Wednesday, August 24, 2011

National coalition advocates for job growth through the National Housing Trust Fund

On August 23rd, 45 national organizations, including the National Housing Conference, sent a letter to the Administration requesting that $10 billion for the National Housing Trust Fund be included in the President’s jobs-creation plan.

Affordable rental housing for extremely low income households continues to be a serious problem nationwide. There are 10 million extremely low income renter households in our country and only 6.5 million housing units they can afford. The Trust Fund, which was authorized in 2008 but has yet to be funded, will produce, rehabilitate, preserve and operate rental housing that is affordable to extremely low income households across the country while also advancing the Administration’s priority of ending homelessness for veterans and families with children.

The letter affirms that the Trust Fund would also be a strong job creator, observing that every $10 billion spent through the Trust Fund would create 122,000 new jobs in the construction industry and 30,000 new, ongoing jobs in the operation of the rental housing.

The full letter can be viewed on the National Low Income Housing Coalition’s website.

What a perfect time to introduce our new earthquake toolkit!

by Laura Williams

Yesterday’s earthquake (my first!) was lucky, in that there doesn’t seem to be much damage: a crack here, some debris there, but the Mid-Atlantic ended up mostly unscathed. I was particularly struck by this, as we have just begun work on a new disaster mitigation toolkit on earthquake damage mitigation.

This new toolkit will complement our existing toolkit on weather-related disasters – which primarily covers hurricanes and flooding (speaking of which – we might have a hurricane here, too, before the week is out!). One of the initial points we’ve focused on is how to encourage homeowners and landlords to improve existing structures to make them safer in the event of a disaster. This is a particular problem, as building codes generally require new structures to meet certain standards of resistance, but these are not retro-active. (See this article in Slate for an interesting read on the International Building Code and a comparison of requirements across the country.)

One way to encourage updates would be through insurance rebates or premium deductions for making a home safer. However, earthquake insurance is not required even in places where earthquakes are a known risk, such as California, where only 12 percent of homeowners hold insurance. This low rate of insurance has the additional problem of making any quake that does occur extremely expensive – obviously for those without insurance, but also for insurance companies which have trouble spreading the risk associated with an earthquake in such a small pool.

But the real lesson of yesterday is that earthquakes can happen just about anywhere. Fault lines crisscross the earth, and even “inactive” ones move from time to time. Perhaps there is only a damage-causing event every 100, 500, 1,000 years – but they happen, and getting property owners to think about that risk is another hurdle for ensuring people are properly insured.

This is a problem we’ll be thinking about for the next few months; share your ideas in the comments below.

Tuesday, August 23, 2011

Op-ed raises old housing assistance stereotype

 by Sarah Jawaid, National Housing Conference

James Bovard got it so wrong. In his Wall Street Journal op-ed, “Raising hell in subsidized housing” he ignores the Section 8 program’s long history of housing some of the most vulnerable in our society—approximately 36% percent of Section 8 renters are elderly or disabled—while also strengthening communities and supporting families. Instead he attacks the program as an incubator for crime. This is an old stereotype, and the evidence often cited to support it mostly just illustrates the unsurprising coincidence of poverty and crime. But Bovard’s claim that to reduce crime, specifically homicide, we must reduce Section 8 assistance, is logically fallacious.

The evidence Bovard offers to support his claim is weak. He cites an Indianapolis Housing Authority (IHA) study that states 80% of “criminal homicides in Marion County, Ind. links to individuals fraudulently obtaining federal assistance in either the public housing or Section 8 program administered by the agency.” Bovard doesn’t unpack what this statistic means. It could mean that 80% of all Indianapolis murderers were fraudulently trying to obtain fraudulent vouchers. It could also indicate that 80% of all murderers in Indianapolis might have known a lower-income person who had trouble with their Section 8 paperwork. Bovard never makes that "link" between murderers and housing voucher frauds clear. To further muddle his point, he also doesn’t draw a distinction between residents of public housing and Section 8 recipients. So, it does little more than show that poverty and crime are somehow linked, which just isn’t news.

