NHC Open House Blog

Moving Forward: Expanding our Understanding of the Housing Challenges Facing Low-Income Renters

noreply@blogger.com (National Housing Conference) — Thu, 24 May 2012 13:35:00 +0000

by Jeffrey Lubell, Center for Housing Policy

As a field, we have become ever more adept at building, managing, and preserving quality rental housing developments that provide stable affordable housing to families in need and help to strengthen local communities. In addition, through the federal housing choice voucher program, we help two+ million renter households afford the costs of private-market housing of their choice.

These programs have been successful in providing quality affordable housing and merit increased funding. For at least the foreseeable future, however, it is unlikely that enough funding will be available to help everyone in need. Currently, only about one-fourth of the households in need of a housing subsidy receive one. (See page 16 of our recently released report, Housing an Aging Population, for one approach to calculating this statistic.)

In a world of constrained government resources, what steps can be taken to help the millions of households with serious housing needs that are not being aided through government rental assistance?

To answer this question, I believe we need to better understand the housing challenges facing unassisted renter households, with a particular focus on learning how to improve the stability and quality of their housing—two outcomes we know are important to ensuring healthy children and families. Most unassisted renters live in privately owned housing, but we know very little about their housing experiences over time. What causes their housing situations to be stable or unstable? How well do their support systems work during times of crisis? If we had a better understanding of these dynamics, we would be in a stronger position to identify strategic opportunities for intervention that might improve renters' residential stability and housing quality.

Here are some of the research questions whose answers could help inform policy in this area:

What types of circumstances lead doubled-up families to experience events that undermine the residential stability of household members? What low-cost steps could be taken to reduce the likelihood of these conflicts, facilitate their resolution, or help to minimize the trauma of moves for families that are no longer able to stay in their doubled-up units?

What is the quality of housing units occupied by unassisted renters in different types of markets and are there low-cost strategies (e.g., code enforcement, landlord education, etc.) that could materially improve their housing quality?

How effective are programs that seek to promote residential stability by providing "back rent," security deposit assistance, or ongoing rent subsidies that are smaller than standard federal rental assistance subsidies? Are some program designs more effective than others?

How effective are counseling initiatives aimed at helping renters to better understand their housing options, choose units of higher quality, resolve landlord disputes, etc.?

In extreme circumstances, residential instability can lead to homelessness, and it is in this context that these questions have received the most attention. Among other relevant research, a 2005 study by Martha R. Burt, Carol L. Pearson, and Ann Elizabeth Montgomery examined homelessness prevention strategies in six communities around the country. A new research effort by the Urban Institute evaluating the Homelessness Prevention and Rapid Re-Housing Program—a HUD-administered program funded as part of the Recovery Act that—should provide additional insight into the effectiveness of many of these strategies. And of course, the numerous programmatic efforts being funded through the Homelessness Prevention and Rapid Re-Housing Program will add to the base of experience that practitioners have developed addressing this important issue.

We can and should expand efforts to learn how best to prevent homelessness. At the same time, we need to extend the research to learn how to prevent the type of rapid churning from residence to residence that falls short of formal homelessness but nevertheless negatively impacts children's educational progress and the ability of adults to achieve their personal goals.

The broader objective is to better understand how to improve the residential stability and housing quality of renter households. If we accomplished this goal and applied the lessons learned, we could not only help reduce homelessness but also help the millions of renter households that have serious housing needs but lack access to rental housing subsidies.

This challenge calls for a mix of different research methods, including ethnographic and other qualitative research methods, longitudinal studies, and experiments aimed at evaluating the success and cost-effectiveness of different strategies for strengthening residential stability and housing quality. We also need better data to help us measure the number of doubled-up households and track changes over time.

Given the complexity and multiple causes of residential instability, as well as regional variation, it is unlikely that a single large study will definitively answer all of the relevant questions. This provides important opportunities for researchers around the country to contribute to the field's evolving understanding of this issue and help identify the most promising solutions.

* * *

Join the conversation by commenting on this post.

"Moving Forward" is a monthly column about ideas for the future of U.S. housing policy by Jeffrey Lubell, Executive Director of the Center for Housing Policy. The column offers perspectives on the government role in housing and on broader housing market trends likely to shape future housing policy.

Latest on the HOME program: HUD highlights efforts, GAO studies performance, Congress continues oversight

noreply@blogger.com (National Housing Conference) — Mon, 21 May 2012 14:14:00 +0000

by Ethan Handelman, National Housing Conference

HOME is a proven building block of affordable housing and community development—a workhorse program that has produced more than 1 million affordable homes. Recent activity in Washington to strengthen the program and remind policymakers of its value are beginning to bear fruit, as demonstrated by several new developments:

1. HUD’s May 2012 program update on HOME outlines steps the agency has taken to improve oversight of grantees, require certification that grantees have fulfilled key underwriting and other requirements, and provide better monitoring of progress. HUD’s update also consolidates key facts about the program for easy reference.

2. GAO report finds positive contributions from HOME and CDBG activities. The May 15 report titled “HUD Has Identified Performance Measures for Its Block Grant Programs, but Information on Impact Is Limited" takes the Government Accountability Office’s usual cautious approach in evaluating program results, but is generally positive on both block grant programs.

3. House Financial Services discusses subpoena again. In a joint hearing by the Subcommitttess on Oversight and Investigations, and Insurance, Housing and Community Opportunity, members of Congress again pushed HUD to release documents related to its oversight of HOME. The Committee stopped short of issuing a subpoena. The hearing focused specifically on HUD’s document production, unlike past hearings on the program itself (see NHC’s testimony at last year’s hearing).

