Housing Briefs - March 2, 2009

State Updates

MacArthur Foundation Awards $4.5 million to Massachusetts to Help Preserve Affordable Housing

Massachusetts recently received $1 million in grant funding and $3.5 million in program related investment from the MacArthur Foundation to help preserve affordable rental housing at risk of being converted to market rate housing.The grant will enable Community Economic Development Assistance Corporation (CEDAC) to implement an Interagency Working Group to coordinate the housing preservation activities of state, federal, and local agencies, to advocate for necessary state and federal policy changes, and to formulate a joint plan to stabilize properties in the assisted housing portfolio and establish priorities for allocating public resources. The program-related investment will support the Massachusetts Preservation Loan Fund, which will provide predevelopment and acquisition financing for large preservation projects.

CHAPA congratulates DHCD and CEDAC for successfully securing these funds and looks to continue to work with public and private sector partners to enact sensible state legislation to preserve affordable housing and fully capitalize on this investment. We also thank the MacArthur Foundation for

recognizing the significant challenge the Commonwealth faces in preserving its existing affordable housing.



House and Senate Leadership Appoint Members to Leadership and Committees

Speaker DeLeo, Senate President Murray, Minority Floor Leader Tisei and Minority Leader Jones have appointed members to leadership positions and committee assignments in both branches of the state legislature.

The House of Representatives will see significant changes in Committee leadership, including Rep. Charles Murphy from Burlington as chair of the House Ways and Means Committee charged with crafting the House budget. The Senate also appointed several new Committee chairs.

The co-chairs of the Joint Committee on Housing remain the same, with Senator Susan Tucker and Representative Kevin Honan continuing to lead this critical committee. The Housing committee will have two new Vice-Chairs that are both very familiar with housing issues: Rep. Gloria Fox and Senator Brian Joyce.Other Housing Committee members include: Senator Chang-Diaz, Senator Eldridge, Senator Galluccio, Senator Hedlund, Rep. Greene, Rep. Rodrigues, Rep. Fresolo, Rep. Thomas Stanley, Rep. Curran, Rep. Hogan, Rep. Webster, and Rep. Peterson.

Legislative Committee Holds Hearing on Shelter Program Reorganization

On February 25th, Chairman Steve Walsh and Chairman Brian Joyce and members of the Committee on State Administration and Regulatory Oversight heard over five hours of testimony on the Administration’s Article 87 reorganization plan, which would move family and individual emergency shelter programs from the Department of Transitional Assistance to the Department of Housing and Community Development.

With the exception of testimony from Local 509 Service Employees International Union, the majority of testimony was cautiously positive about the change. Many continued to stress that additional affordable housing resources and supportive services are necessary to make serious progress in reducing and ultimately eliminating homelessness.The Committee has 10 days from the February 25th hearing to release its legislative report, and the legislation must be acted on within 60 days of its filing on January 28th.

Two Hearings Scheduled on Emergency Shelter Regulations

The Department of Transitional Assistance has proposed regulatory changes to the Emergency Shelter Regulations that are being closely scrutinized by homeless advocates.

On March 9th, three legislative committees are scheduled to hold a joint hearing on the proposed changes in State House Room A-1 at 10 a.m. In addition, the Department of Transitional Assistance will hold a hearing on March 13th at 10 a.m. in the State House’s Gardner Auditorium.

The Emergency Shelter System is operating under a budget deficit due to increased shelter demand. The shelter regulation changes are set to save DTA over $500,000 in FY09 and approximately $11,000,000 in FY10 while promoting self-sufficiency and maintaining the safety net for the most vulnerable families, according to DTA. However, homeless advocates are criticizing the timing of the regulatory changes and are wary of the potential for the proposed changes to unfairly turn away families with no other alternative. Click here for DTA’s summary of the changes.