Bovard further ignores the result of the Indianapolis study. How did IHA address criminal activity in its “public housing program [and] Section 8 program”? The agency received a $1.3 million grant from the Department of Justice to crackdown on criminal activity that led to hundreds of arrests and reduction in crime, illustrating the value of better coordination between local police departments and housing assistance offices, rather than a reduction of housing assistance.

Bovard goes on to quote Geetha Suresh of her research of Louisville, Kentucky over a 19 year period, saying, “homicide was simply moved to a new location, not eliminated.” But her intent was not to say that public housing and Section 8 is the problem, merely that public housing and Section 8 has been linked to crime in Louisville, Kentucky. She says, “although low-income public housing itself may be safe, it draws offenders to victims and produces an elevated crime risk (Suresh & Vito, 2007).” *

Section 8 vouchers are designed to serve as a support system for families looking to move upward, and part of that is providing affordable housing in communities with employment, good schools, and social services. A study conducted in Denver found that “poorly maintained and managed rental housing, unsavory commercial establishments, gang activity, substance abuse, unsupervised teens, and transients were the main source of crime, not supportive housing (Galster et al., 2002).” The Section 8 program is providing over 2 million very low-income households with opportunities to find safe and affordable housing. Reducing Section 8 subsidy certainly isn’t going to reduce crime; in fact, with no way out of unsafe environments, more criminal activity is likely.

Bovard’s final logical leap, that allowing Section 8 recipients to rent apartments outside of poverty-concentrated neighborhoods will “wreck” other neighborhoods is simply unsupported. The real risk communities face is in the loss of essential support systems like Section 8 that helps people maintain households through periods of unemployment and economic disruption.

****

*Suresh further states that “research on the nature of these homicides (i.e. victim/offender relationship, if they were related to drug deal or domestic violence) is needed to analyze and help determine whether public housing residents are victims and/or offenders. If public housing residents are victims, public housing policy and revitalization need to focus on providing defensible space to protect tenants. If the public housing residents are offenders due to economic oppression and poverty, public housing revitalization policy should focus on bringing economic growth and development of those areas with high opportunities for employment and income generation” (Suresh, 2009).

Galster, Georgel, et al., (2002).The impact of supportive housing on neighborhood crime rates. Journal of Urban Affairs, Vol. 24, Iss. 3; p. 289-316

Suresh, G., & Vito, G. (2007). The tragedy of public housing: Spatial analysis of hotspots of aggravated assaults in Louisville, KY (1989-1998). American Journal of Criminal Justice, 32, 99-115.

Suresh, G., & Vito, G. (2009). Homicide Patterns and Public Housing: The Case of Louisville, KY (1989-2007.) Homicide Studies, Vol. 13, Iss. 4; pg. 411.

Monday, August 22, 2011

The Gray Lady calls for stronger relief for struggling homeowners

A New York Times editorial, “Homeowners Need Help,” (8/21/11) applauds the Justice Department for investigating whether Standard & Poor’s purposely overrated bad mortgage securities in the years leading up to the crisis. However, that storyline mostly serves as a hook for calling for more action to help homeowners hurt by the housing crisis.

The editorial argues that the Obama Administration and the banks have not done enough to help struggling homeowners, citing convincing statistics. Home prices have declined 33 percent since the market’s peak five years ago and 14.6 million homeowners are underwater, owing more on their mortgages than their homes are worth. In addition, 3.5 million homes are in some stage of foreclosure and nearly six million borrowers have already lost their homes.

What’s on the NYT editorial board’s wish list?
  • Principal reductions for underwater loans, brought on by Fannie Mae and Freddie Mac “urging” banks to do so
  • Allowing refinancing on a wider range of underwater mortgages for borrowers who are current on their payments
  • Allowing underwater borrowers who file for bankruptcy to apply their monthly mortgage payments entirely to principal for five years (in effect, temporarily reducing the loan’s interest rate to zero).
We’ll see after Labor Day what comes out in President Obama’s jobs-creation plan, which is expected to include some housing relief measures.

Friday, August 19, 2011

The D.C. Region: Fertile Ground for Policy in Action

This September 26-28, the National Housing Conference and Center for Housing Policy, in partnership with our sponsors and planning committee, will host the Solutions for Sustainable Communities: 2011 Learning Conference on State and Local Housing Policy in Washington, D.C. The Learning Conference is a forum for over 500 state and local leaders to come together to share information on a wide range of topics related to the intersection of housing, transportation, and environmental policy.

