Friday, July 29, 2011

National Housing Counseling Action Network Kicks Off in Baltimore

When $87.5 million in housing counseling funding was cut from the fiscal year 2011 budget, housing counseling agencies and housing organizations from across the country decided that a national coalition was needed to activate and coordinate an advocacy agenda to reinstate funding for the program in the FY 2012 budget.

On Tuesday July 26th, NHC staff along with some members of the Foreclosure Preservation and Neighborhood Stabilization Taskforce participated in a national kick-off event for the National Housing Counseling Action Network in Baltimore, Maryland. The National Housing Counseling Action Network was established to be this convening force to create a unified vision and strategy for the housing counseling industry.

The one-day event was an opportunity for participants to develop a national advocacy agenda for the new network. Participants discussed the challenges they are currently facing and developed principles and goals for the coalition. The day also included homeownership prepurchase and foreclosure prevention workshops as well as plenary sessions on advocacy. The event ended with a pledge to continue to grow the network as well as a plan to join forces and advocate for reinstating funding for housing counseling in the fiscal year 2012 budget.

For more information please visit the Center for NYC Neighborhood’s website.

Thursday, July 28, 2011

Balancing transit dreams with housing needs


Going from national news reports, you’d think all that’s happening in Washington is the sputtering and stalling of negotiations around the debt ceiling. However, those of us who call the D.C. region home can happily report that in the days ahead, we may see relief from gridlock of a more literal kind.

Momentum is building in the national capital region around several new public transit initiatives.  A scan of the local section of the Washington Post in recent weeks reveals a story about development plans coming together in anticipation of the proposed Purple Line, a rail line that would connect Metro stops in Maryland’s Montgomery and Prince George’s counties and has yet to win any construction funds. Other articles address an ongoing debate over placement of a new Silver Line station at Dulles Airport. These are exciting times for transit-oriented development in the Washington area.

However, in all the excitement, it’s easy to forget that shiny new transit lines usually also mean shiny new price tags on real estate along transportation corridors. For example, the Post addressed concerns that redevelopment along Northern Virginia’s Columbia Pike, including the addition of a street car, could result in the loss of affordable rental homes. Last month, in the first issue of his new column, Moving Forward, our own Jeff Lubell discussed ways to build housing affordability into transit line plans before real estate prices skyrocket.

To get planners and advocates in the D.C. area thinking about this topic, the Center is hosting an ongoing series of webinars in partnership with the Metropolitan Washington Council of Governments. Our outstanding speakers are bringing these issues to the forefront and highlighting innovative projects underway in and around Washington, D.C. 

The Live at the Forum Summer Series: Sustainable Development in the National Capital Region, kicked off yesterday with a session on “budget-oriented development” that featured case studies of the Columbia Pike Initiative and the Transforming Tysons project.  Speakers at subsequent sessions will discuss regional coordination and tools for preserving affordability as demographics change in location-efficient areas.  Visit the HousingPolicy.org Forum to learn more.

Wednesday, July 27, 2011

NHC along with others submits more comments on QRM

The National Foreclosure Prevention and Neighborhood Stabilization Task Force, which NHC chairs with Enterprise Community Partners and NeighborWorks America, submitted comments on QRM today, recommending regulators to remain cautious of harming struggling neighborhoods by requiring an overly-restrictive downpayment of 20%. This task force is a cross-industry group of local, state and national organizations working to address the impacts of the foreclosure crisis on communities. See the National Foreclosure Prevention and Neighborhood Stabilization Task Force comment letter for more information.

NHC also submitted comments in partnership with NCB Capital Impact specifically on the issue of affordable homeownership programs funded by local governments and non-profit organizations. In brief, the proposed rules exclude from the definition of QRM many home loans for borrowers that receive assistance through a government-funded or nonprofit affordable homeownership program. These are some of the safest loans for low- and moderate-income families and thus deserve to be included in the definition of QRM. See the joint letter submitted by NCB Capital Impact, NHC and endorsed by 55 organizations from around the country here.

NHC already submitted detailed comments earlier this week. Regulators are accepting comments through August 1, so there is still time to submit your own. See NHC’s comment letter and blog post for a full discussion of the QRM issue.

