STATE UPDATES
Housing Bond Bill Heads to Conference Committee
A conference committee has been appointed to work out the differences between the two versions of the housing bond bill passed by the House and the Senate. While both bills are substantially similar and authorize $1.4 billion in capital spending over the next five years as well as extend the Low Income Housing Tax Credit at $20 million per year through 2020, both the House and Senate versions contain provisions weakening the Affordable Housing Law, Chapter 40B. The bills also make changes to immigration policy as it relates to public housing.
CHAPA is urging the conferees to reconcile the bills this month in order to keep housing programs funded and keep housing production moving. CHAPA is also urging the conferees to remove the larger policy changes attached to the housing bond bill and instead have these complex issues addressed by the Housing Committee.
The Housing Bond Bill conferees are:
- Senator Stephen Brewer (D-Barre), Senate Ways & Means Chair
- Senator James Eldridge (D-Acton), Senate Housing Committee Chair
- Senator Bruce Tarr (R-Gloucester), Senate Minority Leader
- Representative Brian Dempsey (D-Haverhill), House Ways & Means Chair
- Representative Kevin Honan (D-Brighton), House Housing Committee Chair
- Representative Todd Smola (R-Palmer), Member, Joint Committee on Public Service and House Committee on Bonding, Capital Expenditures and State Assets
Changes proposed to the Affordable Housing Law include the prohibition or restriction of housing construction on sites designated as tax increment financing zones (TIFs); a change in the definition of “low and moderate income housing” to include any housing DHCD had agreed to consider as low or moderate income housing prior to July 1, 2007; and a change allowing owners or communities to avoid fair housing marketing requirements for 40B developments. Each of the proposed changes aims to assist specific communities in meeting their affordable housing goals. The Boston Globe published an editorial on September 5 urging legislators to remove these proposed changes to the comprehensive permit law.
Motel Numbers on the Rise
As of September 9, 2013, more than 2,000 families are living in shelter and another 1,820 are living in motels. Despite efforts to move families out of motels into stable housing, the numbers continue to rise. As temporary HomeBASE rental assistance comes to an end over the next several months, thousands more families face the possibility of becoming homeless once again.
CHAPA and the Building Blocks Coalition worked with the Legislature to significantly increase funding in the FY2014 budget for permanent housing and homelessness prevention programs, such as the Massachusetts Rental Voucher Program (MRVP) and Residential Assistance for Families in Transition (RAFT) and DHCD has new flexible funds to dedicate to permanent affordable housing this fiscal year. Even with these additional funds that will soon be accessible to families, we are still facing a housing shortage. The housing shortage is making it challenging for households of all incomes to obtain housing, but it is hardest for those households with low incomes. CHAPA is working to increase housing production with the passage of the bond bill. We are also working to provide communities with more planning tools, which can help to increase housing production across the state. The CHAPA Homelessness Committee will be meeting in coming weeks to discuss short and long term solutions to the homelessness crisis.
Legislative Hearings on State Public Housing Governance - Date Change
The Joint Committee on Housing has revised the dates for two public hearings on proposed bills to reform the governance of state public housing. It will hold a hearing in Taunton on Friday, September 27 at 1:00 p.m. in the community room of Robertson on the River. It will hold a hearing in Boston on Tuesday, October 1 at 10:00 a.m. in Gardner Auditorium. Click here and here for details on the hearings, including directions to the hearing sites, and links to the proposed bills
Visitability Bill Passes Senate
Massachusetts has an old housing stock with many physical barriers that pose problems for those with limited mobility. In addition to posing significant barriers for those with limited mobility looking for permanent housing, our housing supply makes it extremely difficult for those with limited mobility to visit friends and family. Visitable homes allow people with limited mobility to avoid isolation and live an engaged lifestyle with the ability to visit friends, family, and neighbors. Eight states have adopted visitability policies that apply to new single family home construction. Senator Patricia Jehlen’s bill, S.1787, establishing a commission to study home visitability standards and make recommendations about increasing the accessibility and inclusiveness of the Commonwealth’s housing stock, has passed the Senate.
