Weekly update from the National Housing Conference
News from Washington | By Luke Villalobos
CFPB funding ruled unconstitutional in Payday Lending appeal

An appeals court ruled on Wednesday that the CFPB’s funding mechanism is unconstitutional. A three-judge panel of the 5th U.S. Circuit Court of Appeals issued the ruling, finding that funding through the Federal Reserve rather than Congressional appropriations, violates the Constitution’s structural separation of powers. The Dodd-Frank Act set up the funding mechanism to avoid issues of political influence during appropriations.

While the court was dismissive of the substantive arguments raised by the payday lender advocates who filed the lawsuit, it vacated the entire 2017 payday lending rule because of CFPB’s funding. In its ruling, the court cited Article I Section 1 of the US Constitution, which states “that assignment of power to Congress is a bar on its further delegation,” The ruling noted that the Supreme Court has long delimited this general principle: “So long as Congress ‘lay[s] down by legislative act an intelligible principle to which the person or body authorized to [act] is directed to conform, such legislative action is not a forbidden delegation of legislative power.’” The Appeals Court found the CFPB’s structure went too far.

“Other federal financial regulators and the entire Federal Reserve System are funded that way, and programs such as Medicare and Social Security are funded outside of the annual appropriations process,” CFPB spokesperson Sam Gilford said. “The CFPB will continue to carry out its vital work enforcing the laws of the nation and protecting American consumers.” 
Freddie Mac to include bank account data in underwriting

Freddie Mac announced Monday it would begin including a review of borrower bank account data for monthly cash flow to increase underserved borrower homeownership. In addition, Freddie Mac will consider histories of positive cash flow as part of its loan purchase eligibility assessments through its automated underwriting system, Loan Product Advisor, with the permission of the eligible borrower. The changes will take effect on Nov. 6.
“With the addition of positive monthly cash flow data, our underwriting system can help with more accurately predicting a borrower’s ability to pay their mortgage because it uses a comprehensive view of how personal finances are managed over time,” Terri Merlino, Freddie Mac’s Single-Family Senior Vice President and Chief Credit Officer, said. “Our latest innovation levels the playing field and helps make homes more accessible to borrowers whose lenders might not have qualified them with traditional methods of underwriting. This should particularly help first-time homebuyers and underserved communities.”
This update comes soon after Freddie Mac started including rental payments in its underwriting standards.
FHA proposed adjustment to manufactured home loan limits

The FHA announced a proposed rule to calculate loan limits for the Title I Manufactured Home Loan Program annually. The proposed rule is FHA’s latest step to promote manufactured homes. The last update for loan limits on the Title I Manufactured Home Loan Program occurred in the Housing and Economic Recovery Act of 2008.

The proposed rule methodology will seek to collect data from the U.S. Census Bureau using sales prices, the number of sections of the manufactured home, and property data to calculate and adjust loan limits annually. The separate indices proposed to include three loan categories: manufactured home loans used for the purchase or refinance of manufactured homes only, manufactured home lot loans used for the purchase or refinance of the land where the home will be installed, and manufactured home and lot combination loans used for the purchase or refinance of both the home and the land on which the home will be installed. HUD seeks public comments on the proposed rule. Comments are due by Dec. 19.
Gainesville, Florida eliminates single-family zoning

The Gainesville City Commission voted on Monday to eliminate single-family zoning in the city, making it the first city to eliminate restrictive zoning laws. The decision is effective immediately and comes after months of contentious debate, including a letter from the Florida Department of Economic Opportunity claiming the elimination is inconsistent with its comprehensive plan.

Housing advocates support eliminating single-family zoning to increase the affordable housing supply. NHC supports local zoning reform to increase the housing stock and help reduce housing costs.
OIG group reviews natural disaster challenges

Seven Offices of Inspector General (OIG) under the Council of the Inspectors General on Integrity and Efficiency (CIGIE) analyzed 28 disaster-focused OIG reports highlighting challenges and recommendations for disaster recovery. This review seeks to provide agencies with best practices to prepare and respond to future natural disasters. The CIGIE working group includes the Departments of Defense, Health and Human Services, Homeland Security, HUD, Interior, and Transportation, and the U.S. Small Business Administration. The examined reports came out between June 2015 and November 2021 and included 89 recommendations. Implementing internal controls and minimizing barriers to disaster funds will align management and performance challenges across the federal government.
Student loan debt relief application launched

The federal government officially launched its student loan debt relief application on Monday. The program will provide debt relief to an estimated 43 million Americans. Many housing advocates support the relief program, arguing it could help increase homeownership opportunities for millennials and people of color. Both groups are more likely to carry student loan debt. Plus, ongoing research suggests student debt relief can ultimately help narrow the racial homeownership gap.
“There is no question that the student loan forgiveness decision will significantly impact housing, particularly for low- and moderate-income first-time homebuyers and cash-strapped renters,” NHC President David M. Dworkin said.
Chart of the week
P&I up 59 percent year-over-year

Calculated Risk Blog’s new calculations show principal & interest (P&I) payments are up almost 59 percent year-over-year (YoY). The data assumes a fixed loan amount. The change surpasses the previous YoY record of 50 percent, set in 1980. The graph suggests that rather than comparing the current housing environment to the 2008 housing crisis, it is more appropriate to compare to the 1978-1982 period, partly due to similarities in rising P&I alongside climbing mortgage interest rates.
What we're reading
An op-ed in Yahoo Finance by Treasury Secretary Janet Yellen and HUD Secretary Marcia Fudge argues for President Biden’s plans to boost affordable housing. The op-ed discusses the need for increased housing supply and the efforts taken by the Biden Administration to build more affordable housing. It specifically calls for increased investments in Low Income Housing Tax Credits and passing the Neighborhood Homes Investment Act this year, which NHC strongly supports.
A Los Angeles Times series examines Los Angeles’ overcrowded housing, including why L.A. County leads the nation in overcrowding. In addition, the series describes the COVID-19 pandemic’s toll on densely packed cities, connecting past housing decisions that led to high mortality rates during the pandemic.
An op-ed in The Hill calls for sustainable disaster recovery and an expedited process for areas that experience disasters to obtain recovery funds. The piece recommends that congress permanently authorize disaster rebuilding under Community Development Block Grant Disaster Recovery funds to avoid cycles of reauthorization and delays in moving funding into communities in need.
The week ahead
Monday, October 24
Tuesday, October 25
Fall Leadership Meetings (NAHB), in person in Kansas City, MO
Wednesday, October 26
Fall Leadership Meetings (NAHB), in person in Kansas City, MO
Thursday, October 27
Fall Leadership Meetings (NAHB), in person in Kansas City, MO
Area Caucus Meetings (NAHB), 9:30 - 11:30 AM ET in Kansas City, MO
Friday, October 28
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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