Weekly update from the National Housing Conference
News from Washington | By Luke Villalobos
Committee hearings discuss need for housing supply, equitable banking
The U.S. House Committee on Financial Services held a hearing titled Boom and Bust: The Need for Bold Investments in Fair and Affordable Housing to Combat Inflation. The hearing featured witnesses Nikitra Bailey, National Fair Housing Alliance executive vice president; Margaret Eaddy, activist; Michael Mitchell, director of policy and research at Groundwork Collaborative; Mark Zandi, Moody’s Analytics chief economist, and Douglas Holtz-Eakin, American Action Forum president. The hearing focused on how the lack of inventory exacerbates inflation and the need for more affordable supply to ease inflationary pressure. Bailey spoke about pressure’s impact on communities of color and how discrimination continues to drive housing and wealth disparities and ultimately contributes to the overall housing crisis.

“If policymakers are serious about reining in inflation, then they have little choice but to take on the shortfall in housing supply. This means improving the economics of building enough to overcome the costs that have been holding builders back in recent years,” Zandi said. He called for increased investment in the Low-Income Housing Tax Credit, passing the Neighborhood Homes Investment Act, and investing in HUD’s HOME Investment Partnerships Program, the Housing Trust Fund, and Community Development Block Grants to help address the shortfall.

The Senate Committee on Banking, Housing, and Urban Affairs also held a hearing titled Fairness in Financial Services: Racism and Discrimination in Banking. Witnesses included Lisa Rice, National Fair Housing Alliance president and CEO; Marc Morial, National Urban League president and CEO; U.S. Rep. Byron Donalds (R-Fla.); Devon Westhill, Center for Equal Opportunity president and general counsel, and Janai Nelson, president and director-counsel of the NAACP Legal Defense and Educational Fund. The hearing noted persistent discrimination in banking and outlines the resulting impact on disadvantaged communities. However, witnesses disagreed on financial services companies’ role in this discrimination and impact.

“America’s long history of discriminatory housing policies has created distinct advantages for White families, leading to massive racial homeownership, credit, and wealth gaps that persist today. The Black-White homeownership gap today, at a 29-point difference (44 percent compared to 73.3 percent), is higher than it was when the Fair Housing Act was passed in 1968 when the gap stood at a 27-point difference,” Rice said.
2023 conforming loan limits top $1 million

The FHFA released its 2023 conforming loan limit (CLL) values for mortgages acquired by Fannie Mae and Freddie Mac. Loan limits in high-cost areas will exceed $1 million.

For most states, the CLLs are set at $726,200. That’s an increase of $79,000 from the 2022 CLL of $647,200. For high-cost areas, where 115 percent of the local median home values exceed the baseline CLL, the new ceiling for one-unit properties is $1,089,300. That’s an increase from the 2022 limit of $970,800. Rising home values triggered higher limits in all but two U.S. counties. The FHFA’s announcement noted that house prices increased 12.21 percent on average between Q3 2021 and Q3 2022.

While some mortgage lenders praised the higher limits for enabling more people to take advantage of Fannie and Freddie financing, some industry groups expressed concerns that excessively high loan limits may exacerbate the affordability crisis, the current system is overly reliant on government backing, and private capital needs to have a more meaningful role.
Home price measurements show continued deceleration

Two major home price indices came out this week, the S&P CoreLogic Case-Shiller Indices and FHFA’s House Price Index (FHFA HPI). The Case Shiller index showed a continuation of short-term declines and medium-term deceleration in home prices in September.

According to FHFA’s HPI, house prices rose 12.4 percent year-over-year from Q3 2021 to Q3 2022. House prices were up 0.1 percent compared to Q2 2022. Prices rose in all 50 states and the District of Columbia, with Florida, South Carolina, Tennessee, North Carolina, and Georgia experiencing the highest annual appreciation. The District of Columbia, Oregon, California, Minnesota, and Louisiana received the lowest appreciation. The South Atlantic division had the strongest fourth-quarter appreciation, rising 17 percent year-over-year in Q3.