Moving Forward: Building assets through subsidized rental housing

by Jeffrey Lubell, Executive Director of the Center for Housing Policy

A growing body of research confirms the importance of assets in the long-term well-being of individuals and families. Income helps people meet their basic needs. Assets help them move forward, investing in education for themselves and their children, starting a business, or buying a home. Assets also help families weather setbacks such as job loss or medical emergencies and finance retirement.

A whole field has grown up around this insight, developing and implementing a range of creative asset-building strategies for low- and moderate-income families, such as individual development accounts and matched savings accounts for children.

But resources to finance expanded asset-building programs are severely limited. Especially in this budget environment, where can funds be found to help low- and moderate-income families build assets?

One promising approach is to incorporate asset-building opportunities into HUD rental assistance programs. Families in the public housing, Section 8 voucher and project-based Section 8 programs pay 30 percent of their adjusted income for rent. So, if you can help families increase their earnings -- for example, by offering them the financial incentive of an asset-building account that grows as their earnings grow -- you can collect more rent and use the additional rent to pay for the asset account.

Families with assets enjoy better well-being.

This may sound like a shell game, but it's not. It's value capture: similar, for example, to financing public infrastructure investments with tax increment financing linked to expected increases in property taxes. And as explained below, there's good reason to believe it works.

More than 1,000 housing authorities currently participate in HUD's Family Self-Sufficiency (FSS) program. Enacted in 1990 based on a proposal by the first President Bush, FSS helps families in public housing and the housing voucher program make progress toward economic security by combining:

  1. Stable affordable housing,
  2. Work-promoting case management to help families set goals and overcome barriers to increased work, and
  3. An escrow account that grows as families' earnings grow. 

Participants who become and stay employed, become independent of Temporary Assistance for Needy Families assistance, and achieve the other goals they set for themselves at the outset graduate from the program and gain access to their escrow account. Families have five years in which to achieve their goals.

A recent HUD evaluation illustrates the power of the model. The evaluation tracked 170 families who enrolled in FSS at 13 housing authorities over a four-year period. The evaluation found strong results for about half the sample group, an impressive "success rate":

  • 41 families had graduated from FSS. Their annual earnings had increased from an average of $19,902 in 2006 to $33,390 in 2009 (all in 2009 dollars). 35 had positive balances in their escrow accounts, which averaged $5,294 per family.
  • 43 were still enrolled in FSS and mostly employed during the study period. Their average hourly wages had increased from $11.84 to $13.61 (again in 2009 dollars) and their average weekly hours of employment had risen from 29.4 to 34.9. The overwhelming majority had positive escrow balances, averaging in the range of $3,500.

Admittedly, this evaluation had no formal control group. (HUD is about to launch a randomized evaluation of FSS with a control group.) But given the off-the-charts nature of the results, the 20 years of hands-on positive experience with FSS and the fact that the available research literature suggests that earnings incentives work very effectively for families in assisted housing, there is reason to be optimistic that FSS is indeed having a positive impact.

FSS currently serves about 55,000 families. This makes it one of the largest asset-building programs focused on poor or near-poor families in the nation. At the same time, it serves only a small fraction of the 1.3 million non-elderly households in public housing and the housing voucher program that do not include a head or spouse with a disability. There is significant potential to expand participation in FSS and to help existing FSS programs perform at even higher levels. In this regard, it is heartening to see HUD focusing on providing stronger support for FSS and to see Congress considering legislation to expand eligibility to families living in project-based Section 8 developments and to shore up FSS in other important ways.

With the encouragement and support of HUD, Congress and local housing authorities, FSS could serve tens of thousands of additional families, greatly expanding the number of poor and near-poor families with the opportunity to build assets and make progress toward economic security.

Let's start there. But not stop there.

Even as HUD and housing authorities work to get the most out of the existing FSS program, we should be investing in research demonstrations to develop and evaluate the next generation of asset-building and self-sufficiency programs for HUD-assisted families. We should aim high, striving to offer asset-building accounts to all families living in subsidized rental housing. As explained in a paper that I co-authored with Reid Cramer of the New America Foundation, given the value capture potential of the current rent formula in subsidized housing -- rents rise as incomes rise -- it is likely that a system could be devised that both provides a strong incentive for increased earnings and generates sufficient increased rent revenue to fully pay for the incentive.

