State Roundup
Legislature Sends Comprehensive Foreclosure Prevention Legislation to Governor
Last night, the Legislature passed H.4387, the Conference Committee Report for An Act Protecting and Preserving Homeownership. The comprehensive foreclosure prevention legislation will now move to the Governor's desk for his signature.
CHAPA worked with several other organizations, including the Massachusetts Association of Community Development Corporations, the Massachusetts Affordable Housing Alliance, the Massachusetts Nonprofit Housing Association and the National Consumer Law Center as part of a Foreclosure Prevention Coalition to assist the Legislature in passing the bill.
The Coalition assisted in crafting the following provisions, which will positively impact current and future homebuyers. The legislation:
- Provides the Division of Banks with $3,000,000 to regulate the mortgage lending industry and maintain a foreclosure database. The Division of Banks also will reward an additional $2,000,000 in grants to create: 1) a pilot program for best lending practices; 2) a fund first-time homebuyer counseling for sub-prime loans; and 3) funding for 10 foreclosure prevention centers. The funds will be raised from newly established mortgage lender licensing fees.
- Provides for monitoring and oversight of mortgage lenders by the Division of Banks (DOB). Lenders of 50 or more home mortgage loans will be rated on their practices in assisting low and moderate income residents, ensuring that rates and terms for applicants are consistent with similarly situated borrowers, employing safe and sound business practices, ensuring that there is not an undue concentration or systematic pattern of lending resulting in foreclosures, and working with delinquent residential customers to resolve delinquency. The inability of mortgage lenders to receive positive ratings under this monitoring system may result in denial of a license renewal by the DOB.
- Requires that mortgage loan originators, including non-profit lenders, are licensed. In order to be licensed by the DOB, the originator must pass a background check, take a residential mortgage lending course, and meet 8 hours of continuing education requirements every 3 years.
- Failure to comply with the DOB's monitoring and oversight regulation is a felony punishable by up to 5 years in prison and a $2,000 fine.
- Includes mandatory third party, in-person counseling by a non-profit organization for first-time borrowers of subprime loans at adjustable/variable rates. DOB must promulgate regulations or guidelines to effectuate this provision. The non-profit counseling agencies must be approved by HUD, a housing finance agency of the state, the Massachusetts Homeownership Collaborative, or the regulatory agency which has jurisdiction over the mortgagee.
- Establishes a 90 day right to cure a default, during which the loan may not accelerate and fees (with the exception of late fees not to exceed 3 per cent of the amount of principal and interest overdue) cannot be added to the balance. The right to cure is limited to once during any five-year period.
- Requires the Division of Banks to maintain a foreclosure database and produce an annual report to track developments and trends in mortgage foreclosures.
- Requires the lender to give notice of a default before being able to accelerate the loan and foreclose on the property. The notice must include information on the right to cure, the address and toll free number to whom payment should be made, and contact information for a representative of the current mortgage holder to work with to resolve the dispute.
- Includes modest tenant protections by providing that foreclosures do not affect the tenancy agreement of a tenant whose rental payment is subsidized by the state or federal government. In addition, a tenant that occupies a unit under "an unexpired term for years or a lease for a definite term in effect at the time of the foreclosure sale" shall be deemed a tenant-at-will.
- Excludes Community Development Corporations that make mortgage loans from the mortgage lender licensing fee.
- Increases the amount a holder of a mortgage may charge for a fee to revise a loan to one percent of the outstanding balance of the existing note and mortgage.
CHAPA thanks the Legislature, the Governor, and the members of the Coalition for a productive partnership in passing this legislation. The passage of H. 4387 is a great conclusion to 2007 formal sessions.
Governor's Housing Bond Bill Sent to Housing Committee
The Governor's Housing Bond Bill, H. 4375, was referred to the Joint Committee on Housing this week. H. 4375 provides for $1.09 billion in capital investments to preserve and produce affordable housing. While the amount is approximately $160 million less than H. 2030, filed by Representative Kevin Honan and Senator Brian Joyce, it is reportedly the largest housing bond bill proposed by a Massachusetts Governor and is a significant step forward in ensuring that the Commonwealth can meet its housing needs.
H. 4375 is similar to H. 2030 in several aspects. Both bills provide for a $500 million investment in state public housing to begin to meet the estimated $1.5 billion backlog in deferred maintenance needs. Both bills would continue to capitalize on the successes of the Affordable Housing Trust Fund, with H. 2030 providing an additional $45 million over H. 4375.
The Governor's Bond Bill consolidates two programs within the Housing Stabilization Fund (HSF), but maintains commitments to the programs with earmarks for Transit Oriented Housing Development and the Capital Improvement and Preservation Fund (CIPF). The Governor's proposal for CIPF is the greatest deviation from the Legislature, where Representative Honan and Senator Joyce propose $100 million versus the Governor's $30 million to meet the Commonwealth's expiring use challenges. Both bills include a homeownership program for "weak market" cities within the Housing Stabilization Fund, which has been a high priority for CHAPA.
For the Facilities Consolidation Fund (FCF), Community-Based Housing (CBH), Community Development Action Grants (CDAG), and Housing Innovation Fund (HIF), the Governor has proposed amounts in excess of the Honan/Joyce proposal. In addition, H. 4375 codifies four programs within Ch 121B: FCF, CBH, HIF and HSF, and makes minor but substantive deviations from the H. 2030 language to each program.
The Governor's bill does not include the $50 million Public Housing Demonstration Program advocated for by CHAPA to leverage new funds and partners and potentially reduce ongoing capital costs.
