Category: Affordable Housing

Lawmakers Reintroduce Bill to Reform, Expand the Low-Income Housing Tax Credit

Posted on by Trey Jackson

Low income housing SFO residences

Bipartisan, bicameral legislation introduced last Thursday would significantly expand and improve the low-income housing tax credit (LIHTC). The tax credit, strongly supported by The Real Estate Roundtable, subsidizes the construction, rehabilitation, and preservation of affordable rental housing for low- and moderate-income tenants. 

Increasing Supply 

  • The Affordable Housing Credit Improvement Act (AHCIA) would finance nearly two million affordable homes over the next 10 years. (Affordable Housing Tax Credit Coalition, 2023)
  • Led by Sens. Maria Cantwell (D-WA) and Todd Young (R-IN), along with Reps. Darin LaHood (R-IL) and Suzan DelBene (D-WA), the AHCIA (H.R. 3238 and S. 1557) has already garnered nearly 90 cosponsors.  
  • Roundtable President and CEO Jeffrey DeBoer said, “The low-income housing tax credit is a critical and well-designed tool that addresses a pressing issue throughout the country–the lack of affordable rental housing. LIHTC harnesses market forces and the power of the private sector to incentivize the construction and rehabilitation of affordable homes. Countless studies have demonstrated LIHTC’s cost-effectiveness. Inflation has taken a toll on working Americans, but Congress can help reduce the burden of high housing costs by passing the AHCIA reforms.”  
  • A March 7 Senate Finance Committee hearing showed bipartisan policymaker consensus on the need to increase the supply of affordable housing by expanding the LIHTC and other tax incentives. The National Multifamily Housing Council (NMHC) and National Apartment Association (NAA), two key supporters of the AHCIA, offered joint testimony during the hearing. (Roundtable Weekly, March 10) 

AHCIA Provisions 

AHCIA summary

  • A summary of the AHCIA is available here. Among its many provisions, the legislation would:
    • Boost the allocation of low-income housing credits to states by restoring the temporary 12.5% increase enacted in 2018 (expired at the end of 2021) and phasing in a 50% increase in the LIHTC allocation cap over two years.
    • Lower the threshold of private activity bond financing—from 50 to 25%—required to trigger the maximum amount of 4% housing credits available to individual properties. 
  • The bill would also ensure that low-income housing credit projects that seek to maximize their energy efficiency through use of the section 179D commercial building deduction are not penalized by existing provisions of the law that reduce the basis of the development by the 179D deduction amount. 
  • While movement on LIHTC legislation is unlikely before the debt ceiling debate is resolved, the broad-based, bipartisan support for AHCIA could lead to Congressional action on the bill later in the year. (News – The Affordable Housing Tax Credit Coalition)

 Domestic Content 

  • In related news, the Internal Revenue Service (IRS) released a notice this week on “made in the USA” guidance that can increase clean energy tax credits. The Inflation Reduction Act (IRA) offers a “bonus” tax credit of up to 10%  for solar, wind, battery storage, and other projects that use iron, steel, and components manufactured in the U.S. (JD Supra, May 16) 

The “domestic content” notice provides initial guidance until the Treasury Department proposes rules on the subject. A fact sheet prepared by The Roundtable keeps track of various federal agency actions that implement IRA tax incentives of significance to the real estate sector.      

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Congressional Tax Writers Focus on Policies to Increase Supply of Affordable Housing

Posted on by Trey Jackson

NMHC President testifying on Affordable HousingLegislation aimed at increasing the nation’s supply of affordable housing was introduced by Senate and House tax writers this week while the National Multifamily Housing Council (NMHC) and National Apartment Association (NAA) offered joint testimony before a March 7 Senate Finance Committee hearing on “Tax Policy’s Role in Increasing Affordable Housing Supply for Working Families.” (NMHC President Sharon Wilson Géno, above and MarketWatch, March 9)

