Wednesday, February 29, 2012

Senators support change to downpayment requirement in QRM

by Ethan Handelman, National Housing Conference

Senators Johnny Isakson (R-GA) and Jeff Merkley (D-OR) both emphasized the need to revise the proposed qualified residential mortgage rule (QRM) to remove the 20% downpayment requirement. The senators spoke at a policy event hosted by the National Journal, “Underwater: Washington’s Role in Keeping Underwater Homeowners Afloat” to highlight the challenges facing our housing finance system.

Senator Isakson mentioned QRM as one of the constraints blocking a housing recovery, noting that restoring consumer confidence in housing requires that mortgage credit be accessible broadly and that lenders and investors have certainty in regulation. Senator Merkley made similar points and further emphasized that focusing on downpayment is a “misdefinition of the problem,” because low-downpayment lending can be safe and successful.

NHC and a broad coalition of housing groups have spoken out to oppose the downpayment restriction in the proposed QRM rule (see NHC’s comment letter and coalition efforts). Regulatory action is still pending, and there has also been legislation introduced, for instance, in Senator Isakson’s pending mortgage finance reform bill which would change the statutory definition of QRM. A recent study reinforced the concern that high downpayment requirements would exclude many for little reduction in default risk.

Moving Forward: Making the case for affordable housing

by Jeffrey Lubell, Center for Housing Policy

Last week, the Center for Housing Policy released its annual Housing Landscape report, which tracks the affordability of housing for America's working households. In a nutshell, the report found that, despite falling home sale prices, housing affordability worsened between 2008 and 2010 for both working renters and working owners.

The release of Landscape provides a good opportunity to reflect on the question of how to get more people to care about affordable housing. My opinion is that, even as we continue to shine a light on the nation's housing affordability challenges, we need to work harder to link affordable housing with other core societal values, including health, education, economic mobility and environmental sustainability.

Housing Need

Statistics highlighting the number of Americans with severe housing costs burdens can be very powerful, especially when the number of cost-burdened households is rising, as it has in recent years. This increase provides an important counter-narrative to the widely-held belief that declining housing prices have solved our housing affordability problems.

At the same time, however, a focus on severe housing cost burden frames the problem as one affecting a very limited share of the population. With 19.5 million owner and renter households (see tables A-1A and A-1B of this report) paying more than half their income for housing nationwide, the situation is certainly grave. But if this is the extent of the problem, it means the overwhelming majority of the 110+ million households in America don't have a serious housing problem.

Broadening the definition of housing problems to include households paying more than 30 percent of their income as well those experiencing moderate or severe housing quality issues greatly expands the number of affected households. Nearly 55 percent of renters and roughly 34 percent of owners reported one of these problems in the 2009 American Housing Survey.

But this approach has limitations of its own. I would expect that many of these individuals understand they have a serious housing problem — think of someone making $23,000 a year and paying 45 percent of income for housing. But surely there are also many in this broader category who would not necessarily see themselves as having a housing problem — consider, for example, someone making $75,000 a year who decides to spend 35% of income to live in a nicer home. And there are still others who are spending less than 30 percent of income on housing but nevertheless have a serious housing problem. A classic example is the individual who drives till she qualifies and ends up with an affordable home but an unaffordable and unbearable commute.

How Housing Matters

So what frame can we use to capture the full range of the problem and expand the sphere of concerned citizens and policymakers? I don't have the magic bullet to solve this dilemma, but I do have an instinct that suggests we should broaden the dialogue in two ways.