FHFA updates its strategic plan for conservatorship

noreply@blogger.com (National Housing Conference) — Fri, 18 May 2012 20:22:00 +0000

by Ethan Handelman, National Housing Conference

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, released an updated strategic plan in draft form for public comment. The draft builds on the earlier Strategic Plan for Conservatorship but adds significant additional detail. The four strategic goals heading the plan are in keeping with past statements:

1) Safe and sound housing GSEs.

2) Stability, liquidity, and access in housing finance.

3) Preserve and conserve Enterprise assets.

4) Prepare for the future of housing finance in the United States.

Public comments are due June 13, as described in the release. Suggestions for NHC’s comments should go to Ethan Handelman at ehandelman@nhc.org.

Some states use settlement funds to aid homeowners, others divert funds

noreply@blogger.com (National Housing Conference) — Thu, 17 May 2012 19:12:00 +0000

by Sarah Jawaid, National Housing Conference

A small majority of states understand the plight of homeowners struggling from the foreclosure crisis, suggests a recent report by Enterprise Community Partner’s Amanda Sheldon Roberts (Enterprise is a long-time NHC Leadership Circle Member and strategic partner). State attorneys-general, federal officials and five major mortgage servicers announced a $25 billion settlement Feb. 9 that was intended to provide relief in various forms to struggling borrowers and those who have already lost their homes.

Given the loose guidance of the settlement, states have the authority to choose where the funds will be used and many are using the funds to fill budget gaps. Twenty-seven states have agreed to use the funds specifically for housing. For example, of the over $12 million awarded to Arkansas, $9 million will go to down-payment assistance programs, foreclosure counseling and financial literacy programs with the remaining going to legal aid and fees associated with the settlement. Arizona’s over $97 million will also be used for state foreclosure prevention programs. A majority of the over $92 million awarded to Ohio will be used for demolition of abandoned and vacant properties with smaller awards to non-profits and local governments to fund innovative programs to help struggling homeowners and to the attorney general to prosecute foreclosure relief scammers.

While some states understand that homeowners need relief, other states plan to divert settlement funds into general funds or debt repayment. California, one of the hardest hit by the foreclosure crisis, received over $410 million in the settlement and plans to use the funds to pay debts. Texas, Missouri, Georgia, Indiana and Virginia took a similar route in determining the funds were not needed in housing relief.

Andy Schneggenburger, the executive director of the Atlanta Housing Association of Neighborhood-Based Developers, said Georgia governor Nathan Deal’s decision to use the $99 million in funds to bring companies into the state instead of homeowner relief shows “a real lack of comprehension of the depths of the foreclosure problem.” Read the New York Times and NPR for more information.

The invisible soldier

noreply@blogger.com (National Housing Conference) — Thu, 17 May 2012 15:39:00 +0000

by Gary Officer, Rebuilding Together

NHC invites guest blog posters to write on important housing topics. The views expressed by guest posters do not necessarily reflect those of NHC or its members.

What comes to mind when you think of veterans?

What comes to mind when you think of a struggling head of the household, hardly able to afford basic home maintenance?

Despite our preconceived notions of the typical veteran, or the struggling homeowner, there is a burgeoning segment of the population that is perhaps still unfamiliar to many, but is in need of our help. This is the female veteran.

In the next 20 years, it is projected that women will make up 15 percent of all living veterans. This forecast averages a substantial growth of 11,000 female veterans a year over the next twenty years. And their contributions are great: over half of female enlisted and officer service members have been deployed to Afghanistan and Iraq since September 11.

Simply put, the female veteran is an important subset of the American fabric.

Yet, one can conclude that our female veteran population is not a conventional concept in the minds of many Americans. Although their percentages are modest compared to the scope of veteran numbers, their contributions are large.

The Department of Veterans Affairs recently released a new study, “America’s Women Veterans” which highlights the critical socioeconomic and demographic characteristics of this population, as well as their use of various health services and benefits.

One of the most telling facts to come from this study was that 39 percent of all women Veterans under the age of 65 have children ages 17 years or younger living at home. This means that a large percentage of this population has a household with dependents, and a home that requires upkeep and maintenance in order to be deemed a safe and healthy home for a family.

Heroes at Home is a program launched by Sears Holdings and Rebuilding Together to address the critical housing needs of our military and their families. For five years, we have been responsible for rebuilding 1,200 veterans’ homes, impacting the lives of countless families and individuals.

Through our work with Heroes at Home, we have seen the tragic conditions that many of our nation’s veterans, both male and female, have endured upon their return home. Oftentimes they have sustained critical injuries and life-altering conditions during their service period. Not only must they find ways to care for themselves, but they also must care for their family.

Ms. Williams is one such female veteran, age 46, who served in the US Marine Corps. She is a widower of six children, five of which are still under the age of 18. She suffers from an incurable disease and is unable to continue serving her country. She struggled to support her family on a fixed, minimal income, while also tending to her disease, and it left her house in substandard living conditions.

Heroes at Home provided renovations and modifications free of charge, to create a safe and healthy home environment. These modifications accommodated her needs, and those of her children, so that her experience with warfare was only a memory, not an everyday reality.

Ms. Williams is a snapshot into the situation many female veterans now face upon their return home. Not only have they served our country, but they are mothers, homeowners, and bear great responsibilities unknown to many.

