Monday, April 29, 2013

Pre-purchase counseling reduces mortgage delinquency, no matter how it’s delivered

by Maya Brennan, Center for Housing Policy

New research from Freddie Mac suggests that pre-purchase counseling may be even more effective at reducing mortgage delinquency than previously thought. And the delivery method? It doesn’t seem to matter.

According to the new study, pre-purchase counseling reduces 90-day mortgage delinquency rates by 29 percent. The findings relate to low- and moderate-income, first-time homeowners with Freddie Mac mortgages originated between 2000 and 2008. Prior research on mortgages originated in the 1990s found a 19-percent reduction in 90-day delinquency rates.

While the housing field has long recognized the effectiveness of pre-purchase counseling, the evidence had largely suggested that more personal, in-person instruction was better. This study calls that into question. The results were nearly the same whether the counseling was delivered in a classroom, via home study, or even on the phone or online.

This is a stunning change from the state of knowledge previously.

In the earlier study of mortgages originated in the 1990s, the reduction in delinquency rates was largest for individual counseling, followed by classroom, and then home study. Phone and online counseling had no significant effect at that point.

Rural borrowers? People with inflexible schedules? It may be time for you to exhale. It looks like we’ve gotten a lot better at developing effective ways to deliver counseling remotely. (See new online counseling efforts by the Housing Partnership Network and Freddie Mac.)

And how does housing counseling get funded? No single source dominates, but federal budget watchers take note: This highly cost-effective tool for preventing mortgage delinquency gets more than a third of its funds from HUD housing counseling funds, CDBG, HOME, and other federal sources. And these sources have been cut or are well below historical levels.

If you are just such a federal budget watcher and a housing-minded professional to boot, we encourage you to attend this Friday's Annual Budget Forum, where a panel of experts from HUD, PHAs, and nonprofits will discuss the impacts of the President's FY 2014 budget proposals on these and many other important housing programs. You'll also hear from me about the latest data on housing affordability for working households. Register online (and free) here.

Thursday, April 25, 2013

HUD to reorganize multifamily offices

by Ethan Handelman

HUD plans to reorganize its multifamily operations, Deputy Assistant Secretary Marie Head announced yesterday in a call with stakeholders and a press release. The changes involve consolidating its multifamily field offices into 10, made up of 5 primary and 5 satellite offices. Remarks from officials suggest the plan aims to reduce costs in a tough budget environment and increase efficiency of operations.

A vacant former HUD office in Tucson, Ariz.
Projected savings estimated by HUD are $40-45 million. To put that in context, the President’s budget request for HUD in FY 2014 is $47 billion in gross discretionary spending, so the forecasted savings are less than 0.1% of HUD’s annual budget. Operational costs simply don’t loom all that large for HUD relative to the housing funds it disburses.

The planned new field office structure would have five multifamily hubs each with a satellite office:
  • New York, satellite in Boston 
  • Atlanta, satellite in Jacksonville 
  • Chicago, satellite in Detroit 
  • Fort Worth, satellite in Kansas City 
  • San Francisco, satellite in Denver

Other changes announced:
  • Seattle office would remain to specialize in health care properties 
  • OAHP will be renamed the Office of Recapitalization and will handle more preservation transactions with Margaret Salazar as Director 
  • Section 8 and Contract Administration operations will be folded into the Office of Asset Management
  • No Reduction in Force is planned, but rather a long transition offering staff opportunity to relocate or retire with incentives. 
  • Additional changes in HQ staff and organization for specific portfolios and troubled properties

Negotiations with civil service unions and Congress are yet to come. Read more details in HUD’s press release.

Monday, April 22, 2013

NHC joins HOME coalition in presenting outside witness testimony to the Senate in support of the HOME Program


by Ethan Handelman

A broad coalition joined together last week to support the HOME Investment Partnerships program. In outside witness testimony presented to the Senate Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies, the HOME Coalition made a strong case for a program vital to the production and provision of housing affordable to low‐income families. The testimony highlights the flexibility, leverage, and proven results of the HOME program. It also points out the support for increased HOME funding from the Bipartisan Policy Center’s Housing Commission, which called for HOME funds to provide critical gap financing for creation of new affordable housing.

NHC has worked hard to defend the HOME program, which has seen a series of cuts over the last several years. We are pleased that so many NHC members and partners have added their voices, and we are grateful to the National Council of State Housing Agencies for taking a leadership role in the HOME Coalition.

