Housing Briefs - April 17, 2009
State Updates
House Committee on Ways and Means Releases FY ’10 budget
The House Committee on Ways and Means released its FY ’10 budget proposal on Wednesday, April 15th, which includes large cuts across state government, including a 6.6% cut to local aid. Most affordable housing priorities were level-funded, with one significant exception: the Massachusetts Rental Voucher Program was cut by 45 % (from $33.047 million to $17.9 million), and would be funded at half of what Governor Patrick proposed in House One to maintain the current number of vouchers.
At least 2,500 households would be removed from the state’s rental assistance program unless the funding level is increased above the House Ways and Means MRVP funding level. Because the average household income for an MRVP recipient is only $11,000/year, this program reduction would create a sharp increase in homelessness. The proposal would most likely impact both mobile and project-based vouchers. Housing Committee Chairman Kevin Honan has filed an amendment to increase the funding amount to the maintenance funding level of $35.8 million.
Other painful cuts include elimination of the Division of Banks Foreclosure Prevention and First-time Home Counseling competitive grant program. This program was eliminated despite the fact that the Commonwealth experienced over 12,000 foreclosures in 2008 and is on pace to exceed that number in 2009. The foreclosure prevention grants have been funded through the licensure of mortgage loan originators and do not require a general fund appropriation. Chairman Antonio Cabral and Representative William Lantigua have both filed amendments to restore the language necessary to continue this program.
The public housing operating subsidy line item is $200,000 less than the FY’ 09 level. The Ways and Means proposed operating subsidy amount is $66.3 million, $4.7 million less than what Governor Patrick requested as level-funding local housing authority operating budgets due to rising costs and lower incomes for residents. The Individual Development Account program would be eliminated, one of over 50 programs funded in FY ’09 that would be terminated in FY’10.
The Ways and Means Committee chose not to use any funding from the Stabilization Fund; Governor Patrick proposes using approximately $595 million in Rainy Day Funds. While the proposed budget includes no new revenues the Governor’s budget includes just over $300 million in new revenues from select sources. CHAPA supports additional revenues or use of the Rainy Day Fund if necessary to adequately fund housing assistance to avoid unnecessary homelessness and housing instability. CHAPA encourages our members to join us in offering that support.
Amendments to the budget are due Friday, April 17th. Representatives have until April 24th to cosponsor amendments. The House budget will be debated the week of April 27th. The Senate will debate its version in late May.
Donahue Institute Poll Finds Housing and Jobs Top Concerns for Commonwealth Residents
On Monday, April 13th, the UMass Donahue Institute and CHAPA released the results of a public opinion poll on housing conducted in March. The results clearly indicated that Massachusetts residents continue to place the costs of housing among their top concerns. The Poll, which received broad media coverage, finds large numbers of Massachusetts residents very concerned about their job security and their ability to make ends meet; strongly in support the development of new affordable housing in their communities; and overwhelmingly in favor of new policies to protect renters from being displaced by foreclosures and increasing state support for at-risk families.
Governor Announces Third Round of Emergency FY ‘09 Budget Cuts
On April 14th, Governor Patrick took action to close a $156 million FY ’09 budget shortfall. The Governor will use a mixture of federal recovery funds, budget cuts and spending controls, mandatory staff furloughs, and the elimination of over 750 additional state positions through layoffs, attrition, and stringent new hiring limits for state agencies to close the budget gap.
Governor Announces Funding for Affordable Rental Developments
On April 3rd in Chelsea, Governor Patrick announced $108 million in state capital funding and state and federal tax credits for affordable housing rental developments throughout the state. The 39 projects will yield more than 2,000 new affordable houses once construction is complete.
Legislature Swings into High Gear; Several CHAPA Bills Scheduled for Hearings
After a slow start to the 2009-2010 session, legislative committees are scheduling hearings at a rapid pace.
The Housing Committee has scheduled hearings for several CHAPA priorities. On April 28th, Chairman Honan, Chairwoman Tucker and members of the Committee will hear testimony on the Public Housing Innovations Bill (H. 1237/S.624) and the House version of the Affordable Housing Energy Efficiency Bill (H.1220). The Committee anticipates hearing affordable housing preservation legislation on May 5th, including S.666/H.3573 and legislation referred to the Committee related to foreclosure on May 19th, including H. 3571. Both hearings are subject to change.
In addition, the Joint Committee on Telecommunications, Utilities and Energy heard testimony on the Senate version of the affordable housing energy efficiency legislation, S. 1546 on April 15th.
Department of Transitional Assistance Modifies Emergency Shelter Regulation Proposal
The Department of Transitional Assistance (DTA) has scaled back a proposal to modify emergency shelter regulations following opposition from legislators and homeless advocates.
DTA has revised proposals that bar tenants evicted from public housing from shelter, modified savings and work requirements, modified the rejection of housing and abandonment of shelter changes, modified the eligibility impacts to the entire family if a family member has an outstanding warrant, withdrawn changes that would restrict eligibility for 18-21 year old dependents, and withdrawn the proposal to shorten the grace period from six to three month for families that exceed the income limits.
