State Roundup
Housing Bond Bill Passes in the Senate
A $1.355 billion bond bill passed in the Senate today. The bill is largely similar to what passed in the House two weeks ago, with the following differences: the Facilities Consolidation Fund and the Community Based Housing program funding is increased to $75 million each; guidance is given to the Administration to develop additional integrated housing opportunities for people with disabilities; and prevailing wage requirements apply to bond bill funded projects of at least $25 million (this was passed as a floor amendment).
Both the House and Senate bills include:
- $500 million for the modernization and repair of state assisted public housing.
- $220 million for the affordable housing trust fund. Increasing the current authorized amount from $100 million will help meet existing demand for these funds in a predictable manner.
- $125 million for the housing stabilization and investment trust fund. This fund will provide grants or loans to non-profits, for-profits and municipalities for homeownership, purchase, preservation or rehabilitation of distressed properties. Not less than $10 million of this authorization will focus funds on producing homeownership opportunities in "weak markets"- areas with low rates of homeownership, vacant buildings or high concentrations of assisted housing. Senator Tucker is the architect of this innovative program that CHAPA strongly supports.
- $50 million for a public housing demonstration program; $75 million for the Housing Innovations Fund; $30 million for transit-oriented development; $55 million for the Community Development Action Grants; and $50 million for the Home Modification Loan Program.
- $100 million for the Capital Improvement Preservation Fund to preserve properties that are at-risk of no longer being able to affordable to low income residents due to expiring use restrictions or expiring contracts.
- The Massachusetts Low Income Housing Tax Credit is expanded to $10 million per year and the sunset is removed.
CHAPA thanks Housing Committee Co-Chair Senator Susan Tucker, bill sponsor Senator Brian Joyce, Senator Cynthia Stone Creem, Senator Mark Montigny, and the Senate leadership, especially Chairman Panagiotakos and Senate President Murray, for their leadership and support of this landmark affordable housing legislation.
The two branches now need to reconcile any differences and then the bill will move to the Governor's desk for his signature.
DHCD Publishes New 40B Guidelines
DHCD published new 40B guidelines this month to accompany the recently adopted 40B regulation. The new guidelines restate many existing policies with some revisions and expansions and became effective on February 22, 2008. They are divided into six parts: Definitions, the Subsidized Housing Inventory and Housing Production Plans, Affirmative Marketing Plans, Responsibilities of the Subsidizing Agency (and cost examination requirements), Housing in Which Funding is Provided through Other than a State Entity, and Local Initiative Program (LIP) guidelines.
Justice Dept. Investigates Possible Fair Housing Violation in Framingham Treatment of Homeless Shelter
On March 10th, the US Department of Justice's Civil Rights Divisions launched an investigation into whether the Town of Framingham violated the Fair Housing Act in its attempt to prohibit the Southern Middlesex Opportunity Council (SMOC) from building housing for homeless veterans and homeless substance abusers.
The Fair Housing Act prohibits discrimination on the basis of disability, including actions that making housing unavailable to people with disabilities. SMOC is currently suing the town in US District Court, asserting that it conspired to delay and disparage SMOC's plans to expand the Sage House, a homeless shelter in Framingham. In other states, lawsuits alleging and ultimately proving local exclusionary zoning of families and people with disabilities have transformed the zoning landscape.
Hearing Held on Governor's Surplus Land Bill
CHAPA joined Lt. Governor Tim Murray, the Metropolitan Area Planning Council and others to testify in support of the Governor's Surplus State Land Disposition legislation at a hearing before the Committee on Bonding, Capital Expenditures and State Assets. The Governor filed the bill earlier this year, which would expedite the disposition of unused state properties to return them to productive uses. The funding generated from any sales would support the Smart Growth Housing Trust Fund, the host municipality and a Capital Projects Fund. CHAPA awaits committee action on the Governor's bill, and similar bills filed by Senator Karen Spilka and Rep. Jeffrey Sanchez.
