November 10, 2016

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

FHFA Releases 2016 Housing Report 

The Federal Housing Finance Agency (FHFA) released its Annual Housing Report for 2016. The report examines Fannie Mae's and Freddie Mac's affordable housing activities for 2015.
The bulk of the report focuses on Fannie Mae's and Freddie Mac's performance under their 2015-2017 Affordable Housing Goals. It finds that, while each firm met its affordable multifamily goals in 2015, they did not meet all of their single-family goals. Specifically, they did not meet the goal requiring that at least 24 percent of the single-family loans purchased by Fannie Mae and Freddie Mac each year be made to low-income consumers (those making 80 percent or less of area median income, or AMI). According to FHFA, such loans accounted for 23.5 percent of Fannie Mae's loan purchases, and 22.3 percent of Freddie Mac's loan purchases.  Both firms also failed to meet the goal requiring that at least 6 percent of Fannie Mae's and Freddie Mac's single-family loan purchases be loans for very low-income consumers (those at 50 percent or less of AMI). The report states that such loans accounted for 5.6 percent of Fannie Mae's loan purchases and 5.4 percent of Freddie Mac's loan purchases.

Freddie Trying to Find the Balance in Credit-Risk Deals

"Credit risk transfer is an efficient and good thing to do on its own, if the income you give up is relatively small verses the reduction in risk," said Freddie CEO Don Layton.  Freddie Mac's credit risk transfers come with a hefty price tag, but are ultimately still worth it, according to Chief Executive Don Layton.  The government-sponsored enterprise has completely nearly $182 billion in credit risk transfers in which a portion of its credit risk is absorbed by a third-party company either before or after the mortgages are closed. The interest and premiums the GSE pays on the transfers effectively reduced Freddie's guarantee income by roughly 33% for the transactions executed through Sept. 30.  In an interview, Layton said that such a deal still makes economic sense for Freddie under certain conditions.

How Affordable is Housing in Your Congressional District?

In looking at housing affordability across the nation’s congressional districts, home values and rents tend to be higher along the coasts and in denser, urban communities, regardless which party represents a given community in Congress. The current set of congressional districts reflect the results of the 2010 Census, so the 115th Congress will be only the second group serving under current district boundaries. By hovering over a district in the maps below, you can view the representative and party currently holding the seat, along with relevant housing data.

Widespread Credit Blemishes May Well be Holding Back Our Economic Recovery

It is commonly understood that the seven million foreclosures that occurred between 2004 and 2015 fueled the Great Recession and have held back a robust economic recovery. But the role of adverse public records during that same period is just as significant yet rarely discussed.  Nearly 35 million consumers had adverse public records between 2004 and 2015, including bankruptcies, civil judgments, and federal tax liens. Combined with the seven million foreclosures, this means more than one in six Americans with a credit record suffered an adverse event during this period.  These extensive credit problems are partly responsible for consumers’ slow recovery from the financial crisis. The lingering effects of foreclosures and adverse public records prevent consumers from obtaining mortgages and pursuing homeownership, hinder housing market recovery, limit consumers’ ability to obtain other credit (e.g., auto loans), and reduce consumers’ ability and willingness to spend, all of which weakens the economic recovery.

A Guide to House Leadership, Committee, Caucus Elections

Races will place at least 17 members in new positions of power
The race for chairman of the National Republican Congressional Committee will be between Texas Rep. Roger Williams and Ohio Rep. Steve Stivers. While much speculation over House leadership changes in the 115th Congress is focused on a contentious speaker’s election that may never materialize, a long series of intraparty leadership, committee and caucus races guarantee significant turnover in top House posts next year.  Retirements, term limits and lawmakers departing for other jobs mean that at least 17 prominent roles, and likely more, will change hands. Elections to determine those new influencers are set to begin during the lame-duck session that opens the week after Election Day.

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