Housing Briefs - February 16, 2010

State Updates

House Begins Budget Process after Governor Patrick Releases FY2011 Proposal

The House and Senate Committees on Ways and Means have begun to craft the legislature’s FY2011 budget. In the coming weeks, Ways and Means members will tour the state to hear testimony on the Commonwealth’s budget. On March 5th, members of the public are invited to provide testimony to Ways and Means Committee members at the State House’s Gardner Auditorium.

Last month, Governor Patrick released his budget proposal, which level-funds both state rental assistance programs ( MRVP & AHVP), Public Housing Operating Subsidies, Housing Consumer Education Centers (HCECs), the Tenancy Preservation Program (TPP), and the Soft Second Loan Program at FY2010 levels. The RAFT program would be cut to just $60,000 and the Mass. Access Housing Registry could be eliminated under the Governor’s plan to consolidate Mass. Rehabilitation Commission line items. Click here for affordable housing funding analysis.

In order to close a $2.75 billion deficit, the Governor proposed $797 million in cuts to state programs, a cap on the film tax credit of $50 million/year, transferring $175 million from the stabilization fund, securing $600 million from federal jobs legislation pending in Congress, and raising $61 million from eliminating the sales tax exemption on candy and soda purchases.

CHAPA and its allies are advocating for the following funding levels to be included in the FY2011 budget: $35.4 million for MRVP, $66.5 million for public housing, $3.45 million for AHVP, $2.5 million for RAFT, $1.624 million for the HCECs, $500,000 for TPP, $80,000 for the Mass. Access Housing Registry and $500,000 in appropriations for the SoftSecond Loan Program. Click here for more information on each program.

Please contact your state legislators and indicate your support for funding affordable housing programs at these levels.

Housing Committee Advances Legislation Clarifying Mixed-Income Condominium Association Percentage Interest

As condominiums have become widespread, many CHAPA members have expressed interest in how condominium association percentage interest in a mixed-income development may be set under MGL Ch. 183A.

An Act Relative to the Determination of Condominium Common Area Interest, H. 1235 clarifies the options available to set percentage interest so that percentage interest can be established in a way that reduces tension among homeowners and increases marketability of condos in a mixed-income development. We’re pleased to report that the bill was reported favorably. We would like to thank Chairman Honan and Chairwoman Tucker for advancing this CHAPA priority and Rep. Peisch and Sen. Cynthia Stone Creem for sponsoring the bill. Click here to learn more about this issue.

H. 1239 filed by Representative Angelo Scaccia was also reported out favorably. Representative Scaccia’s bill establishes an advisory commission on condominiums.

Housing Committee Advances Host of Bills

Bills impacting various areas of housing were reported favorably out of the Housing Committee last week. H. 1181 filed by Rep. Garrett Bradley and H. 1243 filed by Rep. Theodore Speliotis were favorably reported. Both bills aim to create smoke-free elderly public housing. S. 627 filed by Sen. Creem and Rep. Ellen Story creates new protections for victims of domestic violence. Finally, H. 3576 filed by Chairman Honan excludes foster care payments from affordable housing income eligibility.

Legislation to improve neighborhood stabilization by providing foreclosure relief (H. 3571/S. 1379) and to promote public housing innovations (H. 1237/S. 624) are two of CHAPA’s highest priorities that have still not advanced from the Committee.

Economic Stimulus Bills Emerge in State House

Legislation to assist small business and promote job growth has emerged on Beacon Hill. Bills filed by Governor Patrick and Senate President Murray/Senator Karen Spilka were filed last week. Both bills recognize the role Community Development Corporations play in creating jobs. The legislation also provides a three-year extension for many permits stalled in the development process. The Senate Bill is slated for a hearing on February 23rd at 10:30 am in State House Room 222.

Governor Patrick’s Executive Order Establishes Office of Access and Opportunity

On January 29th, Governor Patrick signed an Executive Order Number 519 to officially create the Office of Access and Opportunity to promote non-discrimination and equal opportunity in all aspects of state government, including employment, procurement, and policy relative to state programs, services, and activities. A veteran of the community development field, Ron Marlow is the current Assistant Secretary for Access and Opportunity.

MassHousing Continues Progress on Homeownership

The January 15, 2010 edition of Housing Briefs included a piece on private activity bonds that stated that the 1,107 homebuyers MassHousing assisted with mortgage assistance from private activity bonds last year was significantly lower than the year prior. The piece neglected to mention that private activity bonds represent a small part of MassHousing’s homebuyer assistance program. Overall, MassHousing made 3,307 first mortgage loans in calendar year 2009 and continues to increase its assistance to low and moderate income homebuyers.

