage products and processes amplified aggregate losses of mortgage originators, investors and servicers following the mortgage boom of 2004-2007. In many instances, product development acceded to market pressures as the economy expanded and regulatory oversight waned.

Freddie Mac’s Chief Diversity Officer on Diversity and Inclusion

In an effort to better represent underserved communities, as well as support ongoing diversity initiatives in the mortgage industry, Freddie Mac has announced the opening of a Borrower Help Center in McComb, Mississippi, according to a recent post by Dwight Robinson, SVP of Human Resources, Diversity and Inclusion, and Chief Diversity Officer at Freddie Mac. Robinson notes that this initiative isn’t new—it is the 14th center of its kind throughout the country; however, what makes this location unique is its locale. It is the first located in the lower Mississippi delta, serving a rural community with a median household income of $29,720. African-Americans also makeup 66 percent of the total population, and have a homeownership rate much lower than that of the regional average—50.0 percent—compared to 70.9 percent.

Distribution of Housing Types, Race and Ethnicity (Urban Areas and U.S.)

The diversity of urban housing markets can also be seen in their racial and ethnic make-up. Among the population of urban housing markets, 33 percent is Hispanic (compared to 17 percent of the nation as a whole), 17 percent is Black (compared to 12 percent of the nation as a whole), 10 percent is Asian (compared to 5 percent) and 3 percent is from other non-Hispanic, non-White racial and ethnic groups (compared to 3 percent). Only 38 percent of the population in urban housing markets identifies as non-Hispanic White.