Tuesday, December 30, 2008
On Monday, HUD approved requests for federal assistance for both Florida and Colorado.
Three Florida communities that have been hit particularly hard by the foreclosure crisis - Hillsborough County, Cape Coral and Fort Myers - will receive $28 million dollars in total from the federal housing agency.
According to RealtyTrac, the Cape Coral-Fort Myers area had the highest number of foreclosure-related filings in November, with one in every 59 housing units filing.
Additionally, HUD has approved Colorado's request for $34 million in NSP funds. Among the areas hardest-hit by foreclosures, the cities of Denver, Colorado Springs, Aurora and metro Denver’s Adams County have separately applied for a total of $19 million in HUD foreclosure-relief funds.
Monday, December 29, 2008
A recent article published on HousingWire.com reveals that the Department of Housing and Urban Development (HUD) has decided to cut the FHA Secure troubled borrower refinancing program as of December 31, 2008. This decision results from the program's inability to address the widening scope of borrowers who are facing foreclosure and in need of modifying their home mortgages.
Sunday, December 28, 2008
Tuesday, December 23, 2008
Chairman Bair made it clear that in her view these claims have no merit. “I think we can agree that a complex interplay of risky behaviors by lenders, borrowers and investors led to the current financial storm,” she said. “To be sure, there’s plenty of blame to go around. However, I want to give you my verdict on CRA – it is not guilty.” She further pointed out that only about one in four subprime loans were originated by the banks covered under the CRA during the heyday of these risky mortgage products from 2004 to 2006.
An editorial in The New York Times reflected this point of view, noting that it made little sense to blame a 31-year old act for comparatively recent problems and that the regulations promoted under the act “actually impose restraints on the riskiest kinds of subprime lending.”
Following Chairman Bair’s speech, Roberto Quercia and a team of researchers from the
The findings showed that the loans in the Community Advantage Program pool had significantly lower default rates than the subprime loans, and even than Federal Housing Administration loans and adjustable-rate mortgages in the prime market. These findings suggest that the current financial crisis is rooted in the widespread use of poorly-underwritten loans with risky features, rather than the act of lending to low- and moderate-income families.
Multiple other reports and statements have echoed the benefits of the CRA and provided evidence that it has not been a major factor in the foreclosure and credit crises. These include:
CRA Not Responsible for Subprime Lending Abuses by Comptroller of the Currency, Administrator of National Banks
CRA is Not to Blame for the Mortgage Meltdown by the Center for Responsible Lending
Defending the CRA by David M. Abromowitz and Cathy Minehan, Center for American Progress
It’s Still Not CRA by Ellen Seidman, New America Foundation
Statement from National Civil Rights, Consumer, Community Development and Housing Groups Regarding Attacks on the Community Reinvestment Act (CRA)
The Community Reinvestment Act: A Welcome Anomaly in the Foreclosure Crisis by Traiger & Hinckley LLP, 2008.
Video, audio and PowerPoint files for Chairman Bair’s speech and the Center for Community Capital’s presentation are available on New America Foundation’s Web site.
Monday, December 22, 2008
• Link national housing tools to state & local housing tools;
• Insure HUD has a passion for preservation; and
• Recognize that the risk management of the system for raising residential capital has to be heavily regulated. Thus, the oversight and regulation of the delivery system for residential capital has to be removed from HUD.
Until the 2008 mortgage meltdown, we never understood the role that housing has in the overall economy. As a result, we have avoided creating a national housing policy because it was both too hard and overridden by local market conditions and political interests. Demand is a local issue but supply has to be the national priority. We have learned that, as it is with utility power, it is too risky not to have government insuring uninterrupted ‘power’ to the housing market.
(a) Create a policy for housing the next generation. Markets move faster than government, and policy is needed to stay ahead of supply issues. The national housing policy has to articulate a balanced approach, elevating rental housing as a more viable option. It should declare that shelter is an entitlement, that housing capital has to be regulated, and that tax policies need to support supply. The preamble of this policy should provide guidance for a residential capital system.
