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Home , Apartment, Making Home Affordable

Secretary Lew Unveils New Efforts to Assist Struggling and Prospective Homeowners, Provide More Affordable Options for Renters

6/26/2014

WASHINGTON – U.S. Treasury Secretary Jacob J. Lew today announced Obama Administration efforts to continue helping struggling homeowners avoid , increase access to affordable rental options and expand access to credit for borrowers. In remarks at the Making Affordable (MHA) Fifth Anniversary Summit, Secretary Lew specifically unveiled a new financing partnership between the Treasury Department and the Department of and Urban Development (HUD) aimed at supporting the Federal Housing Administration’s (FHA) multifamily mortgage risk-sharing program. In addition, the Secretary announced an extension of the MHA program for at least one year and a new effort to help jumpstart the Private Label Securities (PLS) market. Before speaking at the Summit, Secretary Lew met with homeowners and housing counselors at the Greater Washington Urban League, a non-profit organization that provides direct services and advocacy to more than 65,000 individuals each year.

With the new Treasury-HUD partnership, the Federal Financing Bank (FFB) will use its authority to finance FHA-insured mortgages that support the and preservation of rental housing. The first partnership – announced today – with the Housing Development Corporation will help restore affordable rental housing damaged by Superstorm Sandy in Far Rockaway, Queens.

“Families and neighborhoods across the country continue to recover from the financial crisis, and we must not lose our resolve to help them, even as the economy continues to expand,” said Secretary Lew. “From day one, the Obama Administration has worked to provide relief to struggling homeowners and stabilize hard-hit communities. Today’s announcement continues that effort. These new actions will help provide more affordable options for renters, assist homeowners facing foreclosure or juggling bills to pay their mortgages and expand access to credit for prospective borrowers.”

“Families have been especially hard hit during the rental housing crisis. Demand is soaring and prices are climbing,” said Carol Galante, Federal Housing Administration Commissioner and Assistant Secretary for Housing, U.S. Department of Housing and Urban Development. “To help the many hard working families who cannot find affordable rental housing, we are partnering with the Treasury Department, to broaden our efforts to create and preserve safe, decent and affordable rental housing by allowing more Housing Finance Agencies access to the capital they need to build or maintain affordable multifamily .”

In addition to the new Treasury-HUD partnership, the Secretary announced today that the Administration would be extending MHA at least until December 31, 2016, to allow the Administration to continue assisting homeowners facing foreclosure and those whose are underwater. To date, the MHA program has provided relief to homeowners across the country, including more than 1.3 million homeowners who have permanently modified their mortgages, saving a median of $540 a month in mortgage payments. The Treasury Department’s housing assistance programs have also become a model for the broader housing sector, setting a new standard for the mortgage industry on how to

1 restructure loans and help homeowners. More than 5 million homeowners have been helped by private lenders who have, in many cases, used a similar framework to the one created by MHA’s Home Affordable Modification Program.

Finally, in an effort to help expand access to credit for qualified prospective homeowners, Secretary Lew announced a new Treasury-led effort to catalyze the PLS market.

Prior to the housing crisis, private label securities provided access to credit for many qualified Americans who did not meet Government Sponsored Enterprises (GSEs) and FHA eligibility requirements. Securitization allowed the risks associated with extending mortgage credit to be allocated among investors with different appetites for taking credit and interest rate risk.

Since the crisis, Treasury officials have been working with regulators to put in place reforms that the flaws in the securitization and lending practices that played a role in the financial crisis. Nevertheless, many of the largest investors have not returned to the market, resulting in very little issuance and few mortgage financing options for borrowers aside from government-supported channels. To help determine what more can be done to encourage a well-functioning PLS market, the Treasury Department today is publishing a Request for Comment in the Federal Register and plans to host a series of upcoming meetings with investors and securitizers to further explore ways to increase private lending.

The New Treasury-HUD Partnership

Under the new partnership with HUD, the FFB will provide financing for multifamily loans insured under FHA’s risk sharing programs. The new partnership between the Treasury Department and HUD will help create and preserve more decent rental housing by significantly reducing the interest rate for affordable multi-family apartment buildings compared to the cost of tax-exempt bonds under current market conditions.

The New York City Housing Development Corporation (NYC-HDC) has worked extensively with HUD/FHA Risk Sharing, Treasury’s New Issue Bond Program, tax-exempt bonds, and other multifamily housing financing structures. HUD through FHA would provide pursuant to a risk sharing agreement with NYC-HDC and the FFB would fund NYC-HDC mortgage loans for multifamily projects.

The FFB is authorized to fund any obligation that is fully guaranteed by another Federal agency. The Risk Sharing program meets this requirement because FFB would purchase certificates or securities evidencing undivided beneficial ownership interests in 100 percent HUD/FHA-insured mortgages and HUD/FHA would cover 100% of the outstanding principal balance plus 100% of accrued interest in the event of a mortgage claim.