“House prices were flat for the third quarter but continued to remain above levels from a year ago,” said FHFA Supervisory Economist William Doerner. “The rate of U.S. house price growth has substantially decelerated. This deceleration is widespread with about one-third of all states and metropolitan statistical areas registering annual growth below 10 percent.”
Congressional members urge House leadership to expand housing credit
U.S. Reps. Suzan DelBene (D-Wash.) and Brad Wenstrup (R-Ohio) led a letter signed by 50 members of Congress to House Speaker Nancy Pelosi (D-Calif.) and Minority Leader Kevin McCarthy (R-Calif.) on Monday that supported expanding the Low-Income Housing Tax Credit. In addition, the letter urged leadership to include key production provisions of the Affordable Housing Credit Improvement Act (AHCIA) in any year-end legislative vehicle. The letter specifically called on Congress to extend the 12.5 percent housing credit allocation increase that expired at the end of 2021 and to lower the 50 percent test to 25 percent to more efficiently use private activity bonds.

“We cannot ignore this crucial area of our economy, and the working families, veterans, seniors, and low-income families who will be able to afford their homes during this time and in the years "ahead because of the Housing Credit,” the letter said. “The Housing Credit is a proven tool, having financed over 3.6 million homes over the program’s 35+ year history. The AHCIA proposals have broad bipartisan support with more than one-third of Congress cosponsoring the bill.”
HOME Coalition urges appropriators to fund HOME

On Monday, the HOME Coalition sent a letter to Democratic and Republican leadership of both Congressional chambers’ appropriations committees, urging them to provide robust funding for the HOME Investment Partnerships (HOME) program for FY 2023. The coalition represents 44 national, state, and local organizations including the National Housing Conference. The coalition supports $2.5 billion in funding for HUD’s HOME Investment Partnerships Program. The letter asks Congress to fund HOME at no less than $1.9 billion, the same amount requested by the Administration for FY 2023.

The letter cites fewer affordable homes and rising prices as challenges for low-income households and the flexibility of HOME in helping to address these persisting issues. “HOME—our most flexible affordable housing program, which can be tailored to meet local needs—is such an important tool. While some areas need more new construction of affordable rental housing, others may have an existing rental housing stock that just needs rehabilitation. Still others most need single-family starter homes. HOME is the one resource that can do all these things,” the letter states.
NAREB States of Housing in Black America Report

NAREB hosted its Black Housing Summit at Howard University this week, during which it released its latest State of Housing in Black America (SHIBA) report. The report provides a scope of the state of Black homeownership and housing equity benchmarks. It includes an analysis of 2021 Home Mortgage Disclosure Act data, which shows Black applicants received only 7 percent of all mortgage originations. And Black homebuyers experienced a denial rate of 20 percent, compared to 8 percent for white applicants. Black consumers remain disproportionately under-represented among borrowers and continue to rely on high-cost loans for entry into homeownership. As historic gaps persist, Black millennial applicants are experiencing disproportionate disadvantages in the current market, with growing interest rates, home prices, lack of housing inventory, and student debt all dampening their home-buying prospects. While these homebuyers contributed to the increase in Black homeownership rates between 2020 and 2021, Black millennial homeownership lags behind the rates of previous generations.

Recommendations in the SHIBA report include eliminating loan-level price adjustments, eliminating penalty fees to access down payment assistance, reevaluating student loan debt’s impact on debt-to-income calculations, leveraging Special Purpose Credit Programs, and more. In highlighting and designing comprehensive recommendations and actions to address existing disparities, the report tries to help more Black households achieve homeownership. “Our 2022 SHIBA report is designed to shed light on many of the issues centered on neighborhood blight, environmental discrimination, and disaster recovery for Blacks,” wrote NAREB President Lydia Pope. “Its insights, perspectives, data points, and recommended solutions are key to our ability to learn from the past, observe the present and prepare for the future.”
Neighborhood Home surpasses 100 supporters in Congress

