Tuesday, December 18, 2012

Foreclosure inventory up, pre-foreclosures down...yet the song remains the same

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

The good news: the rate of homes headed toward foreclosure continues to fall. The bad news: the foreclosure rate is near its all-time high. The rub: the percentage of homes in (or about to be in) the foreclosure process has not budged for the last two years.

The Foreclosure-Response.org team—my colleagues at the Center for Housing Policy alongside our partners at the Urban Institute and Local Initiatives Support Corporation—released the latest foreclosure and delinquency data for all 366 U.S. metro areas last week, including analysis for the 100 largest metro areas and maps for visual learners (a.k.a. humanities majors) like myself.

The story seems to be that there is no story: despite signs of a real housing recovery, including the biggest year-over-year jump in home prices since before the bubble burst and a bounceback in housing starts, the foreclosure crisis continues to drag on so long it's hard to continue calling it a crisis.

Digging into the data for the 100 largest metro areas, the rate of serious delinquency (combining the foreclosure rate with the rate of mortgages that are 90 or more days delinquent) stands at 9.53 percent, hovering between nine and ten percent as it has for the last eight quarters. But the makeup of the number has changed. While the percentage of homes headed toward foreclosure has fallen to 3.53 percent down from the December 2009 high of 5.48 percent, the share of homes in foreclosure has risen from around five percent in December 2009 to around six percent (where it sits for the third consecutive quarter).

The data can tell us a few things about why the foreclosure recovery has stalled out, plus a few details about the most affected areas:

  • The foreclosure inventory is growing. The data indicate that foreclosure starts have outpaced completions since March 2008, when Foreclosure-Response.org began tracking foreclosures.
  • Unemployment and delinquency are a circular problem. Unemployment impacts housing markets when borrowers struggle to make mortgage payments. Distressed housing markets make it more difficult for job-seekers to sell their homes when promotions or new opportunities become available in other areas.
  • Coastal metros are suffering more than the heartland. Metro areas in coastal states like California and Florida tend to have higher rates of unemployment and serious delinquency than areas in the Central U.S. like Texas and central plains states.

I'll leave it to the policy folks to answer how to deal what we hope has not become a new reality, but suffice it to say that foreclosure remains the most intractable problem left in the wake of the housing bubble and the Great Recession.

Wednesday, December 12, 2012

Veteran homelessness is falling. How do we end it?

by Maya Brennan, Center for Housing Policy

The number of homeless veterans dropped 7.2 percent between January 2011 and January 2012, according to the latest data from HUD. The nation’s chronically homeless population shrank by 6.8 percent in the same timeframe. Concerted efforts to provide permanent housing and supportive services are making progress. To build on this achievement, let’s keep pushing forward to serve the needs of chronically homeless veterans and help returning veterans make a successful transition to civilian life.

The national effort to end veterans’ homelessness includes programs that serve veterans at every level of need, including homelessness prevention assistance, emergency shelter beds, transitional housing, and permanent supportive housing. (See an earlier NHC Open House Blog post for a summary of veterans’ challenges.) One component of the solution involves veteran-specific programs like Grant and Per Diem (GPD), Enhanced-Use Leases (EUL) and HUD-VASH vouchers—especially when they can be project-based. But these programs don’t fully serve the needs of homeless veterans without adding in funds from one or more standard affordable housing programs (CDBG and HOME, for example). Permanent housing solutions may also require Low-Income Housing Tax Credits. In short, it takes a full housing policy menu to serve the full array of housing needs.

Veterans’ housing programs work in concert with robust supportive services to help residents recover from trauma, addiction and other mental health issues and stay stably housed. Smart programs can also help veterans become part of a community and rebuild connections that support positive outcomes. Continuing these efforts and finding strong, effective, and replicable models is critically important for our ongoing efforts to serve the nation’s veterans.

Our nation’s veterans have valuable contributions to make to society, and communities should gladly welcome them home—to a real, permanent home.

Tuesday, December 11, 2012

Envisioning the housing programs of the future

by William R. Frey, Enterprise Community Partners

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.

Thirty years ago, the Northwest Bronx Community and Clergy Coalition (NWCCC) organized buildings to prevent them from becoming abandoned, but the availability of capital to improve buildings was in short supply. Fordham Bedford Housing Corporation began its work in the Bronx during this time by taking over a building on Decatur Avenue, and managing it through a challenging period.  They were eventually able to obtain capital through a moderate section 8 program with the City of New York to rehabilitate the building with tenants in place. It was a beginning for the revitalization of this neighborhood and for the growth of a strong nonprofit housing organization.  That first 24-unit building was the beginning for an organization that now owns and manages over 3,000 units of affordable housing. 

Today, resources are once again in short supply, making it perhaps a good time to reevaluate how they should be allocated.  