First, we should be attuned to the fact that housing problems often lead to other social problems and reach out to advocates and practitioners working on those other areas to build alliances that help all of us achieve our goals. To cite just a few examples, housing problems can lead to:

  • Health problems — for example, when children get asthma or lead poisoning from poor housing quality or experience stunted growth due to excessive housing costs that leave too little income remaining for nutritious food. Or when individuals with AIDS cannot maintain a consistent treatment regime because they are homeless or a lack of coordination between housing and health programs forces older adults to enter nursing homes prematurely. 
  • Education problems — for example, when high housing costs force families to move from one unstable living environment to another, undermining academic stability and achievement, or when low- and moderate-income families are priced out of neighborhoods with top-quality schools.
  • Transportation, infrastructure and environmental problems. Consider the individual who moves far from his or her workplace because housing is too expensive nearby. Not only will the individual incur higher transportation costs that undermine overall affordability, but now he or she is driving longer distances, which increases traffic congestion and emissions of greenhouse gases. And it may mean we need to build more roads and other infrastructure to service a sprawling population, at great cost to the public.

Housing and Opportunity

Second, I would urge us to consider communications frames that situate housing programs within a larger web of policies and programs that together serve a broad cross-section of America. One promising frame that has gotten a lot of attention lately is "opportunity" in which the role of government is understood as providing everyone with the same opportunity to enter the middle class and achieve their own personal version of the American dream. It's easy to see a place for a range of housing policies within this framework, including subsidized rental housing - to provide stability for those who need it and an affordable alternative to ownership for those who prefer it -- as well as policies to make homeownership more accessible, to expand affordable housing opportunities in good school districts and near public transit stations, etc. At the same time, the opportunity frame also supports investments that improve outcomes in other important areas, including education, health care, workforce development and immigration.

In other words, maybe the way to get a larger share of America to care about the nation's housing problems is to start focusing on a larger share of the nation's problems...and demonstrate how decent, safe and affordable housing is essential to the achievement of these broader goals.

*    *    *

Join the conversation by commenting on this post.

"Moving Forward" is a 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, February 28, 2012

House Financial Services hearing on HUD budget proposal


by Sarah Jawaid, National Housing Conference

HUD’s five assistant secretaries appeared before the Insurance, Housing and Community Opportunity subcommittee of the House Financial services committee today for a hearing, Oversight of the Department of Housing and Urban Development. Testimony included: Carol Galante, Acting Federal Housing Administration Commissioner and Assistant Secretary for Housing; Sandra B. Henriquez, Assistant Secretary, Office of Public and Indian Housing; Mercedes M. Márquez, Assistant Secretary, Community Planning and Development; Raphael Bostic, Assistant Secretary for Policy Development and Research; John Trasviña, Assistant Secretary for Fair Housing and Equal Opportunity.

The five secretaries were asked to discuss the President’s FY13 budget and answer questions. Questions from Rep. Miller (R-CA) and Rep. Dold (R-IL) focused on FHA’s constrained regulations that make it difficult to finance condos. Galante said there would be a proposed rule coming out regarding this. Democrat members focused on the negative consequences of cuts to CDBG and HOME. Rep. Waters (D-CA) brought up project-based Section 8 cuts by asking why HUD is short-funding rental assistance contracts and shifting remaining contract renewal expenses to FY2014.

Waters said the Bush administration tried similar strategies which led to “late payments for owners, increased costs, errors in forecasting expenditures, and still required $2 billion to fill in the back end of the contracts.” She went on to say the administration’s proposal says “the program in 2014 would still need the additional $1.1 billion so this program doesn’t really save any money.” Galante responded saying that this one of the more difficult decisions HUD had to make but made sure that owners will get paid during the fiscal year and tenants will not be negatively impacted. She added that this administration differs from the Bush administration’s strategy of short-funding because of added transparency and planning. Galante added that HUD would be saving money during the fiscal year and that contract payments that go beyond the fiscal year can be funded by the FY14 appropriations process.

Monday, February 27, 2012

FHFA releases first REO to Rental portfolio


by Sarah Jawaid, National Housing Conference

The Federal Housing Finance Agency released its first set of REO portfolios for prequalification of bidders.  Properties are in: Georgia, Illinois, Florida, Nevada, California, and Arizona.  See FHFA press release for more information.