In addition, while the Patrick Administration has been supportive of the
Massachusetts Low Income Housing Tax Credit, H. 4375 does not include language extending the program consistent with H. 2030. Extending the Low Income Housing Tax Credit is one of CHAPA's top priorities as we move into 2008, and we will continue to work with the Legislature and Administration to increase the program to $10 million annually to provide tax credits to investors of multi-family rental projects that provide deep affordability requirements.
In addition to the funding comparison below, CHAPA will release a detailed
program comparison of the two pieces of legislation following the Thanksgiving holiday.
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H. 4375 (Governor's Bill) |
H. 2030 (Honan/Joyce Bill) |
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H. 4375 will authorize a $1,090,000,000 in general obligation bonds to fund the Governor's capital plan. |
H. 2030 will authorize a $1,250,000,000 five year capital plan for at least $200 million in bond spending per year in general obligation bonds. |
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Program Name: Public Housing Modernization
Line Item: 7004-7600 Funding Amount: $500 million |
Program Name: Public Housing Modernization Line Item: 7004-7011 Funding Amount: $500 million |
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Program Name: Affordable Housing Trust Fund
Line Item: 7004-7400 Funding Amount: $200 million |
Program Name: Affordable Housing Trust Fund Line Item: 7004-0021 Funding Amount: $245 million |
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Program Name: Housing Stabilization Fund
Line Item: 7004-7500 Funding Amount: $175 million The Governor's HSF program includes the following earmarks: Not less than $25,000,000 for transit oriented housing development projects. Not less than $30,000,000 for preservation projects under the Capital Improvement and Preservation Fund. |
Program Name: Housing Stabilization Fund, Capital Improvement Preservation Fund, Transit Oriented Housing Development
Line Item: 7004-0022, 7004-7015, 7004-7016 Funding Amount: $255 million $125 million for the Housing Stabilization Fund. $100 million for the Capital Improvement and Preservation Fund. $30 million for the Commercial Area Transit Node Program and transit oriented housing development. |
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Program Name: Home Modification Loan Program
Line Item: 7004-7100 Funding Amount: $30 million |
Program Name: Home Modification Loan Program
Line Item: 4000-7997 Funding Amount: $50 million |
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Program Name: Facilities Consolidation Fund
Line Item: 7004-7200 Funding Amount: $40 million |
Program Name: Facilities Consolidation Fund
Line Item: 4000-8200 Funding Amount: $25 million |
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Program Name: Olmstead/Community-Based Housing
Line Item: 7004-7300 Funding Amount: $30 million |
Program Name: Olmstead/Community-Based Housing
Line Item: 4000-8201 Funding Amount: $25 million |
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Program Name: Community Development Action Grant
Line Item: 7004-7700 Funding Amount: $55 million |
Program Name: Community Development Action Grant
Line Item: 7004-7012 Funding Amount: $50 million |
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Program Name: Housing Innovations Fund
Line Item: 7004-7800 Funding Amount: $60 million
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Program Name: Housing Innovations Fund
Line Item: 7004-7013 Funding Amount: $50 million |
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Not included. |
Program Name: Public Housing Demonstration Program
Line Item: 7004-xxxx Funding Amount: $50 million |
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Not included. |
Program Name: Massachusetts Low Income Housing Tax Credit Funding Amount: $10 million annually
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State Supreme Judicial Court Upholds Comprehensive Permit for Ipswich Mixed Use Project
On November 20, the State Supreme Judicial Court issued a decision in Jepsen vs. the Zoning Board of Appeals of Ipswich, upholding the Ipswich ZBA grant of a comprehensive permit for the construction of affordable rental housing, along with an ancillary building for a child care program and retail use. The appellant had argued that Chapter 40B can not be used for the non-residential portion of a development. The SJC disagreed.
Federal Roundup
House Passes Mortgage Reform/Anti-Predatory Lending Bill
On November 15, the full House approved The Mortgage Reform and Anti-Predatory Lending Act of 2007 (H.R.3915). As described in earlier Briefs, the bill establishes minimum lending standards, expands disclosure requirements and consumer protections in connection with subprime loans, and sets limits on securitizer liability. It also protects renters living in foreclosed properties, requiring that tenants receive a notice to vacate at least 90 days in advance and allowing tenants with a lease to remain for remaining term of their lease (up to 6 months). Tenants without a lease can stay for 90 days.
The version of the bill passed by the full House includes several amendments to the version passed by the House Financial Services Committee, including one that exempts Federal Housing Administration (FHA) loans from the bill.
House Passes HUD Budget Bill
On November 14, the full House voted to approve the FY2008 budget bill for HUD (the Transportation, Housing and Urban Development, and Related Agencies conference report). The White House has again threatened to veto the bill because it provides more funding than the President requested, didn't eliminate certain programs and includes too many earmarks (though HUD earmarks are down). The Senate is expected to vote on the conference report in early December. As detailed in the November 14 Housing Briefs, the conference bill provides small increases to several HUD programs and funds new incremental vouchers for homeless vets, the non-elderly disabled and the family unification program, but provides far less funding than is needed to fully fund Section 8 project-based contract renewals.
Upcoming Event
CHAPA Breakfast Forum on The Outlook for the Massachusetts Housing Market and Economy in 2008 CHAPA is sponsoring a breakfast forum on The Outlook for the Massachusetts Housing Market and Economy in 2008 on Friday, December 14 (9:30-11:30 a.m.) in downtown Boston (75 State Street). Speakers will address expectations for job growth, likely trends in home prices and foreclosures, demographic shifts, the impact of energy prices and other key issues. It will feature a panel discussion with Alan Clayton-Matthews, director of the New England Economic Partnership, and Timothy Warren, Jr., CEO of The Warren Group, moderated by Michael Goodman of the University of Massachusetts Donahue
Institute.
Registration can be done online or by contacting CHAPA by phone (617-742-0820) or fax (617-742-3953).
