Wednesday, October 30, 2013

A change of direction at FHFA

by Chris Estes, National Housing Conference

As President Obama renews his call for the Senate to confirm Rep. Mel Watt as the new head of the Federal Housing Finance Agency (FHFA), it is time to evaluate the direction FHFA is taking in housing finance. The agency is increasingly closing off options for housing finance reform rather than opening them, and it has placed affordable housing issues in a distinctly second tier. Senate confirmation of Rep. Watt would allow the agency to take a new direction toward fulfilling the housing needs of all in America. The confirmation decision should be based on policy considerations, not partisan point-scoring

The conservatorship of Fannie Mae and Freddie Mac has moved well beyond the brief stabilization role initially anticipated. Now in its sixth year, conservatorship by necessity affects the ongoing operation of the secondary mortgage market entities and plans for the future. Although FHFA has done much to preserve the assets of the GSEs, it has also taken steps that run counter to meeting pressing housing needs. Examples include the reductions in multifamily production, unwillingness to allow shared appreciation or other principle reductions on distressed loans, the de facto moratorium on product innovation, and the decision not to fund the National Housing Trust Fund.

Rep. Mel Watt brings a dedication to affordable housing, long experience overseeing the GSEs through his committee service in the House, and extensive experience dealing with a wide range of housing stakeholders. If confirmed by the Senate, we expect he will guide the agency ably through the difficult decisions ahead. We urge Senators considering his nomination to focus on the pressing policy issues involved and Rep. Watt’s qualifications to lead rather than partisan distractions. The housing needs in this country—ongoing foreclosures, neighborhoods struggling to recover, and burdensome housing costs for households of modest means—cannot wait on the political maneuverings among parties and branches of government.

Dismantling Barriers to Success

by Maya Brennan, Center for Housing Policy

Federal housing assistance is a scarce non-entitlement program that low-income families can build on to improve their lives, but housing programs can also create barriers to families’ economic progress. Many assisted households remain trapped at low-incomes for fear of earning enough to go over the assistance cliff and lose their housing assistance – support that they may have waited several years to receive.

There is a solution. It’s called FSS.

FSS, or the Family Self Sufficiency program, changes the income incentive for families with housing assistance. In the absence of FSS, any increase in household income leads to an increase in rent -- therefore limiting families’ incentive to work or report their earnings completely. FSS changes the game. For an FSS participant, any increase in household earnings still increases the rent, but an amount equal to the rent increase goes into a savings account for families (also called escrow). This means families grow accustomed to paying higher and higher rents as they earn more, while also building a nest egg to help them achieve any of their goals or dreams.

The program is also a win for public housing authorities. Families pay more in rent, the housing authority’s housing assistance payment (HAP) goes down, and the escrow money comes from HUD. Over time, housing authorities can serve more families and help their existing clientele make headway along a path to economic success. And they don’t even feel it in their bottom line.

So, why don’t more housing authorities offer FSS? Supportive service funding is the main limiter. Housing authorities understand how to work with HUD funding, and many are not equipped to find funding in other ways. With stagnant federal funding for FSS coordinators, it’s hard to blame housing authorities for not offering FSS or trying to expand existing programs’ reach.

But there are FSS models that work. Partnerships that bring in case managers. Funders who will gladly cover program costs when they learn that it opens up a pathway out of poverty.  Using public dollars to leverage philanthropy? Who doesn’t want that?

Let’s expand this program. Let’s get FSS everywhere – explaining to housing authorities that it’s ok to operate a program with no service coordinator money from HUD. And explaining exactly how to do it.

Let’s also break FSS out of the arbitrary limitation to the housing choice voucher program and public housing. What about project-based rental assistance? We could and should easily shift to allowing all HUD-assisted households to benefit from FSS.  Even affordable homes developed using the Housing Credit, with some extra thinking, could offer a better economic support system for their residents.

Tuesday, October 29, 2013

House committee grills FHA Commissioner but loses focus on housing policy

by Ethan Handelman, National Housing Conference

Today, members of the House Financial Services Committee heard testimony from FHA Commissioner Carol Galante and then questioned her closely in a grueling 3-hour hearing. Questions were markedly partisan and at times took a nasty turn, but ultimately the hearing did little to clarify the future of the FHA.