“This is another important milestone in our initiative designed to reduce taxpayer losses, stabilize neighborhoods and home values, shift to more private management of properties, and reduce the supply of REO properties in the marketplace,” said FHFA Acting Director Edward J. DeMarco.

Friday, February 24, 2012

NHC’s Budget Forum highlights challenges for housing in President’s FY13 budget

by Sarah Jawaid, National Housing Conference

The National Housing Conference held its Annual Budget Forum today at the Capitol Visitor Center. The aim of the forum was to provide attendees with a better understanding of the very real challenges facing housing in FY2013. Panelists included: Jonathan Harwitz, Deputy Chief of Staff for Budget and Policy, HUD; Dennis Shea, Principal, Shea Public Strategies LLC, (Former Asst. Sec. for PD&R at HUD under George W. Bush); Douglas Rice, Senior Policy Analyst, Center on Budget and Policy Priorities; Michael Bodaken, President, National Housing Trust.

At a time of austerity, panelists spoke of the challenges the HUD budget faced in FY13 and how to move forward. Rice said the “HUD budget is the lowest since 2006 in nominal terms and lowest since 2000 in real terms. This is a time of an affordability crisis.” The Center for Housing Policy released Housing Landscape 2012 today which shows just this—the cost burden for renters in particular continues to get worse. Harwitz shared that “the people we serve with these programs are exactly the people who would face the greatest cost burden if we didn’t.” Bodaken spoke forcefully about the dangers of short-funding project-based Section 8 contract and the potential negative reactions from lenders and investors. Shea focused his attention towards solutions which included: job creation, reducing regulatory burdens, and deepening the connections between transit and housing because “if the federal government is increasing value around stations, then [developers] can help with affordable housing."

You can find the materials from the Budget Forum at the event page on nhc.org. It has the slide presentations from presenters, NHC’s own budget analysis (which includes links to other resources from our members), and will soon have a letter on the Transportation-HUD 302(b) allocation distributed by the National Housing Trust. You can find the Center for Housing Policy’s new report, Housing Landscape 2012, at www.nhc.org/landscape.

More households are spending more than half of their income on housing

by Laura Williams, Center for Housing Policy

According to the new Housing Landscape 2012 report from the Center for Housing Policy, nearly one in four working households spends more than 50 percent of its income on housing.

Let that sink in for a moment.

Change in Housing Costs vs. Change in Income, 2008-2010
The new report, based on the latest data from the American Community Survey (2010), took a look at the housing costs for working households – those earning up to 120 percent of their area median income and who worked at least 20 hours each week. The picture is not good.

The percent of severely burdened households increased significantly between 2008 and 2010, driven in large part by low-income renters. They saw the costs of renting increase by 4 percent during those two years, even while their incomes declined.

Twenty-four states and nineteen metro areas also saw their rates of housing cost burden increase, while the number that declined can be counted on one hand (with a couple of fingers left over).

The underlying causes are lower employment, lower incomes and, for most, increased costs. Homeowners present some exceptions to this latter case, but only if they’ve taken advantage of the down market and been able to refinance or purchase at newly lower prices. Many have not had those opportunities.

For many more details, check out the report in its entirety at www.nhc.org/landscape.

Wednesday, February 22, 2012

Join NeighborWorks homeownership symposium from the comfort of your desk

by Blake Warenik, National Housing Conference and Center for Housing Policy

You're invited to attend the Homeownership Symposium at NeighborWorks Training Institute in Los Angeles Feb. 29, even if you're nowhere near Los Angeles.

That's right. Through the magic of modern communications infrastructure, you can sign up to join a live, free webcast of the NeighborWorks town hall discussion, Reclaiming the Vision of Homeownership: Challenges and Solutions.The event will be held from 1:00 p.m. - 3:00 p.m. PST (4:00 p.m. - 6:00 p.m. EST) and features a panel of experts from across the housing industry.

On the day of the event, just go to www.nw.org/townhall to join the discussion.