Solutions to Meet the Need 

  • A new report from real estate brokerage Redfin shows that the number of affordable home listings fell 53% from last year—the largest annual drop in Redfin’s records, which date back to 2013. (The Hill and Redfin news release, March 3)
  • The National Low Income Housing Coalition estimates there is a shortage of 7 million affordable and available rental homes in the United States, while a Rosen Consulting Group study reports the underbuilding gap is 5.5 million units.
  • This week’s Senate hearing displayed bipartisan policymaker consensus on the need to increase the supply of affordable housing by expanding the Low-Income Housing Tax Credit (LIHTC) and other tax incentives. (TaxNotes, March 8 and Congressional Research Service, “An Introduction to the Low-Income Housing Tax Credit”)
  • During the hearing, NMHC President Sharon Wilson Géno offered joint testimony that included recommendations to address the affordable housing crisis, including tax policy, regulatory reform, rental assistance, and development incentives. (NHMC News | Video of Géno’s remarks and Written testimony, March 7) 

Senate Bills Senate Finance Committee Chairman Ron Wyden (D-OR)

  • Senate Finance Committee Chairman Ron Wyden (D-OR), above, noted his support for the Affordable Housing Credit Improvement Act (AHCI), the Neighborhood Homes Investment Act, and the reintroduction of the Decent, Affordable, Safe Housing for All (DASH) Act in his opening comments. 
  • Wyden’s DASH Act would strengthen the LIHTC and offer a new Middle-Income Housing Tax Credit (MIHTC) that would provide a tax credit to developers who house tenants between 60 and 100% of the area’s median income. (DASH Act Text | Bill Summary | Section-by-section)
  • The AHCI would expand the pool of tax credits allocated to states for new affordable housing, make it easier to combine LIHTC with other sources of capital like private activity bonds, and facilitate LIHTC rehab projects.
  • Wyden added in his opening comments, “Members of Congress also need to keep pushing state and local authorities to cut back on the thicket of zoning rules that get in the way of building the housing Americans need.”
  • The Roundtable has supported these Senate bills since they were introduced last year. Real Estate Roundtable President and CEO Jeffrey DeBoer previously stated, “Overly restrictive land-use and zoning policies, construction cost increases, and labor shortages are deepening our housing challenges, which now extend across the entire country. Government at all levels needs to be part of the solution, not part of the problem.” (Roundtable Weekly, July 22, 2022) 

House Action Capitol bright sky

  • Reintroduction of similar LIHTC legislation in the House is expected by Reps. Suzan DelBene (D-WA) and Brian Higgins (D-NY). (BGov, March 2)
  • Additionally, House Ways and Means Tax Subcommittee Chair Mike Kelly (R-PA) and committee member Jimmy Panetta (D-CA) on March 1 reintroduced the More Homes on the Market Act, which would double the capital gains exclusion for home sellers to $500,000 for single individuals and $1 million for married couples. (TaxNotes, March 8) 

Despite widespread congressional support for certain affordable housing legislation, prospects for the bills are uncertain until the national debt ceiling issue is addressed—and a tax legislative package is identified that could include such measures. 

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Biden Administration Expands Low-Income Housing Financing and Provides More Flexibility to Affordable Housing Developers

Posted on by Trey Jackson

Housing construction

The Biden administration on Oct. 7 announced several new federal agency actions aimed at closing the housing supply shortfall as part of its Housing Supply Action Plan, launched in May. (White House statement, Oct. 7 | Multi-Housing News, Oct. 10 | Roundtable Weekly, May 20)

LIHTC Reform

The White House’s announcement focused on efforts to reduce barriers to affordable housing construction and preservation by:

