@the horizon

Community Developments - May 24, 2013

A daily roundup of news affecting housing and  communities

By Kenny Marable

 

• In a recent blog post, Enterprise Senior Policy Analyst Emily Cadik discusses the need for a set of broadly-supported rental assistance reforms that would generate $2.3 billion in savings that could be used to house additional families. While the number of renter households considered to have worst case housing needs is growing, spending on rental assistance has declined and is forcing many public housing agencies to terminate assistance. The post proposes steps that advocates can take to encourage legislative action on these reforms. (@horizon, May 23)


• New data released Thursday shows signs that housing is continuing to recover and that there has been solid job growth. In April, sales of new homes rose to the second-highest level since summer 2008, while the median price for a new home hit a high at $271,600, according to the Department of Commerce. This price represents a 13.1 percent increase from a year before. (New York Times, May 23)


• In a report by Zillow, the number of homeowners that are underwater on their mortgages continued to drop in the 1st quarter of 2013. However, millions who are above-water do not have enough equity to move. The report finds that the national negative equity rate was 25.4 percent in the first quarter compared to 27.5 percent at the end of 2012. (Market Watch, May 23)


• According to a study by Experian, women own less mortgage debt and are less likely to be delinquent than men.  The study found that the mortgage origination amount for men is $187,245 which is 4.9 percent higher compared to the amount for women. In terms of delinquencies, 5.7 percent of men were delinquent on mortgages compared to 5.3 percent of women. (DS News, May 22)


• The HUD Office of Policy Development and Research (HUD PD&R) announced that vacancy data from the US Postal Service at the 2010 Census Tract level. This dataset represents the universe of all addresses in the United States and is updated every three months. (HUD PD&R)

 

For the latest housing and community development news and notes, follow the Enterprise policy team on Twitter: @E_Housing Policy and subscribe to the Capitol Express Newsletter. 

Rental Assistance Reform: Generating Savings When We Need it Most

By Emily Cadik

With 8.5 million renter households considered to have worst case housing needs, there is a clear and urgent need for more rental assistance resources. As HUD implements the across-the-board budget cuts required under sequestration there will be 140,000 fewer vouchers issued to low-income families, and public housing, with a capital backlog already estimated at $20 – 30 billion, will continue to become obsolete and unavailable to the families who need it.

But in today’s budget environment, there is little appetite for new spending, and it’s critical to examine existing programs to ensure that scarce resources are being put to the best use. In the case of rental assistance, a broadly-supported set of reforms could generate $2.3 billion in savings over five years to help more families move into affordable rental homes.

The package of rental assistance reforms agreed upon by industry stakeholders and advocates would ease administrative burdens for public housing agencies (PHAs) and owners, deliver fairer and more efficient assistance to low-income families, provide new tools to leverage private capital for affordable housing preservation and development and encourage self-sufficiency.

The President’s fiscal year 2014 budget proposal includes many of these reforms, including providing PHAs more flexibility in using their funds for supportive services, streamlining the Family Self-Sufficiency program, reducing the frequency of recertifications for fixed-income households and broadening the definition of extremely low-income. Requiring residents who get all of their income from Social Security to recertify their income every two or three years instead of annually might not seem like a major policy shift, but when taken to scale and combined, reforms like these save billions of dollars that could be better used providing housing to families in need.

Of particular importance to Enterprise and others involved in developing affordable housing using the Low-Income Housing Tax Credit are reforms that provide greater flexibilities related to project-basing rental assistance. These flexibilities make the best of both subsidies by combining them to preserve affordable housing and better serve special needs populations through sponsor-based rental assistance models.  

Voucher reform has been in the news (the Wall Street Journal and ABC News) in recent weeks because of a provision in the President’s FY 14 budget proposal that would expand the Moving to Work (MTW) rental assistance demonstration program. MTW, which is currently available to only 39 PHAs around the country, has attracted controversy because of certain flexibilities like time limits on assistance, work requirements and certain rent reforms. While some advocates have been wary of these policies, they have agreed to a compromise that would extend these particular flexibilities to only a limited number of PHAs as part of a rigorous rent reform evaluation that would inform the industry on how to best administer rental assistance.