Housing programs can maximize workers' tax refunds

by Maya Brennan, Center for Housing Policy

As the nation’s economic recovery struggles to take hold, many families are counting on maximizing their tax refund, and housing authorities are well-positioned to help. As described in a recent Center for Housing Policy paper, over one million households with earned income live in public housing or have voucher assistance. These families may be eligible for a federal earned income tax credit of up to $5,751 during the 2011 tax year, as well as other federal, state, and local tax benefits. By using their existing relationships with these families, public housing authorities help families find free tax preparation assistance and retain all of the refund money available to them.

The Boston Housing Authority (BHA) is part of a coalition that helps working families access the EITC. They help spread the word about free tax assistance to public housing residents and voucher holders through rent mailings, FSS workers, and property managers – all at minimal cost to BHA. The outcome for families has been tremendous. In 2009, 820 public housing households used the city’s free tax clinics, and these families received a median refund of $1,241 – well over a month’s wages. Best of all, none of the tax refund money was eaten up with fees on refund anticipation loans or other tax preparation costs.

This kind of assistance is has a tremendous payoff for a very small effort. Housing authorities are in regular contact with their residents through income verifications, rent invoices, and other meetings and mailings. It costs next to nothing to include a flyer from a local EITC campaign.

EITC outreach opportunities are not limited to public housing authorities either. Other affordable housing providers have the same sorts of relationships with EITC-eligible families and could collaborate with local EITC campaigns to spread the word. Free tax preparation clinics could also be offered on-site at housing developments to reduce barriers to participation.

In a tough economy, there are few easy ways to get extra cash to pay the bills or contribute to a nest egg. The EITC is one of them. And property managers and housing authorities are well-positioned to help families access it.

Tuesday, February 21, 2012

FHFA releases plan for next phase of conservatorship of Fannie and Freddie

by Ethan Handelman, National Housing Conference

FHFA today released its plan for the “next phase of conservatorship” of Fannie Mae and Freddie Mac. The plan outlines steps the agency will take to build infrastructure for mortgage securitization, gradually wind down Fannie and Freddie, and maintain foreclosure prevention and credit availability activities. The report frames the plan as creating a new secondary mortgage market consistent with all three options for mortgage finance reform outlined by Treasury last February.

Don’t lose sight of mortgage finance reform when worrying about FHA

by Ethan Handelman, National Housing Conference

This Sunday’s Washington Post editorial struck a note of caution about the Federal Housing Administration (FHA), which has played a critical role in keeping mortgage credit available during the housing downturn. FHA expanded to fill the vacuum created when private mortgage capital fled the market, thereby filling a much greater share of the market than it had previously. FHA has also historically been a money-maker for the federal government, earning annual profits from its mortgage insurance premiums that helped reduce pressure on federal appropriations.

The Post editorial raises valid concerns—we should be careful that the emergency role FHA took on does not become a permanent state of affairs. The primary way to do that, however, is not via the government’s management of FHA, but by making its expanded role unnecessary. If capital were flowing into mortgages efficiently outside of FHA, government could safely start ratcheting back the FHA flow. The lesson is that we should get to work fixing mortgage finance so that it serves the market broadly and manages systemic risk effectively.

NHC put forward principles for guiding mortgage finance reform nearly three years ago, followed by more specific principles for the multifamily mortgage finance sector. Despite a thoughtful white paper from the Treasury department about a year ago and some limited legislative action, progress toward a solution has been slow. More is needed.

Thursday, February 16, 2012

Conferees agree on payroll tax cut without a new tax on housing

by Ethan Handelman, National Housing Conference

A bipartisan conference committee reached agreement late last night on a payroll tax cut extension. You may remember that the short term extension of the payroll tax cut relied on, in effect, a tax on housing—an increase in the guarantee fee charged by Fannie Mae and Freddie Mac spread out over ten years. The most recent iteration avoids repeating that error, which would have increased costs for homebuyers at a time when housing markets are still delicate and made future efforts to reform our mortgage finance system more difficult.