If we stick to the presumed perception of a typical veteran, we are unintentionally diverting our attention towards a segment of the veteran population who, in many cases, require a particular set of needs. According to the America’s Women Veterans report, “Women who have served in the US military are often referred to as ‘invisible veterans’ because their service contributions until 1970 went largely unrecognized by society—even after women were granted Veterans status, there is still a history with issues to access, exclusion, and improper management of health care.”

Both the services required by women Veterans and the issues they face after their return to civilian life are different than those of their male counterparts, but the end goal is the same.

A safe and healthy home is an elemental building block for the sustainability and health of our neighborhoods and communities. In order to provide safe and healthy homes for every person, we must recognize the diverse set of needs that many in this country have, including populaces that are of a growing nature.

No veteran should be invisible.

Gary Officer is President and CEO of Rebuilding Together, an NHC member and a leading nonprofit organization providing critical home repairs, modifications and improvements for America’s low-income homeowners. Rebuilding Together’s Veterans Housing was created to meet the growing needs of veterans from past and present wars.

Let’s not drive blind—keep the American Community Survey

noreply@blogger.com (National Housing Conference) — Mon, 14 May 2012 15:29:00 +0000

by Ethan Handelman, National Housing Conference

You wouldn’t drive your car with your eyes closed, so why should we make multi-billion dollar policy decisions that way? Last week, the House approved an amendment to eliminate the American Community Survey, a part of the U.S. Census that collects essential data on Americans’ housing and transportation choices, among many other data. Those data are how we see the results of policy choices, how we know whether what we’re doing to provide safe, decent, and affordable housing opportunities are actually working, how we avoid costly policy mistakes.

A recent example—the Center for Housing Policy’s Housing Landscape 2012 report showed that even as housing prices were falling, severe cost burdens for homeowners and renters were getting worse. That’s essential insight for policymakers, because it’s far too easy to simply assume that since house prices have fallen, affordability concerns need not command attention. To provide that insight, the Center for Housing Policy relies, in part, on the data from the American Community Survey.

Likely, the House’s action is simply position-taking without much chance of changing law. But just so that our lawmakers know how important the American Community Survey is, NHC has joined with others organized by the Census Project to express our desire for a robust, mandatory American Community Survey.

Serious mortgage delinquency is rising two years after the foreclosure crisis' peak. Why?

noreply@blogger.com (National Housing Conference) — Wed, 09 May 2012 16:34:00 +0000

by Maya Brennan, Center for Housing Policy

For more than a year, serious mortgage delinquencies seemed to be stabilizing. The average serious delinquency rate in the nation’s 100 largest metro areas would creep down slightly one quarter, hold steady another. Through this period of stabilization, the rate remained shockingly high from a historical perspective, but seemed to be in a holding pattern — quarter after quarter of marginal improvements. The latest data show something different. The serious mortgage delinquency rate is rising again.

The warning signs were there even as the rate was trending down. As the overall serious delinquency rate was stabilizing, the foreclosure component was rising. Loans were entering the foreclosure process faster than they were exiting – pushing the rate up and up. The 90+ day delinquency rate was dropping enough to obscure that, but not anymore.

An analysis by our partners at the Urban Institute shows that foreclosure rates have been both higher and more consistently increasing in metro areas with judicial foreclosure processes compared with those with non-judicial foreclosures. While judicial review provides important safeguards, it also takes time. The foreclosure crisis increased caseloads, and many courts are having trouble keeping up.

Time is a friend and foe for foreclosure response. Some time is needed to ensure that foreclosure cases have merit and to allow tools like mediation to work. Extended timelines, like those in hard-hit judicial states like Florida and New York, do little more than increase foreclosures’ damage to properties, borrowers, and communities.

Florida is re-hiring retired judges and court staff to help process its foreclosures. Other states with severe backlogs may also need to increase court resources or find ways to review cases more efficiently. The alternative is multi-year foreclosure timelines that make long-term recovery harder for everyone.

What's making mortgages so hard to get?

noreply@blogger.com (National Housing Conference) — Fri, 04 May 2012 13:53:00 +0000

by Ethan Handelman, National Housing Conference

Buying a home is uncommonly affordable these days. Indeed, mortgage rates hit 3.84% according to Thursday’s survey from Freddie Mac—the lowest they’ve ever been. Home prices are low, too. So why are housing markets so slow to respond?

Much of the answer is that it’s still very hard to get a mortgage. Mortgage lending has overcorrected from the too-lax standards during the boom, and there’s no sign of relaxation back to more normal underwriting. A survey conducted by the Federal Reserve found that a majority of banks were less likely to lend to lend to people with credit scores of 620, even with a 10% downpayment, than they were in 2006. Some banks were less likely to lend to borrowers with a credit score of 720 and a 10% downpayment. What could change that lending decision? Having a 20% downpayment.

That shows overcaution, to the result that lending is focusing on high income borrowers with accumulated wealth and very clean credit, but leaving out many low- and moderate-income families who could be responsible borrowers and homeowners. Why are banks doing this? The survey suggests a few major reasons:

Borrowers having higher costs for or more trouble obtaining mortgage insurance. That’s the lending decision one step removed, in some ways, and also a symptom of our disrupted housing finance system.
Put-backs by Fannie Mae and Freddie Mac. The two mortgage entities have stepped up their demands that lenders repurchase loans previously sold to Fannie or Freddie, making lenders very skittish about new lending.
Concern about the future direction of housing prices. This is a broadly shared concern, but it shouldn’t necessarily affect borrower qualifications, only the evaluation of the collateral.