Questions from Republicans on the committee focused on the required capital draw for FHA’s reserve fund, which they termed a “bailout.” Attempts by Commissioner Galante and other committee members to clarify the sometimes subtle differences between on the one hand, the FHA’s appropriation to meet the minimum capital standard required by the actuarial review and, on the other hand, government bailout of private financial institutions owned by private investors, failed to redirect the questioning.

Rhetoric at times overwhelmed both substance and politeness. At various points Republican legislators referred to Commissioner Galante as a “faceless bureaucrat,” questioned her on her health insurance, and compared actions of the federal government in housing to Soviet occupation of Eastern Europe after World War 2. Democrats in response defended the Commissioner and thanked for her public service. They also emphasized the long-standing importance of the FHA in making home loans affordable and available nationwide. They, too, at times strayed onto rhetorical tangents related to the recent government shutdown.

Neither party, however, made much progress in defining a future course for the FHA, which is navigating a difficult path back from the financial crisis. While the recent draw from the Treasury is more of an accounting feature than any kind of actual cash shortfall (FHA has billions on hand), it is a nontrivial reason to think about choices for the future. As we have written about previously, we need a bipartisan, cooperative approach to FHA that makes it more independent, more flexible, and better able to manage risk so that it remains true to its core mission of lending to low-income and first-time homebuyers through up- and down-market cycles.

Watch video replay of the hearing on C-SPAN ( The committee’s hearing page has Commissioner Galante’s testimony and the framing statement from the Chair.

Monday, October 28, 2013

White paper: QRM proposal strikes the right balance

by Liza Getsinger, National Housing Conference

A new white paper released October 24 by the Coalition for Sensible Housing Policy, titled “Updated QRM Proposal Strikes Balance: Preserves Access While Safeguarding Consumers and Market,” explains why regulators have struck the right balance by proposing a rule to align the qualified residential mortgage (QRM) rule with the qualified mortgage (QM) rule. The product standards in QM ensure borrowers have access to safe, sustainable mortgages, and those same standards can also protect investors by applying risk retention requirements to loans outside of the QM standard. Aligning the two standards also brings much-needed clarity for mortgage markets, which will help lower costs for consumers.

Importantly, new data within the paper indicates the underwriting and loan product limitations mandated through QM effectively limit the risk of default without excluding large numbers of creditworthy borrowers. This new analysis by The Urban Institute shows the new proposed QRM will reduce the risk of default and delinquency by more than half:
  • Loans purchased by Freddie Mac and Fannie Mae that met the re-proposed QRM standard had default rates of 4.1 percent as compared to 8.7 percent for mortgages that did not qualify for QM status.
  • The delinquency rate for mortgages in private label securities originated in or prior to 2013, that did not meet the re-proposed QRM standard, was 30.6 percent. The delinquency rate for purchase and refinance loans that met the new QRM proposal was nearly two thirds lower at 12.6 percent.
The coalition also weighs the alternative proposal in the rule which would require a 30 percent downpayment to qualify as a QRM loan. This option would unnecessarily slice the secondary market in two and exclude 60 percent of homebuyers from the most efficient form of financing while disproportionately burdening communities that have historically not been well-served by capital markets.

“In synchronizing the definition of QRM with QM, the revised rule will encourage safe and financially prudent mortgage lending, while also creating more opportunities for private capital to reestablish itself as part of a robust and competitive mortgage market,” the paper concluded. “Most importantly, it will help ensure creditworthy homebuyers have access to safe mortgage financing with lower risk of default.”

The Coalition for Sensible Housing policy, of which NHC is a member, brings together a wide range of housing stakeholders. See the full coalition list at the Coalition for Sensible Housing Policy website.

The entire white paper can be found here.

Thursday, October 24, 2013

Shutdown put strain on HUD staff when we need them more than ever

by Chris Estes, National Housing Conference

This post originally appeared as the Member Update from the President column in the October 22, 2013 edition of the Washington Wire. To receive the Wire in your inbox every week, become a member of NHC

The drama of the government shutdown and near-default has ended, but the after-effects will take a while to
sort out. A lot of attention is paid to those government positions where an immediate impact can be felt by the public or businesses: national parks, museums and monuments, customs and immigration, etc. But what about all the folks protecting our drinking water and food, or folks working on improving school curricula or getting transit projects through to approval so investment can begin?