Enterprise, as part of a coalition of national, state and local organizations advocating for legislation on these reforms, is seeking signatories on letters to members of the Senate Banking Committee urging them to take action. With so many high-priority housing issues on the Senate Banking Committee agenda this year, like housing finance and Wall Street reform, advocacy from stakeholders will be critical in moving voucher reform to the top of the agenda. Individual state sign-on letters to Senate Banking Committee members, a national sign-on letter and other rental assistance reform resources can be found on the Council of Large Public Housing Authorities’ rental assistance reform resource page.

Community Developments - May 23, 2013

A daily roundup of news affecting housing and  communities

By Kenny Marable

 

• The Technical Assistance Collaborative’s (TAC) Priced Out study for 2012 has been released and confirms that non-elderly adults dependent on Supplemental Security Income (SSI) continue to face an ever-growing gap between housing costs and income. The average SSI benefit value for an individual is $8,714 a year – 22 percent below the national poverty line. Average rent for a one-bedroom apartment is $758 a month (equal to 104 percent of average SSI income) and $655 a month for a studio (equal to 90 percent of average SSI income).  (TAC, May 22)


• According to the National Association of Realtors, the sales of existing home has risen 0.6 percent in April to an annual sales rate of 4.97 million – its highest level since 2009. The inventory of homes for sale rose to 2.17 million and the median price for a single-family home increased by $8,900 this month. (DS news, May 22)


• The Federal Housing Finance Agency (FHFA) recently released U.S. housing data that shows a 1.9 percent increase in housing prices in the first quarter of 2013 according to FHFA’s House Price Index. Prices have risen 6.7 percent since the first quarter of 2012. (FHFA, May 23)


• Wells Fargo CEO John Stumpf recently stated on record that he believes the government sponsored enterprises are needed in some form to provide a guarantee that is important to investors. This statement came during an investor conference in London. (American Banker, May 22, Subscription Required)


• Fannie Mae has priced its fifth of eight multifamily Real Estate Mortgage Investment Conduit (REMIC) of 2013 at $1.02 billion this past Tuesday. (National Mortgage News, May 21)

 

For the latest housing and community development news and notes, follow the Enterprise policy team on Twitter: @E_Housing Policy and subscribe to the Capitol Express Newsletter. 

May Local Government Best Practice: Portland Housing Bureau Preservation Strategies

 

By My Trinh

The Portland Housing Bureau (PHB) provides gap funding to projects in Portland. Their approach to long-term preservation of affordable housing units has three components: being proactive, setting aside resources and promoting flexibility in restructurings.

 

 

Be Proactive.

PHB’s underwriting criteria is designed to ensure that projects remain in good repair throughout the affordability period. After a spate of restructurings in 2001, PHB strengthened its underwriting criteria, and implemented a series of policies in the past ten years to address long-term portfolio performance.

• Debt coverage is now reviewed for 30 years rather than 15, and the required debt coverage ratio went up from 1.15 to 1.3-1.4. PHB is considering reviewing this indicator for the entire 60 year affordability period.
• Loans are now structured as cash flow contingent rather than must pay debt with amortized interest as it was in the past, resulting in a positive effect on developer balance sheets. PHB also allows a $600 per unit per year cash cushion that can be distributed to the project’s sponsor before any surplus cash is distributed through the cash flow waterfall.
• Operating expense assumptions have increased. PHB includes asset management and resident services fees above the line in its underwriting.
• Replacement reserve requirements have increased, and PHB is considering increasing them further. 

PHB’s policies push other agencies to reexamine their policies. In a recently closed loan, the senior lender on the deal, a nonprofit lender, recognized asset management and resident services fees as above the line expenses as well. 

PHB is also proactive in its asset management policies.

• Ownership transfers are now an opportunity to review project issues, and address them.
• While PHB has allowed organizations to obtain loans for multiple properties, they require organizations to report on each multifamily property to ensure that property performance issues are not missed.

Set Asides.

PHB has carved out a larger portion of its budget for preservation projects. Currently, one-third of its resources are reserved for rehabs and restructuring projects.

Promote Flexibility in Restructurings.

• PHB has the authority to waive loans and/or accrued interest, and carefully weighs the pros/cons of doing so. When doing so can reposition a project, and allow for healthy long-term stewardship, PHB is willing to forego loan repayment.
• PHB also provides funding for restructuring of projects through its NOFA. 