Gateway Cities Legislation Scheduled for a Hearing on September 10
Legislation sponsored by Representative Antonio Cabral and Senator Ben Downing to significantly increase resources for Gateway Cities revitalization will be heard by the Joint Committee on Economic Development and Emerging Technologies on Tuesday, September 10th at 11:00 am at Western New England University in the Blake Law Center Moot Court Room in Springfield, MA. The bill (H 311 - An Act to Promote Transformative Development in Gateway Cities) would increase the funding for the Economic Development Incentive Program (EDIP), Housing Development Incentive Program (HDIP) and the Historic Rehabilitation Tax Credit, and create a new Gateway Cities Transformative Urban Development Fund to be administered by MassDevelopment. The bill also makes changes within EDIP, HDIP, and the Historic Tax Credit to provide Gateway Cities with more tools to redevelop their communities.
Massachusetts Receives 145 More Housing Vouchers for Homeless Veterans
On August 21, HUD announced the second round of FY2013 awards of Section 8 vouchers for homeless veterans under the HUD-Veterans Affairs Supportive Housing (VASH) program. HUD awarded 1,120 vouchers nationwide this round, including 145 for Massachusetts programs. This brings the total number of VASH vouchers awarded to Massachusetts in FY2013 to 175 (two programs received 30 vouchers in the first round of awards in May, out of 8,635 vouchers awarded nationwide then). VASH combines Housing Choice Voucher rental assistance with case management and clinical services provided by the Department of Veterans Affairs at VA medical centers and community-based outreach clinics.
City of Boston Announces 2020 Housing Plan
Mayor Menino unveiled the city’s 2020 Housing Plan on September 9, announcing a housing production goal of 30,000 new units in the decade of the 2010s (including 25,000 private market rate units). The Plan calls for a 5,000-unit, $1.5 billion dollar middle class housing initiative for households earning $50-100,000 and 5,000 new units of affordable, deed-restricted housing through inclusionary zoning (2,000 units) and public subsidies. Half of the middle class and affordable units will be created using existing units. The plan also aims to preserve 95% of the expiring affordable housing inventory and to house 10,000 more full time students. The Plan discusses five key challenges, including high demand for affordable housing (23,000 very low income families are considered at risk of becoming homeless), while federal funding for affordable housing has been cut by 35 – 45%; rising demand for housing due to strong job growth; middle class housing cost pressures as prices are rising at double the rate of income growth; and the risks facing the current affordable inventory(52,000 units) due to declining federal operating support, capital obsolescence, and expiring affordability restrictions. It recommends a number of strategies to the incoming administration to address these challenges and help finance the production goal, including an increase in the linkage fee.
Median Home Prices Up 12% in 2013
On August 29, the Warren Group reported that the median year to date (January-July) sale price for single family homes in Massachusetts reached $320,550, up 12% compared to the same period in 2012 ($286,000). The median price for homes sold in July was $349,000. A total of 5,941 single family homes sold through July, up 3.6% compared to a year earlier. Condominium sales have also been strong, with a median year to date (January-July) sales price of $290,000, up 3.6% compared to a year earlier, while the number of condominiums sold year to date rose by 4.6% compared to a year earlier.
2013 Foreclosure Activity Down Steeply but Uptick May Loom
The Warren Group reports that foreclosure starts (petitions filed) reached their lowest monthly level in June (245 statewide) since it began tracking this statistic in 2006. Year to date, the number of petitions filed through June (2,943) is down 70% compared to the same period a year ago (9,425). Foreclosure deeds year to date totaled 1,575, down two-thirds from the same period in 2012. Analysts attribute the decline to multiple factors, including rising home values, expanded loan modification activity under the National Mortgage Settlement and enactment of a new 2012 state law in late 2012 requiring lenders to notify borrowers of modification options before foreclosing. However, an analysis in the Massachusetts Housing Partnership Foreclosure Monitor warns that foreclosure activity may rise somewhat in the coming months, now that processing requirements under the 2012 state law have been clarified, especially in some urban neighborhoods that have not seen as much of a rebound in home prices.