I spent some time over the weekend talking with a friend who was one of the essential employees at HUD who worked through the shutdown. Trying to keep housing transactions moving forward with the current staff shortages was hard enough, but it became even more stressful with most of the building empty. My friend told me it really began to feel like "piling on" to an already beleaguered workforce. Not to mention the backlog of work they all faced when they got back to their desks.

In our world of housing, we often complain about HUD much more than we appreciate it. It is a big bureaucracy that has been ignored by some administrations and rarely embraced by any. It easy to take shots at (even by people who work there). Ultimately, though, we want and need talented people to come work at HUD, especially folks who had successful careers outside of Washington who will serve in a leadership role for the 4-8 years of a presidential administration. While HUD is still far from perfect, one of the things I have really enjoyed about coming to Washington has been getting to know many talented and motivated HUD employees, from the Secretary's office on down to field staff.

To endure continuous underfunding while trying to improve HUD's work is a daunting and draining effort. Yet their work is vital more than ever as developers, community organizations and local governments work to respond to the increasing need for quality affordable homes and community investment. Imagine on top of that difficult challenge having most of your co-workers sent home for several weeks because some in Congress cannot agree for political reasons, or see the value of what you do for our country. Remember, you've already experienced a cut in pay from sequestration-induced furloughs. Now imagine you are back at work after your three weeks of unscheduled leave. How many emails are there to respond to, how many projects are now behind? It would be a very difficult environment for sure.

We will all be working with HUD staff as they dig their way out of this. How we work with them can go a long way towards getting the kind of HUD we want versus one where everyone who can, leaves. More importantly, the value of what HUD does is part of our story and of the impact quality affordable housing has on a community. As we look towards another showdown in January and February of 2014, we must remember how damaging yet another round of cuts would be.

Tuesday, October 22, 2013

What our neighbors can teach us about working families

by Lisa Sturtevant, Ph.D., National Housing Conference and Center for Housing Policy

For a researcher, definitions are important. Defining precisely the target population for assessing needs or evaluating program outcomes is essential for producing reliable research results.
Center Director and NHC Vice President for 
Research Lisa Sturtevant, Ph.D.

In the Center for Housing Policy’s Housing Landscape report, working households are defined as those that have household members working at least 20 hours per week, on average, and earning no more than 120 percent of the area median income (AMI). In our Paycheck to Paycheck analysis, we compare the wages of workers in occupations with low and moderate wages to rents and home prices in metro areas across the country to measure affordability.

But I wasn’t thinking about definitions or research reliability during a recent conversation with Lucas.

Lucas is the parking garage attendant around the corner from my office. He started at his job the same week I started at mine, in mid-August. I see him every morning when I pull into the garage and every evening when I leave for home. A few weeks ago, I had an unusually long day. I pulled up to the parking garage just after 6:00 am and Lucas was opening up the garage door. Lucas and I said “Have a good day” to one another. When I returned to the garage at 6:45 that evening, Lucas was still there and wished me a good night.

As I drove home trying to unwind from a nearly 13 hour day at work, I realized that Lucas had also had a 13 hour day. Did he work 13 hours five days per week? Did he have a family he was supporting? What kind of opportunities did he have for getting ahead?

The next day I asked him about his work schedule. It turns out that he does, indeed, work from 6:00 am until 7:00 pm five days a week. On top of that, he comes in on Saturday mornings to power wash the garage and several days during the week he leaves the parking garage at 7:00 and works at a restaurant until 11:00. He has a 12-year old daughter with cerebral palsy, and his wife has to stay home to take her to doctor appointments and to school. He says he gets only about three hours of sleep each night and has a constant headache that recedes only when he closes his eyes. He says they are just getting by.