NHC as well as a wide coalition of housing organizations voiced concern that the previous error not be repeated. We’re glad that voice was heard.

Tuesday, February 14, 2012

NHC and Foreclosure Task Force support HOME rule with comments

by Sarah Jawaid, National Housing Conference

NHC submitted comments to the U.S. Department of Housing and Urban Development today on a proposed rule to improve the HOME Investment Partnerships program. (NHC previously testified in support of HOME, which has created more than one million affordable homes). This rule, which will rewrite some of HOME’s compliance requirements, aims to improve the program’s overall performance.

In summary, NHC offered five recommendations to HUD, each presented in more detail in the comment letter:
  • Align the rental conversion requirement to market realities extending it to 12 months and allowing sale of properties when markets recover. Empower PJs to comply with guidance on setting project-specific milestones.
  • Recognize costs of long-term monitoring and stewardship of affordable properties by allowing reasonable fees on homeownership and rental HOME units.
  • Maintain the requirement that all HOME-assisted homebuyers receive counseling.
  • Retain the new lease-purchase provisions allowing flexibility to use them with tenant-based rental assistance.
  • Maintain the requirement for written policies on underwriting standards, anti-predatory lending measures, and refinancing standards without unduly restricting credit.
In addition, the Foreclosure Prevention and Neighborhood Stabilization Task Force led by NHC, Enterprise Community Partners, and NeighborWorks America submitted comments signed by local and national organizations.

Thursday, February 9, 2012

States and servicers settle mortgage claims

by Ethan Handelman, National Housing Conference

State attorneys-general, federal officials, and five major mortgage servicers today announced a $25 billion settlement that will provide relief in various forms to struggling borrowers and those who have already lost their homes. Details had yet to be released as of this writing, but in broad sketch the deal includes:
  • Principal reductions for underwater borrowers
  • Interest rate reductions on existing loans
  • New servicing requirements to prevent further abuses, including a single-point-of-contact requirement
  • Payments to borrowers who lost their homes to foreclosure 
  • Funds for housing counseling and neighborhood stabilization 
The implications of the historic settlement reach beyond the immediate financial provisions and much-needed relief for those wronged. Among the many positives of a final settlement are:
  • Safer process for borrowers. If the servicing requirements meet expectations, families should have renewed confidence in the process of getting a mortgage to buy or refinance a home. Part of renewing confidence in housing markets must be overcoming the distrust and uncertainty created by the mortgage crisis.
  • Clarity for lenders. Lenders have been very cautious in the aftermath of the bubble, making credit hard to get. The long-term uncertainty around servicing obligations, the bill for past actions, and the scope of future claims made it harder for lenders to take needed actions to prevent further foreclosures and lend more. Resolving that uncertainty should pave the way for foreclosure prevention measures beyond those in the settlement itself.
  • Confidence for housing markets. The greater certainty for all participants in housing markets provided by this settlement will help restore those very markets. Ultimately, we need more activity in housing markets to break the cycle of uncertainty and disinvestment that is slowing not only housing but the overall economy.
  • Relief for news readers. We no longer need to hear that a “settlement is imminent”!
For more details, see coverage in the Washington Post, New York Times, and the announcement on C-SPAN. Official details on the settlement are available at nationalmortgagesettlement.com.

Tuesday, February 7, 2012

Ethan Handelman enters the digital boxing ring

by Blake Warenik, National Housing Conference and Center for Housing Policy

Our own Ethan Handelman is fighting for help for homeowners struggling in the wake of the burst housing bubble. His is one of several perspectives in the U.S. News and World Report's Debate Club, Should the government help homeowners with underwater mortgages?

Debate Club allows readers to choose the winning side. Ethan, Asst. Sec. Raphael Bostic at HUD and Peter Tatian at Urban Institute argue yes, while the Cato Institute's Mark Calabria and George Mason University's Anthony Sanders argue against the government helping underwater homeowners. You can help everyone see why it’s important to act now for housing by voting for perspectives you share and taking points away from those you deem less sound.