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Harvard Joint Center for Housing Studies Report Details Housing

Recovery, Affordability Challenges Posted: 6/27/2014 According to Harvard's Joint Center for Housing Studies' annual The State of the Nation's Housing report released on June 26, the nation's housing recovery is continuing to push forward, but complications still exist for both renters and homeowners. Although home construction and sales increased in 2013, rising prices and interest rates may keep more families from becoming homeowners. Furthermore, increasing demand for rental homes and lacking rental assistance may continue to keep unaffordable for low- and moderate-income families.

According to the report, sales of single-family homes were on the rise for much of 2013 before slowing during the first quarter of 2014. Compared to the first quarter of 2013, new home sales declined by 3 percent and existing home sales declined by 7 percent in the first quarter of 2014. The report lays much of the blame for slowing home sales on rising mortgage interest rates. Since the third quarter of 2013, interest rates have been rising from a low of 3.4 percent. The increase in interest rates corresponds closely with the recent slowdown in the single-family housing market.

Overall, the nation's homeownership rate declined for the ninth year in a row in 2013, and at 65.1 percent is at its lowest point since 1995. While the number of distressed homeowners facing foreclosure is on the decline, rising home prices and interest rates are preventing even more potential homebuyers from joining the ranks of homeowners. Due to increasing prices and interest rates, the average monthly payment for the median-priced home rose 23 percent in 2013.

The report also cites tightening credit requirements as a contributing factor to the decline in the homeownership rate. The average FICO score for qualified borrowers for Fannie Mae-backed mortgages and for Federal Housing Administration (FHA) loans has risen during the recession. The report concludes that an easing of credit availability would positively impact the national homeownership rate.

One major hindrance to household formation cited by the report is the prevalence of loan debt held by potential homebuyers aged 25-34. In the ten year period from 2001 to 2010, the share of households in this age range with student loan debt increased from 26 percent to 39 percent, with a 50 percent increase in the total debt amount. The share of households with at least $50,000 in debt rose from 5 percent to 16 percent. For many young potential borrowers, paying off student loan debt remains a higher priority than homeownership.

The report also ascribes the continuing slow recovery for single-family housing to tepid job growth nationwide. Although the unemployment rate has fallen to 6.3 percent and there now exists as many jobs as there were at the start of the recession, the gains made still do not accommodate the millions of adults who have entered the workforce over the past six years. The report concludes that a more robust employment recovery would help create a more robust housing recovery.

Regarding rental housing, more than one million new renters entered the market in 2013, according to the report. With this increased demand has come increased rental costs, as rents for professionally managed multifamily residences increased by 3 percent in 2013.

The share of cost-burdened households increased during the recession and has remained elevated. The report defines housing as "affordable" if housing costs are no more than 30 percent of a household’s income. By this standard, 35.3 percent of households do not live in housing that is considered affordable, including more than 50 percent of renters and almost 30 percent of homeowners. Twenty-eight percent of all renter households are severely cost burdened, paying more than 50 percent of their incomes for housing. Among households earning less than $15,000 per year, 82 percent are cost burdened and 69 percent are severely cost burdened.

The report states that, when available, rental subsidies can make a deep impact on affordability for low- income families. However, the demand for rental assistance continues to outpace the supply. The number of income-eligible renters rose by 3.3 million households between 2007 and 2011, but the number of assisted housing units remained the same. For the 11.5 million extremely low-income (ELI) renters, earning less than 30 percent of area median income, only 3.2 million units are available and affordable.

4 charts show the phony thrill of existing home sales

Down 5% year‐over‐year, and guess where the only growth is?

Trey Garrison

June 23, 2014I hate to be the bearer of bad news but just like the Grim Reaper has a job to do, so do I.

The National Association of Realtors says that existing home sales rose by 4.9% over April’s numbers.

Party, right? No.

The 4.9% increase in sales from April to May that’s making the dutifully exuberant headlines in the mainstream financial press isn’t the story.

For starters, while an increase of 4.9% over April isn’t bad, May’s existing home sales are 5% down from May 2013.

This comes after existing home sales rose 1.3%, the first increase in 2014. (Feeling the recovery now?)

But that’s not the worst of it.

The devil is in the details and the details don’t make it into the press release. For starters, the slowdown in activity in the West, the largest housing region doesn’t bode well, although it was refreshing to see that much activity in the Midwest.

But of the price buckets, only the one for homes priced over $1 million saw year‐over‐year increases in sales.

Compare that to the bucket breakdown in April, which at least saw a few puddles of activity in the other three top buckets.

So in April, there were at least some gains in sales in the $250,000‐$1 million range, but in May ‐‐ it was all downhill except the $1 million‐plus bucket.

Here’s how the sales broke down by percentage within the price buckets.

So, you know, hooray?

Treasury Official: Department May Take Action to Support FHA-HFA Risk Sharing

Loans

The U.S. Department of Treasury is considering policy options to help lower the cost of HFA loans originated through the FHA-HFA Risk-Sharing program, Mary Miller, Treasury Under Secretary for Domestic Finance, said in a speech delivered to the National Housing Conference’s Annual Policy Symposium last week. Miller also touted several initiatives the Obama Administration has taken to revitalize the housing market and promote access to options and called on policymakers to continue working on comprehensive housing finance reform.