2013 Building Permit Activity Up 60% Year to Date
According to Census Bureau estimates released on August 16, Massachusetts cities and towns issued permits for 8,991 new housing units between January 1 and July 30, 2013, up 60% from the number permitted during the same period in 2012 (5,633). Multi-family units (in buildings with 5+ units) rose 96% to 4,800 – the highest number in over a decade - and single-family units permitted rose by 31% to 3,798. Boston (1,282 units) and Cambridge (887 units) accounted for 45% of the multi-family units permitted. The increase in units permitted in Massachusetts this year to date has outpaced the national increase of 23% for total units and 20% for multifamily units.
FEDERAL UPDATES
Proposed FY2014 Fair Market Rents (FMRs) Published
HUD published proposed FMRs for FY2014 in an August 5 notice and table in the Federal Register. As proposed, FMRs would rise in eight of the 19 FMR areas in Massachusetts and decrease in 11 areas (see summary). The proposed Increases in the two-bedroom FMR range from 0.1% to 4.7%, including a $10 increase for the Boston-Cambridge-Quincy area, while decreases range from 1% to 7%, including a $91 decrease for Barnstable County. The proposed FY2014 FMRs for Massachusetts by FMR area can be found here. HUD has also posted detailed information on how the proposed rent levels were calculated for individual areas on its FMR webpage. The deadline for public comments was September 4.
Revised Qualified Residential Mortgage (QRM) Rule Issued for Comment
On August 28, six regulatory agencies (the Federal Reserve Board, FDIC, FHFA, HUD, OCC and SEC) announced a joint proposed Qualified Residential Mortgage rule, revising a 2011 proposal. The rule is intended to implement the Dodd-Frank Act requirement that sponsors of securitized transactions, including mortgages, retain some of the risk in the transaction. The Act exempted “qualified residential mortgages” (QRMs) from the retention requirement but left the definition of QRM to the regulators. The 2011 draft rule proposed fairly stringent standards, including a minimum down payment of 20%. In response to public comment, however, the new proposal has stepped away from that, leading some critics to characterize it as undermining the original intent of risk retention.
The revised proposal suggests two options for defining QRM. The first defines a QRM as any mortgage meeting the definition of “Qualified Mortgage” (QM) under the Ability-to-Repay rule recently finalized by the Consumer Financial Protection Bureau. The QM definition has no minimum down payment requirement. The second option, “QM plus”, would define QRM as mortgages that meet certain “core criteria” under QM plus several additional standards, since as noted in the blog Calculated Risk, the QM definition doesn’t set underwriting standards related to risk beyond a maximum debt to income ratio and income verification. QM-plus would exclude some types of QM and add additional standards, such as a 30% down payment (see pp. 274-288 of the proposed rule). Comments are due by October 30.
FHFA Seeks Comments on Strategies to Reduce Fannie Mae and Freddie Mac Multifamily Portfolios
Congress continues to discuss long term housing finance reform (see below). In the meantime, however, the Federal Housing Finance Agency (FHFA) has posted a request for public comment on proposed strategies to reduce Fannie Mae and Freddie Mac’s multifamily lending in 2014. The proposed strategies are intended to help it reach its goal of gradually reducing the two firms’ multifamily lending activities and increasing the role of the private sector. In 2013, it announced a goal of reducing new multifamily lending by at least 10%, even as critics noted that the GSE multifamily lending market share had already fallen from 90% at the height of the crisis to 45% in 2012. In this request for comments, however, the FHFA indicated that it is debating whether to seek a broad volume reduction goal or instead reduce selected areas of multifamily lending. Potential strategies include (1) limiting the availability of shorter term (5-year) loans, (2) reducing the number of specialized lending products, (3) re-imposing loan limits or limiting lending based on expected rent levels relative to area median incomes, (4) prohibiting the purchase of seasoned loans or loan pools, and/or (5) only originating loans that can be securitized and sold to investors. The deadline to submit comments to FHFA is October 8, 2013.