Lucas typifies the struggles that many working families face. There is evidence that the situation for people like Lucas has been getting worse over the past few years. Data reported by the U.S. Census Bureau indicate the median household income in the U.S. was $51,017 in 2012, virtually unchanged from 2011 and about nine percent lower than at the beginning of the recession. The highest income households, however, have been seeing their incomes grow. According to an analysis by Emmanuel Saez, an economist at University of California, Berkeley, incomes of the top one percent of households grew by 11.2 percent between 2009 and 2011, while households in the bottom 99 percent shrank by 0.4 percent.

The wealth divide is also growing during the economic recovery. As the stock market has improved, the wealthiest households benefited disproportionately as nearly two-thirds of their wealth comes from financial holdings. But among lower wealth households (those with net worth of less than $500,000), just 33 percent of their wealth is in the form of financial assets; 50 percent comes from their home. While home values have been rising, many homeowners remain underwater. In addition, stringent lending requirements have shut out many potential homeowners, reducing their opportunities for building wealth through their home.

Everything about the current economic situation seems like it’s making it tougher to get ahead.

In the face of growing income and wealth disparities, many families also face high and rising health care costs. The risk of unexpectedly large health care costs weighs heavily on many families’ minds—perhaps including Lucas’s—and unanticipated medical expenses are a primary main driver of foreclosure and bankruptcy.

Lucas works over 70 hours per week to keep a roof over his family’s head, to put food on the table and to pay for medical care and education for his daughter. What opportunities does Lucas have to get ahead? How many other people are there like Lucas across the country, who work as much as possible but face tremendous obstacles to moving up the economic ladder and who are one unfortunate event away from falling far, far behind?

The growing income and wealth inequality, and the difficulty of people on the lower rungs of the economic ladder to be able to get ahead, suggests that housing affordability problems will only increase for those in the more modest income groups. It suggests a need for an increased supply of housing, particularly in fast-growing and high-cost areas. It also suggests the importance of the transportability of housing vouchers within a region, as was recommended by Bruce Katz and Margery Austin Turner, to make it easier for working households to move within a region for a better job or a better neighborhood.

The situation also suggests a need for critical analysis of how working households in the middle and bottom of the income spectrum are to build wealth. Historically, for these households, owning a home was the primary way they accumulated wealth. Even as homeownership became ostensibly more affordable across most of the country, access to homeownership has declined through tighter credit markets and stricter standards.

The ability of working households to get ahead depends on more than just access to affordable and decent housing near jobs. But the lack of accessible and affordable housing is most assuredly a barrier to having a chance.

When I saw Lucas later in the week, he thanked me for asking about his situation. “It sounds like you worry about me,” he said. “I worry about me, so it’s nice to think someone else is.”

What should we be doing beyond worrying? From a researcher perspective, we can remain steadfast in our efforts to document and disseminate data on the economic circumstances of working families. Furthermore, researchers in the housing field, including the Center for Housing Policy, can raise questions and suggest answers for how housing policies and programs incentivize or discourage wealth creation. And researchers should serve as a resource to advocates and others who need to be armed with rigorous and thoughtful analysis as they seek change.

Monday, October 14, 2013

Housing's role in bringing people together

by Maya Brennan, Center for Housing Policy

Twelve Residences, a mixed-income condo community
in downtown Atlanta, features affordable apartment homes
financed through local Tax Allocation District funds.
Our communities don’t have enough affordable rental homes, so it may seem odd for a housing authority to use scarce land for market-rate housing. Yet the New York City Housing Authority has proposed to do just that. NYCHA points out the important role market-rate housing will play in funding the affordable units. And I agree. It’s a smart spin-off on the idea of cross-subsidies, and it fills a difficult funding void. But the reasons don’t stop there.

Leasing land for market-rate housing on public housing properties creates mixed-income communities. Mixed-income homes are not a panacea. The literature is clear on this. But they have some documented benefits – and provide opportunities for more.

Social interaction between people of different incomes and backgrounds is a huge, but largely unrealized opportunity. Getting all the Legos together is the first step. But the blocks all stay where they are until we do the work to connect them.

Yes, land leases on NYCHA property can provide funds to improve public housing’s quality for existing tenants. But they can do more. Connecting market-rate and public housing needs to be followed with step two: adding deeper community program connections. People of all backgrounds can build real relationships across incomes or other divides when we have “common places and a reason to cooperate in them.”