In her remarks, Miller expressed strong support for allowing Ginnie Mae to securitize HFA multifamily loans originated through the FHA-HFA Risk-Sharing program, which she said would provide state HFAs “with the low-cost capital they need to provide affordable mortgages and rental units in the communities they serve.” Miller noted that FHA’s Risk- Sharing program has been very successful historically, but that the financial crisis had made it difficult for HFAs to fund mortgages under the program efficiently. Allowing Ginnie Mae to securitize such loans would greatly reduce HFAs’ borrowing costs.

Because Congress must act to authorize Ginnie Mae to securitize Risk-Sharing loans, Miller said that the Treasury Department is considering other policy options that will lower the costs of Risk-Sharing loans in the interim. Specifically, Miller told the audience that Treasury is examining whether it can use funds from its Federal Financing Bank (FFB) to finance loans guaranteed through the Risk-Sharing program. Treasury is currently working with HUD to determine whether FFB is a viable funding source for such loans and hopes to make an announcement in the near future.

NCSHA, its members, and our partners have continued to work to convince Congress to enact legislation that would allow Ginnie Mae to securitize Risk-Sharing loans. Recently, legislative language authorizing Ginnie Mae to do so was included in one of the managers’ amendments adopted during the Senate Banking Committee markup of Chairman Tim Johnson (D-SD) and Ranking Member Mike Crapo’s (R-ID) comprehensive housing finance reform legislation (the Johnson-Crapo bill). NCSHA will continue to explore all options for advancing this proposal.

Miller also noted several other Obama Administration efforts to improve the housing market, including the New Issue Bond Program (NIBP). Through NIBP, Treasury purchased $15.3 billion in Fannie Mae and Freddie Mac securities backed by HFA bonds. This allowed HFAs to finance their affordable housing activities when the municipal bond market was struggling due to the recession. It is estimated that this program supported over 100,000 new mortgages for low- and moderate-income first-time home buyers and the development of tens of thousands of affordable rental homes.

Miller concluded her speech by urging lawmakers and industry leaders to continue working on housing finance reform. She specifically cited the Johnson-Crapo bill, which she argued is an important step in developing a viable housing finance system. She praised the Johnson-Crapo bill for including several measures designed to increase access to the housing finance system, specifically mentioning the provision that would improve HFAs’ access to the secondary market.

Home Builder Confidence Rises

Sorohan, Mike-June 17, 2014

Builder confidence in the market for newly built, single-family homes almost reached that “tipping point” between pessimism and optimism, the National Association of Home Builders said yesterday.

The NAHB/Wells Fargo Housing Market Index rose by four points in June to 49, one point shy of the threshold for what is considered good conditions. All three index components posted gains in June. The component gauging current sales conditions increased by six points to 54. The component gauging sales expectations in the next six months rose three points to 59 and the component measuring buyer traffic increased by three to 36.

Regionally, the South and Northeast each edged up one point to 49 and 34, respectively, while the West held steady at 47. The Midwest fell a single point to 46.

“Consumers are still hesitant, and are waiting for clear signals of full-fledged economic recovery before making a home purchase,” said NAHB Chief Economist David Crowe. “Builders are reacting accordingly and are moving cautiously in adding inventory.”

On Friday, the Mortgage Bankers Association’s Builder Application Survey for May showed mortgage applications for new home purchases decreased by 8 percent from April. The Survey tracks application volume from mortgage subsidiaries of home builders across the country.

MBA estimated new single-family home sales moved at a seasonally adjusted annual rate of 374,000 units in May. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors. The seasonally adjusted estimate for May showed a decrease of 10.7 percent from April’s 419,000 units. On an unadjusted basis, MBA estimates 36,000 new home sales in May, a decrease of 14.3 percent from April’s 42,000.

Apartment rent hikes are slowing — finally

Renters get some relief this year with rent jumps that aren’t quite as steep

By Amy Hoak, MarketWatch , June 16, 2014, 9:23 a.m. EDT

Increased construction of is one reason rent hikes are slowing in some markets. Good news for apartment renters: Rent hikes are finally starting to slow, a huge relief for those who have put up with annual increases over recent years.

A big reason for the slowdown is the increased supply of new apartment units on the market, said Hans Nordby, managing director of CoStar Group, a provider of information and analytic services for the commercial real-estate industry. “The first quarter of this year, 54,000 new apartment homes were delivered to the market [nationally] and demand was about 27,000 apartments,” Nordby said. “That causes vacancies to pick up a bit.”

Increased vacancies mean that can’t be as aggressive in raising rents, if they want to keep their units filled.

It’s important to remember that all markets are different. In some areas with short supply, rents could continue to rise sharply.

