State Updates
Senate Advances Legislation to Preserve Affordable Housing
By a vote of 36 to 0, the Senate passed legislation today to help address the Commonwealth's expiring use challenges. The bill, S. 782, provides DHCD, or its designee (which may be a nonprofit, for-profit or municipality), with a 90-day exclusive opportunity to negotiate to purchase a publicly assisted housing development, and a 30-day right of first refusal to match any purchase contract for the sale of publicly assisted housing. Properties that are sold in transactions that preserve affordability are exempt from these provisions.
In addition, the bill provides modest protections for tenants in properties that terminate, capping rents at Consumer Price Index plus three percent for each year for a three-year period, and requiring just cause eviction for tenants during that period. The bill also mandates notification of affordability restriction termination two years and one year prior to termination.
CHAPA commends Senate President Murray, Ways and Means Chairman Panagiotakos and Housing Committee Chairwoman Tucker for their leadership in working with CHAPA to advance this compromise legislation. CHAPA will now be advocating for passage in the House prior to the end of the legislative session.
Governor Signs State Budget
Governor Patrick signed the FY '09 budget on Sunday, July 13th. He vetoed $122 million, including $1.815 million in earmarks in DHCD's administrative line item. All statewide housing programs remain at the Legislature's authorized funding levels. For a complete list of FY'09 housing budget authorizations, please click here. CHAPA commends Governor Patrick for supporting affordable housing by signing these important investments into law.
Lead Paint Abatement Program Nearly Out of Funding
The Get the Lead Out Program, which provides homeowners, owner investors, and nonprofits with low interest loans or grants to remove lead paint from their properties, is nearly out of funding and Mass Housing will cease making loans by the end of the summer. Due to the lack of funding, only families with children that already have experienced lead paint poisoning are eligible for funding. The program has not received an appropriation since FY '02 and the market downturn and foreclosure crisis have made the recycling of loans no longer feasible to fund the program. The lack of funding is a major impediment to providing housing for families in many cities with older housing stocks. CHAPA will be working with our partners to seek supplemental funding for the program.
Commonwealth Capital FY '09 Program Changes Announced
On July 3, the Patrick Administration released its FY '09 Commonwealth Capital Application and program changes. Commonwealth Capital is the Administration's effort to support local actions that promote sustainable development by rewarding municipalities that score high on the Commonwealth Capital Application with preference for many grants. Commonwealth Capital continues to reward municipalities that zone for and provide affordable housing, with a greater focus on regional planning in this year's application.
Department of Transitional Assistance Posts Emergency Shelter Assistance RFR
DTA has posted the Emergency Assistance family homeless shelter system Request for Responses (RFR). The procurement is intended to help set the foundation necessary for transforming the shelter system into one that is focused on prevention, stabilization and rapid re-housing. To access the DTA Emergency Assistance 2008 RFR, click here or visit http://www.comm-pass.com.
Interagency Council on Housing and Homelessness Releases RFI
On July 16, the Interagency Council and Housing and Homelessness released a Request for Information (RFI), which seeks information from providers on developing six regionally-based networks. Responses are due by August 1, 2008. The networks will likely include representation from housing agencies, social service providers, municipal leaders, philanthropies, CDCs, business leaders, and others. The information received will also inform a Request for Responses (RFR) which will be released on or around September 1, 2008.
Federal Home Loan Bank of Boston Announces September AHP Funding Round
The Federal Home Loan Bank of Boston announced this month that it will be accepting applications for Affordable Housing Program (AHP) funding from August 1 through September 12 and that all applications must be filed electronically. AHP funds can be used for both rental and ownership activities. Information on the program, application instructions and scoring guidelines are available on the Bank's website.
The Bank has scheduled nine training sessions (including several webinars) for applicants and member banks in July and August. Click here for information on the trainings, including sessions in Massachusetts in Natick (August 7) and Springfield (August 13).
Governor Hosts Town Hall and Cabinet Meetings Across the State
Governor Patrick has begun hosting a series of town hall meetings across the state. The meetings are open to the public, giving residents a chance to talk directly to Governor Patrick about issues they care about most. Governor Patrick will also assemble his full Cabinet for four meetings in different regions of Massachusetts, giving the public more opportunities to ask questions and raise important matters in their communities. Click here for a complete list of meetings.