PHB is in the process of reviewing its policies. Check back in June for a link to their most current underwriting guidelines. 

What best practices has your local government put in place to promote long-term project or organizational financial sustainability? Please contact us to share a best practice on next month’s blog. Learn more about Enterprise’s work in Building Sustainable Organizations.

 

Community Developments - May 22, 2013

A daily roundup of news affecting housing and  communities

By Allison Charette

 

• The House Committee on Appropriations released its sub-allocation report for FY2014 Tuesday. Only $44 billion has been allocated to the subcommittee on Transportation and HUD, which represents a 17 percent reduction from FY2013’s $51.6 billion. (NLIHC, May 21)


• Both HUD and FEMA are sending disaster relief assistance to Moore, Oklahoma after Monday’s tornado destroyed most of the town. President Obama’s disaster classification gives HUD the ability to offer foreclosure relief to homeowners and additional assistance to low-income renters. (HUD, May 21) In addition, the FHFA released a statement offering assistance to homeowners whose loans are owned or guaranteed by Fannie Mae or Freddie Mac. Programs with various forms of relief are available to those affected by the tornado. (FHFA, May 21)


• The devastating effects of tornados in Oklahoma this week has brought attention to the critical need for disaster-resistant housing. Often-times the most vulnerable homes during a natural disaster are those of lower-income households. South Carolina is one of the first states to match funds low- and moderate-income households spend on retrofitting their homes against hurricanes. (National Housing Conference blog, May 21) However, many people in locations prone to disaster have resisted against mandated safe rooms and stronger building codes because of their high cost. Many believe that construction decisions should be market-driven rather than required by government. (New York Times, May 21)


• The Economic Policy Institute (EPI) has published employment reports on Texas, New Mexico, Michigan, Mississippi, and North Carolina and found that in all five states the unemployment rate of minority workers is much higher than that of white workers. In Michigan, Mississippi, and North Carolina the unemployment rate for African-American workers more than doubles that of white workers. (EPI, May 21)


• Over $50 billion has been distributed to over 620,000 homeowners as part of the National Mortgage settlement, amounting to an average of $81,000 per owner. According to a report released Tuesday by the independent monitor of the National Mortgage Settlement, $30 billion of the relief has gone to principal forgiveness and refinancing, enabling borrowers to stay in their homes. Monthly payments have been lowered for 310,000 loans averaging a savings of $83,000 each. The results of this settlement have exceeded HUD Secretary Donovan’s expectations of the mortgage servicers. (HUD, May 21)

 

For the latest housing and community development news and notes, follow the Enterprise policy team on Twitter: @E_Housing Policy and subscribe to the Capitol Express Newsletter. 

Community Developments - May 21, 2013

A daily roundup of news affecting housing and  communities

By Allison Charette

 

• The Brookings Institution held an event Monday for Elizabeth Kneebone and Alan Berube’s new book, “Confronting Suburban Poverty in America.” Poverty in the suburbs has grown by 64 percent since 2000, compared to 29 percent in cities. As current poverty programs were designed for densely populated urban areas, they are not as functional in a suburban environment. A more holistic approach to poverty is needed for policymakers to be effective in the suburbs. (New York Times, May 20)

• While immigration reform is being discussed, the housing industry is considering possible implications. According to the National Association of Hispanic Real Estate Professionals, nearly three million undocumented workers can afford to buy a home today. This could add as much as $500 billion to the mortgage industry. (DS news, May 20)


• In its blog, the Center on Budget and Policy Priorities (CBPP) discusses the potential benefits of a renters’ tax credit. As a complement to the Low Income Housing Tax Credit, the renters’ credit would further help our lowest-income households afford rental housing. As rents rise, incomes fall, and funding for housing assistance is reduced, a renters’ credit is an interesting consideration. (CBPP Off the Charts blog, May 16)


• In this week’s issue of “Sequestration Nation,” the Center for American Progress (CAP) has highlighted how the sequestration cuts affect victims of domestic violence. Fewer domestic violence cases will be prosecuted under the Violence Against Women Act and fewer community shelters and programs will be funded through the Family Violence Protection Services Act leaving survivors vulnerable to homelessness or remaining in dangerous environments (CAP, May 20)


• Common living spaces could be a potential solution to making micro apartments more comfortable. In America’s most expensive cities, apartments sized less than 400 square feet have become an affordable option for young professionals and moderate-income earners. With additional space for a dining table or couch, shared living areas could become the norm in micro apartment design. (The Atlantic Cities, May 13)

 

For the latest housing and community development news and notes, follow the Enterprise policy team on Twitter: @E_Housing Policy and subscribe to the Capitol Express Newsletter. 