In other markets, the supply and demand imbalance could actually lead to rent drops this year. One such place: Washington, D.C., where Nordby said there is a “torrent of new supply,” yet job growth momentum has been sluggish. Other submarkets, including Seattle’s Lake Union area, the Uptown neighborhood in Charlotte, N.C., and Chicago’s also have a lot of new apartments coming on the market, he said.

There’s another factor playing into decisions too. “Some rents have gotten so egregiously expensive, it puts an artificial ceiling on rent growth,” said Ryan Severino, senior economist and associate director of research for Reis, Inc., also a provider of commercial real-estate information.

When rents are rising faster than incomes, at a certain point, tenants can’t stomach meaningful rent increases, Severino said. And when enough of them push back to their landlords, apartment companies may begin scaling back their rent hikes, he added.

Make no mistake, most landlords are still hiking rents, Severino said. They just may not be able to increase them quite as steeply as they were able to previously, he added.

And for some renters, even that slowdown is a relief. “People are definitely reaching like they’ve never reached before,” said John Kobs, chief executive officer and co-founder of Apartment List, an apartment-listing website.

By the numbers

CoStar’s analysis found that asking rents for apartments rose 2.5% in the first quarter, compared with the first quarter of 2013. The vacancy rate was 5.6% in the first quarter, and is predicted to increase throughout the year.

But rents have been rising for years now, after bottoming out in the first quarter of 2010, according to CoStar data. And asking rents are now up 15% between then and the first quarter of 2014. Annual rent growth peaked at 4% in the third quarter of 2012, CoStar figures show.

Even back in 2010, half of renters paid more than 30% of their income (the traditional measure of affordability) on housing, according to Harvard University’s Joint Center for Housing Studies.

For an idea of what a two- apartment is going for around the country: Average rent in is $5,300, average rent in the San Francisco metro area is more than $2,800, average rent in Washington, D.C. is $2,150, and average rent in the Chicago metro area is $1,257 (within Chicago’s Loop submarket, rent is $2,900), according to CoStar.

One reason vacancies are being kept low while rents are on the rise: More people who were formerly homeowners are now renters. A survey from Apartments.com released earlier this year found that 44.1% of all renters previously owned a home, up from 35.1% in 2013 and 33.6% in 2012.

And while there has been a modest recovery in the for-sale housing market, there has been a lack of young buyers, as they either struggle to qualify for mortgages or are simply choosing to remain renters for the time being.

Effects of climbing rent prices

Skyrocketing rents have squeezed some would-be renters out of the market entirely. Various research reports indicate more millennials are living with older relatives for longer. And those who are able to get a place of their own often need a to share the rent, Kobs said.

Moreover, rising rents are also causing people to make different choices about the neighborhoods in which they’re willing to live. Instead of searching for a home exclusively in the city, young people are much more likely to consider rentals in suburban areas, Kobs said.

“People are going to be more willing to commute than before to save money,” he said.

Already, some suburban markets getting hotter. Rents were up 9% in Fremont, Calif., in the fourth quarter, likely as more people try to find affordable rentals in the San Francisco Bay Area; rents were up 8% in Aurora, Colo., outside of Denver, Kobs said. People are also more likely to stay put in their current apartments, if it means saving money. “We’re also seeing a lot of folks extend their , if it’s more affordable to stay in place,” Kobs said.

Mel Watt faces tough affordable housing question

By: Jon Prior

June 16, 2014 11:17 PM EDT

Fannie Mae and Freddie Mac regulator Mel Watt will soon have to dive into the politically thorny debate over affordable housing, an issue that served as one of the key breaking points in recent Senate talks over what to do with the two mortgage finance giants.

The affordable housing goals for government-controlled Fannie and Freddie, last set by the Federal Housing Finance Agency in 2012, will expire at the end of the year and homeowner advocates expect a proposal from Watt, who heads the agency, to come in July at the latest in order to allow time for public comment before it goes into effect next year.

For Watt, who took over the agency in January, the issue may prove to be the toughest test yet for whether the former North Carolina congressman can walk the line between overseeing the immediate needs of the two companies and protecting taxpayers from losses while also addressing concerns that it remains too hard for low- and middle-income borrowers to get a mortgage.

“I think there is going to be a very important push with Mel Watt there,” said National Urban League CEO Marc Morial, whose organization wants the goals expanded.

Since becoming FHFA director, Watt has kept a low profile and avoided getting enmeshed in the congressional debate over housing policy — choosing instead to emphasize that he is carrying out the mandate given to the agency as part of the 2008 takeover of Fannie and Freddie.

But to what degree the two companies should support affordable housing has been a contentious issue, and it will be difficult for Watt to avoid getting caught up in the political crossfire when he releases the new set of goals.

For instance, key liberal senators, such as Democrats Elizabeth Warren of Massachusetts and Sherrod Brown of Ohio, decided not to support a bipartisan housing finance overhaul bill produced by Senate Banking Committee leaders earlier this year, in part, because it got rid of the companies’ affordable housing goals and these lawmakers weren’t satisfied with what would take their place. The bill was approved by the committee but is unlikely to get a floor vote.