State 2009 Tax Exempt Bond Plan Allocates $348.5 Million for Rental Housing

On February 13, the Executive Office of Administration and Finance announced the State’s 2009 tax-exempt private activity bond allocation plan. This year the State will have $918.7 million in bond authority, up $333 million from 2008. The increase is largely due to a $202 million one-time allocation approved by Congress in the Housing and Economic Recovery Act of 2008 specifically for housing and a $95 million increase in unused volume from prior years. The rest of the increase ($36 million) reflects a $5 dollar increase in the amount per capita each state receives.

The 2009 plan allocates $498.5 million (54% of the 2009 cap) to housing, up $103.5 million from the 2008 plan. Of that, $348.5 million (38% of the cap) is for affordable rental housing, an increase of $53.5 million from the 2008 plan, including $110 million for projects financed by MassDevelopment, $192 million for projects financed by MassHousing, and $46.5 million for state public housing capital improvements. It also

allocates $150 million (16% of the cap) for MassHousing mortgages for first-time homebuyers and refinance mortgages for income eligible homeowners.

The remaining funds will support economic development loans ($150 million) and student loans ($270 million). Click here for more information on the 2009 plan and 2008 spending.

Department of Housing and Community Development Releases Public Housing Demonstration Program Regulations

DHCD has promulgated a new set of regulations open for comment to implement the Public Housing Innovation Demonstration Program, 760 CMR 63.00. The Public Housing Innovation Demonstration Program was included in the 2008 Housing Bond Bill and was championed by the Housing Committee Co-Chairs and Rep. Jeffrey Sanchez. The regulations aim to produce new initiatives that put forward cost-effective revitalization methods for state-aided family and elderly-disabled public housing that may be replicated across the state. To date, the program has not received a capital budget allocation.

Written comments may be submitted by Monday, March 27, 2009 and should be sent to DHCD, 100 Cambridge Street, Suite 300, Boston, MA 02114 Attention: Shelagh Ellman-Pearl – 760 CMR 63.00.

State Housing Agencies to Provide Grants and Loans to Buyers of Foreclosed Properties

Banker and Tradesman reported this week that Massachusetts Housing Partnership and MassHousing will launch programs to encourage the purchase of foreclosed or abandoned housing in 39 communities. Assistance will be limited to buyers who will occupy the properties. The first tier will provide soft-second mortgages to buyers. The second tier assist buyers in 19 communities by providing rehabilitation grants of up to $20,000 for condos or single homes and up to $40,000 for multi-family properties.

Massachusetts Foreclosures and Petitions Up in January

In a February 19th release, The Warren Group reported that 974 foreclosure deeds were recorded in January statewide, up 4% from the December level (936) and up 22% compared to January 2008 (800). Foreclosure petition filings in January totaled 1,960, up 21% over the December figure of 1,625, but 39% below than the number filed in January 2008. The release also reported that the foreclosure process took an average of 3 months longer in 2008 than it did in 2006. On average, 342 days elapsed between petition filing and recording of a foreclosure deed in 2008, compared to an average of 253 days in 2006.

Massachusetts Home Prices, Sales Volume Down by over 11% in 2008

On January 27, The Warren Group reported that the median sales price for single family homes fell by $40,000 in 2008 (from $345,000 in 2007 to $305,000 in 2008), a drop of 11.6%. Total sales fell by 11.5%, from 45,339 in 2007 to 40,124 in 2008 – the lowest level since 1991 when sales totaled 39,181. Banker and Tradesman noted a slight uptick in sales volume towards the end of the year, with monthly sales above 2007 monthly sales in three of the last four months.

Condo sales volume fell by 23.1%, falling from 26,162 in 2007 to 20,132 in 2008. Median sale prices for condos fell by only 1.8%, however (from $280,000 to $275,000). According to a February 10 report,

however, sales of two- and three-unit properties rose in 2008, up 22% from the number of properties sold in 2007, but median sales prices were down sharply over 2007 levels, with the two-family median price declining 33% (to $228,000) and the three-family median falling 44% (to $200,000.