  • Finalizing Treasury rules that reform the Low-Income Housing Tax Credit (LIHTC) income guidelines. The new rules provide greater flexibility to develop mixed-income housing, housing for very low-income tenants, and housing in sparsely populated rural areas. Specifically, the final regulations create an alternative means of complying with the rent restriction requirements of the LIHTC. The new rules allow owners to measure and average their tenants’ income based on a broader range of qualifying incomes (20 to 80 percent of the area median). 
  • Extending LIHTC deadlines to ensure that affordable housing projects delayed by public health, economic, and supply-chain issues can be built as expeditiously as possible and still qualify for the credit. (IRS Notice 2022-52)
  • The Real Estate Roundtable has long supported well-designed, targeted tax incentives like the LIHTC that are aimed at boosting the construction and rehabilitation of badly needed affordable and workforce housing. (Roundtable 2022 Policy Agenda Tax Section)

Other Federal Actions Announced by the White House

Construction of affordable housing

  • Reforming and streamlining Fannie Mae’s and Freddie Mac’s Forward Commitment programs, which allow developers to secure financing to pay off a construction loan when construction has been completed and the housing project has been approved for occupancy. Each GSE will be able to provide $3 billion in Forward Commitments per year—above and beyond the multifamily purchase cap.
  • Enabling more affordable housing development and preservation with State and Local Fiscal Recovery Funds (SLFRF) under the American Rescue Plan. Treasury and the Department of Housing and Urban Development jointly published a “How-To” Guide to further encourage state and local governments to make use of these funds with other sources of federal funding.
  • Promoting more housing options near transit and other modes of transportation, coordination of transportation and housing planning, and rewarding jurisdictions that have removed barriers to housing development.
  • Increasing transportation investments that can connect and expand affordable housing supply. The Department of Transportation (DOT) has begun awarding grants for recipients where local governments are improving their transportation infrastructure and promoting a range of transportation, environmental, urban planning, and housing policy goals.
  • DOT also announced “TIFIA 49,” which authorizes borrowing from the Transportation Infrastructure Finance and Innovation Act (TIFIA) program up to 49 percent of eligible costs for projects that meet eligibility requirements, an increase from 33 percent of eligible project costs.

Real Estate Views

Willy Walker on SquawkBox

  • The National Multifamily Housing Council and National Apartment Association applauded the Biden administration’s plan. Their joint statement noted the U.S. needs to produce 4.3 million more apartments by 2035 to keep up with demand.
  • Roundtable Member Willy Walker, above left, chairman and CEO of Walker and Dunlop, joined CNBC’s Squawk on the Street on Oct. 12 to discuss supply and demand challenges in the housing market, rent increases associated with inflation, and the consequence of banks pulling back loans from commercial real estate. (Watch video) 

The Real Estate Roundtable’s Research Committee and Real Estate Capital Policy Advisory Committee (RECPAC) has formed an Affordable Housing Working Group, which is working on a report to address expansion of the nation’s housing infrastructure.  

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New Treasury Guidance Allows Greater Flexibility in Using COVID-19 Rescue Funds for Affordable Housing

Posted on by Trey Jackson

Housing construction

The Biden administration issued new guidance this week that gives local and state governments greater flexibility when using their share of $350 billion in COVID-19 federal relief funds for affordable housing. The changes are in line with the administration’s recent Housing Supply Action Plan, which aims to boost the supply of affordable housing in communities throughout the nation. (Treasury Dept. news release, July 27 and Roundtable Weekly, May 20)

Expanded Use of Pandemic Funds

How-To Guide

How-To Guide Treasury and HUD cover

  • Treasury and the Department of Housing and Urban Development have also jointly published a “How-To” Guide to show governments ways of combining pandemic aid with other sources of federal funding.
  • According to the guide, recipients of Coronavirus State and Local Fiscal Recovery Funds (SLFRF) can “acquire properties that will be transitioned into affordable housing for households that experienced the negative economic impacts of the pandemic. This could include acquisition of market rate rental properties, motels, or commercial properties that will be converted to affordable housing, or acquisition and preservation of publicly supported affordable housing.”
  • SLFRF may also be used to “finance retrofits and weatherization of properties to improve energy efficiency, potentially by leveraging new federal funding such as the Department of Energy’s Weatherization Assistance Program, or infrastructure resources.”
  • Over the coming months, Treasury plans to conduct a series of webinars and briefings with states, local governments, nonprofits, and private sector entities involved in the development and preservation of affordable housing.

