Lack of Housing for 7.2 Million of Lowest Income Renters

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1 Lack of Housing for 7.2 Million of Lowest Income Renters The Gap: The Affordable Housing Gap Analysis 2016, a new report released recently by the National Low Income Housing Coalition (NLIHC), paints a bleak picture of the nation s growing affordable housing crisis. The reports finds that there is a shortage of 7.2 million affordable and available rental units for America s 10.4 million extremely low income (ELI) renter households, those in the bottom 30% of income in their communities.1 Seventy five percent of ELI renter households spend more than half of their income for housing, leaving them without enough money for food, medicine, child care, transportation, and other basic necessities, much less a cushion for emergencies. They are at high risk of frequent moves, eviction, and homelessness. NLIHC calls for greater federal investment in the National Housing Trust Fund (NHTF) and other housing programs to close this ever widening gap. The Gap provides data about the shortage of affordable and available housing for ELI renter households in each of the states, the District of Columbia and the 50 largest metropolitan areas. The report, based on 2014 American Community Survey data, finds that nationally there are only 31 affordable and available rental units for every 100 ELI households. The 10.4 million ELI renter households accounted for 24% of all renter households in the U.S. For the 4.1 million deeply low income (DLI) renter households, those with incomes in the bottom 15% in their communities, there are only 17 affordable and available rental units per 100 households. Twenty states have fewer than the national average of 31 affordable and available units per every 100 ELI households. Nevada has the fewest affordable and available rental units, with just 17 per every 100 ELI households. Other states with the greatest shortfalls include Alaska (21/100), California (21/100), Arizona (21/100), Florida (22/100) and Oregon (22/100). No state has more than 64 affordable and available rental units for every 100 ELI renter households. The states with the greatest percentage of ELI renters spending more than half of their income on housing are Nevada (85%), Florida (84%), Georgia (81%), Oregon (81%), and Arizona (81%). In every state in the country, at least half of ELI renters spend more than half of their income on housing. Among the nation s largest 100 metropolitan areas, Orlando Kissimmee Sanford, FL and Las Vegas Henderson Paradise, NV have the lowest number of rental units affordable and available to ELI renter households, with just 15 units per 100 households. No metropolitan area has more than 46 affordable and available units per 100 ELI households. The Gap reveals an alarming reality about housing for extremely low income households, said Dr. Andrew Aurand, Vice President Research at NLIHC. What is frustrating is the lack of timely action to address the issue. Millions of people in America are living in unaffordable rental homes. They are forced to cut their spending on food, transportation and health to pay rent. Dr. Sheila Crowley, President and CEO of NLIHC, urged the federal government to substantially increase funding for the NHTF to address the shortfall. The National Housing Trust Fund, said Dr. Crowley, was 1

2 explicitly created to address the most critical housing needs in our country, housing affordable to those with the lowest incomes. We can end homelessness and housing poverty in America without adding a penny to the federal deficit through the United for Homes campaign. All we need is the will. NLIHC leads the United for Homes campaign that is endorsed by more than 2,300 organizations and elected officials nationwide. The campaign calls for modifying the mortgage interest deduction by reducing the portion of a mortgage that is eligible for a tax break from the current $1 million to $500,000 and by converting the deduction to a 15% non refundable tax credit. These two changes would result in savings of more than $200 billion over ten years that the campaign calls for investing into the National Housing Trust Fund. The Gap: The Affordable Housing Gap Analysis 2016 is available at: report. [1] Extremely low income (ELI) is 30% or less of the area median (AMI). In most of the country, 30% AMI is less than the federal poverty level for a family of three. 2