The implication: vote early and often. Voting closes tomorrow.

Vote for housing (and Ethan) now

Saturday, February 4, 2012

House votes to abolish guaranteed funding for transit, could threaten housing funds

The U.S. House of Representatives Ways & Means Committee today terminated the guaranteed trust fund revenue for transit and gave it to the highway program. This dedicated funding stream established during the Reagan Administration comes from an excise tax on gasoline. Under this new provision, the burden for funding mass transit would fall entirely on the annual appropriations process, meaning lower funding and much more uncertainty for public transit.

This directly threatens housing. HUD and the Department of Transportation fall under the same appropriations subcommittee, which means their programs compete directly for funds. Putting greater pressure on the transportation side could significantly reduce funds available for housing. Not to mention, mass transit serves many residents of affordable housing as their only connection to jobs, schools, and other community services.

NHC united with others in housing and transportation to oppose this provision contained in HR 3684.  We'll continue to advocate as the bill moves to the House floor and interacts with the Senate transportation bill (which does not contain the damaging provision).  Join NHC at its Annual Budget Forum Feb. 24 to hear more about the connections between transportation and housing funding.


Thursday, February 2, 2012

Obama’s housing plan, piece by piece

by Ethan Handelman, National Housing Conference

President Obama’s announcement of his housing plan was welcome, but it includes more pieces than brief news coverage necessarily notices. Secretary Donovan provided much helpful detail in his remarks, and the fact sheet is a good reference. If you’re looking for a place to start, here’s a quick guide to the parts of the plan and what they might mean for communities and households across the country.

The Obama Administration's Housing Proposals – Topics

Refinancing plan Homeowner Bill of Rights Pilot REO property sale
Forbearance Lending abuse task force Rebuilding neighborhoods

Refinancing Plan

Homeowners with underwater loans have had trouble refinancing—not surprising, since it’s hard to get a lender to make a loan larger than the value of the house. The Home Affordable Refinance Program (HARP) has addressed some of the problem for loans owned or guaranteed by Fannie Mae and Freddie Mac, parts of it are still rolling out. The Federal Housing Administration (FHA) has a program for refinancing its own loans. But that leaves a large section of the market still without any good option for refinancing.

So, the President has proposed allowing FHA to refinance underwater loans, using a streamlined process to help homeowners lower their payments and avoid foreclosure. It’s a heavy lift, however, as it would a) cost money, proposed funding from a tax on banks, b) add underwater loans to the FHA portfolio, albeit in a separate insurance fund, and c) require legislation (particularly difficult to get in an election year).

Homeowner Bill of Rights

Despite the name evocative of 1791, this is a set of mortgage servicing standards aimed at correcting problems highlighted by the recent mortgage crisis. The announcement included only the broadest strokes here, and various parts of the government and mortgage industry have been working on these issues of disclosure, conflict of interest, and fair treatment for many years. Expect concrete details to emerge only when a settlement of the state attorneys-general lawsuit comes out, and watch the new Consumer Financial Protection Bureau for implementation details, especially around disclosure.

Pilot Sale of REO

Among Fannie Mae, Freddie Mac, and FHA, the government owns over 83,000 homes from foreclosures, with potentially hundreds of thousands more to come. Sales of these through traditional listings have been steady but slow, even with the help of the important First Look program. The longer these homes sit vacant, the more neighborhoods suffer and the slower the recovery in housing markets.

Back in August of 2011, the Federal Housing Finance Agency (FHFA) and HUD began with a Request for Information as they tried to design a way to move these REO properties more quickly into use, such as through selling groups of properties to investors who would then rent them out. Many groups, including NHC’s Foreclosure Prevention and Neighborhood Stabilization Task Force, offered perspectives, notably on how to make sure the disposition program protected vulnerable communities and created greener and more affordable housing. FHFA has finally begun pre-qualifying investors, who have to show they can responsibly acquire and manage properties. Expect this program to emerge gradually over the year, starting with a pilot in one or two metro areas, with ongoing engagement by stakeholders to refine the program design.

