Housing Briefs - September 9, 2011

State Updates

Emergency Homeowners’ Loan Program Moving Forward

On June 20, 2011, HUD launched the Emergency Homeowners Loan’ Program (EHLP) in Massachusetts, which provides emergency mortgage relief to homeowners who are unemployed or underemployed (a drop in income of at least 15%) and at risk of foreclosure.  EHLP offers a forgivable loan for up to $50,000 to assist eligible homeowners with: (1) payments of arrearages, including delinquent taxes and insurance, and (2) up to 24 months of monthly payments on their mortgage principal, interest, mortgage insurance premiums, taxes, and hazard insurance.  $1 billion in funding is available for EHLP with a set aside of $61,036,001 for Massachusetts. It is estimated that 1,260 homeowners will be assisted by this program in Massachusetts.

The original date for submitting a pre-application was on July 22, 2011, but the deadline has been extended until September 15, 2011.  In order to apply, a homeowner must fill out a pre-application and submit the pre-application to an approved housing counseling agency.  Select agencies in Massachusetts that are currently taking applications include:  Cambridge Credit Counseling Corp, Lawrence CommunityWorks, Neighborhood of Affordable Housing, Springboard Non Profit Consumer Credit Management, and Twin Cities Community Development Corporation.

CHAPA has been convening an EHLP Working Group that consists of representatives from NeighborWorks and housing counseling agencies in Massachusetts that administer EHLP awards, as well as legal and housing advocates.  The working group convenes a weekly call to share best practices and troubleshoot challenges in administering the program.  If you are interested in the joining the Working Group or would like more information on EHLP, contact Geeta Rao (grao@chapa.org). 

HomeBase Program Underway; Hearings Scheduled on Regulations

On August 1^st, the new HomeBase program began to provide housing assistance to homeless families.  Initial reports are very positive, with some concern about the need for additional stabilization case workers to assist homeless families. 

DHCD is implementing the program under emergency regulations and has shown a helpful level of flexibility in the program’s first month, including waiving aspects of the regulations that could create a barrier to families securing housing.  The Department is currently soliciting testimony on the HomeBase regulations. 

There are the two opportunities to testify: Monday, September 12, 2011 at 10:00 a.m. at DHCD, 100 Cambridge Street, 2^nd  Floor, Boston and Tuesday, September 27, 2011 at 3:00 p.m.. at the Springfield City Library, 220 State Street.  Comments may also be presented at the hearing or by sending them to DHCD, Office of the Chief Counsel, 100 Cambridge Street, Suite 300, Boston, MA  02114, ATT: Michael Malamut 760 CMR 65.00.

Attorney General Does Not Certify New Initiative Petition to Amend Comprehensive Permit Statute

On September 7th, Attorney General Martha Coakley announced her decision not to certify a new initiative petition to substantially amend the Comprehensive Permit Law. If put before the voters and passed, the petition would have reduced the Ch. 40B affordable housing safe harbor of each municipality from 10 percent to 3 percent of its housing stock, eliminated limited dividend organizations from the statute, and changed the law so that local conservation commissions would also be allowed jurisdiction over a development and able to fully enforce local wetland bylaws without regard for the need for affordable housing. 

Under the Massachusetts Constitution, a petition cannot be certified to appear on the ballot that is “substantially the same as any measure which has been qualified for submission or submitted to the people at either of the two preceding biennial state elections.”

In a brief prepared by Mintz Levin on a pro bono basis, CHAPA, MACDC, MAHA, JALSA and the Lawyers Clearinghouse argued that the 2011 petition would substantially eliminate the Comprehensive Permit Law’s effectiveness and strip it of several defining characteristics, making it substantially the same as Question 2 on the 2010 ballot.  The Attorney General agreed that the petition is substantially the same and refused to certify it.  The decision means that petitioners will not be able to move forward with signature gathering to try to place the petition on the 2012 ballot at this time. There is an opportunity to appeal the Attorney General’s decision.

Advocates Push for Increase in State Low Income Housing Tax Credits

A Coalition of stakeholders is requesting a State Low Income Housing Tax Credit (LIHTC) increase of $10 million per year for the next four years. The effort is aimed at addressing the backlog of shovel-ready affordable rental developments that have been seeking State or Federal LIHTCs from DHCD.  The scarcity of resources compared to the overwhelming demand for affordable housing development funding increased further by the recent HUD award of HOPE VI commitments in Boston and Taunton.