There are other factors, certainly, and the survey goes into more detail. To get us further on the road toward a housing recovery, we’ll need to make mortgage credit more broadly available than it is now, and make sure low- and moderate-income families have access to the same safe and efficiently-priced mortgages that higher-income families do.

Hearing highlights foreclosure crisis and response

noreply@blogger.com (National Housing Conference) — Fri, 27 Apr 2012 14:13:00 +0000

by Ethan Handelman, National Housing Conference

On April 26th, the Congressional Progressive Caucus invited testimony from experts on the foreclosure crisis and ways to ameliorate it. Testifying at the were:

New York State Attorney General Eric Schneiderman, who testified on the recent settlement between state attorneys-general and mortgage servicers and his Task Force’s ongoing investigations.
John Griffith of the Center for American Progress, who spoke to the need for shared appreciation mortgages to restructure deeply underwater loans into sustainable loans, thereby preventing foreclosures and improving returns to lenders and investors.
Ali Solis of Enterprise Community Partners, who testified to the many tools being used to prevent foreclosures and stabilize neighborhoods, including the Mortgage Resolution Fund, the Neighborhood Stabilization Program, note purchases, and other mortgage restructuring options.

A recurring theme in the hearing was a call for the Federal Housing Finance Agency to lift its blanket prohibition on mortgage modifications that reduce principal or share appreciation between borrower and lender. As both Mr. Griffith and Ms. Solis pointed out, if 1 in 4 modifications of privately-held mortgages include principal reduction, why shouldn’t the Fannie Mae and Freddie Mac loans have access to the same options?

Questions from all attending members of the Caucus showed strong support for foreclosure prevention and a desire to do more to avert the damaging cycle of disinvestment that foreclosures can trigger. Representatives Ellison (MN) and Grijalva (AZ) co-chaired the hearing, attended by Representatives Jackson-Lee (TX), Nadler (NY), Woolsey (CA), Waters (CA), Schakowsky (IL), Hinchey (NY), and Clarke (NY). Links to the hearing testimony and video will be available on the Caucus web site.

Mom and pop, your local real estate moguls

noreply@blogger.com (National Housing Conference) — Thu, 26 Apr 2012 14:00:00 +0000

by Laura Williams, Center for Housing Policy

The National Association of Realtors recently released its 2012 Investment and Vacation Home Buyers Survey, and my own reaction was something along the lines of, “Finally!” Not that NAR was delayed in their release or anything, but that survey data is beginning to pick up some trends those of us in the foreclosure field had been suspecting for some time: individual investors are becoming a significant portion of existing home sales, with the idea of creating Mom and Pop rental options for single family homes.

As NAR’s chief economist was quoted in their release as saying, rents are rising and home prices are still low, making small-time rental management an appealing business opportunity for those who can afford it; and many can, it seems, as nearly half (49 percent) of investment buyers made all-cash purchases of their properties.

The good news is that these investors are helping to absorb the foreclosures that are hitting the market, preventing further dips in prices. The bad news is that rental management can be a difficult endeavor, particularly as buyers accumulate more properties (nearly half of investors said they planned to purchase another property within two years) or get farther from home (30 percent were more than 100 miles away).

The last round of stabilization funding (NSP3) included many plans pursuing scattered-site rental management. Most of those are on a much larger scale than these individual investors would ever dream of, but together they demonstrate a continued need to study this aspect of the rental market and create resources for landlords.

At the Center, we’ve already begun work in this area, and great resources are available from many other organizations. What other resources do you know of, or what resources do you think we still need?

Public housing continues to play leading role in green construction

noreply@blogger.com (National Housing Conference) — Wed, 25 Apr 2012 15:33:00 +0000

by Pat Lewis, housing communications consultant

NHC invites guest blog posters to write on important housing topics. The views expressed by guest posters do not necessarily reflect those of NHC or its members.

The El Paso Housing Authority officially cut the ribbon Friday at its Paisano Green Community, the first net zero, LEED Platinum public housing community in the nation. Its 73 units will be home to about 100 senior citizens. (It’s also Enterprise Green Communities certified.)

Features like wind turbines, rooftop solar panels, and air-source heat-pump water heaters will generate all the energy the development needs. In fact, the agency will sell any excess power it generates to El Paso Electric. (See Executive Director Gerald Cichon’s video presentation on the project at last summer’s CLPHA/HUD green conference.)

Paisano is just one more example of how housing authorities are playing a leading role in greening affordable housing. From New York’s Green Agenda to a solar panel farm in Indianapolis public housing, these agencies are finding innovative ways to cut operating costs, improve residents’ lives, and help meet the growing number of citywide carbon emission reduction mandates.

It’s not just green that makes Paisano stand out. The design by architect Workshop8 is a model for senior living, a challenge facing more and more communities as senior populations in need of affordable housing grow.

As Workshop8 puts it, "The buildings are configured so that the residents can see their neighbors walking through and across the garden spaces. Circulation zones and semi-private outdoor spaces are created that provide for the opportunity of informal interaction—a wave, a short conversation or a stroll together through the garden to the community building to pick up one’s mail.”

It’s also a reminder of how Recovery Act funds to public housing agencies created thousands of jobs and generated billions in new economic activity at the same time they rehabbed and built in thousands of new affordable housing units. El Paso was one of 36 communities to receive a competitive Recovery Act grant to build green affordable housing. The agency leveraged the $8.25 million grant to raise the total cost of $15 million—including a $500,000 loan from the city of El Paso and $7 million from its Capital Fund Program and reserves.

