May 10, 2017

Community Developments: Loan Programs for Naturally Affordable Housing

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  • Fannie Mae and Freddie Mac are creating a suite of loan programs for the development and maintenance of inexpensive apartments that working households can afford without federal rental assistance. There are about 5.5 million units of naturally occurring affordable housing in the U.S., but every year that number gets smaller. Fannie Mae has a new program that supports new apartments built under local “inclusionary zoning” guidelines, and Freddie Mac is offering lower interest rates on loans for properties that commit to saving energy and bringing down utility bills. In addition, both agencies already provide flexible financing for the kind of older apartment properties that are most likely to be priced affordably. (National Real Estate Investor, May 9)
  • An analysis by Ralph McLaughlin of Trulia and Jed Kolko of Indeed examines the metropolitan areas that offer suitable jobs and affordable housing for recent college graduates. According to the analysis, the markets with the most job opportunities for this group are among the least affordable housing markets, such as Boston and New York City. However, the analysis also shows that that some lower-cost markets, such as Hartford and Pittsburgh, also offer numerous opportunities for recent graduates, though not as many as the expensive markets. (Trulia, May 10)
  • According to Politico, Adolfo Marzol will join HUD as a senior advisor to Secretary Ben Carson. Marzol was a board member and executive vice president at Essent U.S. Holdings, a mortgage insurance company established in 2008 after the housing collapse. Marzol will advise Secretary Carson on “matters related to mortgage finance,” according to Politico. The job does not require Senate confirmation. (Politico Pro, May 9) Politico is also reporting that President Trump is preparing to nominate Brian Montgomery to run the Federal Housing Administration (FHA). If nominated and confirmed, it will be Montgomery’s second tour as FHA commissioner – a job he previously held under former President George W. Bush. (Politico Pro, May 9)
  • CoreLogic’s Loan Performance Insights report shows that the share of mortgages in some stage of delinquency in February 2017 declined by 0.5 percent year-over-year to 5 percent, marking the lowest share since September 2007. According to the report, Mississippi had the highest percentage of mortgages in some stage of delinquency at 18.4 percent, and North Dakota had the lowest percentage at 2.2 percent. The report also shows that the foreclosure inventory rate, which measures the share of mortgages in some stage of the foreclosure process, declined by 0.3 percent to 0.8 percent in February 2017. (CoreLogic, May 9)
  • A new working paper by a group of economists investigates the reasons for the decline of the American middle class. On average, workers born in 1942 earned as much or more over their careers than workers born in any year since – and workers on the job today should not expect to catch up with their predecessors in their remaining years of unemployment. The results show that more unequal incomes are not just a result of a widening gap between younger and older workers. Even among older workers, typical incomes have been falling. (The Washington Post Wonkblog, May 8)

  • As previously reported in Community Developments, the monthly report from the Bureau of Labor Statistics shows that the unemployment rate dropped to 4.4 percent in April 2017, hitting a 10-year low. However, the report also shows slow wage growth. Average hourly earnings rose only by 2.5 percent year-over-year to $26.19, matching the same wage growth seen in 2009, when the unemployment rate was twice the current rate. An article in The Washington Post Wonkblog offers a few possible explanations for why wage growth has lagged behind. (The Washington Post Wonkblog, May 9)


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