If the Legislature authorizes the full increase the Coalition is seeking, DHCD will be able to fund over 50 developments that have been seeking tax credits and both HOPE VI public housing redevelopments.  This will create over 2,600 affordable homes and 2,700 construction-related jobs. 

The Patrick-Murray Administration included language in a supplemental budget pending before the legislation that would set aside funding to offset loss revenue from a $10 million LIHTC increase.  CHAPA, MACDC, the Greater Boston Real Estate Board, the Greater Boston Chamber of Commerce, and the Progressive Business Leaders Network are requesting that the legislature include the full funding increase of $10 million per year for four years as part of the supplemental budget. 

Building Blocks Coalition Advocates for Increase in Capital Funding

The Building Blocks Coalition recently requested that Governor Patrick restore capital funding for affordable housing to FY’09 levels of $193 million.  These critical resources will help create opportunities for working families, seniors, persons with disabilities, persons at risk of homelessness, and veterans in need of affordable housing.  Funding for capital programs was reduced in the past two years to $168 million per year due to the loss of revenue to pay debt service on general obligation bonds.  The Executive Office for Administration and Finance is expected to release the capital budget soon.

CHAPA Advocates for Fall Action on Legislative Priorities

With less than eleven months remaining in the legislative session, CHAPA is ramping up advocacy on critical legislative priorities.  CHAPA’s supportive housing bill passed the Senate unanimously and is pending before the Housing Committee on Ways and Means (S. 1967).  Legislation to promote innovations in state public housing and give housing authorities more flexibility is pending before the House and Senate Committee on Ways and Means (S. 1935 and H.375).  An Act to Sustain Community Preservation, H. 765 cosponsored by a bipartisan group of 116 legislators, is also pending before the House Committee on Ways and Means.  An Act to Promote Accessible Housing for Persons with Disabilities, H 3672, was redrafted by the Housing Committee and reported to the House Committee on Bonding because it includes recapitalization for three capital programs: the Facilities Consolidation Fund, Community Based Housing and the Housing Innovations Fund. 

Community Preservation Coalition Schedules September State House Event

On Tuesday, September 27^th at 10:30 in the State House Great Hall, the Community Preservation Coalition will host an event honoring the success of the Community Preservation Act’s first decade.  The event will also be an opportunity to demonstrate support for legislation filed by Rep. Steve Kulik and Senator Cynthia Creem to enhance the Act in years to come. 

The Coalition invites CPA supporters to attend and recognize 10 special CPA leaders with awards made in the honor of Bob Kuehn, and to visit with legislators. If you’re interested in attending, register here.

Administration Files Legislation to Codify MassWorks Program

The Patrick-Murray Administration has filed legislation to codify the MassWorks Infrastructure Program which provides one-stop shopping for municipalities and other eligible public entities seeking publc infrastructure funding to support economic development and job creation.  The Administration has also extended the deadline to apply for funding from MassWorks, which consolidates Public Works Economic Development (PWED), Community Development Action Grant (CDAG), Growth Districts Initiative (GDI) Grant Program, Massachusetts Opportunity Relocation and Expansion Program (MORE), Small Town Rural Assistance Program (STRAP) and Transit Oriented Development (TOD) Program. 

This past week, the Joint Committee on State Administration and Regulatory Oversight held a hearing on the proposal where legislators touted the approach. CHAPA supports the new approach to promote housing and job creation.   

The supplemental budget pending before the legislature also includes $35 million for 20 infrastructure projects located across Massachusetts to further the MassWorks goal of concentrated investments to create homes and jobs.

 Progress Made on Massachusetts Rental Voucher Program

Due to the legislature and the Patrick-Murray Administration’s continued commitment to the Massachusetts Rental Voucher Program (MRVP), the Department of Housing and Community Development (DHCD) is lifting the freeze that has restricted the re-issuance of mobile MRVP vouchers since July of 2008. This will allow for the re-issuance of any mobile voucher that became available on July 1, 2011 or afterward.  Please click here to read the entire memorandum.

In addition, DHCD is considering a limited amount of targeted rent increases for project-based vouchers, and funding new mobile and project-based vouchers for targeted populations. 

Community Development Partnership Act Advances

The Community Development Partnership Act, a top priority for the Massachusetts Association of CDCs, was favorably reported from the Joint Committee on Community Development and Small Business.  The Joint Committee also announced that they will be conducting a listening tour at Community Development Corporations across the state to learn more about their housing and economic development efforts.  MACDC is assisting the Committee Chairs in this effort.