The Neighborhood Homes Investment Act (Neighborhood Homes) reached a milestone of more than 100 House cosponsors members signing their support. 24 U.S. senators across 37 states also support the legislation, amounting to the bipartisan support of 124 members of Congress. The Neighborhood Homes Coalition, of which NHC is a part, estimates the new tax credit would construct 500,000 homes over ten years in struggling communities. NHC thanks recent sponsors of the bill U.S. Reps. Suzanne Banomici (D-Ore.) and Brendan Boyle (D-Pa.) for achieving this critical milestone.
"This bill would give us a critical new tool in the fight against rising housing costs, drive investment for more homes in the communities that need it most, and work alongside other powerful tools such as the New Markets Tax Credit, Opportunity Zones, and the Low-Income Housing Tax Credit to unleash investment and revitalize communities across the nation,” said U.S. Sen. Rob Portman (R-Ohio), who is a lead sponsor of the bill.

In a letter to Congressional leaders, the Coalition urged the inclusion of Neighborhood Homes in any end-of-year tax or budget legislation. “NHIA would generate $100 billion in new investment, creating nearly 800,000 jobs paying $43 billion in wages. NHIA would fight climate change by encouraging energy-efficient investment in compact communities with underutilized infrastructure and access to transit. NHIA will help revitalize the same low-income and high poverty neighborhoods that COVID has disproportionately hurt. Finally, NHIA would generate $29 billion in federal, state, and local tax revenue, more than its federal budget cost,” the letter reads.
Urban League, Wells Fargo partner to diversify home appraisers

The National Urban League and Wells Fargo announced the Diverse Appraiser Initiative, which seeks to diversify the home appraisal industry and reduce barriers to entry into the field. The announcement noted a longstanding lack of diversity among appraisers, often leading to appraisal bias. HUD’s PAVE Action Plan and the National Fair Housing Alliance’s analysis of appraisal bias reports both include the need for a more diverse workforce as a recommendation to address systematic bias. This new collaborative effort will provide training and support in business basics to help trainees complete the certification process through Urban League Entrepreneurship Centers.

“Racial discrimination in the home appraisal industry is a significant barrier to economic equity,” said Marc Morial, National Urban League president and CEO. “We’re proud to partner with Wells Fargo on this innovative project to open the doors of opportunity and bring a much-needed new approach to diversity, equity, and inclusion that we hope will serve as inspiration to others in the field and beyond.”

“We’re excited to mobilize the combined resources at Wells Fargo and the National Urban League to help address core barriers in appraiser certification and increase the number of diverse-owned appraisal businesses. This relationship will help to diversify the industry and improve customer confidence in home valuations,” Kristy Fercho, Wells Fargo head of diverse segments, representation, and inclusion, said.
HUD releases proposal for Section 184 Indian Home Loan Guarantee Program

HUD released a proposal for the Section 184 Indian Home Loan Guarantee Program to provide homeownership opportunities in Indian Country. The proposal would provide clarity to lenders by modernizing regulations and program requirements. Provisions included in the rule seek to clarify requirements for tribes, eligible borrowers, properties, and loan types. The proposal also outlines requirements for servicers for the Section 184 loan and what is required for loss mitigation when a loan defaults. Additional provisions address claim requirements and HUD’s ability to conduct reviews, reporting, and sanctions for noncompliance with regulations.

“By setting requirements, attracting more lenders, and setting a minimum standard of lending, we are taking steps to make homeownership a reality for American Indian and Alaska Native individuals and families,” said HUD Secretary Marcia Fudge. Comments for the proposed rule are due by March 6, 2023.
2022 Tribal Nations Summit

Last week, the White House hosted its 2022 Tribal Nations Summit during Native American Heritage Month. The event featured speakers from many federal agencies. For example, USDA highlighted its continued commitment to Indian Country and shared a comprehensive list of the agency’s Indian Country accomplishments and stated its commitment to “empower tribal self-determination, promote equity and remove barriers to service and programs, and incorporate Indigenous perspectives.”