Multifamily Response

  • The National Multifamily Housing Council (NMHC) and National Apartment Association (NAA) applauded the flexibility provided by the new guidance.
  • NMHC also unveiled new research this week showing the need for the U.S. to produce 4.3 million more apartments by 2035 to address the underbuilding of housing after the 2008 financial crisis.

In conjunction with the study’s release, the website www.WeAreApartments.org breaks down the data by each state and 50 key metro areas.

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Senate Finance Committee Focuses on Low-Income Housing Tax Credit and Other Affordable Housing Incentives

Posted on by Trey Jackson

Senate Finance Committee

Numerous congressional committees have recently addressed the nation’s scarcity of affordable housing—including this week’s Senate Finance Committee hearing, “The Role of Tax Incentives in Affordable Housing,” which focused on the Low Income Housing Tax Credit (LIHTC) and other legislative incentives. 

Tax Focus 

  • Senate Finance Chairman Ron Wyden (D-OR), Ranking Member Mike Crapo (R-ID) and several witnesses expressed support during the hearing for the Affordable Housing Credit Improvement Act (S.1136), introduced by committee member Maria Cantwell (D-WA). The bill would expand and strengthen the LIHTC.
  • The bill (detailed summary here) would expand the pool of tax credits that are allocated to states for new affordable housing, make it easier to combine LIHTC with other sources of capital like private activity bonds, and facilitate LIHTC rehab projects. (Tax Notes, July 21)

Dana Wade, Walker & Dunlop

  • Hearing witness Dana Wade—an executive at Walker & Dunlop and a former commissioner of the Federal Housing Administration (above)—noted that 25 percent of all renters spend more than half of their monthly income on rent. Wade also testified extensively about the causes of the housing affordability crisis.
  • “An estimated 40 percent of development costs can be attributed to regulation at the federal, state, and local levels,” testified Wade. “Zoning policies like density limits, requirements for parking, height restrictions, lengthy permitting and approval processes, and other land-use restrictions create a perfect storm that can often stymie new development.”
  • One of the largest multifamily lenders and LIHTC syndicators in the country, Walker & Dunlop is chaired and managed by Roundtable Member Willy Walker.

Jeffrey DeBoer Real Estate Roundtable President and CEO

  • “Overly restrictive land-use and zoning policies, construction cost increases, and labor shortages are deepening our housing challenges, which now extend across the entire country,” said Real Estate Roundtable President and CEO Jeffrey DeBoer (above). “Government at all levels needs to be part of the solution, not part of the problem. The Affordable Housing Credit Improvement Act would be an important step forward.”
  • The future of S. 1136 is uncertain after key centrist Sen. Joe Manchin recently said he would not support any legislative package that included tax increases until more economic data affecting the 40-year high inflation rate becomes available. Chairman Wyden did not promise a timetable for committee action. (Roundtable Weekly, July 15) 

Congressional Hearings 

The Roundtable’s Real Estate Capital Policy Advisory Committee (RECPAC) has formed an Affordable Housing Working Group, which is working with the Research Committee to develop proposals on expanding the nation’s housing infrastructure. 