Community Developments - May 20, 2013

A daily roundup of news affecting housing and  communities

By Allison Charette

 

• According to the Washington Post, the relief to troubled homeowners promised in nearly 30 settlements between the government and banks has yet to be felt. Less than half of the $5.7 billion owed has been paid, and some checks that were sent bounced. Banks claim that scale and complexity of settlements, as well as the time necessary to identify who should receive payment, prevent them from issuing the money more quickly. In the meantime, those who were harmed by improper banking industry practices continue to wait for compensation. (Washington Post, May 19)


• Last week, the Urban Institute released an evaluation of the HUD – DOT – EPA Partnership for Sustainable Communities, which seeks to foster interagency coordination to move toward more sustainable housing and transportation options. The report found that the partnership has contributed to breaking down the barriers of collaboration that exist between federal agencies both at the federal and local levels. (Urban Institute, May 17)


• Renters are having a more difficult time finding and affording housing than homebuyers since the end of the recent recession. A study by the Center for Housing Policy has found that between 2008 and 2011, the cost for renting has increased by 6 percent while incomes have fallen 3.2 percent. In 2011, 26 percent of renters spent more than 50 percent of their incomes on rent. (Businessweek, May 17)


• A study by the AARP Public Policy Institute has found that housing affordability has not improved, contrary to the findings of a recent National Association of Realtors (NAR) study. AARP’s study defined home purchasing in terms of ongoing affordability as well as changing incomes, taxes, and fees with a focus on homeowners over the age of 50. Many older adults are having a more difficult time affording a house today than 12 years ago. (AARP, May 16)


• In an effort to reduce administrative costs, HUD will close its offices for the first of seven days this Friday May 24. Unless the sequester cuts are reversed, HUD offices across the US will shut down six more days this fiscal year. (Housing Wire, May 17)

 

For the latest housing and community development news and notes, follow the Enterprise policy team on Twitter: @E_Housing Policy and subscribe to the Capitol Express Newsletter. 

Community Developments - May 17, 2013

A daily roundup of news affecting housing and  communities

By Allison Charette

 

• With tax reform on the horizon, it is crucial for lawmakers to understand the impact the Low Income Housing Tax Credit has on affordable housing development, write Enterprise’s Emily Cadik and Peter Lawrence in an article for Affordable Housing Finance.  Stakeholders and the public are encouraged to visit taxreform.gov and share stories of the Housing Credit’s significance to send a clear message to Congress. (Affordable Housing Finance, May 16)


• A new Urban Land Institute survey on housing, transportation, and community, assesses how satisfied Americans are with their quality of life and community options. According to the results, only 43 percent of Americans are satisfied with the level of public transit available to them. The survey also highlights potential changing preferences among younger generations. Generation Y respondents (18-34 years of age) were more likely than older respondents to value proximity to public transportation, live in apartments and in downtowns, and favor city living. (ULI: Terwilliger Center and The Wall Street Journal, May 15)


• The Center for Housing Policy (CHP) has released a report analyzing how state housing policies help children in poverty, offer families stability, and guide parents to educational opportunities and other amenities. The report highlights opportunities for intervention in existing programs and also presents the idea of unity among housing programs in regards to children. If the interests of children were brought to the forefront, a new coalition could be built and housing policies could have make a greater positive impact on children in poverty. (CHP, May 2013)


• In an issue brief, the Center for American Progress (CAP) provides a snapshot of the current economic climate. Included in its many points is that Americans, on average, own only 46.6 percent of their homes compared to 61 percent before the Great Recession. Also included are statistics of growing income inequality, homeowner distress, unemployment, and household debt. (CAP, May 13)


• The House Appropriations Committee has passed the Veterans Affairs bill as its first spending bill for Fiscal Year 2014. The committee passed the bill for $73.3 billion including a 33 percent increase in funding for programs targeting homeless veterans. (The Hill’s Defense Blog, May 15)

 

For the latest housing and community development news and notes, follow the Enterprise policy team on Twitter: @E_Housing Policy and subscribe to the Capitol Express Newsletter. 

