State Updates
Housing Bond Bill Headed to the Governor's Desk
The House and Senate both enacted the Housing Bond Bill yesterday, which will provide for $1.275 billion in capital spending authorization to preserve and produce housing affordable for low and moderate income households.
Key provisions include $500 million for public housing modernization, $220 million for the Affordable Housing Trust Fund, $125 million for the Housing Stabilization Fund, $100 million for the Capital Improvement and Preservation Fund, $75 million for the Housing Innovations Fund, $50 million for the Home Modification Loan Program, $40 million for Facilities Consolidation Fund, $30 million for Community-Based Housing, and the extension and expansion of the Mass. Low Income Housing Tax Credit to $10 million annually.
The bill includes compromise language that requires developers and contractors using any housing bond funds to properly classify workers who are employed on the project. In addition, all construction contractors involved in bond-funded projects are required to provide documentation that all employees on the project have medical benefits consistent with the health care legislation passed last session.
CHAPA applauds the House, the Senate, and the Governor for their support of this critical legislation.
Senate Advances Strong Housing Budget
The Senate adopted its FY'09 budget last night that increases funding for several key housing programs. Although amendments failed to increase funding for Public Housing Operating Subsidies, the Mass. Rental Voucher Program, the Alternative Housing Voucher Program and the SoftSecond Mortgage program, these programs and others key to affordable housing would see critical increases over FY'08 under both the House Senate budgets. Overall, the Senate adopted very few amendments that added to the bottom line.
The Senate included an amendment (No. 458) sponsored by Senator Brian Joyce that would provide $5 million for the Affordable Housing Trust Fund if there are surplus revenues at the end of the fiscal year. Last year, the Trust Fund received $10 million in funding through this same mechanism. CHAPA will advocate for Senator Joyce's amendment to be included in the final FY'09 budget and thanks him for his support.
Other housing-related amendments added to the budget include: an amendment (No. 112) sponsored by Senator Tucker that make residential mortgage fraud a felony; and an amendment sponsored by Senator Tarr and Senator Hedlund, which may prohibit undocumented immigrants from being admitted to state public housing.
In addition to these amendments, the following differences will need to be rectified by the Conference Committee:
- The House included $1 million more for public housing operating subsidies than the Senate;
- The Senate included an additional $100,000 for MRVP, $250,000 for RAFT, and $300,000 for Mental Health Rental Subsidies than the House;
- There are language differences for Housing Consumer Education Centers and the Homelessness Commission Funding.
CHAPA thanks Senate President Murray, Chairman Panagiotakos, and Chairwoman Tucker for their support and advocacy and looks forward to working with leadership from both branches to resolve these differences.
Surplus Land Legislation Will Not Move Forward This Session
Legislation filed by the Governor, Senator Spilka and Representative Sanchez has been sent to a study by the Committee on Bonding, Capital Expenditures, and State Assets. The legislation would expedite the sale of surplus state land to provide additional housing and open space opportunities, the proceeds of which would fund Ch. 40R among other things.
Three Municipalities Adopt Community Preservation Act
The towns of Becket, Hanson and Plympton each adopted the Community Preservation Act. This brings the total to 133 municipalities, up from 127 at the beginning of the year.
Governor Patrick Creates New Access to Opportunity Post
At the Greater Boston Fair Housing Center's 10th Anniversary Celebration on May 21st, Governor Patrick announced that Ron Marlow was appointed to the new post of Assistant Secretary for Access and Opportunity. Marlow is tasked with overseeing agencies to ensure that all residents and businesses of the Commonwealth have equal access to employment, procurement, and other business opportunities. His responsibilities include ensuring that minority-owned and women-owned businesses are able to compete for state contracts and opportunities.
Federal Updates
Senate Banking Committee Passes Bill to Create Housing Trust and Refinance At Risk Mortgages
On May 20, the Senate Banking Committee approved a major housing bill, "the Federal Housing Finance Regulatory Reform Act of 2008" along with a manager's amendment, that strengthens oversight of the nation's two government sponsored enterprises (Fannie Mae and Freddie Mac), and the Federal Home Loan Banks and requires the GSEs to contribute annually to a new "Housing Trust Fund". The bill also creates a new FHA program (HOPE for Homeowners) to help homeowners at risk of foreclosure to refinance into more affordable mortgages, similar to the program approved by the House on May 8 as part of H.R. 3221. Unlike the House, however, the Senate Committee bill would fund the HOPE program from the GSE contributions to the new Trust Fund, using 100% of those contributions in 2009, 50% in 2010 and 25% in 2011.