Federal Updates

House Debates Foreclosure Bill, Including Mortgage Modifications by Bankruptcy Judges

The House is expected to vote on an omnibus bill to address foreclosure problems this week. The Helping Families Save Their Homes Act of 2009 (H.R. 1106) combines four bills approved by the Financial Services Committee and would:

• Allow bankruptcy court judges to modify mortgages on primary residences (existing mortgages only) of homeowners facing foreclosure who meet certain conditions;
• Allow the FHA, VA and USDA to guarantee or insure mortgages modified voluntarily or through a bankruptcy case;
• Revise the HOPE for Homeowners Program and place it directly under HUD control; the revisions include reducing the insurance premiums, allowing incentive payments to servicers for successful refinances, and allowing lenders to share in later appreciation;
• Create a safe harbor for servicers who modify loans, and
• Make permanent the temporary increase to $250,000 of the cap on FDIC deposit insurance and increase FDIC borrowing authority.

Supporters had originally hoped the House would approve the bill on February 26 but the House was forced to postpone the vote after some Democrats raised questions about the bankruptcy mortgage modification provisions. HUD Secretary Shaun Donovan will brief House Democrats on Monday night (March 2) on the bill details and its role in the Administration’s overall foreclosure strategy. Click here for a House Financial Services Committee summary of the bill as introduced.

President Obama Releases HUD FY2010 Budget Outline

The Obama administration released its budget outline for Fiscal Year 2010 (starts October 1, 2009), including a four page summary of its proposals for HUD funding. HUD would be funded at $47.5 billion, on top of stimulus bill funds, up from a projected level of $40.1 billion in FY2009.

The proposal also calls for legislative and regulatory reforms for some

programs. Among other things, it calls for:

• $1 billion for the new Affordable Housing Trust Fund.
• $4.5 million for CDBG (up from $3.9 billion this year), including a new Sustainable Communities Initiative. It also calls for program changes, including elimination of the Section 108 loan program, and a formula revision to better target funds to distressed communities.
• Full funding for Section 8 vouchers and project-based contracts (but no new incremental vouchers), as well as legislative reforms to reduce administrative burdens and enable housing authorities to fully utilize available funds.
• Funds for a new “Choice Neighborhoods Initiative” to transform high-poverty neighborhoods with concentrations of assisted housing.
• Creation of a New Energy Innovation Fund, in partnership with the Department of Energy, to encourage retrofitting of older housing as well as new green housing.
• Elimination of the American Dream Downpayment Initiative (ADDI).

The Obama Administration will release details of the proposed budget in April.

President Releases Foreclosure Plan; Guidelines to be Announced on March 4

On February 18, the Obama administration released the Homeowner Affordability and Stability Plan to encourage loan modifications and assist struggling homeowners, while also urging Congress to pass legislation to allow bankruptcy judges to modify mortgages under certain conditions. The plan includes two basic loan modification initiatives, with guidelines for both due out on March 4. One will enable homeowners with conforming mortgages held or guaranteed by Fannie Mae and Freddie Mac to refinance at lower rates as long as they are current on their loan and the loan is between 80% and 105% of current appraised value.

The second, to be funded with $75 billion in TARP funds, will aid other homeowners in default or at risk of default by encouraging lenders to undertake loan modifications. Lenders who agree to modify loans following

new federal guidelines will absorb the cost of bringing mortgage payments to 38% of income (for at least 5 years); the government will then share 50-50 in the cost of reducing payments down to 31% of income. The program would also provide incentive payments to lenders, servicers and homeowners. Banks that receive TARP funds going forward will also have to comply with the new Treasury loan modification guidelines.

House Approves FY2009 Omnibus Budget Bill

On February 25, the House approved an omnibus bill (H.R. 1105) to finalize the FY2009 budget (agencies are currently operating under a continuing resolution scheduled to expire on March 6). The bill now moves to the Senate.

As detailed in a chart posted by the National Low Income Housing Coalition, the House bill provides $41.5 billion in budget authority for HUD for FY2009, up 10.4% from the FY2008 budget ($37.6 billion). Programs receiving increases include the Public Housing Operating Fund (up 6%), HOPE VI (up 20%), HOPWA (up 3%), CDBG formula grants (up 1.4%), HOME formula grants (up 12%), Section 202 (up 4%), Section 811 (up 5%), Homeless Assistance Grants (up 6%), the Fair Housing Initiatives Program (up 17%) and Policy Development and Research (up 25%).