Federal Updates
Senate Approves Major Housing Bill; Compromise Bill Expected Next Week
On July 11, the Senate passed the Housing and Economic Recovery Act (H.R. 3221), amending a House version of the bill approved on May 8. The Senate bill was returned to the House and compromise legislation is expected to come to a vote in the House on Wednesday, July 24, with new provisions enabling the Federal Reserve to shore up Fannie Mae and Freddie Mac being attached. In addition, the House leadership has announced that a $4 billion acquisition fund to purchase foreclosed properties will be included in the final House bill despite previous veto threats by the White House (this provision has received overwhelming support in the Senate).
Both House and Senate bills:
- Authorize a new FHA program to insure refinance mortgages for homeowners at risk of foreclosure (unlike the House, however, the Senate bill would fund the program from the contributions by Fannie Mae and Freddie Mac to a new Affordable Housing Trust Fund authorized in the GSE reform portion of the bill).
- Reform FHA mortgage insurance programs to make them more broadly usable, through higher loan limits and other changes.
- Create a new regulator for Fannie Mae and Freddie Mac, strengthen oversight of the Federal Home Loan Bank system and require Fannie and Freddie to contribute annually to a new Affordable Housing Trust Fund.
- Revise rules for the Low Income Housing Tax Credit (LIHTC) program to make it easier to use with other federal programs, revise the tax-exempt bond program, and provides temporary increases in the allocations to states under both programs.
- Provide a tax credit of up to $7,500-$8,000 for first-time homebuyers and a tax deduction for property taxes for non-itemizing homeowners.
The Senate bill also authorizes $3.92 billion in grants to states and localities for the purchase, rehabilitation, management and/or re-sale of foreclosed properties in areas hard hit by foreclosures; the House is now expected to approve this program as part of the compromise bill. The Senate bill does not include certain provisions contained in the House bill related to the LIHTC data collection and rents, Section 202 and project-based vouchers, and Shelter Plus Care, which are intended to make them usable.
CHAPA wishes to thank Congressman Barney Frank, Senator John Kerry, and the entire delegation for their outstanding leadership on this bill.
HOPE NOW Alliance Releases May Statistics on Loan Modifications
On July 2, the HOPE NOW Alliance released statistics on foreclosures, workouts and loan modifications reported by its members (about 27 mortgage servicers). It estimated that servicers have prevented 1.7 million foreclosures since July 2007. It estimates that 1.977 million loans were at least 60 days delinquent in May, while 170,000 loan workouts (prime and subprime) were completed that month (only 70,000 were loan modifications) and another 85,000 borrowers lost their homes.
Critics have noted that little information is available on the nature of the loan modifications. A Washington Post article reported that the Comptroller of the Currency found the Alliance data to have "significant limitations" and the New York Times reported on July 13 that some servicers impose very high fees for modifications and use questionable calculations regarding amounts owed.
Federal Reserve Finalizes Mortgage "Truth in Lending" Rules
On July 14, the Federal Reserve Board announced its approval of a final rule amending Regulation Z (Truth in Lending). The new rule, which applies to all mortgage lenders, limits deceptive home mortgage lending practices and sets escrow account requirements.
It also imposes a number of new restrictions on the making of "higher priced" loans defined as first mortgages with an annual percentage rate of 1.5 or more points above the average prime rate offer index and subordinate liens 3.5 or more points higher.
The new rule restricts loans that borrowers cannot afford by requiring lenders to consider borrower ability to repay the loan, based on the highest scheduled payment in the first seven years and by requiring income and asset documentation and verification. It also bans prepayment penalties in the case of loans where payments can change in the first four years and limits the penalty period to two years in the case of other higher priced loans. The final rule also makes it easier for borrowers to sue the lender by not requiring demonstration of a pattern of violations.
The rule also requires lenders to establish escrow accounts for property taxes and insurance for all first-lien mortgages. Other requirements include the provision of a good faith estimate at least 3 days in advance for all home loans and restrictions on servicer fees and practices.
The new rule will go into effect on October 1, 2009 except for the escrow requirement. That will be phased in during 2010. A more detailed summary of the rule and links to the full text are available on the Federal Reserve Board website.
Bank of America Merges with Countrywide; Reiterates Loan and Workout Commitments
Bank of America announced its acquisition of Countrywide Financial has begun with "legal day one" of the merger occurring on July 1. In a press release that day, the Bank reiterated its commitment to a number of community development activities starting in 2009.
It promised to modify or work out at least $40 billion in troubled loans (265,000) over the next two years, maintain a loss mitigation staff of at least 3,900 for at least a year, and create a $35 million "Neighborhood Preservation Program," which would provide grants and program investments to support counseling, foreclosure prevention, and the purchase and management of vacant properties.