3 Cantwell Launches National Campaign to Increase Federal Resources for Affordable Housing Senator, Mayors Murray, Strickland and Stephanson, along with advocates announce ambitious goals to expand the Low Income Housing Tax Credit an important federal tool for financing affordable housing U.S. Senator Maria Cantwell (D WA) joined by Seattle Mayor Ed Murray, Tacoma Mayor Marilyn Strickland, Everett Mayor Ray Stephanson, and the A.C.T.I.O.N. campaign a coalition of more than 1,300 national, state, and local affordable housing advocates who are urging Congress to expand the Low Income Housing Tax Credit (LIHTC) kicked off a national campaign to increase federal resources for affordable housing. Senator Cantwell called for a 50 percent expansion of the LIHTC, reforms to better target the lowest income populations with LIHTC projects, and unveiled her report, Addressing the Challenges of Affordable Housing & Homelessness: The Housing Tax Credit. Cantwell s proposal would finance approximately 400,000 additional units of affordable housing nationwide over the next decade, with approximately 35,000 units in Washington state (roughly 4,200 more units than is possible under current levels of LIHTC financing). We re here today to launch a national campaign to say that we need to increase the amount of tax credits so more affordable housing units can be built in the United States of America, said Cantwell. We know this is a big challenge, but the housing crisis is a big challenge. We stand here in this beautiful building called Patrick Place and ask, why not? Why not show that a partnership between federal, state, local government, nonprofit organizations, and the private sector can provide homes for people who were formerly homeless. Cantwell continued: We re here in Seattle today, but the campaign doesn t stop here. We are going over to Spokane and on to Tacoma and then we re going to other cities across the nation to take this message to the American people. We need more affordable housing and we need it now. So please tell your friends and neighbors to join the A.C.T.I.O.N. campaign and let s make this story a reality all across America. The press conference was held at Patrick Place which provides affordable housing and support services for low income and homeless individuals. Patrick Place received more than $7 million through the LIHTC. The undersigned businesses and organizations, representing over 1,300 national, state, and local affordable housing stakeholders urge Congress to address our nation s severe shortage of affordable rental housing by expanding the Low Income Housing Tax Credit, wrote the A.C.T.I.O.N. campaign today in their letter to Congress. The Housing Credit is our nation's primary tool for financing the development and preservation of affordable rental housing, and our best solution for addressing the affordable housing crisis. Earlier today, Cantwell released her report, Addressing the Challenges of Affordable Housing & Homelessness: The Housing Tax Credit, which found that across the country there are 3.9 million extremely low income families 169,000 of whom live in Washington state that lack access to affordable housing. The report also noted that the January 2015 point in time homelessness count 1

4 documented nearly 19,419 homeless individuals in Washington state. Both the number of extremely low income families and the number of homeless individuals have increased over recent years. In December of last year, Cantwell championed the LIHTC and secured a critical fix to the program by permanently extending the credit rates to 9 percent of eligible costs on new construction. This ended an era when variable rates made financing of affordable housing less predictable. Since its creation 30 years ago, this tax credit has financed nearly 3 million homes across the United States, leveraging more than $100 billion in private investment. It has developed 75,400 affordable housing units in Washington state, and supports approximately 70,000 jobs each year in Washington state. 2

5 Industry Experts Propose New Housing Finance Reform Plan An independent group of housing industry experts recently released a report proposing a plan for overhauling the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac. The proposal was drafted by Jim Parrot of the Urban Institute, mortgage investor Lew Ranieri, former presidential advisor Gene Sperling, Mark Zandi of Moody's Analytics, and Barry Zigas of the Consumer Federation of America. The report, entitled "A More Promising Road to GSE Reform," calls for the GSEs' single family and multifamily operations to be merged together into a new government corporation, the National Mortgage Reinsurance Corporation (NMRC). Just as Fannie Mae and Freddie Mac do today, the NMRC would purchase mortgage loans and package them into mortgage backed securities (MBS) and sell the MBSs to investors. NMRC would charge a guarantee fee (g fee) for each mortgage it purchases. Unlike the current system, MBSs issued by NMRC would be explicitly backed by the federal government. NMRC would also be expected to enter into syndicated risk sharing arrangements for all securities it issues that put private investors in a first loss position. NMRC would be regulated by the Federal Housing Finance Agency (FHFA). FHFA would be responsible for setting the g fees for mortgages insured by NMRC and for maintaining a mortgage insurance fund, or MIF, funded by those g fees, sufficient to cover the costs of a catastrophic downturn. The report envisions NMRC utilizing many of the initiatives FHFA has undertaken since taking the GSEs into conservatorship in 2008, including the development of a Common Securitization Platform for Fannie Mae and Freddie Mac and its mandate that the GSEs increase their use of risk sharing transactions. The proposal would also require NMRC to be responsible for supporting affordable housing options. The corporation would be expected to meet the same affordable housing goals and "Duty to Serve" obligations that currently apply to the GSEs. NMRC would charge a 10 basis point surcharge on all loans it insures, to help fund its affordable housing activities. The plan does not mention whether NMRC would be required to make contributions to the Affordable Housing Trust Fund, as Fannie Mae and Freddie Mac currently do. The key to this plan, the writers contend, is that it will retain the successful aspects of today's housing finance system while eliminating the factors that hinder it. In addition, because it builds off of the current housing finance reform system, the writers argue it should cause little disruption to the mortgage market. They also say that, because NMRC would be a government corporation, it would be