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House Ways and Means Committee Focuses on Affordable Housing

Posted on by Trey Jackson

House Ways and Means Committee

Policymakers discussed the nation’s scarcity of affordable housing, legislation that could boost the housing supply, and institutional ownership in the single—family home market during a July 12 House Ways and Means Committee hearing, which followed a similar House Financial Services Subcommittee hearing last month. (Roundtable Weekly, July 1) 

Housing Market Challenges 

  • Ways and Means Democrats focused on the role of the pandemic in exacerbating the shortage of affordable housing, expressed concerns regarding growing institutional ownership of homes and the practices of corporate landlords, and reiterated support for policies such the low-income housing tax credit (LIHTC).
  • Committee Republicans emphasized how high inflation has shut many buyers out of the market. (Hearing video and testimony, July 13)
  • Committee Chairman Richard Neal (D-MA) stated, “Our families and communities can’t thrive without quality, affordable housing. But too many Americans face skyrocketing housing costs, long waiting lists, new pressure from institutional investors, and unprecedented bidding wars that keep them out of the housing market.” (Neal opening statement)
  • Neal added that an expansion of the Low-Income Housing Tax Credit (H.R. 2573) and passage of the Neighborhood Homes Investment Act (H.R. 2143) would create nearly 1 million additional affordable homes. (Joint Committee on Taxation, Present Law and Background Relating to Tax Incentives for Residential Real Estate, July 13)
  • Committee Ranking Member Kevin Brady (R-TX) blamed Democratic policies for driving the annual inflation rate to 9.1 percent and increasing the average home price by $100,000. (CNBC, July 13) 

Housing Affordability and Institutional Investment 

New York Times - housing supply shortage

  • Christopher Herbert of the Joint Center for Housing Studies at Harvard University, which recently published The State of the Nation’s Housing 2022, noted that although institutional investors have contributed to the demand for single-family homes, supply shortages predating the pandemic are the primary culprit behind rising prices. (Herbert testimony, July 13)
  • Edward Pinto of the American Enterprise Institute testified, “Vilifying institutional landlords distracts from the underlying issues facing the housing market.” He continued, “On the single-family side, they account for too small a share of purchases and of the housing stock nationally. Even in the few metros where their share is higher, it is not enough to move the price needle, especially at the low end of the market.” (Pinto testimony, July 13)
  • Several witnesses addressed legislative proposals that would boost the supply of housing—including H.R. 2143, introduced by Rep. Brian Higgins (D-NY), that would establish a new tax credit for developers rehabilitating vacant properties into affordable homes—and H.R. 2573, introduced by Rep. Suzan DelBene (D-WA), that increase the low-income housing tax credit. (CQ, July 13 | Higgins news release, July 1, 2020 and DelBene news release, April 15, 2021)
  • The New York Times reported this week on how the lack of affordable housing, once a problem largely limited to the coastal markets, now has spread across the country. Freddie Mac estimates the nation needs 3.8 million housing units to keep up with household formation. (Image above, New York Times)
  • Roundtable President and CEO Jeffrey DeBoer recently addressed the issue of housing costs, “Expanding the supply and availability of affordable housing deserves a coordinated local, state, and national policy action plan. Local zoning restrictions, permitting issues, and the oversized influence of NIMBYs—coupled with high and now significantly rising labor and material costs—are the true factors limiting housing supply, and in turn, increasing housing costs.” (Roundtable Weekly, July 1) 

Roundtable Support 

RER 2022 Policy Agenda Cover

  • The Roundtable Policy Agenda, above, states, “More can be done to incentivize builders, developers, and owners to create low- and middle-income affordable housing. Low-income housing tax credits and incentives for land-use permitting and zoning reform should be enhanced.”
  • Additionally, The Roundtable’s Real Estate Capital Policy Advisory Committee (RECPAC) has formed an Affordable Housing Working Group, which is working with the Research Committee to develop proposals on expanding the nation’s housing infrastructure. 

Next week, a Senate Finance Committee hearing will focus on “The Role of Tax Incentives in Affordable Housing.” The July 20 hearing will include testimony from Dana Wade, Chief Production Officer, Real Estate Finance at Walker & Dunlop.  

