Housing Briefs - March 30, 2009

March 30, 2009

State Updates

CHAPA Launches Foreclosed Properties Clearinghouse Initiative

At a well-attended event in New Bedford on March 16, CHAPA announced a foreclosed properties clearinghouse to help return foreclosed properties to productive uses.

The goals of the program are to:

• Stabilize neighborhoods by reducing vacant and abandoned units and by providing important property tax revenues to municipalities.
• Ensure that the sale of foreclosed properties is done in a sustainable manner that does not set the stage for a future cycle of foreclosures and property decline.
• Help responsible renters who are living in foreclosed properties avoid eviction and displacement.
• Provide affordable housing opportunities—both homeownership and rental—to low and moderate income residents.

CHAPA designed this program in coordination with the Patrick-Murray Administration; a broad-based local advisory committee; the Massachusetts Association of CDCs; and the National Community Stabilization Trust, a national non-profit organization specifically created to help local communities acquire foreclosed properties. The program’s local partners include approximately 50 housing organizations and 30 municipalities. The first phase of the program includes properties owned by Fannie Mae, Freddie Mac, Citi, Wells Fargo, GMAC, JP Morgan Chase (including Washington Mutual), and Bank of America (including Countrywide). Additional banks may be included in a second phase of the program.

The program features a first look at REO properties prior to being placed on the open market and an ability to purchase multiple properties at the same time (bulk sales) to make a significant neighborhood impact. For more information, please contact Geeta Rao at 617-742-0820 or via email at grao@chapa.org.

CHAPA Legislative Priorities Assigned to Committees

CHAPA’s 2009-2010 legislative priorities have each been assigned bill numbers, referred to committee, and added to the CHAPA website.

The Affordable Housing Preservation Bill (H. 3573 and S.666), the Public Housing Innovations Legislation (H. 1237 and S. 624), Affordable Housing Energy Efficiency Legislation (H. 1220 and S. 1546) and Community Housing and Services bill (H. 1222) were all referred to the Joint Committee on Housing.

The House version of the CHAPA foreclosure relief bill (H. 3571) was sent to the Joint Committee on Housing, while the Senate version (S.1379) was sent to the Joint Committee on Revenue. An Act to Sustain Community Preservation (S. 90) and a related bill to continue CPA-funded rental assistance (S. 634) were referred to Community Development and Small Business. The Land Use Partnership Act was also sent to two different committees: H. 3572 to Housing and S. 765 to Municipalities and Regional Government.

Legislative committees will begin to hold hearings on legislation in the coming weeks. Click here to visit the CHAPA website for additional information on bill numbers and initial Committee assignments.

CHAPA Holds Legislative Briefing on Budget Priorities

On March 11th, CHAPA and our allies from the affordable housing and homeless advocacy community presented shared budget priorities for FY 2010 to approximately 55 legislative staff and legislators. The budget is expected to be released April 15th. For a list of CHAPA budget priorities, please click here. CHAPA members are encouraged to contact their legislators to express their support for affordable housing and their specific priorities in the FY 2010 budget.

Briefing on Housing Resources for Those at Risk of Homelessness Scheduled for April 6th

The CHAPA Homelessness Committee will host a briefing on housing resources to assist legislative offices in responding to constituents experiencing significant housing instability due to the foreclosure crisis, recession, and a continued lack of affordability. Several legislative offices have reported a spike in calls for housing resources and assistance.

The briefing will be Monday, April 6th at 10:30 am in State House Room B-1 (please note this is a room change from the original schedule), with practitioners from several housing and service agencies and organizations participating. This event was originally scheduled for January 28th but was canceled and rescheduled due to snow.

Emergency Shelter Article 87 Reorganization Passes

Legislation to transfer the individual and family emergency shelter programs from the Department of Transitional Assistance to the Department of Housing and Community Development passed the legislature and was signed by the Governor. The change will be effective July 1st.

Ethics Legislation Passes House; Significantly Expands Definition of “Lobbying”

On March 26, the House of Representatives advanced sweeping legislation that overhauls government ethics and lobbying laws. The legislation redefines the definition of executive lobbying to include discussions about strategy and research that contribute to attempts to influence Administration policy or legislation.