6 driven by a public mandate "to balance broad access to credit with the safety and soundness of the mortgage market," instead of profit. The report concludes with a warning from the writers, who fear that, due to the recent upward trend of home prices and home sales, the mortgage industry will become complacent with the current mortgage finance system. The current system's situation is very precarious, the report cautions, because the GSEs are unable to build capital. If policymakers wait to enact housing finance reform, the report warns, the process will only become more difficult and complex.

7 NCSHA Submits Comments on FHFA Proposed Duty to Serve Rule NCSHA recently submitted a letter to the Federal Housing Finance Agency (FHFA) commenting on its proposed Enterprise Duty to Serve Underserved Markets rule. FHFA's proposal, which was released in December, would require the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac to develop and implement plans to serve lower income families through activities related to manufactured housing, rural areas, and preservation. Congress mandated that the GSEs support such activities in the Housing and Economic Recovery Act of NCSHA previously summarized the proposed rule on its blog. In its comments, NCSHA expresses strong support for a provision in the proposed rule that would allow the GSEs to receive credit towards meeting their "Duty to Serve" obligations for purchasing or guaranteeing HFA issued Housing Bonds. NCSHA urges FHFA to implement this provision in a flexible manner that will allow the GSEs to receive credit for all Housing Bond investments. While the GSEs' Senior Preferred Stockholder Agreements with the U.S. Department of Treasury currently prohibit the GSEs from purchasing Housing Bonds, NCSHA hopes that Treasury will consider lifting the restriction in light of the Duty to Serve provision and the GSEs' improved financial health. NCSHA also urges FHFA to allow the GSEs to resume making Low Income Housing Tax Credit (Tax Credit) investments. FHFA currently prohibits the GSEs from making such investments. The proposed rule sought public comment about whether this restriction should be rescinded, noting that the Housing Credit is a valuable tool for supporting affordable housing and also represents a liquid investment. Allowing the GSEs to resume Housing Credit investments, NCSHA argues, will help boost liquidity in the Housing Credit market and increase the amount of equity available for developments in underserved markets. NCSHA also asks FHFA to: Require that the GSEs file Underserved Market Plans detailing how they intend to fulfill their Duty to Serve obligations and solicit public input on the plans; Award the GSEs credit for supporting affordable manufactured housing loans and loans for manufactured housing communities owned by state and local governments or nonprofit organizations; and Encourage the GSEs to work together with state HFAs to identify state affordable housing programs that could benefit from GSE support.

8 Representative Waters Introduces Emergency Relief Legislation to End Homelessness Last week, House Financial Services Committee Ranking Member Maxine Waters (D CA) introduced the Ending Homelessness Act of 2016, H.R. 4888, which would provide $13.27 billion over five years to housing and services programs with the goal of ending homelessness in America. Announcing her new legislation, Representative Waters argued that homelessness is not an insurmountable problem but requires "the political will to put the necessary resources behind the solutions we know will work" and called on Democrats and Republicans to come together to end the homelessness crisis through increased resources. Specifically, HR 4888 would provide $1.05 billion annually in mandatory spending dedicated to the National Housing Trust Fund; $2.5 billion for special purpose Section 8 Housing Choice Vouchers for homeless families, youth, and individuals; $5 billion in McKinney Vento Homeless Assistance Grants funding; $500 million in outreach funding to ensure homeless people are connected to the resources they need; and $20 million in technical assistance funding to help states and localities align health and housing systems. According to HUD's latest Annual Homeless Assessment Report to Congress, there were 407,000 homeless households in H.R would provide funding for approximately 405, ,000 units of deeply affordable housing for homeless individuals, families, and youth. H.R was referred to the House Budget and Financial Services Committees for consideration and currently has no cosponsors. After introducing the legislation, Representative Waters sent a letter to House Financial Services Chairman Jeb Hensarling (R TX) urging his support for H.R and reiterating an earlier request for a series of hearings on the state of homelessness in the country.