Forbearance for the Unemployed

Giving unemployed borrowers hurt by the recession time to get back on their feet helps avoid foreclosures—it’s a good move for lenders, communities, and households. The President’s statement is more an observation that private lenders have followed the example set by Fannie Mae and Freddie Mac in extending forbearance to 12 months (up from 3 months) rather than an new policy announcement.

Task Force to investigate mortgage abuses

The new task force brings together federal and state officials, “responsible for investigating misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities” in the words of the fact sheet. Although the task force has issued subpoenas, little else has been released about its plans or how that intersects with existing investigations. Once the seemingly ever-imminent settlement between state attorneys-general and major servicers is finally behind us, there may be more clarity. Watch for more.

Rebuilding neighborhoods and preserving affordable housing

Foreclosures are still damaging communities across the country, but the Neighborhood Stabilization Program (NSP) has proven that targeted action can halt and repair that damage. By renovating homes, helping former owners remain as renters, eliminating blight, and other innovative solutions, communities have done much to find solutions to the foreclosure crisis. The President’s proposal for Project Rebuild would expand on the work of NSP, providing more resources on a broader range of activities—help that communities very much need. The President is also proposing $1 billion for the National Housing Trust Fund, to preserve essential rental housing for extremely low income households.

It’s exactly what’s needed, but these steps do require federal funds and legislative action, which can be difficult to muster in an election year with fiscal constraints. That said, the benefits should be visible regardless of one’s partisan affiliation. Project Rebuild in particular would sustain and expand efforts to preserve neighborhoods and essential affordable housing, building on the proven NSP program. It’s an investment we ought to make.

Wednesday, February 1, 2012

National Housing Conference responds to housing announcements

by the National Housing Conference

Statement from Ethan Handelman, Vice President for Policy and Advocacy

“President Obama’s announcement today reinforces what we all know—we need coordinated action at many levels to restore housing markets, help struggling households, and support a broader economic recovery. That action must, by necessity, be bipartisan and cooperative. We urge Congress to take up these proposals in a spirit of bipartisanship and the Administration to move swiftly to implement the elements that it can do on its own.”

“More, however, is needed. Secretary Donovan, in his remarks today, referred to the mounting evidence that principal reduction will help restore housing markets, helping not only individual households but all of the institutions that depend on housing. The proposals announced today are a step in the right direction. More can be done, using shared appreciation mortgages, structured short sales, and other proven means to reduce outstanding debt, while improving returns to lenders and preventing painful and destabilizing foreclosures. If leaders of both parties come together now, they can take concrete steps to prevent foreclosures, stabilize neighborhoods, and secure safe, decent, and affordable housing for all in America.”

White House proposes new refinancing plan

by Ethan Handelman, National Housing Conference

This morning, President Obama announces a new refinancing plan to help homeowners lower their monthly payments. Early reports in the Wall Street Journal and AP say the program is aimed at privately held mortgages that could be refinanced with new loans from the Federal Housing Administration (FHA). In effect, this would broaden the Home Affordable Refinance Program (HARP) changes made last year to cover more than just Fannie Mae and Freddie Mac loans.

The new plan would require Congressional action—a tall order in an election year, especially if it has a budgetary cost. And it would demand even more of FHA, which has handled an already unprecedented volume of loans as other lenders have retreated during the housing crisis.

That said, it’s the kind of action we need. Over 22% of home loans, nearly 11 millions, are underwater. A refinancing program to help lower payments could help prevent foreclosures, keeping families in their homes and protecting neighborhoods from blight. Refinancing alone isn’t enough—we also need principal reduction for those that refinancing can’t help—but it’s a great step in the right direction.