Although specific details of the bill were not available, it is reported that the House adopted an amendment stating that anyone that spends 25 hours per quarter (up from 10 hours per quarter) that attempts to directly influence legislators or Administration employees, or that participates in discussions about strategy or research that contribute to attempts to influence legislators or Administration employees would have to register and report as an “executive lobbyist”. The registration fee would be increased to $1,000 and the Secretary of State would be given authority to promulgate regulations to implement the new law. Amendments added on the House floor were not yet available so it unclear if the Ethics Committee proposal was altered.

Several non-profit membership organizations that represent low income residents, civic groups, persons with disabilities, and environmentalists have raised concerns about the potential to stifle civic engagement and add significant costs to advocacy. The legislation is now before the Senate.

Massachusetts Home Prices Fall as Foreclosed Homes Rise to 11% of Sales

The Warren Group reports that the median price for a single family home sold in Massachusetts in February was $245,000, down 18% from February 2008 ($300,000). They attributed $21,000 of the decline to low sale prices on bank-owned homes (averaging just under $100,000 in January and February). Bank-owned homes (206) accounted for 11.3% of all single family home sales in February, up from 1.8% in February 2007. Year-to-date sales volume for single family homes is down 12.5% from a year earlier and condo sales are down 29.5%. The median price for a condominium sold in February fell to $220,000, down 14% from February 2008.

Initiative to Promote Smoke-Free Multifamily Housing Launched

The Public Health Advocacy Institute at Northeastern University School of Law has launched a program to encourage owners and residents of multi-unit residential properties in Massachusetts to adopt building-wide, no-smoking policies.

The Department of Public Health funded the initiative after experiencing a dramatic increase in the number of complaints about involuntary exposure in the home. The Public Health Advocacy Institute provides education as well as technical and legal guidance directly to owners and residents across the entire spectrum of housing types. Comprehensive guides are available for Owners, Residents and Property Management companies or by calling (617) 373-2026.

Public health advocates indicate that a no smoking rule is the best and most practical way to protect residents from exposure to secondhand smoke. Those who smoke are welcome in smoke free properties, but are asked to smoke outside.

DOR Releases 2009 Community Preservation Act Projections

The Department of Revenue released its 2009 CPA Projections. CPA municipalities will receive a projected 29% first round match to what is raised locally this year, down from approximately 68% in 2008 and 100% in 2007. Communities that adopted CPA at the full 3% property tax surcharge are eligible for additional 2nd and 3rd round funds in excess of 29%.

Mass-ALFA Fall Conference and Trade Show 2009: Request for Presentations (RFP)

The Massachusetts Assisted Living Facilities Association (Mass-ALFA) Annual Conference and Trade Show will take place on Thursday, November 5, 2009 at the DCU Center in Worcester, MA.

Mass-ALFA is seeking presenters with innovative ideas and programs. A Request for Presentations (RFP) and more information about the types of workshops Mass-ALFA is looking for is available on the Mass-ALFA website at http://www.massalfa.org/downloads/2009_Conference_Request_for_Presentations_FINAL3-3-09.doc





Federal Updates

Treasury Outlines Plan for Toxic Assets (“Legacy Assets”), Seeks Public Comment

On March 23, Treasury Secretary Timothy Geithner outlined plans for a Public-Private Investment Program (PPIP) to encourage the sale of real estate loans and mortgage backed securities (residential and commercial) that are creating uncertainty about the capital condition of financial institutions. The program will use $75-$100 billion in TARP funds and Federal Reserve debt financing to carry out two distinct programs, details of which are still evolving.

The “Legacy Loan” program will oversee the sale of loans held by banks, while the “Legacy Assets” program will encourage the purchase of mortgage-backed securities. The TARP investment is projected to be divided about equally between the two programs.

The goal of PPIP is to remove uncertainty about the financial condition of banks, by clarifying the value of their current assets and restore the ability of those in sound condition to raise capital and lend funds. In addition, the program seeks to restore liquidity in the market for these troubled assets, as purchases establish a market value and make it easier for other investors to begin purchasing them with confidence in a price.