9 Fannie and Freddie Give $186M to Affordable Housing Fund "The goal is to expand the supply of affordable housing," said Sheila Crowley, head of the National Low Income Housing Coalition. Fannie Mae and Freddie Mac gave $186 million to the National Housing Trust Fund, their first such contributions to a fund designed to provide construction and rehabilitation of rental housing for lowincome families. The fund was created in 2008, but never got off the ground before the two government sponsored enterprises were seized and placed into conservatorship later that year. Department of Housing and Urban Development Secretary Julian Castro told lawmakers Thursday that some states will start submitting their requests for affordable housing funds in April. "We expect the first allocations of the Housing Trust Fund will be made this summer," Castro told members of a Senate Appropriations subcommittee. The National Low Income Housing Coalition have been advocating for a housing trust fund since Coalition members are already working in the states and providing training so affordable housing advocates will be "up to speed" on the allocation process, according to the group s president, Sheila Crowley. The coalition has also lined up nonprofit developers who have expertise in providing housing for extremely low and very low income families, including homeless families. These developers can also provide advice on financing and construction models. "The goal is to expand the supply of affordable housing," Crowley said in an interview Friday. Coalition members want the rollout to go smoothly so the new program can show tangible results quickly and increase Congressional support for the program. "So we would really like to see a really good first year," she said. Fannie and Freddie paid a total of $382.3 million in late February to meet their affordable housing obligations. Fannie contributed $217 million and Freddie $165.3 million, according to securities filings. But less than half of that sum is going to the Housing Trust Fund. The first 25% of the funds will be diverted to the Treasury Department and the Hope Reserve Fund to cover losses on loan modifications made by lenders under the Hope for Homeowners program. A Treasury spokesman declined to comment on the amount of losses the loan modification program has incurred. Of the remaining funds, 65% will be transferred to HUD for the National Housing Trust Fund and 35% will be transferred to the Treasury Department for a Capital Magnet Fund.

10 The capital magnet fund will be a special account within the Community Development Financial Institutions Fund that Treasury can use to fund grants for the development, rehabilitation or purchase of affordable housing for extremely low, very low and low income families. The amount of money going to the Housing Trust Fund is "much smaller than we had hoped for" back in 2008, Crowley said. But the coalition will be working on getting more money into the fund. Eventually, Congress will have to pass housing finance reform, she said, which would provide an opportunity to increase funding for the Housing Trust Fund. The failed Johnson Crapo reform bill provided $3.5 billion in annual funding for the HTF. The housing group also has its eye on tax reform and a potential revamp of the mortgage interest deduction. Currently, the mortgage interest deduction subsidizes homeownership for high income earners at the "expense of solving housing problems for the very poor," she said. "That is wrong."

11 FHA Releases New Single Family Loan Certifications; Proposes Modified Lender Certifications On March 15, the Federal Housing Administration (FHA) announced that it has revised the form mortgagees must file when submitting a loan for FHA insurance and proposed changes to the certification statements lenders and other mortgagees must file when applying to participate in FHA's homeownership programs. FHA said it hopes these actions will increase lender participation in FHA's single family programs by clarifying FHA mortgagees' underwriting responsibilities and liabilities. To implement the revised certification requirements, FHA has amended the HUD/VA Addendum to the Universal Residential Loan Application (Form 9200 A), the official form mortgagees must file when submitting a mortgage loan for FHA insurance. These amendments clarify what liability mortgagees might face if the loan is found to contain underwriting or other errors. The new Form 9200 A will become effective on August 1. FHA first proposed revisions to Form 9200 A last September, after many mortgagees began to curtail their participation in FHA lending programs, citing uncertainty about what potential liability they would face. This uncertainty was partly a response to recent legal action taken by the U.S. Department of Justice (DOJ) against lenders DOJ claims fraudulently sold FHA loans that were ineligible for insurance. The final Form 9200 A includes several changes from the version FHA proposed in September, including language making it clear that, by filing a Form 9200 A, mortgagees are only certifying that the information contained in the form is true to the best of their knowledge. These revisions were made when many housing industry and advocacy groups, including NCSHA, pointed out that the language FHA proposed adding to Form 9200 A in its initial proposals could be read as making mortgagees responsible for any incorrect information they receive from borrowers or other third parties. In a statement released after announcing the new certifications, Ed Golding, who administers FHA in his capacity as HUD Principal Deputy Assistant Secretary for Housing, stated that the purpose of the revisions is to make it clear that mortgagees "will be held accountable for only those mistakes that would have altered the decision to approve the loan," and that minor mistakes will not cause a loan to lose its FHA insurance. Golding expressed hope that the revisions would reduce mortgagees' confusion about FHA policy and entice more mortgagees to originate FHA loans. FHA also proposes to modify the certifications each mortgagee, including government mortgagees such as HFAs, must file when applying to participate in FHA single family programs and also refile each year thereafter. The new certification language requires a mortgagees' top corporate officer to certify that neither their entity nor any of its employees involved in the home lending process have committed any violations that would make the mortgagee ineligible to participate in FHA programs. This certification is 1