(b) Improve and update the national tool box for lowering the cost of housing for the nation, 80% of whom cannot afford full market cost of shelter. Along with setting the standards and managing the risks of housing affordability and quality, designing the most powerful and relevant set of tools are HUD’s primary functions.
(c) Expand the primary reach of HUD. Create a network of regional linkages between HUD and State and local housing agencies.
(d) Remove anything to do with capital formation and management of its risks from HUD to permit its focus on creation of relevant tools and risk management.
(e) Create the federal housing finance bank. Bundle together the entities in the business of residential capital creation and all forms of insuring the instruments for raising capital. Move them into a bank and regulate like heck. The nation’s economic health is at stake, and it can contaminate the world.
Only then can we make decisions about the relevance of the government entities that are key to delivering capital to the residential industry, i.e. the Federal Housing Administration, Fannie, Freddie, and the Federal Home Loan Bank.
Douglas Moritz is a Principal at JMB Preservation Advisors, a consulting firm in Rockville, Maryland.
Thursday, December 18, 2008
Wednesday, December 17, 2008
H4H became effective October 1 and has only collected 312 applications to date. Many policymakers argue that the program's strict eligibility guidelines and a lack of participation among mortgage lenders prevent more struggling homeowners from receiving aid.
HUD leadership, including current Secretary Steven Preston and FHA Commissioner Brian Montgomery have shouldered a large extent of the blame attached to H4H's inability to reach a wider scope of homeowners facing foreclosure. However, both Preston and Montgomery have recently defended themselves publicly, stating that frustration with the program's lack of success has been misdirected.
Monday, December 15, 2008
To read more about this announcement and Secretary-Designate Donovan, check out this article in the Los Angeles Times, which provides an interesting biography on Donovan and discusses his experience working with multifamily housing.
USA Today also published an article about Donovan that includes a quote from NHC President and CEO Conrad Egan.
Sunday, December 14, 2008
Please see this detailed story from The Associated Press about Secretary-designate Donovan and the announcement, which includes a quote from NHC President and CEO Conrad Egan.
It is important to note that the current topic for expert posts on "Open House" is "Strategies for Strengthening the Effectiveness of the U.S. Department of Housing and Urban Development."
Guest bloggers that have already contributed posts below on this topic include: Jeffrey Lubell, executive director of NHC research affiliate the Center for Housing Policy; NHC Executive Committee Member Carol Lamberg, executive director of Settlement Housing Fund; Anne Lindgren, chair of the Lantern Group, and former executive committee member for NHC and Settlement Housing Fund (joint post with Carol Lamberg); and NHC Trustee Larry Simons, former Federal Housing Administration commissioner.
Thursday, December 11, 2008
Despite the critical need for an effective and coordinated response to these housing issues, they routinely fall between the cracks of the jurisdictions of the different federal agencies. The U.S. Department of Housing and Urban Development administers a great number of important and effective housing assistance programs that merit continued and expanded support. But its mission, mandate, and funding all need to be expanded to cover the full range of pressing housing issues facing the nation.
Yes, by all means, let’s preserve and strengthen our existing stock of public and assisted housing and expand the number of families benefiting from housing vouchers. But ultimately, the base of support for these programs will be much stronger if the agency charged with administering them is seen as a key part of the solution to the critical housing challenges facing a broad cross-section of America.
Jeffrey Lubell is executive director of NHC's research affiliate the Center for Housing Policy, which specializes in developing solutions through research.
Monday, December 8, 2008
Read the full report here.