Under the Legacy Loan program, banks will be responsible for identifying assets for sale and the FDIC will review the assets to determine the level of loan guarantees it is willing to provide. The FDIC will then auction off pools of loans to private investors. The FDIC would guarantee up to 6/7 of the winning bid amount, and the Treasury Department would provide half of the remaining 1/7 as equity. Investors would provide the remaining 1/14 as equity. The FDIC is requesting public comments on 17 questions regarding program design by April 10.

The Treasury Department will oversee the Legacy Assets program. It expects to select about five fund managers who apply to participate. Approved managers will raise private capital, with Treasury and the Federal Reserve providing $1 in capital and $1-2 in non-recourse loans for every $1 in private capital raised. The fund manager will use the proceeds to purchase assets. Other private investors will also be permitted to purchase assets without federal participation.

New Federal Mortgage Refinancing Programs Begin

On March 4, the Obama administration released guidelines and began accepting refinancing applications under two new programs for homeowners with unaffordable mortgages. It also set up a website called “Making Home Affordable” with extensive program information, including FAQs and tools homeowners can use to determine their potential eligibility.

• Refinancing at a lower rate (for owners current on their mortgage but with little equity): The Home Affordable Refinance program allows owner-occupants of 1-4 unit properties who have conforming mortgages held or guaranteed by Fannie Mae and Freddie Mac to refinance to a fixed rate, usually lower cost mortgage. The new first mortgage can’t exceed 105% of current appraised value and owners must have sufficient income to repay the refinanced loan.
• Loan Modifications by Lenders The Home Affordable Loan Modification program, funded with $75 billion in TARP funds, is for owner-occupants of 1-4 units who are in default or at imminent risk of default. The owner’s mortgage-holder must agree to participate and modify the loan to bring mortgage payments down to 31% of income for at least five years and to permanently cap the mortgage loan rate. To encourage participation, the government will pay part of the cost of the reduction and provide incentive payments to the lender, servicer and homeowner (a small payment to principal each month the modified loan stays current), with extra incentives for modifications made before a loan goes into default.

House Passes Legislation to Allow Bankruptcy Judges to Modify Mortgages

On March 5, the House voted 234-191 to approve a bill that, among other things, will allow bankruptcy court judges to modify first mortgages on a primary residence in order to avert foreclosure when families declare Chapter 13 bankruptcy.

The Helping Families Save Their Homes Act of 2009 (H.R. 1106) limits this assistance to households who have already asked their lender to modify the mortgage and requires sharing of any increase in the value of the home if it is sold within four years of the modification. Proponents hope this bill, if enacted into law, will encourage more lenders to modify loans upfront. Similar legislation (S.61) was introduced in the Senate but has yet to move forward.

HUD Assistant Secretaries Nominated

The Obama administration announced nominations for several key HUD posts this month:

• Carol Galante was appointed Deputy Assistant Secretary for Multifamily Housing Programs. Galante is director of BRIDGE Housing Corporation, California’s largest nonprofit housing developer.
• Dr. Raphael Bostic is the nominee for Assistant Secretary for Policy Development and Research (PDR). He teaches at USC’s School of Policy and is an expert on housing credit markets.
• Helen Kanovsky is the nominee for General Counsel. She is currently the Chief Operating Officer of the AFL-CIO Investment Trust (and a former chief of staff to Senator John Kerry).
• David Stevens is the nominee for Assistant Secretary for Housing and FHA Commissioner. Now head of a large residential brokerage firm, he previously worked at Freddie Mac and Wells Fargo.
• Peter Kovar is the nominee for Assistant Secretary for Congressional and Intergovernmental Affairs. He has served as Congressman Barney Frank’s chief of staff since 1991.
• John Trasviña is the nominee for Assistant Secretary for Fair Housing and Equal Opportunity. He has been the President & General Counsel of the Mexican American Legal Defense & Educational Fund (MALDEF) since 2006 and previously served in the Clinton administration.

The nominations await final action by the Senate Banking Committee. Several other key posts remain vacant, including the assistant secretary for public and Indian housing and for community planning and development.

