June 27, 2018

Community Developments: Administration Proposes Major Changes to the Nation’s Housing Finance System

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Community Developments

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  • In a blog post, Enterprise’s Vice President for Policy Development Andrew Jakabovics looks at the Administration’s recent proposal that would make major changes to the nation’s housing finance system under the umbrella of reform. Jakabovics explains that the proposal, which was nestled within the Administration’s sweeping proposal to reorganize the Federal Government, calls for ending the conservatorship (and charters) of Fannie Mae and Freddie Mac (collectively, the Government Sponsored Enterprises or GSEs), creating a paid-for guarantee of catastrophic risk on mortgage-backed securities, and establishing other fully private guarantors. Using previous Enterprise policy recommendations for housing finance reform as a guide, Jakabovics evaluates the new proposal pointing out that it is largely in line with the mainstream, bipartisan consensus that there is an appropriate role for a paid-for government backstop that would limit investor losses on mortgage-backed securities without guaranteeing the entities issuing them. However, the proposal is entirely silent on the future of rental housing finance and the GSEs’ multifamily business lines, and makes a critical mistake in assuming that affordable housing objectives and traditional underwriting are mutually exclusive and therefore would shift primary responsibility for serving low- and moderate-income borrowers to HUD and FHA. Enterprise will continue to remain engaged on this critical issue and work towards a future system that is structured to protect taxpayers while broadly serving the needs of homeowners and renters. Learn more about the proposal in Enterprise’s blog post
     
  • The Urban Institute has released the Community Development Financial Flow data tool to show which counties are doing better at accessing federal funds and which are facing serious shortfalls. Researchers from the Urban Institute measured federally sponsored or incentivized community development capital – they used data from 2011 to 2015 – to all U.S. counties with populations greater than 50,000, creating a combined measure that averages federal funding for housing, small business, impact finance and other community development. The analysis finds that the top three jurisdictions that received the largest amounts of combined federal capital flows are the District of Columbia, San Francisco County and St. Louis City. According to Urban Institute, this new tool aims to spark local dialogue and inform strategy design regarding accessing federal funds. (Urban Institute, June 26)  
     
  • According to an article in POLITICO PRO, a six-month extension of the National Flood Insurance Program has been included in the latest iteration of the Senate's farm bill. Senators John Kennedy (R-Louisiana) and Bill Cassidy (R-Louisiana) introduced the extension to “maintain the program through hurricane season and to give lawmakers more time to agree on a long-term reauthorization and overhaul.” It is unclear if Congress will be able to pass the farm bill (S. 3042 (115)) by the flood insurance program's July 31 expiration date. The article also points out that as precaution, Senators Kennedy and Cassidy have also introduced a standalone, six-month extension, and lawmakers are looking at government funding legislation as another vehicle. (POLITICOPRO, June 27) 
     
  • An article in the Wall Street Journal notes that a number of municipalities, including Austin, Boston, Boulder, Los Angeles and Portland, are encouraging small houses, accessory dwelling units and other smaller units to alleviate their affordable housing challenges. The article notes that in 2010, Portland began exempting accessory dwelling units from certain fees associated with new construction, such as fees for water, sewage and street access. Similarly, in 2015, Austin began easing the requirements for accessory dwellings in certain neighborhoods, reducing minimum lot size and setbacks as well eliminating requirements for driveways. (WSJ, June 26)

In Case You Missed It

  • The Enterprise Opportunity Zone Mapping Tool has been updated to include final designations in all states and the District of Columbia. The Opportunity360 team created the mapping tool to help stakeholders determine which tracts have been designated as Opportunity Zones and what other federal programs and designations are in effect in those areas. In addition, users can filter tracts using the Opportunity360 Outcome Indices to see how people living in these tracts are faring across our five outcome dimensions, as well as explore eligible tracts that were not designated as Opportunity Zones. Visit our Opportunity Zones webpage for information and updates on the tax incentive.

For the latest housing and community development news and notes, follow the Enterprise policy team on Twitter: @E_Housing Policy and subscribe to the Capitol Express Newsletter. The Enterprise Public Policy team works to safeguard, expand and improve programs that end housing insecurity. Learn more about our public policy efforts.