Housing policies provide the tools to segregate us or integrate us. Let’s make the better choice.

Friday, October 11, 2013

It’s your turn to move housing forward

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

For the last two and a half years, I’ve been fighting the good fight to promote housing affordability here at the National Housing Conference and Center for Housing Policy. And it’s been a blast. I’ve seen this organization start the long transformation into one of the new breed of nimble advocates, effectively responding to the realities of advocacy today: building a movement, engaging advocates in other issue areas, and making the pie bigger rather than fighting over the last slice. I love knowing that we are truly moving the needle on housing in our nation’s capital. I love being connected to smart professionals from across the housing spectrum and around the country—my friends in Rhode Island, North Carolina and Washington State help me get better at my job. And most importantly, I love working with my colleagues here at NHC and the Center.

The sweet two-monitor setup my successor will enjoy
That is why, when I announced last week that I’m resigning from my position as communications manager to pursue another opportunity, I did so with more than a little regret. But my loss could be your gain. NHC is hiring a new communications associate to replace me, and I cannot emphatically enough encourage anyone looking for their next communications/public affairs opportunity to apply. Do it now. It shouldn’t be your first walk in the park, but let me be the first to tell you that this position can grow with you.

You need to be a very, very strong writer. You need to have a good handle on web technology and social media. You need to solve problems. (I repeat: you must despise, hunt mercilessly and then destroy problems, whether it’s an AP style error or some buggy table formatting.) You need to learn complex issues quickly. You need an insatiable curiosity. And you need to care deeply about social justice and economic empowerment for low-income and working families around the country. Beyond that, this job can become what you want it to be.

You'll also have public speaking
opportunities. Pulling a Ren Höek-style
face as I have done here is not required.
Are you a social media guru? Engage your heart out. A disciplined project manager? Man, do we have some stuff coming down the pipe for you. A gifted designer? Bring it. I have a Wacom tablet I never quite figured out up in the cabinet with your name on it. What else will you get? You’ll get the great team of enjoyable colleagues—friends, really. You’ll get to work in a very convenient location with too many good lunch options. You’ll get to go home at night knowing you’re working towards something good.

And there is no time like the present. With the reboot of the Solutions Conference series in Atlanta this fall and the launch of the Housing Communications HUB, NHC is a place that clearly recognizes the central role of communications, framing and messaging in making housing a first-tier national issue and in getting stuff done on the ground. You will influence the work that your colleagues in research and policy do. And with NHC and the Center’s merger on the horizon and a half-dozen other exciting projects coming up, you will never be bored.

This was my first job in housing, but I’m not convinced that it will be my last. The housing space is not something that I really knew anything about before I started here at NHC. We don’t want you to know everything, or anything, about housing issues before you start. We just want a talented, balanced communicator who cares about doing good and is ready to learn. Are you ready? Apply now. The application period closes October 25.

Thursday, October 10, 2013

Solving homelessness means putting housing first

by Marice Fernando, National Housing Conference

Atlanta's historic Imperial Hotel, rear, once
abandoned, now under renovation
into 90+ units of supportive housing
The city of Atlanta was recently recognized for its effort to house a record number (more than 700) of homeless individuals this year, including 100 veterans. The city’s goal is to find homes for a total of 800 homeless individuals by the end of 2013 as part of the initiative “Unsheltered No More.” The program “seeks to catalyze a new level of coordination among all of the public, private, nonprofit and faith-based organizations that serve the homeless—and to set Atlanta on a path to meeting the federal government’s goal of ending chronic and veteran homelessness by 2015.” According to the 2012 Annual Homeless Assessment Report compiled by HUD, there are more than 6,000 homeless individuals in the metro Atlanta area with more than 1,200 being “chronically homeless” meaning “…continuously homeless for one year or at least four times in the last three years and has a disabling condition, such as a substance use disorder or a mental illness.” These individuals are the most vulnerable of the homeless population.