HUD Announces Guidelines for Use of Stimulus Bill Funds for Homelessness Prevention

On March 19, HUD issued guidelines for state and local use of the $1.5 billion in funding approved nationwide for a Homelessness Prevention and Rapid Rehousing Program (HPRP).

Massachusetts will receive $44.6 million (the State will receive $18.4 million and 20 cities and towns will receive a total of $26.1 million). The 21 grantees must submit spending plans to HUD, in the form of amendments to their 2008 Consolidated Plan by May 18 and will be required to award all funds by September 30, 2009. The guidelines outline eligible activities, including tenant-based rental assistance for up to 18 months.

HUD and Department of Transportation Announce Sustainable Communities Initiative

On March 18, the secretaries of HUD and the Department of Transportation (DOT), announced the creation of a high level interagency task force to coordinate federal housing and transportation investments and carry out a proposed HUD Sustainable Communities Initiative (SCI).

One goal of SCI is to have every major metropolitan area in the nation carry out an integrated housing, transportation and land use planning and investment program over the next four years. SCI would provide planning grants for this. It will also develop new affordability measures to reflect both housing and transportation costs and an online calculator for consumers.

HUD and Department of Energy Announce Weatherization Program Partnership

On February 27, the secretaries of HUD and the Department of Energy (DOE) announced the creation of an interagency task force to coordinate the use of $16 billion in new stimulus bill funds to finance energy retrofitting in existing housing (including HUD-assisted public and private housing). The agencies will:

• sign an interagency agreement to coordinate how funds will be spent (since the $16 billion is allocated to a number of individual HUD and DOE programs);
• develop common guidelines for retrofits;
• develop a common baseline to measure pre- and post-retrofit energy use; and
• collaborate on ways to develop new financing products to encourage national scale investment in energy efficiency.

HUD Issues 2009 Income Limits; Announces Policy Change for FY2010

HUD issued its 2009 median family income (MFI) estimates and income limits for Section 8 and other programs on March 19, effective immediately. In most of Massachusetts’ 19 fair market rent (FMR) regions, the MFI estimates and extremely low income (30% of AMI) and very low income (50% of AMI) limits for Massachusetts rose by 3-6% over 2008. In the Boston-Cambridge-Quincy area, these income limits rose by about 5%, but the 80% limit did not change.

HUD also issued separate income limits for the low income housing tax credit and tax exempt bond program (Multifamily Tax Subsidy Projects or MTSPs) for the first time. The MTSP limits reflect new statutory “hold-harmless” language enacted in July that ensure project income limits will not fall, even if area median family incomes do. It also includes special provisions for projects placed in service in 2007 and 2008 in areas that had declining incomes to ensure future income limit adjustments will be based on rises in area income from FY2008.

As a result of the new MTSP policy, HUD also announced that it intends to end the practice of holding Section 8 income limits harmless starting in 2010. It stated that the original policy was enacted to protect MTSP rents (as they were tied to Section 8 limits) and is no longer necessary.

Fannie Mae Imposes New Restrictions on Condominium Mortgages

On March 18, the Wall Street Journal reported that Fannie Mae has added restrictions making it more difficult for developers to sell units in newly created condominiums.

Starting March 1, Fannie stopped guaranteeing mortgages in condo buildings if fewer than 70% of the units have been sold, up from 51%. It also won't guarantee loans for sales in buildings if 15% of current owners are delinquent on condo fees, if more than 10% of units are owned by one entity, or if more than 20% of the total space is used for non-residential purposes.

FHFA Seeks Comments on Future of Fannie Mae and Freddie Mac

In a notice published in the Federal Register on January 30, the Federal Housing Finance Agency (FHFA) asked for public comments on a host of questions around the future of Fannie Mae and Freddie Mac. Comments are due by June 1. Many of the questions relate to the appropriate size and composition of their portfolios and the extent to which affordable housing goals should continue to apply.