President Outlines His Priorities for Housing Finance
On August 6, President Obama gave a general speech outlining his housing agenda and simultaneously issued a more detailed fact sheet. The speech focused primarily on homeownership policies and on the future role of government in housing finance. The president urged Congress to pass legislation to improve access to refinancing; called for regulatory changes to improve access to mortgages by qualified buyers; called for additional investment in affordable housing; and outlined principles for a new housing finance system, including preservation of the 30 year, fixed mortgage. In the fact sheet, he also called for replacing the GSEs with a new system that ensures continued access to financing for multifamily rental housing and first-time and underserved homebuyers. Other agenda items in the fact sheet include new aid to communities hard hit by foreclosures, immigration reform, continued support for the Low Income Housing Tax Credit and New Markets Tax Credit and adequate financing for HUD programs.
Congress Works on GSE Reform Bills
Both the Senate and House are working on housing finance reform bills, though few expect passage this year. In the Senate, Senators Bob Corker (R-TN) and Mark Warner (D-VA) introduced a bill (S.1217) that would wind down Fannie Mae and Freddie Mac in five years and replace them with a new Federal Mortgage Insurance Corporation (FMIC). The FMIC would offer a government guarantee, continue to purchase and securitize both single- and multi-family loans and oversee the Federal Home Loan Banks. Rather than setting affordable lending goals, it would capitalize two affordable housing funds through fees charged for securitization (80% to a Housing Trust Fund and 20% to a Capital Magnet Fund), with up to 60% of the Housing Trust funds allowed to assist households with incomes of up to 120% AMI. The bill is still being refined, especially with regard to multifamily lending (the first hearing will be September 12) and observers expect a different bill will ultimately be the primary legislative vehicle for GSE reform. The Senate Banking Committee has posted a two page summary. Enterprise Communities as posted a more detailed analysis – including a comparison with the House proposal (see below), and recommended changes consistent with the guiding principles developed by the Mortgage Finance Working Group of the Center for American Progress.
The House Committee on Financial Services supports a very different approach, approving a bill that winds down the GSEs and largely eliminates federal backing for housing finance. The bill has stirred opposition from many in the banking industry and some believe it will end 30 year fixed rate mortgages. The “Protecting American Taxpayers and Homeowners (PATH) Act” (H.R.2767) was filed by Committee chair Rep. Jeb Hensarling (R-TX). As detailed in the Committee summary and the Enterprise Communities analysis, the Act replaces Fannie Mae and Freddie Mac with a new private, not-for-profit National Mortgage Market Utility. The utility would develop origination, servicing, pooling, and securitizing standards, and operate an outlet to match loan originators with investors, but would not be allowed to originate, service, or guarantee any mortgage or mortgage backed security. The bill also eliminates the Housing Trust and Capital Magnet Funds and affordable housing goals, makes the FHA an independent agency, raises the FHA minimum down payment for non-first-time buyers to 5%, reduces FHA insurance from 100% to 50% and sets income limits for non-first-time homebuyers.
LIHTC Legislation Introduced in Senate
In August, Senator Maria Cantwell (D-WA) introduced legislation (S.1442) to make permanent the current temporary nine percent minimum credit rate for new construction and substantial rehabilitation. The bill would also establish a 4% minimum floor for credits used for acquisition. The current 9% floor was adopted in 2009 as part of the Housing and Economic Recovery Act but is limited to credits allocated through 2013. Absent an extension, it will revert to the old “floating rate” formula, which bases the amount of credits a property can receive on the interest rate paid by the federal government, rather than the flat 9% and 4% credit rates in force when the program was first enacted. The floating rate means changes in the federal cost of borrowing reduce the amount of equity that can go into any given project, creating uncertainty and potential funding gaps.
FHA Cuts Post-Foreclosure Waiting Period to One Year for Some Buyers
On August 15, the Federal Housing Administration (FHA) issued a new rule (Mortgagee Letter 2013-26). Part of the FHA’s “Back to Work – Extenuating Circumstances Program,” the rule allows some borrowers who have experienced a bankruptcy, foreclosure or short sale to re-qualify for an FHA-insured mortgage after one year (previously, they were subject to a minimum waiting period of three years). To qualify, the applicant must demonstrate that the bankruptcy, foreclosure, etc. was caused by an economic event beyond their control, such as loss of employment and/or income, that lasted at least six months and that they have since re-established satisfactory credit and receive housing counseling.