We’re not holding this conference in D.C. just because it’s the center of national policy. The D.C. area is also living laboratory for remarkable local and regional programs that conference participants can experience firsthand during our mobile workshops or from an exciting lineup of speakers that includes some of the region’s most innovative thinkers.

Jurisdictions across the D.C. region are taking steps to expand housing choice for working families while make their community more sustainable by retrofitting suburban corridors to accommodate new transit; promoting walkability and bikability; and targeting affordable housing investments near job centers and planned transit expansion.

Solutions for Sustainable Communities will showcase these regional examples throughout the conference and they will take center stage during Wednesday, September 28 Town Hall Plenary. This final plenary session will feature government leaders from some of the largest jurisdictions in the D.C. region to discuss the challenges and opportunities for developing sustainable and inclusive communities, with an emphasis on local planning and development projects.

The discussion will be moderated by Robert Puentes, senior fellow and director of the Metropolitan Infrastructure Initiative at the Brookings Institution, and will feature an outstanding line-up of speakers:
  • County Executive Rushern Baker, III, Prince George’s County, MD
  • Mayor William Euille, City of Alexandria, VA
  • John Hall, Director, District of Columbia Department of Housing and Community Development
  • Supervisor Catherine Hudgins, Fairfax County, VA
  • County Board Chairman Christopher Zimmerman, Arlington County, VA
Solutions for Sustainable Communities is not to be missed. Register online today to attend the Town Hall Plenary and the array of sessions, facilitated discussions, training sessions and networking opportunities. Click here to learn more about the learning conference. Register today!

Tuesday, August 16, 2011

White House continues to kick around the future of GSE reform


An August 15 Washington Post story covered the ongoing development of a mortgage finance reform proposal first given shape by the Obama Administration in its February white paper, which outlined three options for government’s role in mortgage markets.  Those options ranged from an emergency-only government rescue capacity to an always-on government guarantee to sustain liquidity, stability, and broad affordability of home finance.  The Post reports that the proposal under development would “keep the government playing a major role in the nation’s mortgage market.”

Naturally, the White House describes the Post’s reporting as “premature.”  Which, of course, it is—that’s why it’s interesting to read now.  The Post’s article also provides a useful thumbnail sketch of the mortgage finance policy development thus far, though it focuses on the Administration perspective to the exclusion of legislative activity.  One example of a bipartisan proposal is the Miller-McCarthy proposal to nationalize Fannie and Freddie into a single credit facility. Another is the Campbell-Peters  proposal (HR 1859) to create multiple private securitizers with a federal backstop.

Thursday, August 11, 2011

Guest Post: "Conrad Egan"

by Matthew Brian Hersh, senior editor of the National Housing Institute's "Rooflines" blog.

NHC invites guest blog posters to write on important housing topics.  The views expressed by guest posters do not necessarily reflect those of NHC or its members.


I suspect I came to the same conclusion when titling this post as Harold Simon did when thinking of a title for our summer 2011 interview with Conrad Egan, who retired as president of the National Housing Conference in 2010. Conrad Egan—an organizer, housing developer, HUD official, and affordable housing advocate—is often best identified by name alone.

Don’t be mistaken: the whole cliche that he “needs no introduction” is not applicable here. Egan deserves an introduction. Our interview spans his five-decade career, from his time at the University of Michigan School of Social Work where he specialized in community organizing, to his abrupt meeting with Saul Alinsky in Chicago (who promptly told Egan to get back to Detroit), to his first stint at HUD working with the likes of Marilyn Melkonian, to the National Housing Partnership, to a second stint at HUD, to NHC, and to a decidedly busy post-retirement working to end homelessness in Fairfax County and serving on advisory boards to the Virginia governor, Housing Virginia, and DC’s Community Preservation Development Corporation.