Center for American Progress Issues Discussion Paper on Mortgage Finance Reform

On March 16, the Center for American Progress issued a draft discussion paper on “Principles to Guide Development and Regulation of a Renewed Mortgage Finance System”. It recommends that regulatory and GSE reform efforts be guided by two related goals: (1) ensuring adequate access to credit (for single and multifamily borrowers) and (2) ensuring consistent and adequate liquidity. Toward these ends, it urges policymakers to focus on reforms that will maintain the strength of primary lenders (banks) and restore secondary markets. Both goals will require better regulation, while permitting innovation. Click here for links to a panel discussion on the paper.

The paper notes that homeownership is not an appropriate goal for all households and that the current finance system does not meet the credit needs of the small rental properties that provide much of the nation’s lower cost housing. It notes the need for policies that can be adjusted as economic conditions fluctuate (e.g. possibly increasing capital requirements when credit is easy and reducing them when times are hard). It sees improved risk management (and appropriate pricing of risk) and oversight as key needs that must be addressed through new regulations. It also recommends stronger consumer protections and continued attention to fair access to credit.

Recent Research

DHCD and UMass Release “The State of the Massachusetts Housing Market”

The University of Massachusetts Donahue Institute released a detailed study of the current state of the housing market in Massachusetts and projected housing demand through 2012, statewide and by 7 regions. The study was commissioned by DHCD last year and provides a wealth of information about regional housing markets and needs.

Overall, the study found that the growth of housing demand has slowed in recent years and that the current foreclosure crisis and capital market tightening make some projections difficult. At the same time, however, it found that the number of households with housing affordability problems has continued to rise, with almost half of all renters and one-third of owners paying more than 30% of income in 2005/2006. It projects that shortages of affordable housing will grow through 2012, even in areas with net housing surpluses as available housing is sometimes poorly matched to demand.

New Study Issues State Report Cards on Child Homelessness

The National Center on Family Homelessness issued a report this month on the incidence of child homelessness and number of children at risk by state and ranked each state on its efforts to address this problem through programs to promote food security, child health and educational proficiency and policies and planning efforts related to reducing homelessness. The report includes a detailed profile of every state. Connecticut ranked first (best) in the nation. Massachusetts ranked 8th best despite an above average incidence of child homelessness in 2006 (before the recent run-up).

Upcoming Events

Monday, April 27, 9:30-11:30 a.m., MassHousing, One Beacon Street, Boston – CHAPA Breakfast Forum on Land Use and Zoning Reform

Thursday, April 30, 8:30-11:00 a.m. - Welcoming Communities Forum, at the Boston Private Bank & Trust Company, Ten Post Office Square - Great Room, 2nd Floor, Boston. Sponsored by the Commonwealth Housing Task Force. The forum offers municipal leaders a chance to discuss strategies that will help to create a welcoming environment for people of color, people with disabilities, low-income people and other groups that traditionally experience greater challenges moving to many of the cities and towns in Massachusetts. Space is limited so interested parties are asked to RSVP to cra@bostonprivatebank.com as soon as possible.

Friday, May 8, 8:00 a.m. - 2:15p.m., Chapter 40B Comprehensive Permit training, at the Lowell Doubletree. Sponsored by CHAPA, DHCD, MHP, and MassHousing.

Thursday, May 14, 9:00 a.m.-Noon, College of the Holy Cross, Worcester. Creating Affordable Housing Through Reuse and Revitalization. Co-sponsored by MHP, CHAPA, and the Central Massachusetts Regional Planning Commission.

Tuesday and Wednesday, June 9-10 - 2009 Massachusetts Housing Institute, at the Marriot Spring Hill Suites and Conference Center at Devens. Co-sponsored by the Massachusetts Housing Partnership, this two-day intensive workshop is designed for local officials, planners, housing committees, community preservation committees, housing trusts, and others who are working to provide housing options for their community. The cost to attend is $125 per participant (participants may also sign up for one day for $75). Need based scholarships will be made available and the sponsors are committed to including all community members who wish to participate. Participants may also sign up for one day for the cost of $75.

Wednesday, June 24, Holy Cross College, Worcester – CHAPA Foreclosure Conference (save the date; a brochure will be sent six weeks before the conference)