National Housing Conference Report Finds Housing Cost Burdens Remain Widespread among Working Households
The National Housing Conference's (NHC) Center for Housing Policy released its Housing Landscape 2016 Report February 18. The report uses the latest American Community Survey data to evaluate severe housing cost burdens of low and moderate income working households, defined as households in which members work at least 20 hours a week on average and total household income does not exceed 120 percent of area median income. The report finds extensive housing cost burdens among working households, especially renter households. In 2014 more than 17.6 million total households, including 9.6 million working households, were severely housing cost burdened, paying more than 50 percent of their pretax income for housing. The report found that working renter households represent a large share of those with severe cost burdens. A quarter of working renter households had a severe housing cost burden in 2014.
Treasury Announces Process for Awarding Additional Hardest Hit Funding
The U.S. Department of Treasury announced how it will award the additional $2 billion in Hardest Hit Fund (HHF) program funding Congress recently appropriated in the Consolidated Appropriations Act for FY 2016. As Congress directed, eligibility for the new funds is restricted to the 19 states Treasury previously selected for HHF. Treasury's announcement includes a list of the HHF states receiving additional amounts and the amounts they will receive. Treasury plans to award the additional funding through two separate phases. In the first phase, Treasury will divvy up $1 billion through a formula based on each eligible state's population and the amount of its initial HHF allocation that is has currently obligated. To be eligible for funding in this phase, an HFA must have drawn down at least 50 percent of its initial HHF funding. In the second phase, Treasury will award the remaining $1 billion through an application process in which Treasury will consider each applicant's housing needs, proven track record of utilizing HHF funds, and ability to design and execute effective programs. All HFAs participating in HHF will be eligible to apply for funding in this phase and may request an amount up to the lower of either 50 percent of their existing HHF allocation or $250 million. The deadline to apply for the additional funding under the second phase is March 11.
Watt: GSEs Face Future Challenges Under Conservatorship
Director Mel Watt warned that Fannie Mae and Freddie Mac (the GSEs) will face increasing challenges and risks if they remain in conservatorship in the coming years. The only way to address these challenges, Watt suggested, is for Congress to advance a plan to reform the GSEs and the housing finance system. Watt began his speech by reviewing what FHFA has accomplished since first placing the GSEs into conservatorship in September 2008. Both the GSEs and the housing market have improved substantially since then, Watt said, with the GSEs returning to the U.S. Treasury more than $50 billion over the amount of federal assistance they received. Watt attributed some of this improvement to decisions FHFA made during conservatorship, including directing the GSEs to increase the guarantee fees they charge for each mortgage they insure, improving the GSEs' representations and warranties framework, strengthening counterparty standards for mortgage insurers and seller/servicers, and mandating that the GSEs enter into more risk-sharing arrangements with private investors. Watt also made a point to commend the staff at FHFA and the GSEs for their work during conservatorship. Despite these improvements, Watt told the audience, a long-term conservatorship is untenable and poses major risks for taxpayers and the housing market as a whole. Watt noted that the GSEs are currently required, as a condition for receiving assistance from the federal government, to send Treasury any business income they generate at the end of each quarter. In addition, while the GSEs are allowed to keep enough assets to maintain a "capital buffer" to protect against losses temporarily, that buffer is required to be reduced each year until it is zero by the January 1, 2018.
Clinton Unveils Economic Revitalization Initiative with Housing Policies
Presidential candidate Secretary Hillary Clinton released her "Economic Revitalization Initiative," which includes a number of housing-related policy proposals she would support should she be elected president. The plan envisions an investment of $25 billion in various initiatives supporting community revitalization, connecting high-poverty neighborhoods to opportunity, removing barriers to homeownership, and increasing the supply of rental housing. Clinton proposes to defend the Housing Credit and to increase Housing Credit authority in communities where demand for Credits far exceeds supply. The proposal states, "The additional credits will be allocated through a competitive process to those cities and states that are in the best position to use them effectively," but does not provide further detail about how the competition would function.