Republicans point to the government’s push to make mortgages available to more lower- and middle- income borrowers as a contributor to the housing crisis and are critical of any attempt now to have Fannie and Freddie expand their role in this market.

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“My suspicion is that Mel is going to send us on the path that we were on before the 2008 collapse,” said Sen. Mike Johanns (R-Neb.), who had voted for the Senate housing plan during a committee markup in May. “I hope I’m wrong.”

Housing advocates are pushing Watt to do more, arguing that he has the flexibility to expand the affordable housing goals without hurting Fannie and Freddie’s bottom line.

“I think he’s going to do what he believes he needs to do to execute his role as conservator but also in his role as a director of an agency that could help ease some of the tight credit in the market today,” said National Council of La Raza senior policy adviser Enrique Lopezlira.

Fannie and Freddie do not originate mortgages but instead buy them from lenders and package them into securities to be sold to investors. They guarantee full payment on these bonds as part of a system that ensures money will be there for new loans. They were rescued by taxpayers and taken over by the government in 2008, but policymakers have struggled to figure out what to do with the mortgage finance giants since.

Because the two companies continue to dominate the housing market, they have a big impact on how easy it is to get a mortgage.

FHFA said in its annual strategic plan released earlier this year that it would consider whether Fannie and Freddie could do more to reach underserved creditworthy borrowers, but Watt made no mention of the affordable housing goals in May when he delivered his only major policy speech.

An FHFA representative declined to comment.

Consumer groups have already dispatched letters and held meetings with agency officials to make their case for broader access to the mortgage market.

“Now that you have indicated a desire to lead the market towards a responsible loosening of credit, we encourage the goals rulemaking to reflect that expectation,” a collection of 22 advocacy groups and left- leaning think tanks, such as the National Community Reinvestment Coalition and the Center for American Progress, wrote in a May 23 letter to Watt.

The groups criticized Watt’s predecessor, former FHFA Acting Director Edward DeMarco, when the goals were last finalized in 2012 because they required that 23 percent of the loans the two companies finance go to low-income families. The groups thought this percentage was too low by historical standards and wanted the percentage set closer to 30 percent.

DeMarco’s concern was limiting the amount of risk Fannie and Freddie took on in order to limit taxpayer’s exposure to losses.

“We were really disappointed with what DeMarco did,” Morial said.

The areas covered by the different goals are broken down by median income with a separate category for how much refinancing business Fannie and Freddie are required to provide as well.

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Broadening the goals doesn’t mean Fannie and Freddie would dive into the subprime mortgage business. It may not even result in changes to their core underwriting standards for loans they will purchase.

In the past, the two companies bought more mortgage bonds from private banks that contained loans written under looser standards than their own. As major buyers of mortgage-backed securities, they adjusted these investments as one of the ways to meet their affordable housing goals. But Fannie and Freddie were banned from such business when they were taken over in 2008.

Instead, the two companies are now expected to work more closely with state housing finance agencies, local nonprofits and some community banks to work out deals that would make it easier to lend in lower-income neighborhoods.

This could come in the form of down payment assistance, special discounts on the the two companies charge or new programs in which Fannie and Freddie would approve some loans that a state agency or a bank would automatically have to buy back if the borrower can’t make monthly payments. This sort of arrangement would allow more borrowers to qualify for financing but spins the risk away from taxpayers back to the lender if the homeowner runs into trouble.

Watt’s proposal, too, would come at a time when industry officials and analysts are sparring over whether Fannie and Freddie are doing enough to provide financing in minority neighborhoods and whether an overhaul of the market prescribed by the Senate Banking Committee would mean more credit would be available in these areas.

Minorities have typically been the largest benefactor of the affordable housing goals, which led to a rise in homeownership for blacks and Latinos when they were established in the 1990s.

A recent study from the Urban Institute showed these communities were being shut out more than others, but it was unclear whether outright discrimination was taking place in the current market.

Roughly 40 percent of black mortgage applicants were denied a Fannie or Freddie-backed mortgage by their lender in 2012, compared with 14 percent of whites, according to the study. This difference held when credit characteristics were factored in: Roughly 75 percent of black applicants with weak credit histories were denied a loan compared with roughly 50 percent of whites with similar issues.

The results underscore broader concerns about inequality in the U.S. economy that housing policy — even an expansion of the housing goals or a reform of the entire market — is unlikely to solve on its own.

“The goals are no panacea, but they’re part of a formula,” Morial said.

Martina Guilfoil is the CEO of Chattanooga Neighborhood Enterprise, which provides financial counseling to borrowers before they buy a in lower-income neighborhoods in the Tennessee city.

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She said borrowers who want to buy a home in the area typically don’t make as much and are more often than not turned away from a lender because of the amount of debt they have taken on to supplement their stagnant wages. These borrowers are often steered to the Federal Housing Administration, and Guilfoil said even if the affordable housing goals for Fannie and Freddie are expanded, many would still not qualify for their tougher standards.

“It will be difficult for them to expand aggressively,” Guilfoil said.

