November 24, 2015

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

FHA's Capital Ratio Returns to Statutorily Required 
HUD recently released its 2015 Annual Report to Congress on the Financial Status of the Federal Housing Administration's (FHA) Mutual Mortgage Insurance Fund (MMIF). The report finds that the MMIF, which funds FHA's single-family and reverse mortgage programs, has a capital ratio of 2.07 percent, slightly above the statutory minimum ratio of 2 percent. This is the first time the MMIF has met its minimum capital ratio since 2009.  According to the report, the MMIF began fiscal year (FY) 2015 with a net value of $24 billion, an increase of nearly $19 billion over the beginning of FY 2014. In FYs 2012 and 2013, due to losses caused by the financial crisis, the MMIF ran a negative balance. In September 2013, HUD was forced to request funding from the U.S. Treasury Department to keep it actuarilly solvent. In FY 2014, the MMIF returned to a positive balance, but its capital ratio was at only .41 percent.

HUD Publishes 2016 QCTS and DDAs Using New Small Area DDA Methodology 

HUD published on its website the 2016 Difficult Development Areas (DDAs) and Qualified Census Tracts (QCTs), which are eligible for the 30 percent basis boost under the Housing Credit program. As HUD has long planned, the methodology for determining 2016 metropolitan DDAs relies on new Small Area Fair Market Rents, and thus result in 311 zip code level small area metropolitan DDAs across 45 states, the District of Columbia, and Puerto Rico. This compares to 35 full metropolitan statistical areas in 11 states plus Puerto Rico that HUD designated as DDAs in 2015.

Most Renters Carry Debt Each Month, Downpayments on a Home Not a Top Priority 

  • Gen Xers more likely than Millennials or Boomers to buy a home 
  • Millennials more likely to save for short- and long-term goals 
  • Renters offset rent hikes by spending less on essentials and are considering getting a roommate 
Renters indicate they still feel challenged with their finances and 66 percent are carrying debt each month, according to a recent Freddie Mac (OTCQB: FMCC) survey. Yet, the majority of renters (56 percent) are optimistic about managing their debt. Renters are also saving money for numerous priorities and a down payment on a home is not at the top of their list. In addition, Gen Xers are more likely than Millennials or Boomers to buy a home in the next three years.

House votes to revamp Qualified Mortgage rules; Presidential veto is looming

The House of Representatives voted recently to change the definition of “Qualified Mortgage,” opening the door to a potentially seismic change in the mortgage lending landscape.   By a vote of 255-174, the House approved the “Portfolio Lending and Mortgage Access Act,” which would broaden the definition of qualified mortgages – those that qualify for the safe harbor – to include all mortgages held on a lender's balance sheet.  The new QM rule would recognize all residential mortgage loans held in portfolio by credit unions and other lenders as qualified mortgages for the purposes of the Consumer Financial Protection Bureau’s mortgage lending rules.

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