Governor's Office Announces "Embrace Your Future" Initiative

On January 26, Governor Patrick's Office launched the Massachusetts "Embrace Your Future" initiative, overseen by the Executive Office of Elder Affairs. The initiative is part of a joint federal-state program operated by the United States Department of Health and Human Services (HHS) entitled "Own Your Future." It is designed to give information to middle-aged and older adults to help them plan for their future long-term supports.

In addition to the Governor sending 400,000 Commonwealth households whose head of household was between 45 and 59 years old, a 44-page Massachusetts specific informational guide will be mailed from HHS to all households responding to the Governor’s letter or to anyone who requests it. CHAPA's Mass Access Housing Registry was one of the primary programs highlighted as being of great assistance to middle-aged and odler adults in planning for their futures.



Massachusetts Lobbying Law Resources Available

The state’s new lobbying law took effect on January 1st and many professionals from a variety of fields continue to struggle with understanding their legal obligations. Common Cause, the Mass. Nonprofit Network and the Secretary of the Commonwealth have been helpful in learning more about the new law.

Massachusetts Single Home Sales Rise, 2009 Median Price Falls to $285,000

On January 27, Banker and Tradesman reported further declines in home prices in 2009, compared to 2008, with some improvement in sales volume. Overall, the number of single family homes sold rose by 3%, while sales of condominiums fell by 7%.

The 2009 median sale price for single family homes fell to $285,000, down 6.6% from $305,000 in 2008 and the lowest median since 2002 (but well above the median of $200,000 reported in 2000). The median sale price for condominiums fell to $252,000, down 7% from $275,000 in 2008. Sales of bank-owned foreclosed properties made up 4.5% of the single family sales in 2009 and 5.5% of the condominium sales, compared to 5.2% and 4.5% respectively in 2008.

Massachusetts Building Permit Activity at Historic Low in 2009

According to U.S. Census Bureau preliminary estimates, building permit activity in 2009 in Massachusetts was lower than any year since 1980. The Bureau’s preliminary estimate (likely to be adjusted upward when finalized) is that 7,097 units were permitted, 28% below the 2008 final estimate (9,883 units) and 71% below the recent peak in 2005 (24,549 units). However, Massachusetts’ 2009 drop is less severe than the national average. Nationally, units permitted were down 37% compared to 2008, with a 45% decline in the Northeast.

Federal Updates

HUD Office of Sustainable Housing and Communities Launched

On February 4, HUD announced that its new Office of Sustainable Housing and Communities is now up and running. Funded for the first time in the FY2010 budget, the Office will work with other federal agencies, including Transportation and the EPA, to foster energy-efficient housing and regional planning that encourages locating homes near jobs and transportation and encourages clean energy jobs.

Its $150 million budget includes $50 million for an Energy Innovation Fund (to develop new mortgage and educational products to promote energy efficiency) in the single and multifamily market. It also includes $100 million for a Sustainable Communities planning grant program to support regional initiatives that integrate housing, transportation, economic and environmental protection planning.

HUD has published a description of the proposed planning grant program (see “Advanced Notice and Request for Comments”) and will be accepting comments on the proposal through March 12 at its wiki site.

It also plans to hold regional listening sessions and webcast briefings between February 16 and March 5 (details to be posted on the OSHC website). It currently proposes two categories of grants – one for small metropolitan and rural areas (populations below 500,000) and larger areas.

Obama Administration Releases FY2011 HUD Budget Proposal

On February 1, the Obama Administration released its FY2011 Budget proposal. It proposes $41.6 billion in budget authority, down 5% from the FY2010 appropriation, but increased FHA and Ginnie Mae receipts will offset some of the reduction. It provides increases for several key programs and includes some new initiatives. It would fully fund project-based and tenant-based rental assistance and public housing operating subsidies and increase homeless assistance grants.

As detailed in a National Low Income Housing Coalition analysis and chart, programs receiving the largest cuts include the Public Housing Capital Fund, HOME and the Section 202 and 811 programs. OMB noted in its justifications that the public housing capital program received an extra $4 billion in stimulus funds in 2009. The proposal includes $1 billion for the National Housing Trust from a yet-to-be-identified source, but no funding for project-based rental assistance for Trust projects was included. It also zeros out HOPE VI, funding the Choice Neighborhoods Initiative instead.

New initiatives include “Transforming Rental Assistance (TRA)” - a program to begin consolidating some rental assistance programs and to replace some current public and assisted housing subsidies with project-based voucher assistance that could support mixed-finance capital improvements. HUD is expected to propose authorizing language in early March. The proposed budget also includes language to extend the 9% tax credit exchange program through 2010 and to stabilize the FHA single family program through premium and FICO score changes.