12 currently included as part of Form 9200 A, but HUD has determined it would be better to have the mortgagee make such a certification separately as an entity rather than on an individual loan basis. FHA originally proposed changes to its lender certifications in September, and its new proposal incorporates changes suggested by comments it has received. FHA also released a chart comparing the language of the current certifications lenders must file with the proposed new language. FHA is soliciting comments on its modified lender certifications until April 14, and has said that it hopes to implement the new language by August. NCSHA is considering whether to submit comments on behalf of all HFAs. If you have any questions or input you would like to share to help inform NCSHA's decision, please Greg Zagorski by Friday, April 8. 2

13 Bond Buyer: Housing Bond Volume Increased 27% in 2015 Total tax exempt housing bond issuance increased substantially in 2015, an analysis recently released by The Bond Buyer (subscription required) finds. The gains in the housing bond market were widespread, with both single family and multifamily bond volume rising last year. According to the study, which is based on data from Thomson Reuters, 531 housing bond issuances totaling almost $16.7 billion in volume were issued in 2015, a 27 percent increase in volume over This includes more than $7.9 billion in single family mortgage revenue bonds and $8.7 billion in multifamily bonds, representing increases of 38 percent and 18 percent, respectively, over The increase in housing bond issuance was driven largely by new money bonds, which increased 49 percent year over year. Refunding issues decreased 7 percent. This is a notable contrast from the municipal bond market as whole, which was driven largely by refundings. The analysis finds that state agencies accounted for $13.3 billion in housing bond activity last year, up 37.5 percent from last year. Most of the other housing bonds were issued by local authorities, which issued almost $2.4 billion in housing bonds. The Bond Buyer analysis states that total municipal bond volume in 2015 was $404 billion, 19 percent higher than in 2014 and the highest yearly issuance since It also shows that the sectors with the highest bond volume were education at $127 billion, general purpose at $93 billion, transportation at $48 billion, and utilities at $41 billion. Housing was the seventh largest sector, at $17 billion. The report does not distinguish between Private Activity Bond issuance and other municipal bond issuance.

14 GSE reform is happening: Are people paying attention? The disagreement on what comes next Congress recently adopted so called government sponsored enterprise Jump Start legislation. Since the bill actually restricts actions to facilitate GSE reform, this is somewhat of a misnomer. But the goal is understandable. Congress wants to reserve to itself the right to make the big picture GSE reform decisions, like whether there should be a federal guarantee and whether and in what form Fannie Mae and Freddie Mac should survive. But no one should be misled by the lack of comprehensive Congressional action into thinking that GSE reform is on hold. Fundamental reforms already have or are now taking place reforms that reduce risk, protect taxpayers and build on lessons we learned from the 2008 crisis. The most fundamental reform is loan quality. The GSEs would not have gone into conservatorship if they simply hadn t made no doc (Alt A) loans and purchased MBS securities. With QM and strong underwriting standards, Alt A is a thing of the past. And GSEs have not only stopped making portfolio purchases, they are unwinding their existing portfolio holdings. The second sea change is risk sharing. Almost all new GSE loan purchases now involve some form of risk sharing, also known as credit risk transfer. Risk sharing significantly reduces GSE credit risk and imposes private sector market discipline. CHLA has concerns about how this is done; for example, an approach dominated by up front securitization deals would hurt both consumers and small lenders, with the big banks potentially using securitization to create a choke point and control the market. But risk sharing is now, as they say, the reality on the ground. There is now a strong regulator the Federal Housing Finance Agency. Everyone agrees the pre Crisis regulator, Office of Federal Housing Enterprise Oversight, was too weak and timid. Since it took over in 2008, FHFA has required sound underwriting standards, imposed higher servicer and mortgage insurer capital standards, and established a Scorecard to measure performance, including areas like access to credit. Significant work has also gone into the development of a Common Securitization Platform. A CSP and common security would create a more uniform and competitive securitization market. For these reasons, CHLA opposes proposals by some in Congress to turn the CSP over to the big banks. Finally, the model of private gain, public loss that characterized the pre crisis GSEs is gone. When taxpayers stepped in to backstop the GSEs in 2008, they had received no premiums from previous years to cover the risk and cost of that action. 1