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House Lawmakers Focus on Institutional Ownership of Single-Family Homes

Posted on by Trey Jackson

House Committee on Financial Services - image

Rent increases, financial barriers to homeownership, and the growing role of institutional investors in single-family home markets were the focus of two hearings in the House this week. Committee Democrats blamed corporate landlords for exacerbating affordable housing problems as Republicans emphasized high inflation and excessive government spending as the root causes. (Axios, June 29 and GlobeSt, June 30)

Views from the House

  • During the June 28 House Financial Services Subcommittee on Oversight & Investigation hearing, “Where Have All the Houses Gone? Private Equity, Single Family Rentals, and America’s Neighborhoods,” Chair Al Green (D-TX) stated policymakers are examining “… troubling issues regarding the mass predatory purchasing of single-family homes by private equity firms, including the adverse impact predatory purchasing has had on first-time home buyers, the working class, and people of color.” (July 28 House committee hearing memo)
  • Subcommittee Ranking Member Tom Emmer (R-MN) countered that an 8.6% inflation rate is the cause of current affordable housing challenges—and Congress should focus instead on lowering the cost of living for Americans. (Hearing video, June 28)

Sam Chandan testifying

  • A June 29 full committee hearing entitled, “Boom and Bust: Inequality, Homeownership, and the Long-Term Impacts of the Hot Housing Market” included testimony from Sam Chandan (above)—Director of the Center for Real Estate Finance Research and Professor of Finance, NYU Stern School of Business—and a member of The Real Estate Roundtable’s Research Committee. (July 29 House committee hearing memo)
  • Chandan cited Freddie Mac research published this month that shows, “Nationally, the institutional investor share of the market has risen since just prior to the pandemic, but still only accounts for approximately 2.5 percent of home sales. By way of comparison, individual investors and other non-institutional investors account for 24 percent of the market, nearly ten times the institutional share.” (Chandan’s testimony and hearing video, June 29)
  • Chandan also noted that housing equity gaps and the shortfall of affordable housing can only be addressed with a long-term, multifaceted approach that includes reforming local building codes and zoning, improving the supply of construction materials, and investments in public transportation that open new land development opportunities.

Responses

Jeff DeBoer - Real Estate Roundtable President and CEO

  • David Howard, executive director of the National Rental Home Council, submitted a statement for the hearing record that included: “As a multitude of data consistently shows, the answer to the question posed in the title of this week’s hearing, ‘Where Have All the Houses Gone?’ is they were never built. Simply stated, the supply of housing in the United States has not kept pace with demand.”
  • Roundtable President and CEO Jeffrey DeBoer, above, stated, “Expanding the supply and availability of affordable housing deserves a coordinated local, state, and national policy action plan. Local zoning restrictions, permitting issues, and the oversized influence of NIMBYs—coupled with high and now significantly rising labor and material costs—are the true factors limiting housing supply, and in turn, increasing housing costs.”

The Roundtable’s 2022 Annual Report states, “The affordable housing shortage is one of the most important and complex political problems in America, and The Roundtable continues to work with our national real estate organization partners to jointly advocate for policies that will help enhance the supply of safe, affordable housing.” (Housing section, 2022 Annual Report)

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Blackstone Commits $1 Billion to Private Sector Affordable Housing Program

Posted on by Trey Jackson

Blackstone's Kathleen McCarthy image

Blackstone on Jan. 14 announced a $1 billion commitment to help address affordable housing challenges often faced by low-to-moderate-income families in historically under-represented communities. Blackstone’s single-family rental company Home Partners of America will expand their private sector program called Choice Lease, which offers qualified applicants below market rents and paths to homeownership without government subsidies. (Bloomberg, Jan. 14) 

An Affordable Housing Solution 

  • Kathleen McCarthy, above, Global Co-Head of Blackstone Real Estate and Real Estate Roundtable Board Member, said, “The lack of housing supply is a national crisis. We are proud to support Home Partners’ mission of addressing housing access and affordability while also providing underserved populations with a new path to homeownership. Blackstone’s scale and long-term capital make a program like this possible.” (GlobeSt, Jan. 18)
  • Home Partners intends to use the Blackstone funds for purchasing approximately 4,000 homes over the next two years that will benefit eligible individuals and families facing challenges to homeownership, including lower credit scores and lack of savings. (News release, Jan. 14)
  • Bill Young, co-founder and CEO of Home Partners of America, said, “Our Choice Lease program is providing a critical service to many who would not otherwise be able to access the housing market. We are grateful that our partners at Blackstone have provided the support needed to implement this initiative. We have a unique opportunity to drive change that will help these groups access quality homes while providing a clear and transparent path to homeownership.” 