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Commonwealth of Virginia of Governor Terry McAuliffe

Media Release June 9, 2014

Contact: Brian Coy, Governor’s Office Phone: (804) 225-4260

Governor McAuliffe Signs Agreement to Help End Veteran

Richmond, Virginia - Gov. Terry McAuliffe has signed onto a national agreement aimed at ending veteran homelessness by the end of 2015.

“This ambitious accord will require cooperation and leadership at all levels to complete such an important task,” McAuliffe said. “We are all guided by the same drive and desire to serve these men and women who have served their country.”

Virginia Secretary of Veterans and Defense Affairs John Harvey made the announcement Monday at a statewide summit in Richmond sponsored by the Virginia Coalition to End Homelessness.

“This endeavor clearly recognizes the status veterans have in the Commonwealth,” Harvey said. “They can be assured that they have advocates at the highest level of government in Virginia.”

The agreement, known as the Mayor’s Challenge, is an initiative of the U.S. Department of Housing and Urban Development and is being promoted by the National League of Cities through its Homeless Veteran Leadership Network. Originally envisioned as a means for city leaders to pull together and implement local strategies targeting veteran homeless, the agreement has also attracted commitments from chief executives of Colorado, Connecticut,Minnesota, Puerto Rico and now Virginia.

Monday’s summit drew homeless service providers, business leaders and state and local government officials, who met together to develop an action plan for addressing the specific needs of veterans and their families. The goal was to create a state plan that cultivates partnerships, identifies and secures new resources, and increases efficiencies in the delivery of services. The summit was a collaborative effort of the Virginia Department of Veteran Services and the Homeless Outcomes Coordinating Council, and was funded by a grant from Dominion Resources.

The Homeless Outcomes Coordinating Council, led by Health and Human Resources Secretary Bill Hazel and Commerce and Trade Secretary Maurice Jones, has embraced the veteran initiative as part of its overall effort to reduce homelessness in the Commonwealth. The group’s hard work is generating significant results. Homelessness in the Commonwealth has declined 7.9 percent in the last year, with a 10.8 percent decrease in family homelessness and a 14 percent decrease in veteran homelessness. Much of that progress can be attributed to bipartisan support for permanent and rapid re-housing solutions.

“One in every 10 Virginians is a veteran,” said Secretary Hazel. “They are our neighbors, friends, brothers, sisters, parents and children.”

“All Virginians should be concerned about veteran homelessness,” added Secretary Jones. “These brave men and women deserve the certainty and security of a place they can call home.”Nationally, the U.S. Interagency Council on Homelessness established the goal of ending veteran homelessness by the end of 2015. About 58,000 veterans are homeless in the United States.

The initiative has attracted widespread interest. First Lady Michelle Obama announced her support last week.

Senate Appropriations Committee Releases Details of FY 2015 HUD Funding Bill

The Senate Appropriations Committee released the bill text and accompanying report for the FY 2015 Transportation, Housing and Urban Development, and Related Agencies (T-HUD) appropriations bill, S. 2438, it approved on June 5.

The bill proposes $950 million for the HOME program, a $50 million, or 5 percent, cut from the FY 2014 funding level of $1 billion. The level is $250 million more than the House Appropriations Committee- passed FY 2015 bill and equal to the President’s FY 2015 request. Unlike the House bill and the President’s request, the Senate bill does not propose to move funding for the Self-Help and Assisted Homeownership Opportunity Program (SHOP) into the HOME account. According to the report accompanying the Senate bill, it also would allow statewide nonprofits to be designated as Community Housing Development Organizations (CHDOs). The bill would also create an exception to the 30-day notice in instances where a tenant poses a threat.

The bill would provide $9.7 billion for project-based , $171 million, or 2 percent, less than the FY 2014 level and equal to the House bill and the President’s request. Of the $9.7 billion, $210 million would be for contract administration, $55 million, or 21 percent, less than the FY 2014 level and equal to the House bill and the President’s request. The report states that the Committee “reluctantly concurs with the Administration's proposal to shift the payment of contracts to a calendar-year basis.” It states that due to FY 2015 budget constraints, the Committee accepts the proposal as the best option for preserving HUD’s housing assistance programs.

The report also states, “Performance-Based Contract Administrators (PBCAs) are typically authorities (PHAs) or State housing finance agencies (HFAs). They are responsible for conducting on-site management reviews of assisted ; adjusting contract rents; and reviewing, processing, and paying monthly vouchers submitted by owners. The Committee notes that PBCAs are integral to the Department's efforts to be more effective and efficient in the oversight and monitoring of this program. The Committee is also aware of ongoing litigation that will affect the future of these entities and will continue to monitor developments. The Committee believes that fair and open competition is the best way to ensure that the taxpayer receives the greatest benefit for the costs incurred. The Department is directed to ensure that the PBCA selection process be, to the greatest extent legally permissible, full, open, and fair.”