Federal Updates

President Proposes $15 Billion to Rebuild High Foreclosure Neighborhoods

The President’s proposed economic stimulus bill (the American Jobs Act), outlined in a speech to the nation last night, includes $15 billion for “a national effort to put construction workers on the job rehabilitating and refurbishing hundreds of thousands of vacant and foreclosed homes and businesses.”  Called “Project Rebuild”, the effort will build “on proven approaches to stabilizing neighborhoods with high concentrations of foreclosures … bring in expertise and capital from the private sector, focus on commercial and residential property improvements, and expand innovative property solutions like land banks.  This approach will not only create construction jobs but will help reduce blight and crime and stabilize housing prices in areas hardest hit by the housing crisis.”

In his speech, the President also said that he would work with Federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4% - “a step that can put more than $2,000 a year in a family’s pocket, and give a lift to an economy still burdened by the drop in housing prices.”

House Proposes Deep Cuts to Some HUD Programs in FY2012, De-funds Federalized Units

The House Appropriations Subcommittee on Transportation, Housing and Urban Development (T-HUD) marked up its draft FY2012 appropriations bill for HUD yesterday.  The proposed bill, released on September 7, includes the following provisions (“technical changes” approved in the mark up are not yet available online so it is not known if they affected language items):

• Provides sufficient funding to continue all Section 8 rental assistance (tenant and project based) and provides funding for new vouchers for veterans, but cuts Section 8 administrative fees by 24% compared to FY2011.
• Increases funding for Section 202 Housing for the Elderly by 50% relative to FY2011.
• Increases funding for the Section 811 program by 30% relative to FY2011. 
• Provides a small increase to CDBG block grants but cuts the amount grantees can spend on administration, management and planning from 20% to 10%.
• Cuts HOME block grants by 25% and keeps the current minimum threshold for a formula allocation.
• Eliminates funding for HOPE VI and Choice Neighborhoods.
• Continues to zero-fund Housing Counseling.
• Cuts the Public Housing Operating Fund appropriation by 16% and prohibits any use of funds for units recently federalized by states (approximately 3,600 state public housing units are in the process of being federalized in Massachusetts).
• Cuts the Public Housing Capital Fund by 25% and calls on HUD to consider excess reserves of PHAs when allocating funds.
• Eliminates funding for Sustainable Communities.

A detailed budget chart is on our web site.

FMRs to Drop in Parts of Massachusetts Under HUD’s Proposal

HUD published proposed Fair Market Rents (FMRs) for FY2012 in the Federal Register on August 19.  The proposed FMRs for Greater Boston and the Cape will increase slightly compared to FY2011 (1.5-1.7%), but will fall in most other parts of the state, with the largest drops occurring in the following FMR areas: Western Worcester county (down 18%), Fitchburg-Leominster (down 17%), Lowell (down 15.6%) and Brockton (down 11%).  Comments are due to HUD by September 19. 

The declines appear to be due primarily to the rent data for 2005-2009, though HUD is also using less refined recent mover data (since FY2010, it has defined recent movers as those who moved in the prior 24 months, rather than the prior 15 months, due to ACS data limitations).

Note: Individual Area documentation shows different (unofficial) limits for a few areas

The August 19 Federal Register notice announcing the proposed FY2012 FMRs also includes a request for comments on whether HUD should set a fixed date for releasing its annual Section 8 income limits.  It notes that the release date has been slipping later and later into the calendar year recently as HUD has turned to American Community Survey (ACS) for data.  The notice suggests two possible fixed dates (October 1 or December 1) but notes that moving to the earlier dates would require the use of older data.  Comments are due by September 19.

HUD Releases RFI on Disposition of Foreclosed Properties

On August 10, the Federal Housing Finance Agency (FHFA) issued a Request for Information (RFI) to solicit ideas for the disposition of Fannie Mae, Freddie Mac and Federal Housing Administration (FHA) REO properties.  Fannie Mae, Freddie Mac and FHA’s REO inventory include over 92,000 properties at the national level, and in Massachusetts, the inventory includes 1,084 properties. 

The agencies are exploring alternatives that will facilitate current and future disposition of REOs and help stabilize neighborhoods and home values.  The RFI specifically focuses on private investor bulk acquisition of properties (the range will likely involve REO assets totaling at $50 million in value and $1 billion for joint ventures) and may include rental conversions.  The deadline for submission is September 15, 2011.  Click here for the RFI.