Imagine if subsidized rental housing were enhanced so that every family had a strong financial incentive to increase their earnings and a powerful opportunity to build assets. Imagine further if human services, labor and other government agencies worked closely with housing agencies to take advantage of the asset-building potential of subsidized rental housing by providing access to the supports that some families may need to overcome barriers to increased work. As families' incomes rose, they would become better able to afford market rents, opening up space for other families. And with their assets, they could invest in a better future for themselves and their children.

For more information, see Taking Asset-Building and Earnings Incentives to Scale in HUD-Assisted Rental Housing.

Please join the conversation by commenting on this post.

Moving Forward is a new monthly column about ideas for the future of U.S. housing policy by Jeffrey Lubell, Executive Director of the Center for Housing Policy. The column offers perspectives on the government role in housing and on broader housing market trends likely to shape future housing policy.

Tuesday, July 26, 2011

NHC Calls for Elimination of Downpayment Requirement from QRM

NHC submitted comments to regulators on the Qualified Residential Mortgage (QRM) rule calling for the elimination of the 20% downpayment requirement, focusing instead on defining the QRM pool primarily as safe and sound mortgage products that include responsibly structured low-downpayment options without creating an unintended government underwriting standard.  In summary, the recommendations are:

1. Remove downpayment and LTV requirements. (The 10% downpayment requirement offered in the proposed rule would actually be worse.)

2. Consider removing or relaxing debt-to-income ratio requirements.

3. Exempt downpayment assistance and shared equity assistance programs created by government entities and designated, legitimate nonprofits, whether structured as loans, grants, or lower sales prices with resale restrictions.

4. Consider delaying implementation until other aspects of the mortgage finance system are resolved, or making provisions now to require that regulators revisit the rule when other major changes to mortgage finance occur.

Regulators are accepting comments through August 1, so there is still time to submit your own.  See NHC’s comment letter for a full discussion of the QRM issue.

Friday, July 22, 2011

An Affordability Problem

In the Center's latest Paycheck to Paycheck database, an analysis of current home prices, rents and wages across a range of occupations showed that in the midst of a slow recovery from a prolonged recession, home prices have dropped and some employers are slowly starting to hire. However, workers in many newly filled jobs still may not be able to afford housing at the wages currently being offered.

This is a problem nation-wide, as Janet Fowler at Forbes pointed out. And as Jamie Smith Hopkins and Megan Cottrell found, some cities, including Chicago and Baltimore, have it worse than others. But you don’t have to take these bloggers’ words for it: check out how affordable your city is for any one of 72 occupations, and read the report for more comprehensive analysis.

Thursday, July 21, 2011

The Value of Planning Ahead

Today, the Center for Housing Policy is releasing its updated Paycheck to Paycheck database. Paycheck to Paycheck compares wages for more than 70 occupations against home prices and rents in more than 200 metropolitan areas, illustrating how workers in various communities are faring when it comes to housing affordability. The short answer is that there is a lot of room for improvement.

Two of the most popular questions we get about Paycheck are: “why is housing unaffordable?” and “how can we fix it?” The answer to both is “it varies.” From time to time, though, communities are faced with singular opportunities to re-imagine and redevelop their housing patterns in ways that could drastically improve affordability for workers. The development of the Purple Line on the outskirts of Washington, D.C., could prove to be one such chance.

The Purple Line is barely off the drawing board, but communities are already preparing for its impact. The line, planned to arc through the Maryland suburbs around the northern edge of the District of Columbia, would connect three existing Metro lines at an estimated cost of almost $2 billion, and it already has visions of higher density, mixed-use infill developments dancing in the heads of area planners.

Planning ahead, of course, is always a smart move, but the communities highlighted in a Washington Post story this week seem to be missing a significant opportunity at this early stage: to prepare and preserve space for affordable housing. Working to identify opportunities now, before land and property values climb with the new transit options, will make including affordable housing options in development plans much more feasible for local governments and development companies. It could also help to ensure the success of the developments, as low- and moderate-income residents are the most reliable users of transit. Low- and moderate-income families also benefit from proximity to retail and job opportunities within walking distance (or a short transit trip), as it can save them the costs associated with owning a car (and so free up dollars in the household budget for other necessities such as food, clothing and school supplies).

The D.C. metro area is already very unaffordable for working families. Planning ahead for the Purple Line could help keep teachers, police officers, firemen, janitors and other important community members in the area.