Deputy Secretary of the Treasury Wally Adeyemo spoke about Treasury’s efforts to support Tribal communities by distributing American Rescue Plan funds. He described a “three-prong approach” to address challenges in Indian Country: supporting tribal governments, Native CDFIs, and tribal and Native businesses.

At the Summit, HUD Secretary Marcia Fudge launched the first-ever Tribal Intergovernmental Advisory Committee (TIAC). Committee members will advise and coordinate policy on the housing priorities of American Indians and Alaska Natives across all HUD programs. See here for the complete list of committee members.
HUD and Census Bureau release Rental Housing Finance Survey

HUD and the U.S. Census Bureau released the latest Rental Housing Finance Survey, reviewing the country’s 49.5 million rental housing units. According to the survey, individual investors own 70 percent of small rental properties and 86 percent of rental properties contain only one unit. In addition, nearly 46 percent of all rental properties have one-to-four units.

“The Rental Housing Finance Survey provides insight on the financial, managerial, and physical characteristics of rental properties nationwide,” said Soloman Greene, HUD Principal Deputy Assistant Secretary for Policy Development and Research.

From the national level findings, the median estimated market value per rental is $175,000, with a median purchase price of $99,000 per rental unit. See here for highlights of the full survey findings. 
Chart of the week
Bank mortgage loan applications disproportionately attract white borrowers

In NAREB’s newly released State of Housing in Black America report, authors analyzed HMDA data to determine how white and Black borrowers sought mortgage loans in 2021. Both white and Black borrowers predominately sought loans from independent mortgage companies, with 72 percent of Black applicants and 63 percent of white applicants applying for a loan from an independent mortgage company. Meanwhile, 33 percent of white applicants applied for bank loans, compared to 20 percent of Black applicants. In addition, the report notes that since the Great Recession, independent mortgage companies received the largest share of applications from Black borrowers for FHA-insured loans (34 percent). Conversely, white borrowers hold the largest share of applications for conventional loans from independent mortgage companies at 43 percent.
What we're reading
An article in Nonprofit Quarterly outlines how homeownership fails to build wealth for Black women and the systematic obstacles within the housing system that cause this inequity. The article covers intergenerational wealth, appraisal bias, subprime mortgages, and other contributing factors to the persisting racial homeownership gap.

An opinion piece in The Washington Post discusses the current plight of poverty and overviews a new collection of essays from the American Enterprise Institute titled American Renewal. The article highlights several staggering statistics from the essays, including that more than half-a-million homeless people in the U.S. and three out of every eight women have less than $2,000 in net worth. The piece calls for reform of federal antipoverty programs.

The National Fair Housing Alliance released its 2022 Fair Housing Trends Report. It finds that the number of housing discrimination complaints increased by 8.7 percent from 2020-2021, and this increase happened despite fewer agencies reporting complaint data. In total, there were 31,216 housing complaints filed in 2021. The report recommends funding increases for fair housing enforcement agencies to help better address discrimination.
The week ahead
The week ahead
Monday, December 5
2022 ULI Florida Summit Miami (ULI), in person in Miami, FL
Tuesday, December 6
2022 ULI Florida Summit Miami (ULI), in person in Miami, FL
Fair Housing (NAHRO), 1:00 - 4:00 PM EST
Wednesday, December 7
2022 ULI Florida Summit Miami (ULI), in person in Miami, FL
NHCMA Annual Meeting (NH&RA), in person in Nashville, TN
Fair Housing (NAHRO), 1:00 - 4:00 PM EST
Thursday, December 8
Fair Housing (NAHRO), 1:00 - 4:00 PM EST
Friday, December 9
Fair Housing (NAHRO), 1:00 - 4:00 PM EST
The National Housing Conference is a diverse continuum of affordable housing stakeholders that convene and collaborate through dialogue, advocacy, research, and education, to develop equitable solutions that serve our common interest.
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