It’s a fascinating interview on several levels, but Egan’s ability for storytelling is on display here, particularly when he describes being in Detroit during the 1967 race riots:

We could hear the guns—there would be a “pop,” and then there would be a 50-caliber machine gun response, “pop-pop-pop.” And the major rioting occurred a little north of us, up 12th Street, north of the boulevard, and then over on the west side, over on Cass and other streets like that. Our neighborhood supermarket got burned out. A lot of our neighbor institutions were destroyed. We were in our home and we heard all this stuff going on, but we didnt feel threatened or endangered.

I was working at the time at University of Detroit Housing Law Project over on the immediate other side of the CBD at the University of Detroit Law School. And I walked into the office, and there was nobody there, and the streets were deserted. So I eventually called my boss, who was located close by in a development called Lafayette Park. This is an interesting development in Detroit that was designed I think by Mies van der Rohe, if I have my architects correct. It’s typical Mies style.

And so she said, “Hey, come on over to my apartment and well get together.” It was a fascinating, amazing picture. If you looked out over this high-rise, and looked down on the folks who were there because they didn’t go to work because they were scared, they were down there swimming in the pool and having their margaritas and Bloody Marys. But as you looked out over the city, you could see the smoke plumes coming up.


There’s so much more. You should really check it out here.

Wednesday, August 10, 2011

Young Leaders in Affordable Housing tour CPDC’s Mayfair Mansions

The Professional Development Committee of Young Leaders in Affordable Housing (YLAH) hosted a tour on Tuesday, August 9 of Mayfair Mansions, an affordable housing property owned and operated by the Community Preservation and Development Corporation (CPDC). Mayfair Mansions is an impressive complex of 410 garden-style units with a pool, community center, and playground. All of the one-, two- and three-bedroom units are affordable to families earning 60 percent of area median income (AMI) or less, and more than 100 of the units are reserved for families earning less than 30 percent of AMI.

Tim Westrich, a Real Estate Associate with CPDC and member of YLAH, hosted the event. Tim gave a great overview of the history of the property and detailed the financing structure used to preserve the property. As he described, the renovation was due in large part to many types of financing involved: low-income housing tax credits, historic tax credits, tax-exempt bonds for construction and permanent financing, funding through the District of Columbia’s Housing Production Trust Fund, and funds from the Federal Home Loan Bank of Atlanta.

Sonya Hochevar, CPDC’s program staffer at Mayfair, described the diverse range of programs available for residents, including coffee hours for senior citizens, computer training, dance classes, youth mentorship initiatives and a recently concluded summer camp supported by Save the Children. YLAH participants were eager to understand the challenges, benefits and outcomes of these various programs.

“The most inspiring part was that the tenants organized to preserve their home several years ago when it looked like it might be converted into condos,” said YLAH member Elina Bravve. We even met with some of the long-time tenants who were involved in saving their community.”

The YLAH Professional Development Committee seeks to provide members with opportunities to enrich their careers in affordable housing. Please stay tuned for future YLAH events.

Tuesday, August 9, 2011

Why It’s the Wrong Time to Cut Housing Programs

With the debt ceiling debate behind us, at least temporarily, some economists have expressed concern that the spending cuts required in the deal may stall or reverse the nation’s already weak economic recovery. In a recent article published in the Planning Commissioners’ Journal, Center for Housing Policy senior research associates Rebecca Cohen and Keith Wardrip make the case that cuts to housing programs may also weaken local economies. Investments in affordable housing can create local economic growth and increase state and local tax revenues – both of which are sorely needed in many parts of the country today.

The article outlines the basic premises covered in the Center’s recent literature review exploring the impact of affordable housing on local economies. Building affordable housing creates short-term jobs in the construction industry, and, once occupied, its residents support local commerce and have more money to spend on necessities because their housing costs are in-line with their incomes. State and local governments benefit from taxes and fees collected during construction. Additionally, research shows that the risk of foreclosure is lower for those who participate in affordable homeownership programs than for similar borrowers who do not, and reducing the number of foreclosures allows local governments to spend less on property maintenance and court costs. Finally, by creating affordable options that would not have existed otherwise, investments in affordable housing can make it easier to attract and retain an essential workforce, thus making a community a better place to do business.