“One of the most interesting things about the Paisano Green Community is how many pressing domestic issues it addresses -- and what it says about our ability to tackle those issues,” said HACEP CEO Gerald Cichon. “We created over 400 jobs and provided needed housing for some of our most vulnerable citizens. We slashed energy spending and demonstrated that going green isn’t a luxury that affordable housing can’t afford. And we showed the potential for economic growth from this kind of development."

Pat Lewis is a consultant who worked most recently as communications director for the Council of Large Public Housing Authorities.

NHC, alongside member group Enterprise Community Partners and the U.S. Green Building Council lead the Green Affordable Housing Coalition, organizing policy and educational efforts to promote projects like Paisano Green Community. Learn more at the Coalition's website and look out for new convenings and forums.

Home should be where the jobs are

noreply@blogger.com (National Housing Conference) — Tue, 24 Apr 2012 13:52:00 +0000

by Maya Brennan, Center for Housing Policy

Affordable housing programs can influence residents’ employment for better or for worse. When well-designed and executed, affordable housing programs provide opportunities, incentives, and supports to help low-income residents increase their earned income and make progress toward economic security. But when affordable housing is concentrated in high-poverty communities far from local job opportunities, residents can be trapped in neighborhoods that make finding and keeping a job both difficult and expensive.

A recent Texas Tribune article (also appearing in the New York Times) described the concentration of low-income housing developments in Texas' minority and low-income communities. Homeowners in relatively affluent communities in Texas and elsewhere often try to keep subsidized properties out of the area for fear that they will harm property values—even though researchers have found the fear to be unwarranted. The system in Texas for evaluating potential Low-Income Housing Tax Credit developments gives substantial weight to community support—meaning that vocal opponents of subsidized housing may be able to force development out. Developers then have little choice but to add more low-income housing in already low-income and low-opportunity communities. And that leads to stories of families like the Machados, profiled in the above Times story. One spouse commutes 35 minutes across the city for work; the other can only find minimum wage work so far away from home that her pay would be consumed by gas expenses.

How can we expect families like this to get ahead when they are stuck either living near jobs but not being able to afford their housing or living where communities will allow affordable developments but having no access to jobs once they are there? We can do better.

The federal government, through programs like Choice Neighborhoods, is increasingly emphasizing the linkage between housing, jobs, education, and other opportunities. This emphasis should ultimately help improve opportunities for low-income households without negatively impacting their neighbors. But Choice Neighborhoods alone will not create a sturdy bridge between low-income households and the opportunities they need to get ahead. States and municipalities can look at their own programs to ensure that scoring systems, like the one used in Texas, are not inadvertently leading to exclusion.

We can also take our efforts well beyond preventing exclusion and build new incentives, opportunities, and supports. Where people live matters in the opportunities they have. For those struggling to get ahead, shouldn’t we ensure that the road to economic security is not a full tank of gas away from home?

National Task Force asks for more neighborhood focus in REO-to-Rental pilot

noreply@blogger.com (National Housing Conference) — Mon, 23 Apr 2012 19:15:00 +0000

by Sarah Jawaid, National Housing Conference

The National Foreclosure Prevention and Neighborhood Stabilization Task Force called on FHFA to focus more clearly on stabilizing neighborhoods in its new pilot program for facilitating investment in REO homes as rental properties. The Task Force, led by NHC, NeighborWorks America, LISC, and Enterprise Community Partners, sent a letter signed by more than 27 organizations from around the country that highlights specific areas of focus including complementing existing neighborhood stabilization efforts, green renovations, long-term affordability, nonprofit participation, monitoring and enforcing long-term commitments, and more. Read the letter here.

Senate moves early on housing appropriations

noreply@blogger.com (National Housing Conference) — Fri, 20 Apr 2012 18:23:00 +0000

by Ethan Handelman, National Housing Conference

The Senate is moving quicker than in past years to move appropriations bills forward. On April 19, the Senate Appropriations Committee approved the Transportation, Housing and Urban Development FY 2013 appropriations bill, clearing the way for it to advance to the Senate floor. The Subcommittee had approved the bill just two days previously, as NHC reported on its blog. Expectations raised by this quicker-than-usual action should be tempered by realization that this is still an election year with split partisan control of Congress. Completion of the appropriations process for FY 2013 may well end up waiting until after the election.

Despite a lower 302(b) allocation, the total amount of funds for HUD programs under the bill would be almost $35 billion, which is $1.4 billion above the President’s budget request. Offsetting receipts from from FHA and Ginnie Mae allowed the Committee to go beyond the budget request. Key areas that were increased:

Project-based Section 8. $9.9 billion. The Committee bill eliminates the proposed short-funding of Section 8 contracts (for details, see Michael Bodaken’s guest blog post).
CDBG. $3.1 billion, including $50 million for Sustainable Communities.
Section 8 vouchers. $19.4 billion. (Level-funding for HUD-VASH vouchers.)
Homeless assistance grants. $2.2 billion.
Public Housing Operating and Capital Funds. $4.6 billio and $1.99 billion, respectively.

To learn more, see the detailed comparison chart and summary from Enterprise Community Partners, an NHC Leadership Circle member.

Americans are moving back to the city. Can all residents afford it?

noreply@blogger.com (National Housing Conference) — Thu, 19 Apr 2012 16:01:00 +0000

by Robert Hickey, Center for Housing Policy

The Brookings Institution recently profiled an important new trend: cities and high-density inner suburbs are now growing at a faster rate than the nation’s exurbs—those communities at the region’s edge whose boom once seemed unstoppable. This interrupts a pattern dating back more than two decades during which housing development consistently favored outer suburbs over urban areas. The findings provide new evidence of a shift toward urban living that has important implications for the affordability of our compact towns and cities.