New DOE Rule Issued to Ease Use of Weatherization Funds for Affordable Housing

On January 25, the Department of Energy (DOE) issued a final rule making it easier to establish that federally assisted multifamily housing units meet federal Weatherization Assistance Program eligibility requirements. The final rule allows certain properties identified by HUD and the Department of Agriculture (USDA) to be considered automatically eligible and will not require further verification by state weatherization administering agencies. It also allows benefits other than reduced utility costs to be considered when ensuring that benefits flow primarily to tenants.

The National Housing Trust has posted a summary of the new rule on its website.

FHFA Releases Status Report on Fannie Mae and Freddie Mac

Contrary to expectations, the Administration’s February 1 release of its FY2011 budget proposal did not include recommendations for the reform of Fannie Mae, Freddie Mac and the Federal Home Loan Banks.

However, on February 2, the Federal Housing Finance Agency (FHFA), the oversight agency created to monitor the GSEs, issued a letter to Congress, on the status of the conservatorship of Fannie Mae and Freddie Mac and its view on their future direction.

FHFA reported that the GSEs’ role in providing credit for single and multifamily mortgages has risen dramatically with the contraction of private investment since 2008, reporting market shares of 78% and 64% respectively in 2009 through September, up from 54% and 33% in 2006. At the same time, equity losses have totaled $174 billion since the conservatorship began in early September 2006. FHFA reiterated its support for the GSE affordable housing mission and foreclosure mitigation efforts and noted that no portfolio shrinkage is anticipated this year.

The House Financial Services Committee has scheduled a hearing on the role of the GSEs in the mortgage market for March 2. Both Secretary Donovan and Secretary Geithner are expected to testify.

National Groups Urge CRA Regulator to Clarify Rules to Promote Lending

In December, a coalition of national housing groups and affordable housing lenders sent a letter to the directors of the Federal Financial Institutions Examination Council (FFIEC), the FDIC, the Federal Reserve and the Office of the Comptroller of the Currency urging them to remind CRA-covered institutions of their continued obligations and to continue to hold them to high standards.

It also urged them to clarify certain rules and guidance to encourage continued purchase of low income housing tax credits and new market tax credits. It generally urged them to rethink the CRA regulatory framework and consider developing a community development test to replace the investment test.

Treasury Reports 66,000+ Permanent Modifications Through HAMP

On January 15th, HUD announced the release of its December performance report on loan modifications under its Home Affordable Modification Program (HAMP). It reported that over 112,000 permanent modifications have been approved and 66,457 of those have been accepted by owners since the inception of the program. Overall, over 850,000 homeowners have received at least a trial modification.

Servicers continue to show varying levels of participation; overall, only 25% of the delinquent borrowers reported by participating servicers have received either a trial or permanent modification. Analysts continue to cite the paucity of principal reductions as a barrier to long-term solutions.

Recent Research

2008 Report on Mortgage Lending Patterns in Massachusetts Released

The Massachusetts Community and Banking Council issued its 16th annual report (“Changing Patterns XVI”) on mortgage lending to traditionally underserved borrowers and neighborhoods in Boston, Greater Boston and Massachusetts this month.

The report, by Jim Campen, examines lending activity in 2008. It found a huge decline in subprime lending activity, but continued disproportionate use by minority households. It also found that home purchases by minority households continue to be concentrated in a few communities. It also found that lenders subject to CRA were more likely to offer prime loans to minority households.

HUD Releases 2008 Picture of Subsidized Households

On February 4, HUD released its 2008 Picture of Subsidized Households, the first update since 2000. The report describes the number and characteristics of housing units and households assisted by major HUD programs and the Low Income Housing Tax Credit program. National, state and local data (down to the public housing agency or census tract level in some cases) is provided and can be queried online.

Brookings Institution Finds Suburban Poverty Rates Rising Faster

A new study by the Brookings Institution’s Metropolitan Poverty Program has found that poverty rates rose more rapidly in suburbs between 2000 and 2008 than in primary cities, though rates in the cities are still far higher. Specifically it found that poverty rates in the 95 largest metro areas rose by 10% in suburban areas (from 8.5% to 9.5%), while rising 2% (to 18.2%) in the primary cities. That same trend held true for changes in poverty between 2007 and 2008, with the rate rising from 9.1% to 9.5% in the suburbs. The report also found geographic variations, with no growth or even declines in poverty in some primary cities (no growth in the Boston MSA and a decline in Worcester).

Upcoming Event

CHAPA Breakfast Forum - “Incorporating Clean and Efficient Energy Technologies in Affordable Multifamily Housing,” Monday, March 15, 9:30 a.m., Nixon Peabody, 100 Summer Street, 25th Floor, Boston.