Community Developments - May 15, 2013

A daily roundup of news affecting housing and  communities

By Allison Charette

 

• In remarks made to the 2013 Federal Home Loan Banks (FHLBanks) Directors Conference Tuesday, FHFA Acting Director Edward DeMarco discussed past and current difficulties due to the Great Recession. Recent bank failures, reduced member lending, and slow economic recovery have delayed the FHLBanks’ previously high profits. Despite slowed business, DeMarco expects improvements and emphasized the banks’ importance in future housing finance reform. (FHFA, May 14)


• In the first quarter of 2013, US households have reduced their collective debt by one percent to $11.2 trillion, the lowest level since 2006. Household debt declines were primarily driven by reduced mortgage and credit card debt; student debt, on the other hand, has risen to an all-time high of $986 billion. (DS news, May 14)


• Banks and the GSEs believe the supply of foreclosed homes and REOs peaked in 2012 and inventory will continue to fall throughout this year. CoreLogic and RealtyTrac have reported significant decreases in recent foreclosure activity resulting in fewer distressed properties. (Mortgage Servicing News, May 13)


• The Congressional Budget Office expects the US budget deficit to be $642 billion by the end of 2013 –$200 billion less than February’s projections. This marks the budget deficit’s smallest shortfall in five years, which will delay any vote on raising the debt ceiling until at least November. (Bloomberg, May 15)


• According to the National Association of Home Builders/Wells Fargo Housing Opportunity Index, 73.7 percent of all homes sold in Q1 2013 were affordable to households earning the national medium income of $64,400. While this news is encouraging, such affordability is not consistent across the US. Many low-income earners, particularly in urban settings, live in areas where home prices are rising significantly faster than incomes. (Mortgage Servicing News, May 14) 

 

For the latest housing and community development news and notes, follow the Enterprise policy team on Twitter: @E_Housing Policy and subscribe to the Capitol Express Newsletter. 

Community Developments - May 14, 2013

A daily roundup of news affecting housing and  communities

By Allison Charette

 

• This year’s proposed farm bill would reduce farm spending by $39.7 billion over ten years, $21 billion of which would be from the Supplemental Nutrition Assistance Program (SNAP). This cut would eliminate food assistance to 2 million low-income households, including working families with children and senior citizens. Additionally, several hundred-thousand children would lose their free school meals. (CBPP, May 13)


• A new survey commissioned by the Consumer Federation of America and VantageScore Solutions has found that one in four Americans have serious misconceptions of how credit scores are calculated and used. Two-fifths of respondents were unaware that credit card companies and mortgage lenders use credit scores to determine credit availability/pricing, while one-quarter did not know keeping credit card balances low improves scores. (American Banker, May 13)


• The DC Council has voted to remove Mayor Gray’s changes to the Homeless Services Reform Act for the Fiscal Year 2014 budget. The proposed changes would have given homeless families “provisional” placement in shelters, then required them to move to their own apartment with temporary rental assistance. According to the Washington Post, city officials support “rapid re-housing” because of shelter overcrowding, while many homeless family advocates believe such changes would only reduce access to shelters. Cities across the US are dealing with similar difficulties as shortages in affordable housing continue and budgets are cut. (The Washington Post, May 13)


• Part of Fannie Mae’s $58.7 billion first-quarter income this year came from the rising prices of REO properties. Fannie sold almost 43,000 foreclosed properties in the first-quarter alone. (Mortgage Servicing News, May 13)


• Freddie Mac’s new streamlined loan modification program became available to delinquent borrowers yesterday, nearly three months ahead of schedule. Eligibility for the program has been extended to all Hurricane Sandy victims, who can begin the loan modification process immediately. (Housing Wire, May 13)

 

For the latest housing and community development news and notes, follow the Enterprise policy team on Twitter: @E_Housing Policy and subscribe to the Capitol Express Newsletter.