The bill would provide $19.6 billion for the Housing Choice Voucher (voucher) program, $385 million, or 2 percent, more than the FY 2014 level, $205 million more than the House bill, and $483 million less than the President’s request. Of that amount, $17.7 billion would be provided for voucher renewals, $353 million, or 2 percent, more than in FY 2014, $26 million more than the House bill, and $288 million

1 less than the President’s request. The funding level also includes $1.6 billion for administrative fees, $55 million, or 4 percent, more than the FY 2014 level, $205 million more than the House bill, and $150 million less than the President’s request. Also included in the funding level, is $75 million for 10,000 new HUD-VASH vouchers. The Committee is requiring HUD to set aside a portion of the HUD-VASH funding for a pilot “designed to provide housing and supportive services to veterans who are homeless or at-risk of homelessness living on tribal reservations or in Indian areas.” The pilot would be administered through the Indian Housing Block Grant program.

The Committee voiced its hope that a full Section 8 reform bill will be enacted, saying such a bill is expected to modernize aspects of the program, expand the Moving to Work (MTW) program, and increase reporting by MTW agencies. In the absence of a reform bill, the Committee says it expects HUD to update regulations that do not require congressional action.

The bill would provide $2.1 billion for homeless assistance grants programs, $40 million, or 2 percent, more than the FY 2014 level and the House bill, and $261 million less than the President’s request. Of that amount, $1.8 billion would be for the Continuum of Care (CoC) and Rural Housing Stability Assistance programs and no less than $250 million would be for the Emergency Solutions Grants (ESG) program.

The bill would fund the Community Development Block Grant (CDBG) program at $3 billion, $10 million less than its FY 2014 level, $20 million more than the House bill, and $220 million more than the President’s request. The Committee added a new requirement that any funding provided to a for-profit entity for an economic development project funded under the bill undergo appropriate underwriting.

The bill would also provide $420 million for the Section 202 Housing for the Elderly program, $36.5 million, or 9 percent, more than the FY 2014 level, equal to the House bill, and $20 million less than the President’s request. It would provide $135 million for the Section 811 Housing for Persons with Disabilities program, $9 million, or 7 percent, more than the FY 2014 level, equal to the House bill, and $25 million less than the President’s request. The report states that this funding level for Section 811 would support all project rental assistance contract (PRAC) renewals and that should HUD identify any residual receipts or recapture other unobligated balances in the account, the HUD Secretary must direct those funds to supplement the recent demonstration competition for project rental assistance (PRA) to state HFAs.

The bill would fund at $49 million the HUD Housing Counseling program, $4 million, or 9 percent, more than in FY 2014, $2 million more than the House bill, and $11 million less than the President’s request. The Senate report says the Committee supports the Homeowners Armed With Knowledge (HAWK) program initiative, but does not include a separate appropriation for it and directs HUD to use existing resources to implement HAWK. The House bill includes a provision barring any funding from the bill or collected by the Federal Housing Administration (FHA) from being used to implement HAWK.

The bill would cut funding for the National Foreclosure Mitigation Counseling (NFMC) program to $50 million, $18 million, or 26 percent, less than the FY 2014 level and equal to the House bill and the President’s request. The Senate and House reports both note that the NFMC program is not permanent

2 and highlight improvement in the housing market. The Senate report states that FY 2015 awards should be targeted to areas that continue to face high levels of foreclosure.

The bill would also provide $4.5 billion for the Public Housing Operating Fund, $75 million, or 2 percent, more than the FY 2014 and House bill’s levels and $125 million less than the President’s request. It would provide $1.9 billion for the Public Housing Capital Fund, $25 million, or 1 percent, more than in FY 2014, $125 million more than the House bill, and $25 million less than the President’s request. According to the report, the bill would allow PHAs to transfer up to 20 percent of their operating funds to their capital fund and to transfer up to 30 percent of their capital funds to their operating funds.

The bill includes $10 million for the Rental Assistance Demonstration (RAD), which according to the report will allow HUD to convert 3,000 units of public housing in high-poverty neighborhoods that would otherwise be unable to address their capital needs. The bill would also lift the current 60,000-unit cap to 185,000 units and would allow developments in the Single Room (SRO), Rent Supplemental, and Rental Assistance Payment (RAP) programs to convert to Section 8.

Separate from the voucher account, the Committee would fund the Family Self-Sufficiency (FSS) program at $75 million, equal to the FY 2014, House bill, and President’s request levels. In the report, the Committee states its support for expanding the FSS program to residents of project-based Section 8- assisted properties. However, the Committee also says it recognizes the difficulty of expanding the program without also increasing funding. Therefore, the bill would allow project-based Section 8 residents to participate in the program, but would not allow the owners to compete for service coordinator funding. The House bill does not include a similar provision.

The bill includes a provision instructing the HUD Secretary to establish a demonstration program, running through September 30, 2017, “to test a performance-based model program that facilitates financing of energy and water conservation improvements in assisted multifamily housing to reduce utility costs.” The demonstration is capped at 20,000 units.