“Unsheltered No More” provides housing first and then other supportive services, as part of a growing national movement to provide housing first without imposing prerequisites (such as participation in a treatment program or sobriety) on the individuals being housed. The belief behind this is that once homeless individuals are housed they will be encouraged to make positive decisions about their health and overall well-being to stay housed, giving them both independence and a sense of pride. The 100,000 Homes Campaign, of which Atlanta is a part, seeks to reduce homelessness by providing housing first. In addition to Atlanta, there are 219 communities across the U.S. participating in the 100,000 Homes Campaign with a collective goal of housing 100,000 homeless individuals by July 2014. Thus far, the campaign has successfully housed 70,399 individuals, including 19,912 veterans. Each city’s or community’s progress is tracked monthly.

“Unsheltered No More” strategies to reduce homelessness include: building a coordinated outreach strategy to reach and prioritize the most vulnerable, and developing an intake, assessment, and triage process that will match homeless individuals with their housing and service needs. In January 2013 over 100 volunteers went out into the city to survey Atlanta’s homeless about their housing and health needs. The program also seeks to expand permanent supportive housing and create a model for temporary re-housing assistance, in addition to eliminating barriers (such as criminal backgrounds) that hinder access to social services. Being from Atlanta and volunteering with the homeless population throughout high school and college, I’m pleased to see the city has made addressing its homelessness crisis a priority.

Providing housing first makes sense because it is a first step to stability. Not only is housing important for health and safety reasons but even finding a job can be a challenge without a permanent address. Job applications often require the applicant to provide an address and phone number. How many employers would be willing to hire an individual who is homeless without any bias? Even if they were hired, how can the employer begin to contact the employee? How can they fill out forms for taxes and other benefits? These are simple question that a formerly homeless individual raised as they tried to transition off the streets. The added benefit to this community wide initiative is that it will better allow for coordination and collaboration—preventing efforts from being duplicated and identifying gaps that need to be addressed. This will hopefully maximize the resources to address homelessness and assist more individuals than if a few organizations were going about this effort alone. While there is obviously a lot of work to be done, and many more individuals are still in need of housing, providing a stable living environment is a key step toward ending the cycle of homelessness.

Tuesday, October 8, 2013

We hear you!

Attendees give Solutions 2013 high marks, help set direction for next year

by Amy Clark, National Housing Conference

Solutions 2013 was my first conference with NHC, and I enjoyed every minute of it. It’s always rewarding to see months of work come to fruition, and if that can happen in a conference center full of 400 housing advocates and practitioners from all over the U.S., all the better. More important than what I thought about Solutions, of course, is what our attendees thought about the conference—and what we’re doing to respond to their feedback. So instead of giving you a day-by-day recap of what happened in Atlanta, I thought I’d share what we learned from our survey of Solutions 2013 attendees, and some of our plans for when we take Solutions to Oakland in November 2014.

The majority of survey respondents were either satisfied or very satisfied with their overall conference experience. The majority also expressed an interest in returning next year, though understandably, cost or location were cited as potential barriers by many. We’ll continue to offer early registration discounts, and Solutions will be in a different region of the country each year so that people around the U.S. have a chance to attend a national housing conference in their own backyards.

Those who took our Solutions survey were for the most part very pleased with the organization of the tracks, and with the workshops themselves. We heard a lot of positive feedback about the content of most of the workshops, and we will continue to put our energy into creating days full of content-rich sessions. We are conscious, though, that different attendees—advocates, government employees, and housing providers, for example—all have different viewpoints and needs. We’ll work to meet those varying needs better at Solutions 2014. We are also looking for ways for more of our members to participate in workshops as moderators or speakers, or by proposing workshops. NHC members should be on the lookout in the next few months for an invitation to submit session or speaker ideas.

Where plenary sessions were concerned, survey responses were more mixed. Our survey respondents told us they wanted the general sessions to be more relevant to their work. We also heard from Solutions attendees that they loved the networking opportunities we provided, and that they want more. At Solutions 2014, we’ll still aim to bring in at least two major speakers, but we’re also looking for ways to use general session time—and the wealth of knowledge our attendees possess—more constructively. We’re contemplating providing structured networking opportunities during one or more mealtimes that would allow attendees to organize themselves around specific topic areas and learn from one another. Let us know what you think of this idea, and if you have seen something like this done well at other events.