Guest Bloggers: Carol Lamberg and Anne H. Lindgren on a Transparent Approach to Permanently Affordable Housing
Political reality simply gets in the way of good housing policy. Politicians from high cost areas are reluctant to admit how much it costs to finance, build and maintain modest housing. Government agencies impose unrealistic cost limits that are popular politically, but they do not work, especially when enacted in statutes that are hard to amend. The result has been a consistent effort to mask the true costs by providing a maze of shallow subsidies, soft second loans and tax incentives. Motivated developers, with an army of lawyers and accountants, have learned how to navigate this maze. The typical development pro-forma now easily includes as many as six sources of capital. Often 40% of the funds pay for non-construction costs. The process of putting the deals together is time consuming and ultimately more costly than necessary, although nobody really knows by how much.
The maze, often called creative financing or leveraging, has other inherent problems. The various programs have different requirements, the subsidy terms don’t match the financing terms, and the affordable housing projects are often left in jeopardy.
So let’s forget about realism and at least start out by advocating simpler, transparent, permanently-affordable housing programs. There are examples of success to be replicated.
Federal Housing Administration (FHA) insurance with project-based Section 8 programs worked well until attacked by the Reagan administration as a budget breaker. The attackers used deceptive calculations and cited a few failed projects to end the program. The Reagan math, actually invented in prior administrations, involved adding up the entire twenty years of a subsidy contract and crying “shame”, with claims of sticker shock. When the Section 8 contracts expired, many owners converted to market-rate housing. Others marked “to-market” a program conjured up by the Clinton administration.
A new administration should let good regional administrators set realistic cost guidelines, with reasonable incentives. Tax incentives, especially when “as of right,” have proven an effective way to encourage production. Families should pay twenty-five percent of gross income or thirty percent of income net of taxes as rent. If they do not pay, they should face eviction. A maintenance budget should be prescribed for local operating costs, and whatever is left from rental income should be available to pay debt service on a mortgage. With workable FHA insurance and contractual rent subsidies, banks could start lending again.
There are many variations on the theme. Britain and the Netherlands have funded very large nonprofit organizations that have taken over public housing and created new schemes to satisfy “customers.” Sweden has no income limits for public housing, which is very well maintained. The families who cannot afford the rent receive housing allowances. Singapore lets families buy their high rise apartments with twenty percent of their retirement savings, and after five years in residence, can sell the apartments on the open market.
Whatever the budget predicament, affordable housing is still an excellent stimulus, with a great multiplier effect to boost the economy. Young people, poor people and middle income families still cannot find decent housing within their means in many cities. In areas with a glut, rent allowances could make vacant units affordable. In areas with low or no vacancies and high costs, we still need new, government-supported housing. And we know that families who feel safe in their housing become more productive citizens.
We would like to avoid complex creative financing and build permanently affordable housing that would become a source of pride for America, as opposed to a maze of financial subterfuges that takes thousands of accountants to unravel.
Carol Lamberg is the executive director for the Settlement Housing Fund and co-chair of the New York Housing Conference. She also serves on the executive committee as the regional affiliate representative for the National Housing Conference.
Anne H. Lindgren currently serves as vice president of the Michaels Development Company. Ms. Lindgren is chair of the Lantern Group and has served on the executive committees for the Settlement Housing Fund and National Housing Conference.
Friday, December 5, 2008
Thursday, December 4, 2008
Wednesday, December 3, 2008
This problem will have to be rectified by a top down approach. The incoming HUD Secretary should be a person of major stature, preferably with extensive housing experience.That person should be made part of the economic policy team. I realize that morale is low at HUD now, but strong leadership can turn it around. A strong leader will attract others to fill the key positions if there is the realization that housing once again has been recognized as having an important role in our federal government.
Lawrence B. Simons is the former Federal Housing Administration commissioner, an NHC Board of Trustees member and a Life Trustee of NHC.
Tuesday, December 2, 2008
The Neighborhood Stabilization Program provides grants to communities laden with high foreclosure rates and was authorized under Title III of H.R. 3221, the "Housing and Economic Recovery Act of 2008." Las Vegas, Nevada currently has the highest foreclosure rate in the nation and is eligible to receive approximately $14 million in Neighborhood Stabilization funds .
Read more about the high rate of home foreclosures in Las Vegas here.