January 18, 2018

Community Developments: FHFA Recommends Reforms to the Housing Finance System

A daily roundup of news impacting housing and communities. Not receiving the Community Developments daily email yet? Sign up here. 

  • Yesterday the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac (the government-sponsored enterprises, or GSEs), outlined proposals for housing finance reform. Its recommendations include turning the GSEs into privately owned utilities with regulated rates of return, creating an explicit and paid-for government guarantee on mortgage-backed securities and preserving the 30-year fixed-rate mortgage. The Senate Banking Committee is working on legislation to overhaul the current housing finance system. In a letter sent to the Senate Banking Committee alongside the recommendations, FHFA Director Mel Watt wrote that the agency seeks to provide its views “independently and transparently,” adding that FHFA believes housing finance reform as the “prerogative and responsibility of Congress.” (Bloomberg Politics, January 17). Read Enterprise's recommendations for improving the housing finance system.

  • As previously reported in Community Developments, the Tax Cuts and Jobs Act created the Opportunity Zones Program, which allows Opportunity Funds to aggregate and deploy private investment into Opportunity Zones throughout the nation. Governors in each state and U.S. territory now have less than 90 days to identify which census tracts will be eligible to receive private investment through the program over the next decade. Up to 25 percent of all qualified census tracts in each state or territory can be designated as an Opportunity Zone, and Enterprise has created a mapping tool that depicts which census tracts meet eligibility requirements based on the two categories identified in the enacting legislation. See Enterprise’s new Opportunity Zone Eligibility Map.
  • Fannie Mae announced a new initiative to encourage affordable housing developers to focus on the health and wellbeing of their residents. Called Enhanced Resident Services, it is part of Fannie Mae’s Healthy Housing Rewards program, which offers developers an incentive to include healthy design features in new or rehabilitated affordable, multifamily rental properties. Developers will now be eligible to receive a lower borrowing rate if they provide health and wellness programs, day care, food access, youth and education programming and job training for their residents. Fannie Mae will implement the program alongside Stewards for Affordable Housing for the Future. (HousingWire, January 17).

  • HUD announced yesterday that it will offer $25 million in grants to identify and eliminate lead-based paint hazards in public housing. Lead-based paint was banned for residential use in 1978, but HUD says that control methods that were implemented twenty years ago may no longer be effective, necessitating new tests and abatement. The funds will be offered through HUD’s Public and Indian Housing Lead-Based Paint Capital Fund Program, and the grants will be awarded to approximately 30 recipients in amounts ranging from $25,000 to $1 million. Applications are due March 20, 2018. (HUD, January 17).

  • Seattle Mayor Jenny Durkan announced plans to use $11 million in proceeds from the expected sale of a city-owned property to pay for rental assistance and short-term housing options for the homeless. This is one of the first steps taken by Mayor Durkan’s administration to deliver on a campaign proposal to develop 1,000 tiny housing units for people experiencing homelessness. Durkan has awarded a record $100 million for affordable housing units since becoming mayor, and if the sale goes through, the proceeds will add to the $34 million already dedicated to homeless services. (The Seattle Times, January 17).

  • A new blog post by the Harvard Joint Center for Housing Studies (JCHS) anticipates another robust year for residential renovations and repairs. According to JCHS’ latest Leading Indicator of Remodeling Activity (LIRA), homeowner spending on improvements and repairs will approach $340 billion in 2018, an increase of 7.5 percent from estimated 2017 spending. JCHS also finds that steady gains in the broader economy and home sales and prices could support the strongest gains for home remodeling in more than a decade. (JCHS, January 18).

  • Oakland Mayor Libby Schaaf along with Oakland Housing Authority (OHA) announced new financial incentives for property owners to accept low-income families as renters. The "Housing Oakland" program encourages property owners to allow Section 8 families to move in by providing a $500 cash signing bonus and up to $2,500 in interest-free loans for repairs and upgrades. These incentives are part of an ongoing strategy to ease the city’s affordable housing crisis and combat the rising costs of living, with Schaaf aiming to protect and produce 34,000 units of affordable housing by 2024. (SFGate, January 17)

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