Our survey told us that if you attended one of our mobile workshops, chances are you had a great experience. We also heard that having more information about the mobile workshops earlier and more clearly both in the registration process and at the event itself would have helped you plan and participate. For Solutions 2014, our goal is to give you more information about the entire conference up front. We hope to have general sessions and mobile workshops planned by the start of spring, and workshop descriptions set by the middle of the year, so you’ll know early on whether or not Solutions 2014 is the right conference for you.

Being away from home and engaged in workshops all day can be tiring and difficult for everyone, so we were especially concerned about your personal comfort during the event. Most who took the survey were satisfied with the hotel and with the assistance they received from both the hotel staff and NHC and Center staff. But our attendees had one complaint we heard loud and clear: You need a reliable, free internet connection in the meeting rooms! We agree, so for Solutions 2014, we’ll make every effort to make internet access available to our attendees.

One final issue that came up across the Solutions survey is that many attendees would like us to provide content that addresses the needs and special challenges faced by rural communities, and by communities of all sizes that are just starting to get their affordable housing work off the ground. This is a challenge we’re happy to take on, but we want input from those with experience with these issues to make sure we’re addressing them in a way that is constructive and useful. Do you have recommendations for us? Let us know in the comments.

Friday, October 4, 2013

FASB Task Force defers vote on revised standards

by Ron Diner, Executive Chairman, Raymond James Tax Credit Funds

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.

At a meeting on September 13, the Financial Accounting Standards Board’s Emerging Issues Task Force (EITF) deferred approval of revised standards for accounting for low-income housing tax credit (LIHTC) investments. Housing credit industry officials had hoped the EITF would issue guidance at the meeting allowing the cost of LIHTC investments to be amortized “below the line” on the tax line along with the tax credits. The industry believes this change would boost affordable housing investment.

The EITF could finalize the revised standards at its next meeting on November 14.

Earlier this year, a nationwide task force of LIHTC investors and sponsors, working with Novogradac & Company LLP and CohenReznick LLP, and led by Raymond James Tax Credit Funds, developed a white paper on the subject that was presented to the FASB, which assigned it to the EITF for review. On March 14, the EITF issued an exposure draft proposing to allow entities to elect to account for a LIHTC investment by amortizing the cost of the investment “below the line,” even when a guarantee is not provided – a change suggested by the white paper. A public comment period drew 73 comment letters, all generally agreeing with the proposed amendments in the exposure draft.

At its September 13 meeting, the EITF included an update from its staff on the comment letters and EITF staff recommendations based on the responses. The EITF generally reaffirmed its original conclusion that the cost of LIHTC investments could be amortized “below the line.”

However, the EITF revised two aspects of the proposed amendments

1. A number of letters had expressed concern that the proposed requirement that investors retain no operational influence over LIHTC investments other than protective rights was overly restrictive and would make it difficult for many LIHTC investments to qualify to report losses “below the line.” Suggestions included “substantially no operational influence” or “no significant operational influence” other than protective rights. The EITF tentatively agreed with the concept of “no significant influence over operating and financial policies.”

2. In requesting comments, the EITF asked whether the respondents agreed that the effective yield method was an appropriate method by which to write off an investment. Forty respondents supported a proportional or ratable amortization method in addition to, or in place of, the effective yield method. Instead of the effective yield method, the EITF tentatively agreed on a proportional amortization method based on the tax credits and other tax benefits to recover the cost of their investments “below the line.”

Two additional items resulting from the September 13 meeting were:

1. The EITF asked staff to provide more information on the applicability of the EITF’s decisions to date on other kinds of tax credit investments.

2. The EITF tentatively agreed that LIHTC investments meeting the conditions in the proposal be presented as deferred tax assets on the balance sheet instead of as an investment. The EITF asked the staff to do further research on the implication of that decision.

The industry task force is discussing the open items with EITF staff in anticipation of the November 14 meeting.

Ronald Diner is Executive Chairman at Raymond James Tax Credit Funds, based in St. Petersburg, Florida. Raymond James has been sponsoring affordable housing since 1969, and has raised more than $4 billion in equity for more than 1,300 properties across the country since the inception of the Tax Credit program in 1986.