Monday, July 18, 2011

Washington Post ombudsman adds little to the HOME debate

Washington Post ombudsman Patrick Pexton on July 15th wrote about the controversy surrounding the Post’s criticism of the HOME program back in May, but the review adds little to the debate.  It doesn’t address the performance of HOME relative to the widespread delays in private real estate development, nor does it do anything to reconcile the apparently incompatible evidence-based claims by both HUD and the Post. Since no new data has been released by either the Post or HUD, the ombudsman’s opinion doesn’t provide enough information to those observing the debate to come to any real conclusions on the program.

Wednesday, July 13, 2011

"Live at the Forum": Sustainable Development in D.C.


This summer, the Center for Housing Policy is partnering with the Metropolitan Washington Council of Governments to present a three-part webinar series, Sustainable Development in the National Capital Region. These latest editions of the "Live at the Forum" series will highlight exciting and innovative projects in the Washington, D.C., metro region that are connecting housing and transportation policies together to develop sustainable and inclusive communities. The projects that will be featured include: Arlington County's Columbia Pike Initiative, the Transforming Tysons project, D.C.'s Region Forward initiative, the D.C. Transit-Oriented Development Affordable Housing Trust Fund, and affordable housing preservation efforts throughout the region.

Click on the following links to register for the webinar series and to see the great panel of speakers lined-up!
The webinar series will help queue up topics that will be covered in more detail at the upcoming Solutions for Sustainable Communities: 2011 Learning Conference on State & Local Housing Policy from the Center for Housing Policy and National Housing Conference. The conference will take place in Washington, D.C., September 26-28, 2011. See the event page at NHC.org for more details.

For more information about the webinar series, contact Rebecca Cohen at (202) 466-2121 x236 or rcohen@nhc.org.

Tuesday, July 12, 2011

Legislators go in circles on GSE reform

At a hearing today, Representative Ed Royce (R-CA) introduced a bill to eliminate the National Housing Trust Fund (NHTF) before a subcommittee of the Housing and Financial Services committee and it passed by a vote of 18-14, along party lines. The bill will be considered by the full committee next.

Although Chairman Garrett (R-NJ) set the stage for a bipartisan exchange on the future of the NHTF, the conversation quickly turned to finger-pointing and what ultimately seemed like an opportunity for members to take positions without actually making any decisions on comprehensive GSE reform.

The NHTF was established as a provision of the Housing and Economic Recovery Act of 2008 and to be funded by annual contributions by Fannie Mae and Freddie Mac. Since the two GSEs went into conservatorship, the fund has not yet been capitalized.

Representative Barney Frank (D-Mass.) voiced his frustrations over Republican inaction on GSE reform, going so far as saying, they “have a resistance to create rental housing assistance” because of an inclination towards homeownership, even if income doesn’t allow for it. Chairman Garrett (R-NJ) said the fact that this hearing was being held shows that Republicans are open to discussing GSE reform. However, Frank was skeptical that a hearing on the NHTF is an effective use of the subcommittee’s time.

On the other side of the aisle but in similar vein, Campbell disagreed with the purpose of the hearing all together, saying that the subcommittee should be debating comprehensive GSE reform, referencing his own bill (Campbell/Peters) and the Miller/McCarthy bill, both of which have received little attention. Campbell warned that by having conversations on eliminating the trust fund without substantive dialogue on the future of Fannie Mae and Freddie Mac, the stability of the housing market is at risk. His comments went mostly unacknowledged.

Trying to find a middle ground, Representative Al Green (D-TX) introduced an amendment that preserves the NHTF, but eliminates the required annual contributions of Fannie Mae and Freddie Mac to fund the program. The amendment did not pass.

Thursday, July 7, 2011

Thinking long-term about affordability near transit

There are numerous benefits to the transformation of blighted neighborhoods with vacant and underutilized properties into walkable, mixed-use, transit-oriented communities that offer residents access to public transportation, jobs and a host of amenities. Not only does the immediate community realize these benefits; the greater region also does. These transit and job centers often act as economic engines for their cities, providing employment, shopping and recreation for those living outside the area. They can also add to the overall vibrancy of their respective cities, serving as hallmark locations that often receive national recognition.

But at the same time, these developments often come at a cost to those who most need better access to transit, jobs and vital services. Reliable transit and the other amenities afforded by TOD usually add a premium to housing costs in these areas – and this premium often increases as demand for transit and location efficiency drives residential and commercial growth in these communities. At some point, these transit and job centers may no longer be affordable to low-, moderate- or even middle-income households.