Department of Revenue Releases CPA Match Estimates for 2008
According to a memorandum released by the Department of Revenue (DOR), the estimated state match for the 127 municipalities that have adopted the Community Preservation Act will drop to 65% for those participating in the program below a 3% local surcharge. The municipalities at the full 3% will receive between 65% and 100% of the funds raised locally for CPA purposes, depending on the size and income of the locality.
To date, CPA has been responsible for over 1,300 units of affordable housing, and has also contributed to capacity building in towns with less experience with affordable housing. CHAPA is working with Senator Cynthia Stone Creem on legislation, S. 137, which would expand access to CPA by cities not yet able to participate, and would ensure a match of 75% in future years. For more information on how to use CPA to advance affordable housing, click here.
Patrick Administration to Raise Group Adult Foster Care Rates
Secretary of Elder Affairs Michael Festa and the Patrick Administration have decided to provide a modest increase to the Group Adult Foster Care (GAFC) rates paid to providers, effective late spring, which will help low income residents of Assisted Living and supportive elder housing.
In a tight budget environment, this increase is much appreciated and demonstrates the Administration's commitment to the program. In addition, the Executive Office of Elders Affairs is in the process of reviewing GAFC regulations to determine a rational manner to increase rates as costs increase and to look for ways to more proficiently administer the program. CHAPA will take part in these conversations as an active member of the Coalition for Senior Housing to advocate for GAFC rates that adequately reflect costs.
DHCD to Hold Hearing on Ten-Year Section 8 "Moving to Work" Plan
DHCD has scheduled a public hearing for April 11 on its proposed "amended and restated" Section 8 Moving to Work (MTW) Agreement. MTW is a HUD pilot program authorized in 1996 to allow up to 30 public housing agencies (PHAs) nationwide to operate their Section 8 and federal public housing programs more flexibly to achieve housing goals and promote work. DHCD received approval in 1999 to use Section 8 funds to assist up to 183 families who were leaving public assistance or homeless using a model that provided time-limited but flexible housing assistance with support services.
The draft agreement will extend DHCD's current 183-unit program through June 30, 2018. The hearing will be held in Boston at DHCD. As detailed in the public hearing notice, DHCD will also accept written comments through Thursday April 17. Written comments can be submitted by mail or fax (627-573-1345). Persons planning to attend are asked to call DHCD in advance at 617-573-1206 or 617-573-1209.
Three Bills to Slow Foreclosures to be Filed This Week
Three emergency bills to slow foreclosures are expected to be filed in the House and Senate this week. Bill numbers are not available yet.
- An Act Requiring Just Cause for Eviction and Foreclosed Properties would prohibit mortgagees who gain title to a property through a foreclosure from evicting tenants and occupants except for just cause (e.g. non-payment, lease violations, refusal to extend or renew after expiration) and would apply to all properties that became lender-owned through foreclosure in the past three years. The bill is sponsored by Senator Dianne Wilkerson and Representative Liz Malia.
- An Act Relative to a Temporary Moratorium on Foreclosures would establish a 180-day moratorium on foreclosures of 1-4 unit properties in cases of mortgages from subprime lenders. It would apply to loans with any of the following features: adjustable rate with a re-set within the first three years; a debt to income ratio exceeding 50% at the fully indexed ratio; was based on stated income with no regard to the borrowers ability to repay; is interest only; has loan to value ratio of 100%; or substantial prepayment penalties or points, fees or interest rates that violate the Predatory Home Loan Practices Act. The bill will be sponsored by Senator Wilkerson and Representative Lantigua.
- An Act to Require Judicial Foreclosure would require that all foreclosures of residential mortgages on 1-4 unit owner-occupied property be initiated by filing a foreclosure complaint in Superior or Housing Court and give the court authority to modify the mortgage or grant other relief. It would also give mortgagors a right of redemption for six months after the entry of judgment. The bill will be sponsored by Senator Wilkerson.