HUD Announces Formula Grant Amounts for Massachusetts Under Stimulus Bill

Last week, HUD announced the new funding amounts states, localities and housing authorities will receive under the formula grant portions of HUD programs funded in the newly-signed stimulus bill (American Recovery and Reinvestment Act).

Click here for the allocations to Massachusetts entities from the Public Housing Capital Fund, Homelessness Prevention Grants, the Community Development Block Grant (CDBG) program, the low-income housing tax credit “gap filler” grant program (using HOME) and other programs.

President Establishes White House Office of Urban Affairs

On February 19, President Obama issued an executive order creating a new White House Office of Urban Affairs. The function of the office will be to “provide leadership for and coordinate the development of the policy agenda for urban America” across federal agencies. He also announced the appointments of a Director of Urban Affairs (Adolfo Carrion) and a Special Assistant to the President for Urban Affairs (Derek Douglas).

Donovan Outlines Goals for HUD



Speaking at a housing policy conference earlier this month, HUD Secretary Donovan outlined his agenda for HUD in terms of five “areas of interest”. As detailed in an article by National Low Income Housing Coalition, the five areas include: (1) remaking the mortgage system; (2) addressing the persistent rental housing crisis and providing funding for the National Housing Trust Fund; (3) making HUD a force for sustainability; (4) reinvigorating fair housing; and (5) becoming a leader in research and

evaluation with high standards of accountability.

House Finance Services Committee Sets Agenda for 111th Session

On February 12, the House Financial Services approved its “oversight plan”, laying out its priorities for the 111th session of Congress. The 24-page plan includes numerous mortgage and housing items including continuing to study and identify solutions to deceptive and discriminatory mortgage lending. It will also explore recommendations for updating and improving the effectiveness of the Community Reinvestment Act and examine proposals to improve or modify the role of Fannie Mae and Freddie Mac in the mortgage market.

Foreclosure-related plans include examining ways to encourage sustainable loan modifications and considering ways to protect the right of bona fide renters and holding a hearing on the adequacy and effectiveness of the Neighborhood Stabilization Program (NSP).

The Committee also plans to hold hearings on the FY2010 budget for HUD and RHS, on public housing programs, and on CDBG (including the allocation formula) and to resume efforts to enact Section 8 Voucher Reform Act (SEVRA) legislation.

Recent Research

National Housing Conference Launches Websites on Foreclosure and Housing Policies

On February 17, the National Housing Conference (NHC) Center for Housing Policy announced the launch of two new websites. One (Foreclosure-Response.org) provides extensive data and information on foreclosure prevention and neighborhood stabilization programs and proposals. The second is a new online housing policy discussion forum (http://forum.housingpolicy.org/) with separate discussion groups for various policy areas, including foreclosure prevention, neighborhood stabilization, rental housing preservation, inclusionary zoning and shared equity homeownership.

At the same time, the Center announced the publication of three new housing policy briefs on the impact of affordable housing on nearby property values, the impact of affordable housing on the well-being of children, and one on the role of preservation databases on efforts to preserve affordable housing.

Report Finds High-Cost Lending Activity Fell in 2007; Racial Disparities Remain

The Massachusetts Community and Banking Council issued its 15th annual report on mortgage lending patterns in Massachusetts earlier this month. “Changing Patterns XV – Mortgage Lending to Traditionally Underserved Borrowers and Neighborhoods in Boston, Greater Boston and Massachusetts – 2007” found that the percentage and number of high-cost loans declined dramatically relative to 2006. It also reports that the market share of non-CRA lenders (i.e. neither a bank nor a credit union) fell from 74% of all home loans in 2006 to 62% in 2007.