Working families with tight household budgets benefit most from proximity to transit, jobs and services. In certain parts of the country, their combined housing and transportation costs can eat up well over half their monthly income. Living in these location-efficient, transit-oriented communities can help these families significantly reduce their transportation costs…but only if housing in these communities remains affordable to them.

So how can these lower-income, working households gain access to these vibrant, transit- and amenity-rich neighborhoods?

Localities like Austin, TX, and Fairfax County, VA, are employing programs that preserve the affordability of for-sale and rental properties in areas undergoing major transit investment. Essentially, the housing created using these programs will remain affordable for as long as the transit improvements themselves will last – several decades, maybe even centuries.

Austin projects like the Mueller Airport redevelopment use inclusionary zoning tools that set aside a quarter of units in new developments to be affordable to low-income households in combination with PeopleTrust, a shared equity housing program that keeps these homes affordable for at least 99 years. The ambitious redevelopment plan for Tysons Corner in Fairfax County employs a similar inclusionary set-aside program along with long-term affordability restrictions for rental and for-sale units that will preserve affordability over and beyond the three-decade development timeline for the project.

The Cornerstone Partnership, the Center for Housing Policy and the National Housing Conference recently hosted a webinar exploring tools and strategies for providing long-term affordability near transit, highlighting the efforts in Austin and Fairfax County. If you have any questions you’d like to pose to the presenters and the greater housing policy community, you can post them on the HousingPolicy.org Forum.

Wednesday, July 6, 2011

GSE bill from Miller and McCarthy would create a government-owned mortgage credit facility

A new bill from Representatives Gary Miller (R-CA) and Carolyn McCarthy (D-NY) would create a government-owned credit facility to replace Fannie Mae and Freddie Mac. The first preview of the bill came on June 24th at NHC’s Policy Summit on Mortgage Finance, where Rep. Miller drew a sharp contrast between his proposal and other GOP-sponsored bills in the House that would quickly wind down the GSEs without any replacement.

The Market Facility for Residential Mortgages Act of 2011 would create a single entity, owned by the federal government, that would issue mortgage-backed securities (MBS). The MBS would have an explicit government guarantee paid for by a guarantee fee set by the Federal Housing Finance Agency (FHFA), which currently regulates Fannie and Freddie. FHFA would also be charged with making sure the facility’s market share did not exceed specified targets except during times of market disruption.

The Miller-McCarthy bill has several strengths based on principles articulated by NHC and others:
  • Explicit government guarantee paid for by guarantee fees
  • Strong regulation by FHFA
  • Ability to scale up government role in times of distress
  • Maintains existing securitization capacity to supply liquidity to mortgage markets
  • Provides access mortgage credit broadly, in all markets under all market conditions
  • Continues the successful multifamily mortgage business line (although it is unclear whether all existing products fit within the language in the draft version of the bill)
The bill is set to be introduced on July 7, with a briefing scheduled in the afternoon. As details are released and debated, we will see how the bill develops. As of this writing, early drafts did not include explicit requirements for affordable housing, although the bill would allow for low-downpayment loans with mortgage insurance.

Tuesday, July 5, 2011

HUD Secretary on 20% down payment requirement: “We can’t overcorrect”


Secretary Donovan appeared on CNN’s “State of the Union” on Sunday to discuss the 20% down payment requirement in the draft qualified residential mortgage (QRM) rule as part of the Dodd-Frank legislation.  Mortgage loans that don’t meet the down payment requirement would be subject to risk-retention, potentially raising costs and unduly burdening low- and moderate-income homebuyers with good credit but little upfront capital.

Donovan asserts “we can’t overcorrect” the problems that led to housing meltdown and must find ways to provide access to credit that isn’t overly restrictive for Americans who may be successful homeowners. By going so far in the “other direction, we cut off ownership for people,” said Donovan to a CNN correspondent.

In addition to QRM, Donovan gave his analysis that home prices will “very unlikely” see decline in the coming years. The bigger question is when housing prices will rise—some analysts say as early as this fall while others think it to be next year. Donovan advised this to be the right time to buy a home due to low housing prices that will likely rise.

Watch video of Secretary Donovan on CNN’s “State of the Union” here. Also read more on NHC’s position on QRM here