The graph from the Brookings Institution below will not come as a complete surprise to many. Previous posts here have noted the surge in rental demand in cities, the declining appeal of remote suburbs that require extensive driving (especially as gas prices rise) and the shifting demographics that are fueling demand for closer-in, walkable town centers and cities. (See also recent research from RCLCO).

But for study author William Frey, this latest evidence “raises the prospect that we may be reaching a ‘new normal’ about where people decide to locate.”

Source: William Frey, Brookings Institution

Short-term forces may help explain the decline in housing starts at the periphery, as has been suggested elsewhere. But rising gas prices and our increasing numbers of smaller households and older adults would suggest that the decline in far-flung suburbs is more than just a short-term market-correction.

All this points to a growing need to start thinking now about how to get ahead of this housing curve. The latest findings from Brookings should add urgency to efforts to ensure ongoing affordability for a diversity of employees and households in our urban settings.

As the Washington, D.C., region and other metropolitan areas have discovered, new housing construction does not necessarily mean more affordable choices for lower-wage workers, not does it protect existing residents from the displacing forces of gentrification. For example, in Washington, D.C., the supply of apartments for lower-income households fell by more than one-third between 2000 and 2007 (and the supply of moderately priced for-sale homes shrunk even more), even as the city added more than 10,000 new homes, according to research by the DC Fiscal Policy Institute.

Given the high costs of development in many urban areas, new rentals are being priced at the upper end of market, and new condominiums (while less than the price of single family homes) are still well out of reach for lower-income residents. Absent policies that reduce overall development costs, and set affordability expectations for new development – especially where public actions create new value – this pattern will continue, and growing demand for city and town-center locations will exacerbate affordability problems in those locations.

Fortunately, there are many tools available to help city policymakers balance urban reinvestment with affordability. This includes zoning reforms that include value capture mechanisms, inclusionary housing and policies that preserve the affordability of for-sale and rental properties in areas undergoing major transit investments. A great place to learn about these and other tools is the Center for Housing Policy’s ever-growing Sustainable and Equitable Development toolkit.

Moving Forward: Building a community of practice to support local housing policy decisions

noreply@blogger.com (National Housing Conference) — Wed, 18 Apr 2012 14:04:00 +0000

by Jeffrey Lubell, Center for Housing Policy

This column makes the case for establishing a national community of practice devoted to building knowledge about effective local housing policy. By fostering an ongoing, structured dialogue among local policymakers and practitioners that informs an evolving knowledge base about efficient and effective policy solutions, this community of practice would help speed up the local policy development process and foster better housing policy outcomes with existing funding.

The importance of local housing policy

Many important housing policy decisions get made at the local and state levels, including:

Zoning and permitting policies that determine where housing can get built, what form the housing may take, how many units can get built on a given parcel, how difficult it will be to obtain approval for new development, and how long that approval process will take.
Local affordable housing policies related to such matters as the use of federal block grant funding for affordable housing; tax increment financing; the use of publicly owned land for affordable housing; inclusionary incentives and requirements; impact fees; etc.
State housing policies related to the Low-Income Housing Tax Credit, tax-exempt bonds, fair share housing requirements; housing elements in local comprehensive plans; etc.

This is just the tip of the local and state policy iceberg. There are also planning processes at multiple levels; decisions regarding public housing, housing vouchers and the preservation of privately-owned affordable housing; policies to assist the homeless, older adults, people with AIDS and people with disabilities; predatory lending policies; policies related to the financing of small multifamily properties; energy-efficiency policies; tax abatement policies; housing code enforcement policies; policies to help renters remain stably housed. Etc., etc., etc.

(The balance of this column focuses on housing policy decisions made at the local level. I hope to address state housing policy more specifically in a future column.)

Existing resources on local housing policy

The Center for Housing Policy has developed a number of resources to help local decision-makers learn from the experience of other communities and establish effective local housing policies. Our online guide to local and state housing policy, HousingPolicy.org, covers a broad range of housing policy objectives. A sister site, Foreclosure-Response.org -- a joint venture of the Center, LISC, and the Urban Institute -- focuses specifically on local policies to prevent foreclosures and stabilize affected communities. And most recently, we launched the Housing Research and Advisory Service, a low-cost inquiry service to provide local communities with customized responses to their housing policy queries.

HousingPolicy.org and Foreclosure-Response.org provide links to many other excellent resources that other national organizations have prepared to help local decision-makers make informed housing policy decisions. Other resources are available through conferences and organizations active at the state and regional levels. Despite all of these efforts, however, I believe there is more that needs to be done to support informed and effective decision-making by local housing policymakers.

The need to provide more support to local policymakers

Local housing policy is complex, requiring coordinated decisions by multiple entities within (and sometimes across) jurisdictions. Particularly outside of large urban jurisdictions, local decision-makers often lack access to information about the housing policies that other similar jurisdictions have adopted, and thus end up, to some extent, reinventing the wheel.

The large cuts to the federal HOME program are likely to exacerbate the problem, leading to the loss of knowledgeable local housing program staff and the expertise they have accumulated over the years. The elimination of the Redevelopment Agencies in California will likewise lead to a devastating loss of human capital and talent.