The Senate is expected to begin considering FY 2015 appropriations bills the week of June 16. It has not announced which bills it will consider first. The House begins consideration of its T-HUD bill, H.R. 4745, today. See NCSHA’s funding chart for additional information on HUD and USDA housing program funding levels.

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Black Knight: Loan Mod Resets Could Be Ticking Time Bomb

Nearly 2 million loan modifications are facing interest rate resets in the near future, and of those, about 40% are underwater, according to Black Knight Financial Services' Mortgage Monitor Report.

What's more, more than 10% are in "near negative equity" positions, with 9% equity or less.

Some fear that when these loans reset, it could trigger another wave of .

"Given that the data has shown quite clearly that equity - or the lack thereof - is one of the primary drivers of mortgage defaults, these resets may indeed pose an increased risk in the years ahead," says Kostya Gradushy, manager of loan data and customer analytics for Black Knight, in a release.

Gradushy says although there has been "a continual reduction in the number of underwater borrowers at the national level for some time now … modified loans show a different picture." He points out that "slim margins in equity can have a significant effect on overall negative equity levels with even slight variations in home price index."

Many of the borrowers who are "near negative equity" are in New Mexico and the southern states, he says. How great the risk of foreclosure is for these loans largely depends on how much home prices continue to rise.

The report also finds that gradually rising interest rates are causing many borrowers with adjustable-rate mortgages (ARMs) to accelerate prepayment speeds. ARMs with interest rates below 6% are prepaying at faster speed than fixed mortgages, according to Black Knight.

The report also finds that the gap between judicial and non-judicial states' pipeline ratios is narrowing and is at its lowest since at least 2005, as the bulk of the shadow inventory has now been liquidated.

The total U.S. loan delinquency rate, as of April, was 5.62%, an increase of 1.84% compared to March.

The total U.S. foreclosure pre-sale inventory rate was 2.02%, a decrease of about 5% compared to March.

States with highest percentage of non-current loans include Mississippi, New Jersey, Florida, New York and Louisiana.

States with the lowest percentage of non-current loans include Montana, Arkansas, Colorado, South Dakota and North Dakota.

House Appropriations Committee Approves FY 2015 Rural Housing Funding Bill

On May 29, the House Appropriations Committee reported by a vote of 31 to 18 the FY 2015 Agriculture, Rural Development, Food and Drug Administration, and Related Agencies (Agriculture-Rural Development) funding bill, which provides funding for the Department of Agriculture’s (USDA) rural housing programs. The bill includes $20.9 billion in discretionary funding, equal to the FY 2014 enacted funding level.

There were no rural housing-related amendments offered during the Committee markup. As reported in NCSHA’s May 20 blog post, the bill would provide the following FY 2015 funding levels:

• $1 billion for the Section 502 single-family subsidized direct loan program, $142 million more than the Senate Appropriations Committee-reported bill and the FY 2014 enacted level, and $682 million more than the President’s FY 2015 Budget request.

• $24 billion for the Section 502 unsubsidized guaranteed loan program, equal to the FY 2015 Senate bill level, the FY 2014 enacted level, and the President’s request.

• $28 million for the Section 515 rural rental housing program and $150 million for the Section 538 multifamily loan guarantee program, equal to the levels included in the Senate bill, enacted in FY 2014, and included in the President’s Budget request.

• $1 billion for rental assistance, $5 million less than the Senate bill, $21.5 million less than the FY 2014 level, and equal to the President’s request.

The bill requires USDA to enter into or renew rental assistance agreements for a 1-year period and prohibits USDA from renewing the same contract twice during the 12-month contract period.

Prior to the markup, the Committee released the Agriculture-Rural Development bill’s accompanying report. The report directs the Rural Housing Service (RHS) to report on its implementation of the three- part test to determine a community’s eligibility to participate in rural housing programs. It directs that the report include information on the factors USDA uses to determine whether a community is “rural in character” and when a “serious lack of mortgage credit exists.”

The report says the Committee “appreciates USDA’s proposals to address challenges within the rental assistance program” and provides USDA the authority to limit the second renewal of contracts during the same 12-month period. The President’s FY 2015 Budget request includes several reform proposals for the rental assistance program, including establishing a minimum rent and proposing that USDA will

1 no longer automatically renew contracts within the same 12-month period. The report does not address USDA’s proposal to implement a minimum rent.

The report also states that given the size of the federal investment in rural housing programs, the Committee believes RHS should actively monitor and manage the portfolio to mitigate risk. The Committee directs RHS to report on the risk in its portfolio and how it is managed and to create a position of chief risk officer.

The Committee also directs the USDA Secretary to continue and expand a pilot program for packaging Section 502 direct loans. The goal of the pilot program is to save federal funds and staff time by allowing non-profits to prepare and review applications for single-family loans.

The Senate Appropriations Committee reported its Agriculture-Rural Development bill, S. 2389, on May 22. The schedules for when the House and Senate will consider their respective Committee-reported bills have not been announced. See NCSHA’s funding chart for additional information on HUD and USDA housing program funding levels.

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