The White House announced steps to expand the affordable housing supply by 100,000 units for homeowners and renters over the next three years. These steps will create, preserve, and sell units to homeowners and non-profit organizations, with an emphasis on lower- and middle-income families. The White House’s plan will be a collaborative effort between HUD, the Department of Treasury, the Federal Housing Finance Agency (FHFA), and the Government-Sponsored Enterprises (Enterprises) Fannie Mae and Freddie Mac.
Specific steps the White House announced include:
- Boost the supply of quality, affordable rental units
- The partnership between Treasury’s Federal Financing Bank and HUD’s Risk Sharing Program will be relaunched to enable eligible HFAs to provide low-cost capital needed to spur the development of affordable housing development. Section 542 (c) Housing Finance Agency Risk-Sharing program allows HFAs to enter into contracts with HUD that provide FHA insurance on multifamily mortgages for properties with affordable housing units underwritten by an FHA, and where HUD and the HFA share the risk of any potential loss if the mortgage defaults.
- FHFA will raise the Enterprises’ equity cap for Low-Income Housing Tax Credit to $850 million annually, which was previously limited to $500 million. With the new cap, any investments above $425 million in a given year will be required to be in areas that have been identified by FHFA as markets that have difficulty attracting investors. FHFA also announced that it will increase the Duty to Serve (DTS) rural/targeted investment requirements from 40% to 50% which will support the development and preservation of affordable units in areas most in need.
- The Treasury Department will soon issue a notice announcing funding availability to Community Development Finance Institutions (CDFIs) and non-profit housing groups for the production of affordable housing under the Capital Magnet Fund. $383 million in funding will be available to facilitate the production of affordable housing units throughout the country.
- Boost the supply of manufactured housing and 2–4-unit properties
- The administration is calling on state and local governments to reduce zoning and financing barriers to manufactured housing and 2-4 units and additional steps to increase financing options. FHFA already authorized the Enterprises to accept loan delivery on eligible single-wide manufactured housing deliveries. The Enterprises will also continue performing industrywide outreach and education about the eligibility of manufactured housing, modular, and factory-built homes. FHFA has also authorized Freddie Mac to revisit certain mortgage eligibility requirements for 2-4-unit properties made in 2020 that reduced available financing.
- Make more single-family homes available to individuals, families, and non-profit organizations—rather than large investors
- The administration will prioritize homeownership in the sale of FHA-insured properties through Second Chance Claims without Conveyance of Title (CWCOT). With CWCOT sales, servicers can sell their FHA-insured foreclosed properties directly to third parties – without conveying them to HUD – and still get their claim by FHA. This sales method reduces costs for taxpayers and will prioritize getting the homes for owner occupants and nonprofits instead of large investors.
- HUD is also planning to sell more than 1,700 distressed HUD properties this fall, with 50% of those notes to non-profit and community organizations that will commit to rehabilitating, and then selling, the related properties to owner occupants or creating other positive outcomes for the communities.
- FHFA will expand the Enterprises’ real estate owned (REO) first-look period from 20 days to 30 days. The first look period is when owner occupants, public entities, and nonprofits will have exclusive ability to buy the Enterprises’ REO properties before they are available for investor purchase.
- HUD will improve the outreach to non-profits entities, local governments, and other interested community organizations for REO sales.
- Working with state and local governments to boost housing supply
- HUD’s Office of Community Planning and Development will create a Housing Supply Toolkit that provides easy-to-implement strategies to deploy existing block grants and other resources to address supply and affordability challenges that have been deepened by the pandemic. HUD will also form and support a cohort of communities working to address supply issues, helping accelerate their efforts to find solutions. Treasury will also continue to engage with local officials to highlight the use of state and local fiscal recovery funds for developing and preserving affordable housing.
- FHFA is also announcing that it will conduct a study on the degree to which the Enterprises’ mortgage activity is concerted in jurisdictions with exclusionary zoning policies.
- The White House, HUD, and FHFA will also convene state and local officials and stakeholders for a series of peer learning and listening sessions. The purpose of the listening session is to exchange best practices on locally led zoning reform to address supply and affordability challenges and to identify the obstacles to implement the remaining aspects of the Build Back Better Plan.
“President Biden promised the American people that his Administration would dramatically expand our nation’s supply of affordable rental housing—and the actions announced today represent a significant down payment toward that commitment,” said HUD Secretary Marcia Fudge. “These actions will expand access to critical capital for state Housing Finance Agencies, empower local communities to build more affordable housing using the historic investments contained in the American Rescue Plan, and advance equitable housing policies such as inclusionary zoning practices. Moving forward, HUD and the Biden-Harris Administration will continue to pursue bold actions to create and preserve affordable homes for all Americans.”
“The severe shortage of affordable housing in America requires coordinated government action,” said FHFA Acting Director Sandra Thompson. “As part of the federal government’s response, FHFA is instructing Fannie Mae and Freddie Mac to boost the housing supply in communities across the country by significantly increasing their Low-Income Housing Tax Credit investments and by expanding opportunities for local families to access affordable homeownership and rental housing. In addition, FHFA will begin to study the interaction between exclusionary zoning and our regulated entities.”
Read the White House Fact Sheet at: https://bit.ly/3kSYTBw
Read HUD’s press release on the announcement at: https://bit.ly/2WKVlsP
Read FHFA’s press release on the announcement at: https://bit.ly/3h0RL50
Read FHFA’s Press Release on Fannie Mae and Freddie Mac’s LIHTC cap increase at: https://bit.ly/2V9Y0fa
Read FHFA’s press release on the extension of Fannie Mae and Freddie Mac’s REO First Look Period at: https://bit.ly/3h0RL50