HUD is to distribute all other funds in the Trust to states, using a formula it must devise based on a number of factors, including each state's share of the national shortage of units available and affordable to extremely low income households and to very low income households, the percentage of such households paying more than 50% of income for housing, and construction costs. Trust funds can only be used to provide housing assistance to very low income households (incomes at or below 50% of area median) and 75% of the funding must assist extremely low income households (at or below 30% of area median). The funding can be used to produce, preserve or rehabilitate rental or ownership housing, to help pay for the costs of operating rental housing, and to help create homeownership opportunities through downpayment and closing cost aid and interest subsidies. The bill now goes to the full Senate.
FHA Announces New Steps to Help At-Risk Borrowers
On May 7, the Federal Housing Administration (FHA) announced that it is expanding eligibility for insured refinance mortgages starting on July 14. Currently, the FHA Secure program can only refinance borrowers with adjustable rate mortgages who are current or who became delinquent as a result of an interest rate re-set. Starting on July 14, the FHA will broaden eligibility to borrowers who became delinquent prior to reset (due to an extenuating circumstance such as a job loss or medical bill). It will also loosen credit history requirements. Currently, borrowers must generally have missed no payments in the six months prior to reset. The new guidelines will accept borrowers who have missed 1-3 payments prior to the reset/ extenuating circumstance. In addition, borrowers with fixed rate mortgages will also be eligible for the program if they are current on their payments. The FHA will use risk-based premiums as described below.
On May 13, in a notice published in the Federal Register, HUD announced that the FHA will implement risk-based mortgage insurance premiums for single family (one unit) loans assigned case numbers on or after July 14, 2008. Currently, FHA borrowers pay an upfront premium of up to 2.25% of the insured loan amount and an annual premium of up to 0.55% of the outstanding balance. Because most borrowers pay the same premium amounts, low risk borrowers cross-subsidize high risk borrowers. Under the new system, low-risk borrowers will pay lower premiums and the highest risk borrowers (as measured by credit score and loan to value [LTV] ratios above 95%) will pay more up to the statutory maximums. HUD will also manage risk by reducing the maximum LTV ratio for borrowers with credit scores below 500 to 90% or less. HUD noted that up to 20% of current FHA users would not qualify under the new standards.
Fannie Mae to Stop Requiring Higher Downpayments in Declining Market Areas
On May 16, Fannie Mae backed away from the policy it implemented in mid-January that increased the downpayment requirement for borrowers in declining market areas by five percentage points over what Fannie would otherwise require. It announced that starting June 1, 2008, downpayment requirements for conforming loans on one-unit properties will be uniform nationwide, regardless of local house price trends, allowing loans to value of up to 97% for borrowers who meet automated underwriting criteria and up to 95% for all others who qualify. With this uniform standard, it is also ending its zero-downpayment loan programs except for loans fully insured or guaranteed by a federal agency (FHA, RHS, HUD, VA). Details on the new policy are available here.
Proposed Rule Would Allow Use of AHP Funds to Refinance/Restructure Subprime Loans
On April 16, 2008, the Federal Housing Finance Board published a proposed rule that would allow Federal Home Loan Banks to temporarily use some of their Affordable Housing Program (AHP) funds for the refinancing or restructuring of subprime or nontraditional mortgages on owner-occupied properties. The Board estimates this authority could help 7,500 households nationwide.
As proposed, this authority would expire on June 30, 2011. The proposed rule would allow regional Federal Home Loan Banks to use up to 35% of their annual AHP allocation to provide assistance of up to $25,000 per household to help households with incomes at or below 80% of median to refinance into affordable mortgages (debt to income ratios not exceeding 45%). The proposed rule asks for comments on numerous aspects of the proposed program design, including the amount of annual AHP funds that should be allowed to be used for such a program and whether funds should be made available to community organizations to assist their counseling clients as well as to member banks to assist individual borrowers. Comments are due no later than June 15, 2008.
Research Updates
Study Urges National Effort to Increase Energy Efficiency of Very Low Income Homes
A new study by Enterprise Community Partners, Bringing Home the Benefits of Energy Efficiency to Low-Income Households, calls for a national effort to improve home energy efficiency for the 25 million U.S. households with incomes of $25,000 or less, including 16 million renter households. It notes that in addition to the environmental benefits, increased energy efficiency would help to reduce the very high housing cost burdens many of these households currently bear and also help create new jobs, including entry-level jobs, in green industries.
The report recommendations emphasize upgrading existing rental and ownership units. They include fine-tuning current federal tools such as tax credits and energy efficient mortgages, increasing federal weatherization funding, providing additional funding sources as part of federal climate change legislation and funding the federal Energy Efficiency and Conservation Block Grant authorized in 2007. The report notes the need to revise current policies that act as disincentives to invest in energy efficiency, such as the way utility allowances are calculated for subsidized housing. It also recommends more public education, technical assistance and support for research.