15 This is no longer the case. In fact, we have gone too far in the other direction. Under the Sweep Agreement, 100% of GSE quarterly profits are swept to taxpayers and each GSE s capital has been arbitrarily reduced to $1.2 billion today, going to zero in January FHFA Director Mel Watt recently referred to the GSEs thin capital buffers as their most serious risk. Even a small non cash accounting loss would precipitate a Treasury advance, which in the director s words could undermine confidence in the housing finance market. Such a manufactured crisis would be bad for consumers and housing markets. That is why CHLA recently joined with ICBA and CMLA in a letter to FHFA, asking for the FHFA to allow the GSEs to build up a modest capital buffer. This is different from the broader issue of whether to fully recapitalize the GSEs. Unfortunately some opponents of the GSEs are characterizing any efforts to build capital as a return to the failed ways of the past. As this article shows, that is a straw man argument. GSE reform has matured much further than most people realize but there is disagreement about what comes next. CHLA believes the FHFA, as conservator, should develop a capital plan to show how the GSEs could be recapitalized, including exploring options like a utility model. The result would a more informed Congress when it gets around to resolving the bigger issues that must be settled. Everyone would benefit from that. 2

16 HUD AWARDS $1.6 BILLION FOR LOCAL HOMELESS PROGRAMS Funding support to thousands of local homeless housing and service programs Virginia $23,471,202 U.S. Department of Housing and Urban Development (HUD) Secretary Julián Castro awarded $1.6 billion in grants to provide funding to 6,400 local homeless housing and service programs across the U.S., Puerto Rico, Guam and the U.S. Virgin Islands. The Tier 1 Continuum of Care (CoC) grants announced today support the Obama Administration s efforts to end homelessness by providing critically needed housing and support services to individuals and families experiencing homelessness. HUD will award approximately $300 million in Tier 2 grants in the spring to support hundreds more local programs. A safe, stable home is the foundation for opportunity in all of our lives, said Secretary Castro. That s why we re continuing to challenge communities to deploy proven strategies to help people experiencing homelessness find a place to call home. Through unprecedented partnership among every level of government and private, non profit and philanthropic organizations, we know this goal is not just aspirational it s achievable. More than 20 communities and two entire states have leveraged the leadership of their continuums of care to build systems that have ended homelessness among our nation s veterans, said Matthew Doherty, executive director of the U.S. Interagency Council on Homelessness. Working together with state and local leaders, CoCs continue to prove that a combination of the right strategies, enough resources, and urgent action can end homelessness in America for everyone. This year s grants are being awarded in the most competitive environment HUD has experienced in the Continuum of Care grant program. To compete most effectively, communities made very challenging decisions, often shifting funds from existing projects to create new ones that will have a more substantial and lasting impact on homeless populations. In 2010, President Obama and 19 federal agencies and offices that form the U.S. Interagency Council on Homelessness (USICH) launched the nation s first ever comprehensive strategy to prevent and end homelessness. Opening Doors: Federal Strategic Plan to Prevent and End Homelessness puts the country on a path to end veterans and chronic homelessness as well as to end homelessness among children, family, and youth. HUD estimates there were 564,708 persons experiencing homelessness on a single night in Since 2010 local communities around the country reported a declined by more than 72,000 persons, an 11 percent reduction. In addition, veteran homelessness fell by 36 percent, chronic homelessness declined 22 percent and between 2010 and January 2015, family homelessness declined by 19 percent, while the estimated number of unaccompanied homeless youth and children was 36,097.

17 Across the nation, local homelessness planning agencies called Continuums of Care recently organized volunteers to help count the number of persons located in emergency shelters, transitional housing programs and living unsheltered on the streets. Continuums of Care will report these one night pointin time counts later in the year and will form the basis of HUD s 2016 national homeless estimate.