Program Details 

How Chose Lease Works

  • Bloomberg reports that Home Partners buys a home on behalf of its Choice Lease client, and rents it back on a series of one-year leases. Blackstone confirmed that throughout the lease, the tenant has the option to purchase the house at any time.
  • Choice Lease’s rental and purchase options, as well as free financial education and counseling programs, come as a housing shortage pushes rents and purchase prices higher throughout the United States. (National Mortgage Professional, Jan. 17) 
  • Choice Lease is intended for households who earn 80% or less of the area median income. The program also offers residents rental rates 10% lower than market rates – and caps a home’s eventual purchase price at a 3.5% annual increase. (Information on the Choice Lease Program and Chicago Agent Magazine, Jan. 17)
     
  • Home Partners has implemented Choice Lease in four metropolitan areas, including Atlanta and Phoenix, and is expanding the program to thirteen other markets. (Bloomberg, Jan. 14) 

The affordable housing shortage is one of the most important and complex political problems in America, and The Roundtable continues to work with our national real estate organization partners to jointly advocate for policies that will help to enhance the supply of safe, affordable housing. 

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Fannie & Freddie Get Updated Duty-To-Serve Criteria for Manufactured, Affordable and Rural Housing

Posted on by Trey Jackson

FHFA Duty-to-Serve x475

Strict criteria for how the Government Sponsored Entities (GSEs) Fannie Mae and Freddie Mac must facilitate a secondary mortgage market for very low-, low-, and moderate-income families in manufactured, affordable and rural housing were released on March 11 by the Federal Housing Finance Agency (FHFA). (Updated FHFA Guidance)

  • FHFA oversees the GSEs, which remain in government conservatorship since the financial crisis of 2008.  The Housing and Economic Recovery Act of 2008 established a duty for Fannie Mae and Freddie Mac (the Enterprises) to serve the three specified underserved markets.  (FHFA Duty-To-Serve Program)
  • Under the Duty-to-Serve regulation, each Enterprise must prepare a three-year plan showing how it will increase the liquidity of mortgage investments and improve the distribution of investment capital available for mortgage financing for the three markets.  The new evaluation criteria, which take effect 2021-2023 incorporate several changes:
    • Revised ratings framework – The revisions establish four ratings to describe Enterprise performance;
    • Higher expectations for impactful plans – The revisions require a minimum concept score of 30 for each objective, rather than the previous requirement that the concept scores of all objectives average a 30;
    • Increased threshold for determining compliance – The revisions increase the threshold for compliance scores; and
    • Technical changes – The updated Guidance also includes technical changes to reflect current practices that have streamlined processes and improved program administration.
  • The evaluation guidance sets forth the process and standards by which FHFA will evaluate, and report annually to Congress on the Enterprises’ performance and achievements under their plans.  The updated guidance will ensure that the Enterprises Duty-To-Serve programs have a measurable and significant impact in underserved communities.