Thursday, October 3, 2013

Housing affordability is important. So how do we get the message across?

by Janet Viveiros, Center for Housing Policy

In this climate of uncertainty in the midst of a federal government shutdown and constrained government resources, it is difficult, and yet more important than ever, to call attention to the need for more action to provide decent and affordable housing to all Americans. As Dave Brown of National NeighborWorks Association wrote in his August Open House Blog guest post on the Home Matters initiative, this is “a crucial time to expand the public discussion of housing as a national priority.” But how do we talk about housing in a way that makes it a priority to those outside our field?

When participating in this public discussion, it is important for those of us in the housing community to understand public opinion on housing affordability issues in order to frame housing issues in ways that resonate best with people. Leading public opinion firms, like Hart Research Associates and Belden Russonello Strategists, have conducted numerous surveys on behalf of housing advocacy groups around the country to gauge public opinion regarding housing affordability. Understanding what people think when asked about housing affordability in different ways is critical information that can influence the development of messages about housing affordability issues that help the public better understand housing affordability needs and solutions. Several lessons can be drawn from this body of research and they are summarized in the latest Center Insights report, which I authored with former Center researcher Rebecca Cohen, Building Support for Affordable Homeownership and Rental Choices: A Summary of Research Findings on Public Opinion and Messaging on Affordable Housing.

The main findings of research assessing public opinion on the perceived importance of, and need for, affordable housing are that:
• Housing cost issues have the most traction in high-cost areas

• Housing cost concerns are often passive and do not translate into political support

• Homeownership solutions are more attractive to the public than rental solutions

• Personal familiarity with housing challenges has increased
In terms of language and framing, the research shows that most effective messages:
• Focus on specific beneficiaries

• Describe programs in terms that affirm the beneficiaries deserve assistance

• Make clear that the whole community benefits

• Appeal to core values such as choice, hard work, balance, fairness and opportunity
This research on public opinion and messaging should be treated as a starting point. More research is needed to fully understand the post-housing crisis landscape of public opinion and messaging. In the meantime, however, these findings can help housing advocates and practitioners shape their messages to have the greatest impact.

In addition to learning from research, that is a great deal that those in the housing community can learn from each other and from successful campaigns that have put the research findings into action. Go to the newly launched Housing Communications HUB to catch up on the latest housing communications research and, more importantly, share your successes, resources that others can benefit from and lessons learned with other housing researchers, advocates and practitioners from around the country.

Wednesday, October 2, 2013

The government shuts down...what does it mean for housing?

by Liza Getsinger, National Housing Conference

As of this writing, the federal government has shut down. After weeks of back and forth, Congress remained deadlocked and failed to reach a budget deal that would keep the government open for business. As the fiscal year ended, the Senate and the House could not reach agreement on the proposed continuing resolution (CR). Just before midnight the Office of Management and Budget (OMB) instructed federal agencies to begin executing plans for the shutdown.

The blockage in Congress is centered on controversial amendments that would block or delay implementation of the Affordable Care Act (ACA). Over the last week Majority Leader Senator Harry Reid (D-Nev.) has been adamant that Democrats will only accept a "clean" CR that would keep the government funded at the sequestration level of $986 billion. President Obama has been similarly adamant that he would not negotiate on either the CR or the debt ceiling under threat of government shutdown. Due to the stalemate, the government shut down for the first time in 17 years. If legislators act quickly (as they did to make sure active-duty military personnel would be paid), they can end the shutdown with a clean CR before much more damage is done. Let's hope Congress can remember all the people who rely on a functioning federal government.

What does a government shutdown mean for housing programs? Last week HUD released a contingency plan outlining a department-wide strategy in the event of a lapse in appropriations related to shutdown and offering detailed guidance on all HUD programs. In general, housing programs that still have funds from past appropriations can continue functioning, although there will be very few HUD personnel available to manage the programs. In many ways housing programs are better off than some, because HUD moves funds out to program participants in batches, but we expect to see disruptions increase if and as the shutdown continues, particularly in programs already weakened by sequestration cuts.