by Rebekah King, National Housing Conference
2014 held some interesting developments for the affordable housing sector, despite little housing legislation enacted. From changes in HUD and Congressional leadership to the Federal Housing Finance Agency (FHFA) decision to fund the National Housing Trust Fund and Capital Magnet Fund, changes happened at many levels. Given last week’s announcement by the Administration to lower FHA premiums and continued policy actions from the FHFA, and Congressional interest in tax reform, we anticipate 2015 will be another busy year for housing.
Major housing policy developments of 2014:
- Julian Castro, former mayor of San Antonio, became the secretary of HUD and Shaun Donovan became the Director of the Office of Management and Budget. Castro has called HUD “the department of opportunity” and emphasized initiatives like Choice Neighborhoods, Jobs Plus, and the Rental Assistance Demonstration. He has also highlighted the need to bridge the digital divide and increase broadband access.
- Fannie Mae and Freddie Mae began offering 3 percent downpayment mortgages again. These programs will be targeted primarily to first-time and low-income homebuyers, those buyers with good credit but low wealth. These programs will offer first-time homebuyers a more affordable entry to homeownership but may also act as a substitute for FHA mortgages. Now that the Administration has announced a reduction in FHA premiums, we hope both of these developments will empower more creditworthy borrowers to purchase homes.
- Republicans gained control of the Senate in the mid-term elections. With a Democratic President and a Republican-controlled Congress, legislative impasses are still likely; however, the benefit of not having a divided Congress could be the ability to get more legislation enacted if Republicans and the President can reach compromise.
- Congress authorized the expansion of the Rental Assistance Demonstration Component 1 program, from 60,000 units to 185,000 units, in the FY15 THUD omnibus bill. This expansion will address all of the applications that have been approved on the waitlist as well as allow for new applications for 8,000 units. The bill also allowed residents in project based Section 8 to participate in the Family Self Sufficiency Program for the first time. Unfortunately, it also prohibited any FHA funding for the HAWK program and made cuts to the CDBG and HOME programs.
- The Federal Housing Finance announced it will allow the GSEs to fund the National Housing Trust Fund and the Capital Magnet Fund as of Jan. 1, 2015. NHC member Enterprise Community Partners has estimated that $400-$500 million will flow to the HTF and CMF each year. These funds will support the creation and preservation of affordable housing, and this development is incredibly important. A final rule is expected from HUD soon.