No one would argue that waste should be trimmed from any government’s budget. However, proven programs that invest in affordable housing for those who need it should be spared from punitive cuts. Not only do these programs lower the cost of housing for those who cannot afford what the market offers, but they can also inject life into flagging local economies. The irony is that the failure to protect these programs might weaken the economy at a critical time and create even more families who need housing assistance.

Thursday, August 4, 2011

NHC’s Ethan Handelman asserts the importance of getting QRM right


In a Bloomberg wire story this week, NHC Vice President for Policy and Advocacy Ethan Handelman emphasized the importance of getting the new Qualified Residential Mortgage (QRM) definition right from the beginning.

“This is the first step in reshaping our housing finance system,” Handelman said, referring to the forthcoming decision federal regulators will make on which mortgages should be considered low-risk. “It has implications far beyond the specific step it takes. It sets you on a path.”

Acting on two mandates of the Dodd-Frank Act, federal regulators initially proposed a risk retention rule defining QRMs as requiring a minimum 20% down payment and top credit scores from borrowers. (QRMs would be exempt from a risk-retention standard requiring that sponsors of asset-backed securities retain at least five percent of the credit risk of the assets.) After NHC and other housing groups joined in criticizing the proposal, regulators extended the deadline for comments to August 1.

NHC has joined other industry and advocacy groups in criticizing the new QRM definition proposed by federal regulators. In comments to regulators, NHC argued that the minimum down payment and credit requirements would make loans with good terms harder to come by for low- and moderate-income borrowers. A recent Washington Post column asserted that the proposed down payment rules would disproportionately affect minorities.

Making the Most of Your Money in Neighborhood Stabilization

With weak revenue leading to spending cuts nationally, communities with large numbers of foreclosures are in a difficult position of needing to take action to prevent ripple effects of neighborhood decline but also needing to watch every penny in the process.  What are some of the ways to get the most value for your limited neighborhood stabilization dollars? 

Target Programs for Maximum Effect

Spreading funding around in a thin layer throughout a city may seem equitable, but it is not effective.  Rehabbing one property on a block where several other properties are vacant will not improve local conditions.  On the contrary, even a high-quality rehab may find no interested buyers if the block is still distressed, and the home can be expected to deteriorate again.  Rehab money can easily be wasted by attempting to spread a little money around a lot of places.

Similarly putting rehab money into properties that are in very strong housing markets may not be the smartest use of limited funding.  A small number of vacant properties in an otherwise strong area are likely to attract private investment and recover without public money. 

Public funds are generally better spent on areas with tipping point housing markets – areas that would still have moderate appeal if only the foreclosures were fixed up.  Local real estate experts may already know which communities fit this category.  For communities that need some extra help, data and guidance for creating an effective neighborhood stabilization strategy are available through Foreclosure-Response.org.

Targeting resources to revive a few areas completely will allow the community to get the most impact from its funding investment and then turn its focus to another neighborhood and begin to apply a similar strategy there. 

Adopt Cost-Saving Approaches to Code Enforcement

Maintaining the quality of a neighborhood can also happen within existing budgets – no special neighborhood stabilization funding is needed.  The new approach to code enforcement included in Baltimore’s Vacants to Value initiative is a good example.  The city streamlined its procedures for following up on violation notices and was able to reduce costs while increasing results.  Violation notices now automatically trigger a warning letter followed by a citation (with a $900 administrative fine, similar to a parking ticket).  A second citation and ticket are automatically issued if the violation is not resolved.  The new system means that the housing department only needs to get attorneys involved in the most egregious cases.  The steep fines and quick turnaround of citations helps the city improve the condition of properties without needing to increase their code enforcement budget.

Prevent Vacancies 

One of the strongest ways to stabilize neighborhoods is to prevent vacancies; if properties don’t go into decline there is no need to spend money stabilizing them.  Foreclosure prevention is clearly a key way to prevent vacancies, but policies can also be implemented to break the link between foreclosures and vacancies.  Creating an automatic mediation program is one low-cost, high-impact policy for foreclosure prevention.  Communities can also build a coalition with a local bar association to train lawyers to provide pro bono assistance in foreclosure cases.  Ensuring that renters are aware of their rights after foreclosure can also be a low-cost method of preventing vacancies and thereby preventing neighborhood decline.