House Holds Hearing on Proposed Bill to Transfer Rural Housing Service Programs to HUD

The House Financial Services Committee held a second hearing on September 8 on a draft bill, “the FHA-Rural Regulatory Improvement Act of 2011”, that among other things would transfer the administration and operation of RHS programs to HUD.  Rural Housing advocates have expressed many reservations about the transfer proposal and Assistant Secretary Carol Galante of HUD in testimony at the hearing recommended against it.  She reported that HUD is working closely with RHS to align HUD and RHS rental programs through a White House Rental Policy Working Group that also includes the Treasury Department and recommended continuing the alignment rather than “a more extensive reordering” of the agency roles.

HUD Releases “Rental Assistance Demonstration” Discussion Draft

In August, HUD began circulating a “trimmed down” version of its earlier Transforming Rental Assistance (TRA) bill.  The new discussion draft for a “Rental Assistance Demonstration (RAD)” program would allow public housing agencies to convert units to project-based rental assistance in order to increase their ability to finance capital improvements and would require a mobility option for at least 90% of the units programwide.  HUD posted a summary chart describing key elements of the proposed bill.  

Housing Scorecard Reports Fragile Market; HAMP Modifications Grow

HUD’s August Housing Scorecard, released on September 1, showed mixed trends in the housing market, with weak housing price trends but a decline in mortgage delinquencies.  Its HAMP Servicer report showed that the total number of homeowners with active permanent loan modification rose to over 675,000 as of July 31, an increase of about 18,000 households, as new permanent modifications (about 28,000) exceeded cancellations (just under 10,000).  It also reported that two major servicers continue to need substantial improvement (Bank of America and J.P. Morgan Chase).  Currently, almost 17,000 Massachusetts homeowners have active permanent HAMP modifications.

HUD Responds to Washington Post Critique of HOME Program

On August 18, HUD’s Blog posted a detailed response to the Washington Post’s critique of the HOME program published in May.  The Washington Post reported that 700+ HOME projects were stalled, based on its analysis of information supplied by HUD the previous November.  HUD argued that the Post had misread the data and after the Post refused to meet with HUD to discuss the matter, HUD responded last month by posting the data on the projects in a public database.  The database showed that over half the projects (52%) were complete and another 2% had been cancelled.

CHAPA Submits Comments on Proposed Mortgage Rules Under Dodd-Frank

CHAPA submitted comments this August on two proposed rules to implement new mortgage lending requirements under Dodd-Frank.  One rule details the steps lenders must follow to comply with the “Ability to Repay” provision, bans lenders from making mortgage loans unless they have determined that the borrower will be able to repay the loan.  The second proposed rule details the types of mortgages that would be exempt from a new requirement that issuers of private mortgage-backed securities retain at least 5% of the risk.

Recent Research

Report on Multifamily Rental Housing Market Finds Stresses for Tenants and Owners

A new study on the state of the multifamily rental housing market has found that affordability has continued to decline while conditions for owners vary due to variations in market demand (some markets are improving, others remain weak). 

In “Rental Market Stresses:  Impacts of the Great Recession on Affordability and Multifamily Lending”, the Joint Center for Housing Studies and the Urban Institute find that renter cost burdens have risen in all 100 of the nation’s largest metropolitan areas, as incomes have declined and the low-cost rental inventory has shrunk. 

Owners also face financing challenges, especially owners of marginal properties.  Owners of stronger properties who purchased or refinanced during the bubble will face refinancing challenges as short-term loans come due in an era of more stringent underwriting.  Foreclosures have largely been averted for stronger properties, as servicers have generally used resolution teams to negotiate workouts.  The study found reason for long-term optimism in demographic trends that are likely to increase demand for rental units.

Upcoming Events

CHAPA Breakfast Forum: Brownfields Reclamation, September 20, 9:30 a.m. (registration at 9:00 a.m.)
Nixon Peabody LLP, 100 Summer Street, 25^th Floor, Downtown Boston
Click here for registration and additional information

Affordable Housing Design Leadership Institute, September 21 – 23
Harvard Graduate School of Design, Cambridge
Click here to learn more

Products & Technologies that Change People’s Lives: Universal Design and Assistive Technology in Massachusetts, September 23, 9 a.m. – 4 p.m.
Hynes Convention Center, Boston
Click here for more information

CHAPA Annual Dinner, October 25, 5:30 p.m.
Boston Convention and Exhibition Center, 415 Summer Street, Boston
lick here for individual registration and additional information

Save the Date: New England Housing Network Annual Conference, December 2
Sheraton Needham Hotel, Needham
Click here to learn more