Federal Roundup
Senator Dodd Files Section 8 Reform Bill
On March 3, Senator Dodd of Connecticut filed Section 8 reform legislation (S.2684). The bill is similar in many ways to the Section 8 Voucher Reform Act (SEVRA) passed by the House (H.1851) last July, with provisions to simplify program administration, improve the renewal funding formula, and make portability provisions easier to administer. Both bills would also authorize 100,000 new vouchers and Senate bill would authorize the use of project based preservation vouchers in lieu of tenant-based enhanced vouchers for expiring use properties if the owner requested. The Senate bill does not reauthorize the Moving to Work (MTW) program. A comparison of the House and Senate bills in available on the website of the Center on Budget and Policy Priorities.
Rep. Frank Releases Draft Foreclosure Bill; Senator Dodd Plans Similar Bill
On March 13, 2008, Representative Barney Frank of Massachusetts and Senate Christopher Dodd each announced that they will be filing legislation shortly to address the foreclosure crisis. Both proposals call for a new FHA insurance program for refinanced mortgages, but differ in other respects.
On the House side, Representative Frank has released a draft bill and summary of the FHA Housing Stabilization and Homeownership Retention Act of 2008 (no number assigned yet), noting that the final text could change before introduction, and asking for input and comments over the next few weeks. He will hold a hearing on the bill on April 9. As currently drafted, the bill would:
- Create a Temporary FHA Program to Refinance Troubled Borrowers, authorizing the Federal Housing Administration (FHA) to insure up to $300 billion in new mortgages for at-risk borrowers if the current mortgage holder/investor agrees to accept a payment not exceeding 85% of the appraised value of the property and waive all prepayment penalties and default/delinquency fees and penalties. The FHA would underwrite the refinance mortgage at a maximum LTV of 90% of appraised value using a debt to income ratio generally not exceeding 40% (with a higher ratio permitted in some cases). The program would sunset after two years (HUD could extend it up to two more years). To help defray costs and discourage flipping, the FHA would be entitled to an "exit fee" payment from the borrower on resale or refinance equal to 3% of the FHA original mortgage loan (or if higher, a declining share of any profits if sold/refinanced during the first five years).
- Allow the FHA to provide these refinances on a bulk basis, using auctions or other mechanisms. The Treasury Department, HUD, and the Federal Reserve Board would be responsible for devising a potential structure within 60 days of bill enactment.
-
Authorize a $10 billion loan and grant program for states to enable them to set up programs to purchase foreclosed properties for resale to homebuyers or for operation as rental housing by nonprofit or government entities. Funding would be based on state foreclosure rates and median single family home costs and would be available for two years from the date of bill enactment. States would have 30 days from bill enactment to submit plans to HUD outlining how they would spend these funds. Three quarters of the funding ($7.5 billion) would be in the form of short term loans (2-5 year terms) to purchase homes for resale to households with incomes at or below 140% of area median or for rental to households with incomes at or below 100% of median. Loan funds could also be used for rehab costs.
Properties must be small (20 units maximum in the case of multifamily buildings) and vacant or in the case of multifamily properties, "predominantly vacant". The other 25% would be grants and could be used for operating, holding, acquisition, closing and administrative costs. The federal government would receive a share of any profits on a subsequent sale or refinance.
On the Senate side, Senator Dodd has not yet filed his bill but has published a bill summary. It appears that his bill would create an FHA insurance program similar to that proposed by Representative Frank. It also would set "foreclosure prevention" goals for Fannie Mae and Freddie Mac, requiring them to purchase loans at a discount and write them down to levels the borrowers can afford. Unlike the Frank bill, it does not appear to include funding for states to deal with foreclosed properties.
HUD Estimates Nation Will Lose 43,000 Affordable Units in "Expiring Use" Developments
The National Housing Trust, in its March 4 newsletter, reports that HUD budget documents indicate that the Department expects to lose 43,000 project-based Section 8 units nationwide between October 1, 2007 and October 1, 2009. NHT notes that this is more than twice the annual rate of loss (about 10,000 units a year) since 2001.