New Federal DOT Guidance for Transit Projects Adds Affordable Housing to Evaluation Criteria
On August 14, the federal Department of Transportation issued final policy guidance outlining how it will score applications for funding under its primary transit program (New Starts/ Small Starts). The guidance fleshes out the final program rule published in January 2013. As detailed in a policy brief by Enterprise Community Partners, these changes make New Starts/Small Starts the first federal transportation program to explicitly address affordable housing and the needs of lower income and transit-dependent populations. Applicants will receive points for serving these populations and for siting projects in areas with relatively more affordable housing (use-restricted) within a half mile. They will also receive points for having plans to preserve currently affordable housing over time and for encouraging new affordable units as part of station area development and will not be penalized for extra costs associated with sustainable design. The guidance overall encourages more collaborative transit planning.
Court Rules GSEs are exempt from Chicago Vacant Building Registry
On August 23, a federal judge ruled that buildings in foreclosure with mortgages backed by Fannie Mae and Freddie Mac do not have to follow Chicago’s vacant building ordinance. As detailed in an article in the Chicago Tribune and a legal analysis, the ruling may put similar ordinances in municipalities across the country at risk should the FHFA challenge them. The decision in Federal Housing Finance Agency v. City of Chicago held that the Chicago ordinance (which requires mortgagees of vacant buildings to register with the city, pay a fee, and maintain the building) does not apply to the FHFA or to Fannie Mae or Freddie Mac. The court held that the Chicago ordinance was preempted by federal law and constituted an impermissible tax against the federal government.
RECENT RESEARCH
HUD Reports “Worst Case” Housing Needs Up 19% in Two Years, 43% since 2007
HUD’s full Worst Case Housing Needs 2011 study, released on August 14, reports a 19% increase between 2009 and 2011 in the number of very low income renter households (at or below 50% of area median) paying more than half their income towards housing or living in severely inadequate conditions. The 2011 estimate of 8.47 million households represents a 43.5% increase since 2007. The report profiles the characteristics of these households (e.g. 17% are elderly without children, 38% are families with children, 9% are other family types and 35% are persons living alone or with roommates). Causes of the increase include new household formation (15%), changes in tenure as owners become renters (37%), decreases in renter incomes (15%), increases in rents and the failure of housing assistance programs to expand.
New Study Quantifies Negative Impact of Financial Stress and Poverty on Cognitive Function
A new study, Poverty Impedes Cognitive Function, published August 29, suggests that financial stress and poverty interfere heavily with decision-making and task-accomplishment. As detailed in shorter articles on the websites of Princeton University, the Atlantic Cities and the Guardian, the researchers found that a person's cognitive function is diminished by “the constant and all-consuming effort of coping with the immediate effects of having little money, such as scrounging to pay bills and cut costs,” leaving him or her with fewer "mental resources" to focus on matters such as “education, job training and even managing time.” They note that while wealthier people may face stresses that equally strain their mental resources, the financial consequences are less likely to be as severe. The authors suggest that programs serving the poor can be more effective if adapted to recognize these challenges (e.g. providing help with applications, sending reminders regarding deadlines).
Study of LIHTC Use in Greater New York finds Units Remain Concentrated in High Poverty Areas
A new study examining the location of developments with federal Low Income Housing Tax Credits (LIHTC) in New York City and its suburbs that were placed in service between 1998 and 2007 found that most units were in high poverty and/or high minority areas. Choice Constrained, Segregation Maintained found that 71% of the affordable units created in the region were in tracts with a poverty rate of 20% or more, including 52% that were tracts with a poverty rate above 30%. It also found that 65% of the units were in areas of that were majority minority and another 12% were in areas where the percentage of minority residents ranged from 20-50%. Family units were even more likely to be in such tracts, as suburban units were far more likely to be reserved for the elderly (49%), especially units in low poverty suburban areas (where 60% of the units were for the elderly).