As foreclosure rates stay at historic highs (and rise even higher) and budgets are constantly being slashed, communities are faced with a tremendous challenge.  The approaches mentioned here are some of the stronger solutions for stabilizing neighborhoods on a limited budget, but innovative thinking can surely uncover more ways to stretch the value of your neighborhood stabilization dollars and improve communities even if there is no NSP money on the table.

Wednesday, August 3, 2011

Guest Blog Post: "No more of the same failed finance systems"

by Tom White and Charlie Wilkins


NHC invites guest blog posters to write on important housing topics.  The views expressed by guest posters do not necessarily reflect those of NHC or its members.


Today we face a global housing finance crisis as a result of failures in single family finance. But make no mistake, the same factors that caused the single family finance crisis – a federal guaranty for mortgage loans, the failure to assess risk accurately, and inappropriate capital requirements – have been at work in the multifamily industry as well.

Yet industry participants say that there is no problem in multifamily and seem to be calling for 'more of the same, except with less discipline'. See, for example, position papers from the National Multi Housing Council, the National Housing Conference and the Center for American Progress.

We have spent our careers working in apartment finance and apartment program administration, and we disagree. Instead, ‘more of the same is the wrong idea, and we need more discipline, not less’.

For a full discussion, see our longer paper available here or by contacting us.

We take issue with the conventional wisdom in three major ways:

  • Industry participants imply that because we have a government-dominated multifamily lending system today, we need one in the future as well. We disagree; the present government-dominated system should be dismantled over time and replaced with a fully private system.
     
  • Industry participants imply that because the GSE multifamily programs have remained profitable, they are safe. We disagree; although the GSE multifamily lending programs have been generally prudent and safe, the GSE capital requirements were and are too low to protect against a repeat of 1989-1991 multifamily market conditions.
     
  • Industry participants imply that because the GSE multifamily experience has been good, multifamily lending is safe. We agree that prime multifamily lending is safe, but most of the lending that industry participants want is below-prime lending that is risky and that should only be made by private lenders with their own capital at risk.

A Government-Dominated Multifamily Lending System is Bad Policy and Bad Economics

Other countries have viable, stable mortgage credit markets without a government guaranty (see our longer paper). So there is no reason to think that a guaranty is necessary in the United States. Clearly, however, a federal guaranty involves significant risk to taxpayers. We believe that a federal guaranty saddles the government with a lot of risk, for little or no actual gain.

Government has proven time and time again – and not just in housing – that government is not an efficient market maker. Government domination of a lending market always distorts the behavior of borrowers and lenders and politicians. Federal backing becomes incompatible with the ‘skin in the game’ that keeps a creative discipline in lending products.

GSE Multifamily Programs Have Been Successful But Not Over a Full Market Cycle

It is true that GSEs have had a strong performance in multifamily, but that performance does not cover a full market cycle. Although recent single family market conditions represent a true bottom of cycle, in order to find a multifamily bottom of cycle, we have to look back to 1989-1991. That is, to a time that predates current GSE multifamily efforts. Similar conditions prevailed in 1974-1976. In a repeat of those market conditions, we would have seen GSE multifamily failure, even with the generally conservative loans that the GSEs made over the past 15-20 years. Said bluntly, the 0.45% capital requirement for the GSEs was and is too low, even for prime multifamily loans.

We believe that the current GSE programs were created in a sort of reverse bubble, in a reaction to the disastrous losses that multifamily lenders suffered in the 1989-1991 market bottom. In the aftermath, the GSEs created conservative and prudent programs, and government regulators did not meddle. We believe that if a federal guaranty for multifamily is continued, government will meddle, risk will increase, and taxpayers will ultimately suffer.

Prime Multifamily Loans Are Safe, Below-Prime Multifamily Loans are Risky

We happen to agree that over the past 15-20 years the GSEs demonstrated what prime multifamily mortgage loans were, how to make prime multifamily mortgage loans, and that prime multifamily mortgage loans are safe investments. We also believe that prime (GSE-style) multifamily loans are on the order of five times safer than below-prime (conduit-style) multifamily loans.