Friday, April 12, 2013

NHC Supports the LIHTC to House Ways and Means

by Ethan Handelman

NHC offered a statement for the record in support of the Low Income Housing Tax Credit to the Real Estate Tax Reform Working Group of the House Committee on Ways and Means. We also joined the A.C.T.I.O.N. Campaign’s coalition statement advocating for continuation of the Housing Credit and making credit percentages fixed at 9 percent and 4 percent.

Our comment emphasized the acute need for affordable rental housing and the essential role the Housing Credit plays in filling that need, particularly by creating permanent supportive housing for the most vulnerable in America. We also highlighted how the program aligns public and private incentives using the tax credit mechanism in particular. Read our comment and the A.C.T.I.O.N. letter.


HARP refinancing program extended through 2015

by Ethan Handelman

The Federal Housing Finance Agency announced on April 11 that the Home Affordable Refinancing Program (HARP) will be extended through 2015. It was previously scheduled to expire at the end of this year.

HARP is an important tool for preventing foreclosures and reducing housing cost burdens for underwater homeowners. These homeowners could not otherwise take advantage of low interest rates because their loan exceeded the market value of their home. As of the March 2013 Housing Scorecard, there had been well over 2 million refinancing under HARP since the program began in April 2009.

Thursday, April 11, 2013

President’s FY2014 Budget Reflects Deficit Pressure and Tough Times for Housing

by Ethan Handelman

The President’s FY 2014 budget, delivered April 10, follows the recurring theme in Washington of deficit reduction. It does so in ways that attempt to balance immediate job creation with the long-term need for investment in people, infrastructure, and industry, while also reducing the deficit. In housing, the budget shows the how the overall pressure to reduce spending filters down to the program level, with cuts or flat funding for some core housing programs alongside a few increases and new proposals in key areas. These cuts come on top of prior year reductions and the across-the-board sequestration cuts, leaving housing programs and the people they serve more vulnerable. Read our summary document here.

The budget arrives, however, after the Senate and the House of Representatives have each set their budgets for 2014 (S Con Res 8, H Con Res 25). It may therefore be less of a specific blueprint for appropriations and more a proposal in negotiations over the future of government funding. This summer will bring another potential battle over raising the debt limit, with sequestration still in place until an agreement on deficit reduction occurs. The budget proposal combines new revenue sources with cuts in spending, aiming for the still-elusive grand bargain needed to bring deficits down without harming the economy or the most vulnerable in America.

The top line HUD budget is $47.6 billion, which is a 9.7% increase above FY 2012 (two years ago). It renews funding primarily to preserve assistance for currently-assisted households, making cuts mostly in programs that create new units. In other words, the practical effect of this necessary triage is to put off and worsen the affordable housing needs of tomorrow by not creating needed units today. In several areas, the budget proposes program expansions or changes, noted in NHC’s budget summary, which also provides links to learn more. The summary table below gives a quick view of requested program funding levels.

Summary Table of FY 2014 Budget Proposal Compared to Past Years

Key: 

Programs (Figures in Millions)
FY11* Enacted
FY12* Actual
FY13 CR
FY13 CR Less 5% sequester**
FY14 Budget Proposal

Tenant Based Rental Assistance
18,371
18,914
19,006
18,056
19,989
Project Based Rental Assistance
9,257
9,340
9,395
8,925
10,272
Family Self Sufficiency

60
60
57
75
Rental Assistance Demonstration
-
-
-
-
10
Public Housing Operating Fund
4,617
3,962
3,986
3,787
4,600
Public Housing Capital Fund
2,040
1,875
1,886
1,792
2,000
Homeless Assistance Grants
1,901
1,901
1,913
1,817
2,381
Section 202 – Elderly
399
375
377
358
400
Section 811 – Disabled
150
165
166
158
126
CDBG (excluding disaster funds)
3,501
3,308
3,308
3,143
3,128
HOME
1,607
1,000
1,006
956
950
SHOP***
82
54
54
51
10
Sustainable Communities
100
0
100
95
75
Choice Neighborhoods/Hope VI
100
120
121
115
395
HOPWA
334
332
334
317
332
Housing Counseling
0
45
45
43
55
502 Single Family Direct****
1,119
900
900
855
360
502 Single Family Guaranteed
24,000
24,000
24,000
22,800
24,000
515 Rental Housing Direct
69
64
0
0
28
538 Rental Housing Guaranteed
31
130
150
143
150
521 Rental Assistance
954
905
907
862
1,015






Legend
=  increase, = decrease, = increase vs. last year but below historical levels, = no change

Notes

*FY12 Actuals and FY13 CR amounts as reported by HUD in the Congressional justification
**FY13 CR less 5% sequester calculated from FY 13 CR figures

***SHOP would receive only a $10 million carveout from the HOME budget