Homelessness Prevention and Rapid Rehousing Plan Released
DHCD and DTA released their plan to utilize $18.4 million in funding for homelessness prevention and rapid re-housing appropriated through the American Recovery and Reinvestment Act (ARRA). Under the plan, 75% of the funds would be committed to rapidly re-house homeless households and the remainder would be used for homelessness prevention. The plan is open to comment until April 27th and hearings will be held on April 22nd in Worcester and April 23rd in Boston.
The CHAPA Homelessness Committee submitted recommendations to the Interagency Council on Housing and Homelessness, DHCD and DTA prior to the release of the plan.
DHCD Accepting Comments on State Weatherization Plan
Massachusetts is receiving $122 million in new funding for Weatherization under the American Recovery and Reinvestment Act (ARRA). As required, DHCD held a public hearing on its draft plan for use of these funds on April 14 and will accept comments through Tuesday, April 21. The draft plan calls for weatherizing 13,360 units. It reserves up $25 million to weatherize about 4,500 units of state public housing and up to $6 million for improvements in expiring use/preservation projects (about 1,445 units).
Community Preservation Act Activity Picks Up In Spring; Kuehn Community Preservation Awards Announced
Seekonk and Rehoboth both adopted the CPA this year, bringing the statewide total to 142 municipalities. Attempts to adopt CPA in Lynnfield and Hardwick came up short.
In addition, the Community Preservation Coalition (of which CHAPA is a member) announced the Robert Kuehn Community Preservation Award Winners. The award is named after Bob Keuhn, a founding member of the Community Preservation Coalition and past-president of CHAPA who passed away in 2006.
The winner in the Large Community Category was the Douglas House in Lexington, a 15-unit affordable housing residence for survivors of brain injury located in the historic Lexington Press building. The winner in the Small Community Category was the Marion Music Hall, a historic preservation project in Marion. Marion, Lexington, and several other impressive projects will be highlighted at a ceremony on Thursday, May 14, 2009 at 3:00 pm in Nurses' Hall at the State House.
Governor’s Office Creates Stimulus Funding Website
On April 10, the Governor’s office launched a website - Mass.Gov Recovery – that will enable the public to track the State’s receipt and use of federal funds under the American Recovery and Reinvestment Act (ARRA). The Government Accountability Office (GAO) will be tracking how 16 states, including Massachusetts, use their stimulus funds and spending impacts.
Federal Updates
Sandra Henriquez Nominated to be HUD Assistant Secretary
On April 10, the Obama administration announced its nomination of Sandra Henriquez to be HUD Assistant Secretary for Public and Indian Housing. Ms. Henriquez has been chief executive officer of the Boston Housing Authority since 1996, a member of the Mayor’s cabinet as well as a member of CHAPA’s Board of Directors. In her new position, she will oversee HUD policy for public housing and the Section 8 Housing Choice Voucher program.
Congress Approves FY2010 Budget Resolutions with Funding for National Housing Trust
On April 2, the House and Senate both adopted budget resolutions for the FY 2010 budget. The resolutions are the first step in the appropriations bill process, as they set overall spending limits, including a cap on the amount that can be spent for discretionary domestic programs. Both bodies included authorization for the National Housing Trust Fund and both included it in the mandatory, rather than discretionary, part of the authorization. Congress will begin working on reconciling the two resolutions next week and is expected to approve a final joint resolution by May 15.
IRS Exempts Investors from Tax Penalties for Loan Modifications under HAMP
On April 10, the IRS issued a Revenue Procedure and Notice stating that loan modifications under the new federal Home Affordable Modification Program (HAMP) will not trigger penalties in cases involving loans that were packaged or securitized using an Investment Trust or a real estate mortgage investment conduit (REMIC).
HAMP, announced on March 4th, is the program under which Treasury will share the cost of loan modifications that bring the borrower’s payment down to 31% of income. The notice makes clear that HAMP modifications will not trigger tax liabilities nor jeopardize the tax-free status of Investment Trusts. This change is effective March 4, 2009 and the IRS will incorporate it into its regulations for HAMP when issued.
New Website Tracks Use of ARRA Housing and Energy Funds for Affordable Housing
The National Housing Trust has launched a website tracking how states are using stimulus funds for affordable housing. Its April newsletter urges housing advocates to take advantage of the opportunities new Energy Block Grants and increased Weatherization funds provide to fund improvements in affordable multifamily housing. It advises advocates to work to ensure new state plans include assistance to multifamily properties (State weatherization plans are due to HUD by May 12).
The newsletter includes specific recommendations for State weatherization plans and a link to information on State plans and hearing dates. Massachusetts will receive $122 million in new weatherization funds. The State and 42 communities will also receive a total of $42 million in Energy Block Grants.
HUD Seeks Comments on LIHTC Tenant Data Collection
HUD published a notice in the Federal Register on March 30, seeking early input (“advance solicitation”) on annual demographic and economic information on residents in tax credit projects that state housing agencies should provide to HUD. The request stems from a provision of the Housing and Economic Recovery Act (HERA) in 2008 requiring HUD to establish such standards. Comments are due by May 29.