The findings held true for new construction and rehab projects, though there was some difference by allocating agency (New York City, the State and the state HFA). The report calls for the U.S. Treasury Department to develop regulations that will (1) encourage the siting of family developments in a way that expands housing choices, (2) more clearly define the concerted community revitalization plan required for high poverty sites, (3) mandate affirmative marketing and tenant selection, and (4) require allocating agencies to monitor occupancy data by site on race, national origin and use of housing choice vouchers.
Study Finds No Link between Housing Choice Vouchers and Crime Rates
A new study, The Impact of Housing Vouchers on Crime in U.S. Cities and Suburbs, examined “the common belief that subsidized housing contributes to higher crime rates,” and specifically the effect of housing choice vouchers. The study, conducted by Michael Lens of UCLA, examined data covering 215 cities and 114 MSAs from 1997-2008 and found no evidence of a relationship between voucher household prevalence and crime rates at the city or suburban level. The study also reviews other studies of relationships between crime and various geographies and types of subsidized housing.
African American Households Lost Over Half their Wealth during Financial Crisis
A new report by the National Association of Real Estate Brokers (NAREB), the State of Black Housing in America, details the economic losses suffered by African-American households between 2005 and 2009. Higher rates of subprime lending and foreclosure lead to a 53% decline in their median net worth between 2005 and 2009, falling to $5,677 in 2009. The median net worth of Latino households fell by 66% during those years (to $6,325), while the median net worth of non-Hispanic white households fell 16% (to about $113,000). Homeownership rates for African Americans have also fallen sharply, reaching 43.1% in the first quarter of 2013, compared to 73.4% for non-Hispanic whites and 45.3% for Latinos. The report concludes with public policy recommendations.
HUD “Picture of Subsidized Households 2009-2012” Shows Changing Mix of HUD Assistance
HUD has released its Picture of Subsidized Housing database for 2009 through 2012. The online query system provides detailed data on HUD’s major subsidy programs by geography (from national totals to individual developments). As detailed in a summary by the National Low Income Housing Coalition, the supply of federally subsidized housing nationwide rose by 0.9% between 2009 and 2012, with losses in public housing (25,099 units) and older multifamily programs offset by increases in housing choice vouchers (95,132), including vouchers to assist tenants losing other forms of federal assistance. The number of Low Income Housing Tax Credit units rose by 52,305. In Massachusetts, total federally assisted units increased by about 4,000 (to about 181,800), primarily due to the federalization of state public housing units and an increase in LIHTC units.
Study Suggests that Public Transit Investments Offer Large Hidden Economic Benefits to Cities
A new study - Transit Service, Physical Agglomeration and Productivity in US Metropolitan Areas - by Daniel Chatman of the University of California at Berkeley suggests that public transportation provides more economic benefits to cities than previously estimated. The additional benefit comes from the fact that transit promotes agglomeration (easier labor market access, information exchange and industry specialization), which in turn increases jobs and raises economic productivity. The study includes estimates of the impact of specific increases in transit services on local wages and job numbers.
UPCOMING EVENTS
September 20 – CHAPA’s 2013 40B Training: Re-emerging in a Recovering Market - UMass Lowell Inn & Conference Center, Lowell, MA 7:30 a.m.-1:00 p.m. Click here to register and click here to download the conference brochure.
September 25 - CHAPA Brown Bag Lunch Series for Young Professionals in Affordable Housing Returns: The US Housing Crisis – 5 Years Later with Rachel Bratt – CHAPA Office 12:00 p.m. – 1:00 p.m. Click here to register. Free.
October 8 – CHAPA Breakfast Forum: Planning Ahead for Elderly Housing Needs - Boston Bar Association Conference Center, 16 Beacon Street, Boston MA 9:00 a.m.-11:00 a.m.. Click here to register.
October 29 – CHAPA 46th Annual Dinner, Tuesday October 29 5:30 p.m.-8:30 p.m., Boston Convention and Exhibition Center, South Boston. Click here for registration information.