Below-prime multifamily loans include construction loans, loans to properties in lease-up, “story loans” based on the hope of higher rents, loans in markets with declining population, loans in small markets, loans on small properties, loans exceeding 75%-80% of value, and loans to properties with complex subsidy structures. Curiously, however, industry participants (including the Center for American Progress and the National Housing Conference) want a federal guaranty to be extended to exactly these kinds of loans. That, we believe, would be a formula for disaster.

Say that the present 8.0% bank capital requirement is “right” for below-prime multifamily loans. If we are correct that prime multifamily loans are on the order of five times safer than below-prime loans, the “right” capital requirement for prime multifamily loans might be in the range of 8.0% ÷ 5 = 1.6%. That is, higher than the 0.45% GSE capital requirement but not nearly as high as the current bank capital requirement.

A Careful Transition is Needed

We acknowledge the fear of throwing away the crutch (the present federal guaranty for multifamily debt). We also acknowledge that a transition to a fully private multifamily lending market cannot occur overnight. Rather, we believe a transition is needed over a reasonable period such as five years.

In Closing

It is essential to return to a fully private multifamily mortgage system, without a federal guaranty. That system should make clear distinctions between prime and below-prime loans, with prime loans being rewarded with appropriately lower capital requirements.

Because multifamily and affordability are such closely related topics, in our longer paper we also argue for taking a careful look at the existing stock of federally subsidized apartments, to reach a better understanding of how to structure properties for long-term success.

We look forward to the debate.



Tom White

After leadership positions with the Michigan State Housing Development Agency and the National Council of State Housing Agencies, Tom White was responsible for Fannie Mae’s multifamily lending activities from the early 1990s through the early 2000s. twhite518@gmail.com

Charlie Wilkins

After being responsible for asset management of the National Housing Partnership’s 60,000 unit portfolio of affordable apartments, Charlie became a consultant in 1997 and now works primarily with regulatory agencies regarding affordable housing policy, finance, asset management and property management. cwilkins@compassgroup.net

Monday, August 1, 2011

Washington Post: Proposed down-payment requirement would squeeze minorities

Comments on the proposed qualified residential mortgages (QRMs) rule are due to federal regulators today. One key provision within the rule is a 20% down-payment requirement. NHC has united with consumer advocates and the housing industry to recommend the elimination of this requirement, focusing instead on defining the QRM pool primarily as safe and sound mortgage products that include responsibly structured low-down-payment options. (See NHC’s QRM comments and the Coalition for Sensible Housing Policy.)

Michelle Singletary’s July 30 column in the Washington Post highlights the particular housing and asset-building challenges faced by minority households. She notes that the proposed 20% down-payment requirement would have disproportionately negative consequences for minorities and cites a new report from the Pew Research Center, which found that there is a major and growing homeownership and wealth gap between minorities and whites. The housing crash erased home equity across the country, but minority homeowners had a greater portion of their assets concentrated in their homes and were hit harder by the crash. Singletary observes that lenders know how to make low-down-payment lending work (don’t make the loans predatory, for instance), and that we still need federal policies to close the homeownership gap between whites and minorities.

$95 Million Available Through Sustainable Communities Grant Programs


HUD Secretary Shaun Donovan announced on Thursday, July 28, that $95 million would be available through the Regional Planning and Community Challenge Planning Grant programs. Both programs are entering their second year as part of the Partnership for Sustainable Communities—a collaborative effort between HUD, the Department of Transportation, and the U.S. Environmental Protection Agency to provide Americans with sustainable housing and transportation choices. 

The Regional Planning Grant program will focus on funding two types of regional planning—1) the preparation of regional plans for sustainable development and 2) the modification of existing plans to conform to the six Livability Principles established under the Partnership. The Community Challenge Planning Grant program will award funds to state, local, and tribal governments to promote sustainability at the local and neighborhood level. Of the available funding for the Community Challenge Planning Grant program, $3 million will be set aside for localities with populations less than 50,000. Pre-applications for the Regional Planning Grant program are due August 25, 2011 and Community Challenge Planning Grant program applications are due September 9, 2011. Those interested in applying can find more information and application materials here.