Foreclosure Updates
Fannie and Freddie Lift Moratorium on Foreclosures and Foreclosure Evictions
Both Fannie Mae and Freddie Mac lifted their moratorium on foreclosures on March 31. The end of the moratorium was not announced publicly but reported by the Washington Independent. Fannie Mae indicated that the moratoria were no longer necessary since both GSEs now have programs that allow tenants to stay on in their REO properties and the federal government has launched new foreclosure modification and finance programs.
Federal Reserve Study Urges Direct Aid to Avert Foreclosures
A new study published by the Federal Reserve Bank of Boston, “Reducing Foreclosures” uses economic modeling to understand why servicers tend to foreclose on delinquent mortgages, rather than modify them. It concludes that foreclosing is more efficient from the servicer’s perspective and that in times of volatile incomes, policy makers should look at ways to address short-term payment “shocks” due to income losses (e.g. short-term grants or loans), rather than seeking long-term loan modifications.
Study Finds Few Loan Modifications Reduce Payments by More than 10%
On April 3, the Office of Thrift Supervision and the Office of the Comptroller of the Currency released their Mortgage Metrics Report for Fourth Quarter 2008, summarizing trends in mortgage delinquencies, loan modifications and re-defaults. It documents the unsustainable nature of most loan modifications in 2008.
Overall, it found that less than half of all loan modifications reduced monthly payments (32% actually increased monthly payments) and only 29% reduced payments by 10% or more (though this improved in 4th quarter). Not surprisingly, re-default rates were much lower (29% after 9 months) on modifications with payment reductions of at least 10% than on modifications that raised payments or left them unchanged. The report also found re-default rates were much lower (30%) for loans held in the servicer’s own portfolio, compared to rates on loans serviced by a third party (49.5%).
Recent Research
2009 “Out of Reach” Study on Rental Housing Affordability Issued
On April 14, the National Low Income Housing Coalition (NLIHC) released its 2009 annual “Out of Reach” report on housing affordability problems nationally, by state and by metro and non-metro areas. The report compares what renters must earn to be able to afford the going rent for recently leased units (as measured by HUD fair market rents). Based on 2009 FMRs, it found renter households in Massachusetts (statewide average) would have to have a combined income of $47,769 to afford a two-bedroom unit ($22.97 an hour).
New Study Finds People With Disabilities Face Extreme Rental Affordability Problems
A new report by the Technical Assistance Collaborative (TAC), “Priced Out in 2008”, has found that fair market rents for studio and one-bedroom apartments is now 112% of the average income of people with disabilities living on SSI (up from 69% ten years ago).
In Massachusetts, the ratio was 119% for a studio apartment and 131% for a one-bedroom apartment. The study recommends a number of steps to address this crisis, including new Section 811 and Section 8 funding, funding of the National Housing Trust Fund, revisions to make it possible to produce supportive housing with low income housing tax credits, and a coordinated disability housing policy at the federal level.
Federal Reserve Bank CRA Study
The Federal Reserve Banks of Boston and San Francisco released a collection of research reports and essays, entitled “Revisiting the CRA: Perspectives on the Future of the Community Reinvestment Act” this month. The collection, marking the 30th anniversary of the Act, looks at the impact of the Act over the years, the extent to which it did or did not keep up with changes in the financial landscape, and the implications for the Act’s future.
Upcoming Events
Monday, April 27, 9:30-11:30 a.m., MassHousing, One Beacon Street, Boston – CHAPA Breakfast Forum on Land Use and Zoning Reform
Thursday, April 30, 8:30-11:00 a.m. - Welcoming Communities Forum, at the Boston Private Bank & Trust Company, Ten Post Office Square - Great Room, 2nd Floor, Boston. Sponsored by the Commonwealth Housing Task Force. The forum offers municipal leaders a chance to discuss strategies that will help to create a welcoming environment for people of color, people with disabilities, low-income people and other groups that traditionally experience greater challenges moving to many of the cities and towns in Massachusetts. Space is limited so interested parties are asked to RSVP to cra@bostonprivatebank.com as soon as possible.
Friday, May 8, 8:00 a.m. - 2:15p.m., Chapter 40B Comprehensive Permit training, at the Lowell Doubletree. Sponsored by CHAPA, DHCD, MHP, and MassHousing.
Thursday, May 14, 9:00 a.m.-Noon, College of the Holy Cross, Worcester. Creating Affordable Housing Through Reuse and Revitalization. Co-sponsored by MHP, CHAPA, and the Central Massachusetts Regional Planning Commission.
Tuesday and Wednesday, June 9-10 - 2009 Massachusetts Housing Institute, at the Marriot Spring Hill Suites and Conference Center at Devens. Co-sponsored by the Massachusetts Housing Partnership, this two-day intensive workshop is designed for local officials, planners, housing committees, community preservation committees, housing trusts, and others who are working to provide housing options for their community. The cost to attend is $125 per participant (participants may also sign up for one day for $75). Need based scholarships will be made available and the sponsors are committed to including all community members who wish to participate. Participants may also sign up for one day for the cost of $75.
Wednesday, June 24, Holy Cross College, Worcester – CHAPA Foreclosure Conference (save the date; a brochure will be sent six weeks before the conference)