Federal Housing Finance Agency Director Mark Calabria addressed his agency’s oversight of Fannie and Freddie – who own or guarantee $5.6 trillion in single and multifamily mortgages – during The Roundtable’s 2020 State of the Industry Meeting in January. (Roundtable Weekly, Jan. 31)

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White House Report: Over-Regulation Constrains Housing Supplies; Walker & Dunlop Report Considers Barriers, Solutions to Improve Housing Affordability

Posted on by Trey Jackson

2020 CEA Annual Report

The Trump Administration yesterday issued its Council of Economic Advisers’ 2020 Annual Report, which warns that regulatory constraints on affordable housing development in key markets drive up costs, increase homelessness and pose a potential threat to U.S. economic growth.  (White House, Feb. 20)

  • The White House report also lists issues such as the opioid crisis as a drag on the historic economic expansion, while focusing on affordable housing constraints as a major impediment.  (PoliticoPro, Feb.20)
  • “We find that a key driver of the housing unaffordability problem is the overregulation of housing markets by State and local governments, which limits supply,” the report states. “By driving up home prices, overregulation adversely affects low-income Americans in particular, who spend the largest share of their income on housing.”
  •  To illustrate how rising housing unaffordability in U.S. real estate markets adversely affects economic growth, the report profiles 11 supply-constrained geographic areas.  The report finds that deregulation in these areas would increase affordability enough to reduce homelessness by an estimated 31 percent on average. 
  • The report explains, “Such overly restrictive regulations include zoning and growth management controls, rent controls, building and rehabilitation codes, energy and water efficiency mandates, maximum-density allowances, historic preservation requirements, wetland or environmental regulations, manufactured-housing regulations and restrictions, parking requirements, permitting and review procedures, investment or reinvestment tax policies, labor requirements, and impact or developer fees.”
  • The Trump Administration has focused on deregulation by establishing the White House Council on Eliminating Regulatory Barriers to Affordable Housing, while the Department of Housing and Urban Development (HUD) is encouraging State and local governments to focus on increasing housing supply in areas where supply is constrained. (Roundtable Weekly, June 28, 2019)
The Roundtable on Jan. 21 submitted a suite of policy suggestions to HUD aimed at improving access to affordable housing.  The Roundtable’s comments offer specific policies intended to bring safe, decent, and affordable housing within reach of indigent and low-income households.  The comments also urge HUD to focus on the scarcity of homes accessible to middle class families, and recommends policies to increase both purchase and rental options for teachers, first responders, and other contributors in America’s workforce. (Roundtable Weekly, Jan. 17) 
 
Industry Focus
 
Walker & Dunlop’s this week published its Winter Multifamily Outlook – Focus on Affordable Housing that focuses on the economics driving the affordable housing crisis, a Q&A with Fannie-Freddie’s lead regulator Dr.  Mark Calabria; and a report on how Opportunity Zones can be paired with HUD programs to provide new affordable housing.
 
  • Affordable housing policy was also the topic of a panel discussion moderated by Walker & Dunlop Chairman & CEO Willy Walker during The Roundtable’s Jan. 28 State of the Industry Meeting in Washington.  Participants included House Financial Services Committee Ranking Member Patrick McHenry (R-NC) and Federal Housing Finance Agency Director Mark Calabria – whose agency oversees the Government Sponsored Enterprises that own or guarantee $5.6 trillion in single and multifamily mortgages.  (Roundtable Weekly, Jan. 31) 
  • In Walker and Dunlop’s previous Outlook Quarterly Report (Fall 2019) a policy Q&A with Roundtable President and CEO Jeffrey DeBoer addressed housing affordability and rent control.   DeBoer states in the interview, “Although we focus on national issues, we do have concerns about the more local trend to enact rent control. These laws are destructive. They may help those people in the short term but those same people are hurt in the long run by giving them lower and lower quality housing. It ends up being very inequitable over time and hopefully the trend will not gain additional traction.”

  • Bibby states, “A full 32.1% of multifamily development costs are driven by government regulations—fees, standards, approval requirements, impact studies. … Places with the heaviest hand of government are hurting hardworking families trying to make ends meet the most. We should streamline regulations, give people more housing options and bring costs down.” 

The national dialogue about affordable housing policy challenges and solutions, along with the evolving dynamics of the upcoming elections, will be discussed during The Roundtable’s Spring Meeting on March 31 in Washington.