Rep. Frank Releases Draft Bill to Preserve Expiring Use Properties
Representative Barney Frank has drafted a bill to preserve older housing developments at risk of leaving the affordable inventory due to expiring use restrictions or unmet capital needs. The draft builds on a bill introduced last year and will be introduced shortly. Among other things, the 100 page bill would allow owners of properties with older types of rental assistance (Rent Supplement and RAP) to convert their contracts to project-based Section 8 in exchange to lengthening the contract term by 5-20 years. It would also provide at least $675 million to help finance the rehabilitation of older at-risk properties and to help non-profits acquire such properties. Recipients would have to agree to extend the affordability of these properties.
Fannie Mae Announces Initiative to Improve Home Loan Appraisal Practices
On March 3, Fannie Mae announced that it had entered an agreement with New York's State Attorney General to take two steps to improve the integrity of appraisal practices. The agreement was in response to concerns that inflated appraisals in recent years may have contributed to the current mortgage crisis.
Fannie Mae agreed to immediately adopt a Home Valuation Protection Code that sets out requirements regarding appraisal selection, compensation and conflicts of interest. Lenders will not be allowed to use appraisals prepared by themselves or entities in which they have an ownership stake greater than 20%. Lenders must also establish hotlines for consumers with appraisal concerns and randomly review at least 10% of their appraisals for quality control. They must also ensure that all borrowers receive a copy of any appraisal related to their property at least three days before the loan closing unless the borrower waives this right.
Fannie Mae will not purchase any mortgage loans originated on or after January 1, 2009, unless the lender warrants that associated appraisals conform to the Code. Fannie Mae will accept public comments on the Code through April 30, 2008. In addition, Fannie Mae will contribute $12 million over five years to establish an Independent Valuation Protection Institute. The Institute will monitor and study appraisal practices and set up a hotline for consumers concerned that they may have received an improper appraisal.
HUD Issues Proposed Rule to Revise RESPA Forms
On March 14, HUD published a proposed rule which would eventually revise the Real Estate Practices Settlement Act (RESPA) to make it easier for consumers to understand and compare mortgages. Public comments are due by May 13, 2008.
The proposed rule would:
- Require all loan originators to provide a "Good Faith Estimate" (GFE) that clearly states all loan costs and bottom line total settlement charges (closing costs, fees, etc.) using a standardized form.
- Revise the HUD-1/HUD-1A Settlement Statement forms to make it easier for borrowers to compare them to the GFE.
- Require that a standard script be read to all borrowers at closing.
- Limit the extent to which the charges at the actual closing could vary from the GFE.
- Allow settlement service provides to offer volume-based discounts for their services with the goal of lowering average charges.
As proposed, the final rule would go into full effect after a 12 month transition period. During that time, settlement service providers and others could choose to comply with the current rule or the revised rule. Overall, HUD estimates borrowers could save an average of $500-$700 if the rule is implemented. It is unclear when the final rule will be issued (the current rule comes out of an effort HUD began in 2002). HUD also notes that it currently lacks enforcement authority with regard to key elements of both the current and the proposed rule and will seek statutory changes to obtain that authority.
Mortgage Credit Crunch Hurting LIHTC Projects
The Housing and Developer Reporter reported on March 3rd that prices for Low Income Housing Tax Credits (LIHTC) have fallen significantly since in the past few months, from the low 90 cent range in late November to the low-to-mid 80 cent range today. It reported a variety of causes, including curtailed purchases by Fannie Mae and Freddie Mac, as well as curtailed purchases by banks due to larger credit market problems, and a general decline in investors. Because the fall is reducing the amounts of equity sponsors of tax credit projects can raise, sponsors may face funding gaps or need to redesign approved projects.
Brookings Begins Initiative to Strengthen Metropolitan Areas
As part of a new multi-year initiative to promote the economic, social and environmental health and growth of U.S. metropolitan areas, the Brookings Institution released a Blueprint for American Prosperity this month that examines the ways in which current federal policies impede this goal and presents a national policy agenda. Detailed data on each of the nation's 100 largest metropolitan areas by state is also available on the Institute's website.
Guidebook on Employer Assisted Housing Published
Homes for Working Families (HWF) published a guidebook last month on employer-assisted housing, Understanding Employer-Assisted Housing, which outlines program options and implementation steps and includes case studies that illustrate the varied approaches companies have taken to help their employees become homeowners.