18 HUD Proposes Changes to FHA HFA Multifamily Risk Sharing Program Regulations On March 8, HUD published a proposed rule in the Federal Register amending existing regulations for the Section 542(c) Housing Finance Agency (HFA) Risk Sharing Program. HUD explains in the proposed rule that the existing regulations were last updated in 2000 and some aspects have since become outdated. The proposed rule, largely informed by dialogue with NCSHA and a working group of HFAs, is intended to better align the regulations with current industry and HUD policies and practices and provide greater flexibility for program participants. The proposed rule seeks to align the Risk Sharing program with other HUD program requirements, thereby streamlining and facilitating program administration by HFAs and HUD oversight. First, HUD proposes that certain loans made by Level I HFAs (those that assume 50 percent or more of the risk of the loans) do not need to be regularly amortizing, provided that the loans have a minimum term of 17 years and HUD approves the HFA's underwriting standards, loan terms and conditions, and asset management and servicing procedures. In its explanation of the proposed rule, HUD says non fully amortizing loans are not unusual in multifamily lending and this change would align the Risk Sharing program with conventional industry practices, particularly for Housing Credit transactions. HUD also proposes to amend the program so that supportive housing developments financed by Level I HFAs would be subject to the same underwriting standard as Section 202 developments for the elderly, thereby allowing the use of contract rents in the loan underwriting process. In the proposed rule, HUD also lays out two proposed changes that would align the program with other HUD programs, but may be unnecessary given HFAs' strong underwriting standards. These include a proposal to require HUD to recertify every five years the underwriting standards, loan terms and conditions, and asset management and servicing procedures for Level II HFAs (those that assume less than 50 percent of the risk of loss on mortgages insured under this program). The purpose of this review is to periodically benchmark Level II HFA underwriting standards against current FHA standards. In previous written comment to HUD, NCSHA explained that this change was unnecessary except in cases where an HFA has experienced significant claims. HUD is also proposing to require the FHA Commissioner's approval for any "large loan" made by Level II HFA, which is the same policy used under the Multifamily Accelerated Processing (MAP) program. The definition of large loan would be consistent with the MAP program. NCSHA expressed concern earlier that this additional HUD review step is unnecessary and may delay the processing of some loans.

19 The proposed rule also seeks to remove current hurdles HFAs face in using the program for preservation deals. For Level I HFAs, the proposed rule would expand the ability to insure equity take out loans to refinance and acquisition deals. This provision is consistent with similar FHA programs and industry practice. The proposed rule would also amend the definition of "substantial rehabilitation," which is currently defined as work that exceeds 15 percent of the project's value. This definition has resulted in a disproportionate impact on developments in high cost areas, particularly for preservation efforts involving only moderate rehabilitation. Under the proposed rule, "substantial rehabilitation" would be defined as situations in which the scope of the rehabilitation work exceeds in aggregate cost a sum equal to the FHA base per dwelling unit limit times the applicable high cost factor, or when the scope of work involves the replacement of two or more building systems. Finally, the proposed rule includes several technical amendments supported by NCSHA, including removing references to the program being a pilot; updating application requirements to a rolling basis to reflect current practice; amending the definition of "affordable housing" to meet the requirements in Section 42(g) of the Internal Revenue Code; clarifying that the existing requirement that mortgages must be fully amortizing does not apply to construction loans; adding language to provide that one of sanctions HUD can take with a noncompliant HFA is to require the HFA to revise any or all of its underwriting, processing, or asset management policies as directed by the FHA Commissioner; and resolving current inconsistencies about closing document requirements. HUD will accept comments on the proposed rule until April 7, 2016, 30 days after its publication in the Federal Register. HUD justifies this abbreviated comment period because many of the changes are technical and non substantive. Further, the proposed policy changes have already been discussed "and are supported by stakeholders". Please send comments you would like NCSHA to consider including in its comments to HUD to NCSHA's Althea Arnold by April 1.

20 IRS Issues Housing Credit Utility Allowance Submetering Regulations The Internal Revenue Service (IRS) published in the Federal Register combined final regulations amending the Housing Credit utility allowance rules to provide greater clarity for Housing Credit properties that submeter to account for actual tenant energy consumption, and temporary regulations for properties in which an owner acquires energy directly from renewable sources, rather than from a utility company. The final regulations codify an IRS 2012 proposed rule requiring that utility costs paid by a tenant and based on the tenant's actual energy consumption in a submetered Housing Credit qualified unit are treated as paid by the tenant directly to the utility company and thus do not count against the maximum rent that the building owner can charge. NCSHA provided comments in support of the 2012 proposed rule, which we argued would generally allow for more accurate utility allowance determinations, provide greater flexibility to make such determinations, and help Housing Finance Agencies promote energy efficiency in Housing Credit properties. The temporary regulations IRS included with these final regulations further extend these rules to the provision of energy that the building owner acquires directly from renewable sources (for example solar panels on a property) and provides to low income tenants. In such cases, charges by building owners must not exceed the rates that the local utility company would have charged if they had instead acquired energy from that company. Comments on the temporary regulations are due to IRS by May 2.