For the most part, housing dollars today are allocated based upon the merits of a project, with some consideration given to the strength of the housing developer and other factors.  In her piece, “Increasing Effectiveness to Maximize Reach and Resources,” Nancy Rase, president and CEO of Homes For America, suggests that funders should consider providing funding based on the qualities of a developer such as “demonstrated capacity to use the funds effectively and efficiently,” resident satisfaction and high property performance.

Funding developers rather than projects could have its advantages. It would:

  • Encourage organizations to place more emphasis on resident satisfaction as a condition of funding.
  • Reward developers who have strong organizational capacity, consistently serve residents and manage properties well.  Those developers could then operate with a fair amount of certainty with respect to funding awards.  Many current funding allocation schemes often intentionally distribute resources so that no one developer is rewarded too often, leading to a lot of fluctuation in the number of projects each organization receives annually, and similarly frequent changes in staffing needs. 
  • Discourage poor stewardship of housing, and prevent low-capacity organizations from developing housing which may requiring additional assistance if buildings fail to perform due to poor management. 

  • Allow small but effective organizations to receive funding who are currently unable to compete with larger organizations. 
There might also be problems. In any funding allocation program, the concern over fairness is crucial.  What if the most effective organizations disproportionately serve one racial demographic?  What if the funding scheme encourages investment in housing by an organization to the exclusion of all other valuable programs that housing organizations used to provide?  Both of these questions are likely to have policy solutions. 
The real question is, is there value in creating a scheme that maintains high-capacity organizations, like the Fordham Bedford Housing Corporation, as the stewards of affordable housing?

William R. Frey is Director of Relationship Management of Enterprise Community Partners New York office. Enterprise Community Partners, an NHC member organization, works to create opportunity for low- and moderate income people through affordable housing in diverse, thriving communities.

Friday, December 7, 2012

NHC members call for stability and liquidity in multifamily lending

by Ethan Handelman, National Housing Conference

This week, two new white papers, both of which are from NHC members, called for a strong government role in multifamily mortgage finance. The papers highlight the need for reliable capital sources in all markets, mechanisms for getting private capital to take risk ahead of government, and the strong track record of Fannie Mae and Freddie Mac in multifamily lending, even during the crisis. These principles have been a consistent theme of advocacy around mortgage finance for multifamily, for instance, in the NHC paper and principles released earlier in the crisis.

The National Multi Housing Council and the National Apartment Association jointly released “Key Principles for Preserving Liquidity and Stability for Multifamily in a Reformed Housing Finance System.” The paper lays out the need for multifamily rental housing and the financing that supports its construction, refinancing, and capital improvements. In particular, the paper articulates the need for carefully calibrated government guarantee role to ensure that capital is available in all markets that need rental housing finance, not just the handful of major markets that attract capital even in down cycles.

The Mortgage Bankers Association’s Multifamily Task Force issued, “Ensuring Liquidity and Stability: The Future of Multifamily Mortgage Finance and the Government-Sponsored Enterprises” which builds on MBA’s earlier blueprint for mortgage finance reform to call for a system of private capital finance of multifamily housing at a securities level, with the guarantee providing only catastrophic backing. The paper also rebuts the Federal Housing Finance Agency’s (FHFA) approach to multifamily by proposing that policy planning focus on how reformed GSE multifamily platforms can best create a stable, liquid market, rather than a narrow evaluation of whether the platforms can operate without government guarantee.

Wednesday, December 5, 2012

Investors looking to housing market for profit again

by Sarah Jawaid, National Housing Conference

An article in The Economist highlights renewed interest by investors looking to profit from a recovering housing market. "House prices have stabilized since their 2009 trough, and have even made small but steady gains in recent months. Investors convinced that a full-blown housing recovery is under way—a big 'if'—are looking for ways to profit from it" by primarily investing in mortgage backed securities, but also through real estate services investments and direct real estate purchases. Read more in The Economist.

Foreclosures on widow(er)s—another hole in the mortgage system

by Ethan Handelman, National Housing Conference

AARP data show that foreclosures for people over 50 are rising faster than for any other age group, in part due to mortgage servicing failures that make it hard for widow(er)s to assume and modify mortgages from their spouses. The New York Times reports on the problem, the initial steps some lenders have taken, and the push for private-sector reforms and public policy responses.

Tuesday, December 4, 2012

Jeff Lubell has a new monthly column in U.S. News

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

Yesterday marked the publication of the first of many (roughly) monthly columns in U.S. News & World Report by Center for Housing Policy Executive Director Jeffrey Lubell where he will write on the present and future of housing policy on U.S. News' The Home Front blog, edited by Meg Handley, who has covered the Center's work in the past.

In yesterday's piece, "Three Ways We Can Move Housing Policy Forward," Lubell briefly explores the reasons why—during an election where the economy was hands-down the key topic—was housing hardly mentioned despite its extreme importance to the economy. To elevate housing to top-tier national issue in the public consciousness, he writes that housing-conscious thinkers must work to connect housing to critical social goals, show housing as a universal issue and improve the strategies in place for meeting housing needs.

Read Jeff's piece at U.S. News & World Report.