Tuesday, January 13, 2015

Recap of 2014


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.
As these developments play out in 2015, we will work to keep housing in the forefront and keep you updated. Look for more on many issues, including the implementation of the National Housing Trust Fund and Capital Magnet Fund, the RAD expansion, and trends in homeownership. In 2015, we also anticipate renewed discussions around tax reform in policy circles and in Congress, attempts to modify Dodd-Frank regulations, as well as another round of difficult HUD and USDA budget negotiations.

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