A Community of Practice to Support Local Policymakers

For all of these reasons, I urge the field to establish a national community of practice devoted to building knowledge about effective local housing policy. (An article by William M. Snyder and Xavier de Souza Briggs provides a great overview of how communities of practice work.) This community of practice would go beyond the static sharing of information to foster a dynamic interchange of ideas among local policymakers to speed up the policy development process and strengthen local housing policy outcomes.

This community of practice would have several key features:

It would be directed to building knowledge, rather than just sharing information. Lessons learned from practitioner dialogues would constantly be reflected back into an ever-improving knowledge base about promising solutions.
It would be ongoing and sustained over time. The sponsors of the community of practice would continually organize dialogues among interested policymakers and practitioners using a variety of media and forums, including conference calls, webinars, in-person meetings and conferences.
It would recognize the diversity of experience and context of the participants. Those new to the field will have different needs from those who have been working in the area for 20 years. Those in rural communities will have different questions than those in urban or suburban settings. There is no one-size-fits-all solution, but that does not mean we cannot learn from each other's experience.

This is not a small or inexpensive undertaking, but I believe it is essential to developing more effective local housing policies that expand the availability of affordable housing.

Given the vastness of the challenge, it's natural to want to jump up a level or two and focus on changing federal or state policy. We should certainly consider opportunities to use federal and state policy as levers to encourage better outcomes at the local level. But those levers are not a substitute for providing local decision-makers and their staffs with the tools they need to make effective and informed housing policy decisions.

I'd welcome feedback on how to strengthen support for local housing policy decision-makers.

* * *

Join the conversation by commenting on this post.

"Moving Forward" is a monthly column about ideas for the future of U.S. housing policy by Jeffrey Lubell, Executive Director of the Center for Housing Policy. The column offers perspectives on the government role in housing and on broader housing market trends likely to shape future housing policy.

Senate Appropriation Subcommittee marks up housing bill

noreply@blogger.com (National Housing Conference) — Tue, 17 Apr 2012 20:58:00 +0000

by Sarah Jawaid, National Housing Conference

The Senate Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies (THUD) held a markup of its FY13 bill on April 17. Members of the committee acknowledge the difficulty of the decision and how the cuts ran deep with a total proposed budget authority of $53.4 billion, $3.9 billion less than 2012 enacted. The markup was brief with amendments to be considered at the full committee markup on Thursday. There were strong mentions of housing including: a rejection of short funding of Section 8 by Ranking Member Collins as an “ill-conceived budget gimmick,” strong support for CDBG, strong support of the HUD VASH program and homelessness prevention generally. Find the summary here.

Section 8 Tenant-based rental assistance: $19.4 billion for housing choice vouchers. This level of funding is $482 million above the fiscal year 2012 enacted level.
Public Housing: $1.99 billion for the public housing capital fund, an increase of $110 million above the fiscal year 2012 enacted level.
Project-based rental assistance: $9.8 billion for the project-based section 8 program, including over $9.6 billion for the renewal of all project-based contracts for a full 12 months.
Homeless Assistance grants: $2.15 billion for homeless assistance grants. This level of funding is $245 million above the fiscal year 2012 enacted level.
Community Development Block Grants (CDBG): $3.1 billion is provided for CDBG grant funding for States and communities across the Nation.
HOME Investment Partnership: $1 billion for the HOME Investment Partnership program, which is equal to the fiscal year 2012 enacted level.
Housing Counseling: A total of $135 million for housing counseling efforts.
Sustainable Communities Initiative: $50 million within HUD’s Community Development Fund for the Sustainable Communities Initiative to promote integrated housing and transportation planning.
Choice Neighborhoods: $120 million for HUD’s Choice Neighborhoods Initiative.

Housing stakeholders call for broad, well-defined lending standards

noreply@blogger.com (National Housing Conference) — Tue, 17 Apr 2012 13:30:00 +0000

by Sarah Jawaid, National Housing Conference

The National Housing Conference along with a cross-industry group of advocates, lenders and housing professionals wrote a letter to the Consumer Financial Protection Bureau in support of broader, well-defined rule for Qualified Mortgages (QM). The QM rule implements requirements from the Dodd-Frank law to reform mortgage finance in the wake of the housing crisis.

Narrowly defining a qualified mortgage could stall the housing recovery by making access to credit more difficult. The letter observes, “Congress intended that all creditworthy borrowers – especially low- and moderate-income borrowers and families of color – should be extended the important protections of a QM … A broad QM, which includes sound underwriting requirements, excludes risky loan features, and gives lenders reasonable protection against undue litigation risk, will help ensure revival of the home lending market.”

Over $2 billion to stop blight

noreply@blogger.com (National Housing Conference) — Thu, 12 Apr 2012 14:32:00 +0000

by Amanda Sheldon Roberts, Enterprise Community Partners

NHC invites guest blog posters to write on important housing topics. The views expressed by guest posters do not necessarily reflect those of NHC or its members.

The National Mortgage Settlement is an historic joint state-federal initiative that settles claims that the five largest loan servicers (each affiliated with a major bank) engaged in a number of servicing abuses and improperly foreclosed on thousands of borrowers around the country. In the aggregate, the settlement will cost the servicers approximately $25 billion. Of that total, $17 billion will not be cash payments, but rather credit to the servicers for various activities, including principal reduction and loan modifications. Less appreciated in discussions thus far is that up to 12% of that $17 billion in credit may go toward anti-blight activities.