21 ACTION Campaign Circulates Sign On Letter Urging Congress to Raise the Cap on Housing Credit Authority The A Call To Invest in Our Neighborhoods (ACTION) Campaign, which NCSHA co chairs with Enterprise Community Partners, is circulating a national sign on letter calling on Congress to address the nation's severe shortage of affordable rental housing by increasing Housing Credit authority by at least 50 percent. The letter speaks to President Barack Obama and House Speaker Paul Ryan's (R WI) shared goals of alleviating poverty and expanding opportunity, and argues that the scarcity of affordable housing is a significant obstacle to our nation's efforts to achieve these objectives. It explains why the Housing Credit program is the best solution for addressing the affordable housing crisis, and outlines how affordable housing promotes financial stability and economic mobility and contributes to local economies through job creation, community revitalization, and the generation of tax revenues. While NCSHA believes that all state Housing Finance Agencies (HFA) are represented on the letter by virtue of NCSHA's inclusion as a signatory, HFAs are welcome to sign on individually should they wish to be listed on their own. We also encourage you to circulate the letter to your state and local partners and ask for their support. The deadline for signing the letter is Friday, March 11. The ACTION Campaign is a national, grassroots coalition of over 1,000 national, state, and local organizations and businesses that support the Housing Credit. For more information about the letter or the ACTION Campaign, contact NCSHA's Jennifer Schwartz.

22 Representatives Hultgren and Ruppersberger Launch Municipal Finance Caucus On March 1, Representatives Randy Hultgren (R IL) and Dutch Ruppersberger (D MD) announced the establishment of a new, bipartisan caucus, which will serve as an advocacy and discussion forum for House members who are supporters of municipal bonds. The Municipal Finance Caucus will focus on protecting the tax exempt status of municipal debt, understanding how financial regulations treat such debt, and ensuring there is a robust market for municipal securities. Hultgren and Ruppersberger long have been leaders in supporting municipal bonds. In 2015, they led a congressional sign on letter to House leadership opposing proposals to eliminate or cap the deduction on tax exempt municipal bonds, including the President's proposal to cap the tax deduction for municipal bonds at 28 percent, which has been included in the President's Budget for each of the last five years. Including the two leads, that letter garnered the support of 124 House members, with a near even split between Republicans and Democrats. Hultgren and Ruppersberger led a similar congressional sign on effort in We expect more information about which House members have joined the Municipal Finance Caucus and how others might join to be forthcoming.

23 Ways and Means Chairman Brady Issues Tax Reform Mission Statement for Pro Growth Policy Agenda House Ways and Means Committee Chairman Kevin Brady (R TX), who has been tasked by Speaker of the House Paul Ryan (R WI) with leading a task force on tax reform, on March 2 released a mission statement, set of principles, policy reforms, and desired outcomes for the task force. The tax reform task force is one of six task forces Ryan has established and charged with developing a Republican progrowth agenda to be presented to the country in the months ahead. The task forces are designed to allow for a bottom up approach that allows other Republican House members to provide input into the development of the agenda through a series of idea forums. The tax reform task force's mission, to "create jobs, grow the economy, and raise wages by reducing rates, removing special interest carve outs, and making our broken tax code simpler and fairer," provides insight into the direction Brady is likely to take when the Committee embarks on comprehensive tax reform. Brady and other Republican leaders on multiple occasions have said that while they do not expect Congress to enact comprehensive tax reform until the next President takes office in 2017, they intend to use this year to lay the groundwork for those reforms. The policy reforms Brady intends to seek would "lower tax rates for families, small businesses, and corporations; eliminate special interest carve outs; reduce complexity in the tax code; reduce the double taxation of savings and investment; and reduce the tax bias against headquartering businesses and locating jobs in America," with the goals of increasing investment and employment, providing stability, allowing business decisions to be driven by economic potential rather than tax considerations, and achieving further pro growth reforms.