As detailed in a summary of key findings, the report also found that minority borrowers and purchasers in minority neighborhoods are still much more likely to have a high-APR loan than other borrowers. Only 5% of white borrowers purchased homes with high-APR loans in 2007, compared to 20% of black borrowers and 22% of Latino borrowers. Similarly, while high-APR loans represented 25-29% of home purchase loans in Mattapan and Roxbury, they made up only 2% of home purchase loans in the South End. The authors estimated that using a high-APR loan adds about $8,000 a year to borrower costs in Massachusetts.

The report also found the home purchase lending to blacks and Latinos remains highly concentrated in a handful of towns, with over 56% of black purchase loans being made in five cities and towns and half of all purchase loans for Latino buyers concentrated in nine cities and towns.

Report Recommends New Federal Approach to Mitigate Impacts on Neighborhoods

The Brookings Institution issued a report this month urging a new federal strategy to assist high-foreclosure neighborhoods. The report, “Stabilizing Communities: A Federal Response to the Secondary Impacts of the Foreclosure Crisis”, by Alan Mallach, recommends four changes to current strategy: (1) redesigning the Neighborhood Stabilization Program and making it multi-year; (2) creating a federal land banking entity to finance the acquisition of foreclosed properties, (3) enacting a targeted tax credit for homebuyers in high-foreclosure areas and (4) developing a national mortgage and foreclosure database to guide neighborhood stabilization efforts.

HUD Utility Costs Rise $600 Million in Two Years

In a recent progress report to Congress, “Implementing HUD’s Energy Strategy”, HUD reported that its energy bill for heating, lighting and cooling HUD assisted public and private housing rose 13.5% in two years (from 2004-5 to 2006-7) and now totals $5 billion. The cost includes utility allowances. The report breaks out costs by program (public housing, housing choice vouchers, and private assisted housing).

Paper Proposes Policies to Promote Energy Retrofits in HUD-Assisted Housing

The Council for Energy Friendly Affordable Housing, a group formed by members of the National Housing and Rehabilitation Association, issued a white paper this month outlining changes in policy that HUD could take to promote energy retrofits in assisted properties.

Among other things, they recommend increasing allowed annual distributions from a project to permit a “green dividend” for new investments in energy conservation. They also recommend that HUD encourage the use of project reserves for energy improvements and encourage the use of energy performance contracts as is now done for public housing. The paper notes its recommendations will also require HUD to develop standardized systems and methods to track energy savings.

Using the LIHTC Program to Increase Access to Areas of Opportunity

The Poverty & Race Research Action Council (PRRAC) and the Lawyer’s Committee for Civil Rights recently completed a report outlining best practices that state allocating agencies can use to promote the siting of low income housing tax credit (LIHTC) projects outside areas of concentrated poverty.

Upcoming CHAPA Events

CHAPA will hold a legislative briefing on affordable housing priorities on March 11th, at 2:30 in the State House, Room B-1. Housing and homelessness advocates will present this year’s housing budget priorities. CHAPA staff will also highlight top housing priorities and breakdown the federal recovery act’s housing benefits for Massachusetts and the Obama mortgage foreclosure plan.

CHAPA has also rescheduled the CHAPA Homelessness Committee Housing Search Training to assist legislators in responding to constituent housing requests for Monday, April 6th, from 10:30 to noon in State House Room A-1. [The original training was scheduled for January 28th, but was canceled due to snow]. Legislators, staff and CHAPA members are invited to both the March 11 and April 6 events and

should RSVP by emailing scaron@chapa.org.

CHAPA will host a forum to discuss policies and strategies for preserving expiring use properties on March 31st, 9:30 a.m., at One Financial Center, Boston. Click here for more information.

DHCD will host an April 1st training for lottery administrators and municipal officials involved with overseeing lotteries for Ch. 40B and other publicly subsidized projects, including a fair housing overview, DHCD Affirmative Fair Housing Marketing Plan guidance, and best practices for conducting lotteries. CHAPA is co-sponsoring this training.

Please save the date for a Chapter 40B Comprehensive Permit training hosted by the CHAPA 40B Training Committee on Friday, May 8th at the Lowell Doubletree. Training information will be provided five weeks before the event.