Bank of America also said it will not originate subprime and no-documentation mortgages, will continue its goal of lending and investing $1.5 trillion in community development activities, and will distribute $2 billion in charitable donations over the next ten years (through 2018).
New Jersey Enacts New Housing Bill; Eliminates Regional Contribution Agreements
Today, the governor of New Jersey will sign a new housing bill (A.500) passed by the Legislature at the end of June that significantly revises its "fair share" law established under the Mount Laurel consent decrees.
The new law abolishes "regional contribution agreements", a provision of its 1985 Fair Housing Act that had allowed wealthy communities to transfer up to half of their affordable housing obligation to poorer municipalities by making cash payments. The bill also requires every municipality to include housing for extremely low income families (incomes at or below 30% of area median) and provides a new funding stream for affordable housing through a 2.5% development fee on non-residential construction which is expected to raise $60-$80 million a year. Links to a bill summary and the text are also available on the Housing and Community Development Network of New Jersey website.
Congressional Gold Medal Conveyed to Senator Brooke
On July 1, President Bush signed a bill authorizing the presentation of a gold medal by Congress to former Massachusetts Senator Edward Brooke in recognition of his service to the nation. Supporters noted his major role in affordable housing legislation, including the passage of the 1969 "Brooke amendment" that first capped rents for assisted housing at 25% of income.
Recent Research
New Report Documents Homeownership Affordability Trends for Households at 60%-120% AMI
Homes for Working Families has issued a new report conducted by Moody's Economy.com on trends in homeownership affordability for "middle income" households (incomes of 60% to 120% of area median income).
Analyzing Affordability in Metropolitan Housing Markets: An Examination of Affordability for Middle-Income Households (click here) examines recent trends in cost burden, credit availability and ownership rates in 40 metropolitan areas. Overall, it finds that while falling prices have increased affordability, all but 8 of 40 areas (primarily in the Midwest) are still less affordable in early 2008 than they were in 2000. In addition, tighter credit standards are making it difficult for would be buyers to purchase homes. Over 40% of lenders tightened standards in 2008, including over 60% of prime lenders, according to the report.
These trends, along with rising foreclosures, have reduced homeownership rates in 22 of 30 metro areas in the past two years (as of Q1 2008). Ownership rates in the Boston-Quincy-Cambridge and Worcester areas, however, rose during that period, by 2.7 and 0.8 percentage points respectively. Overall, the study expects homeownership rates and housing prices to continue to fall at least through mid-2009.
MCBC Releases Report on Effective Financial Literacy Training
The Massachusetts Community and Banking Council (MCBC) has released a report, Expanding Financial Skills in Low-Income Communities: A Framework for Building and Effective Financial Education Program, (click here) authored by Margaret Miley. The report reviews current research on adult education, notes the relatively low demand from consumers for training despite need, and describes practices for nonprofits, trainers and financial institutions undertaking such programs.
New Report Highlights Benefits of Community Land Trusts and Recent Trends
The Lincoln Institute of Land Policy issued a new report this month, The City-CLT Partnership: Municipal Support for Community Land Trusts, (click here)examining the growth in community land trusts in the past decade due to a major increase in local government financial support. The study founds that localities are increasingly playing an active role in starting up these trusts. The study highlights the basic features and benefits of CLTs, the varied roles played by municipalities, approaches that help or frustrate the goals of creating and sustaining long term affordability, and guidance in creating and running a CLT.
Upcoming Events
Tuesday, August 12th, 1:00-8:00 p.m., (free) Foreclosure Prevention Workshop for Struggling Homeowners, Gillette Stadium – Fidelity Investments Clubhouse, Foxborough, MA, sponsored by the Federal Reserve Bank of Boston and the New England Patriots Charitable Foundation.
Mortgage lenders and servicers will be in attendance as well as housing counselors. The workshop will enable owners in distress or concerned about foreclosure to sit down with their lender and work out solutions (owners should bring documentation on their mortgage, income, etc. to the event). For more information, click here.
Friday, September 5th, 9:00 a.m.-12:30 p.m., Suffolk University Law School, Seminar, "A New Look At An Old 40B – New Regulations, New Rulings", 120 Tremont St, Boston, co-sponsored with City Solicitors and Town Counsel Association, CHAPA, and Suffolk University's Moakley Institute.