According to the settlement, servicers can get credit for:

Forgiveness of principal associated with a property where the servicer does not pursue foreclosure
Cash costs paid by the servicer for demolition of property
REO properties donated to accepting municipalities or nonprofits or to disabled servicemembers or relatives of deceased servicemembers

That means over $2 billion could potentially be used around the country to stabilize neighborhoods—paid for by servicers. Indeed, it is financially attractive for servicers to engage in these activities because they will receive a full $1-for-$1 credit for demolition and donations (they will receive $0.50-on-the-dollar credit for the forgiveness of principal). Relative to other activities, such as short sales, these are lucrative credit terms. Therefore, the hope is that servicers will proactively seek to engage in anti-blight activities because it will get them more credit.

The key is that banks need to work with local jurisdictions and nonprofits to ensure that these anti-blight activities align with current neighborhood stabilization efforts. Imagine how impactful it could be if the servicers teamed up with local NSP grantees to target select neighborhoods to donate properties and pay for demolition that coordinated with rehabilitation of other properties and foreclosure prevention. Conversely, this money would do little to stabilize neighborhoods if the servicers demolished and donated properties in scattered geographies and without coordinating with local officials and nonprofits. Think of one donated home on a block with four other vacant and deteriorating homes.

However, the settlement is still new and neither servicers nor communities fully understand how it will be implemented. Therefore, it is critical that the dialogue begin now. Local jurisdictions should capitalize on their existing NSP relationships with servicers to communicate how they would like the funds used. National organizations like NHC and Enterprise can facilitate this dialogue. After all, our shared goal is to ensure that this $2 billion reduces blight in ways that renew and strengthen neighborhoods.

Amanda Roberts is the Housing Director, Public Policy at Enterprise Community Partners, a member of the National Housing Conference's Leadership Circle. For 30 years, Enterprise has introduced solutions through public-private partnerships with financial institutions, governments, community organizations and other partners to create opportunity for low- and moderate income people through affordable housing in diverse, thriving communities.

DeMarco signals new openness to principal reductions, but is focused on the numbers

noreply@blogger.com (National Housing Conference) — Wed, 11 Apr 2012 15:45:00 +0000

by Sarah Jawaid and Ethan Handelman, National Housing Conference

FHFA Acting Director Edward DeMarco shared preliminarily analysis that principal reductions could save the GSEs $9.9 billion, which is $1.7 billion more than savings from existing principal forbearance policy, in part due to increased HAMP incentive payments from the Treasury. Speaking at the Brookings Institution April 10, DeMarco bluntly stated he was not yet ready to announce a decision on whether to encourage principal reductions, but he laid out the results calculated thus far. In his remarks, DeMarco also:

Offered more detail on principal forbearance. Currently, Fannie Mae and Freddie Mac have several tools available to help struggling borrowers—interest rate reduction, term extension, and principal forbearance. DeMarco’s remarks offer more detail about what terms and constraints apply to principal forbearance, which sets aside a portion of principal and requires no payments and accrues no interest on it for a period of time. This can make a significant difference in reducing a too-high monthly payment, but unlike a shared-appreciation modification, principal forbearance does not provide much renewed hope that deeply underwater borrowers can get their heads above water. Were the GSEs to make their policies on the back end clearer (what could be approved as short sales or whether they would pursue deficiency judgments, for instance), there might be more to motivate deeply underwater borrowers.
Highlighted concern about borrower response. DeMarco, in essence, stated that the GSEs' large market presence means policy changes on principal reduction are more visible, have to be more standardized, and may be more likely to trigger changes in borrower behavior. He did not discuss specific figures on likelihood of strategic default, but focused rather on simple calculations of to compare cost of strategic defaults to savings generated.
Noted operational costs of modification programs. Modifying lots of mortgages requires systems, and DeMarco described the costs of changing those systems as "nontrivial." Operational costs are certainly relevant, but this is a national and enduring crisis. If the GSEs have antiquated, inflexible systems, there’s no better time than the present to make needed changes.

His conclusion? A principal reduction program might not move the needle as much as we think. In his prepared remarks: "This is not about some huge difference-making program that will rescue the housing market. It is a debate about which tools, at the margin, better balance two goals: maximizing assistance to several hundred thousand homeowners while minimizing further cost to all other homeowners and taxpayers."

That’s a bit of a straw man. Principal modification that gave underwater homeowners some hope of rationalizing their debt could provide a real sense of confidence in housing markets hurt by foreclosures. Only when buyers can be confident that foreclosures will not cause prices to fall further and owners know they can sell their homes to at least cover their existing debt can housing markets return to normal functioning. That result would certainly be "nontrivial," to borrow the adjective.

Read DeMarco’s prepared statement here plus coverage in the Wall Street Journal.

Where we’ve been and where we’re headed in housing: Interview with Shaun Donovan

noreply@blogger.com (National Housing Conference) — Tue, 10 Apr 2012 14:05:00 +0000

by Ethan Handelman, National Housing Conference

C-SPAN’s Newsmakers hosted a thoughtful interview of HUD Secretary Shaun Donovan by Nick Timiraos of the Wall Street Journal and Margaret Chadbourn of Reuters. Both reporters provide frequent and nuanced coverage of housing issues, and it shows in their questions. A few highlights from the conversation:

Principal write-downs. FHFA Acting Director Ed DeMarco is currently studying the question of whether to allow Fannie Mae and Freddie Mac to write down principal on underwater loans. Donovan made no specific predictions as to what the Administration would do if DeMarco maintained his opposition to write-downs, but he did suggest FHFA might have a legal obligations to allow write-downs.
Evaluating the responses to the housing crisis. Donovan’s message was clear on this point—we’re better off than we were when the Obama Administration took office. Basically a true observation, but also hardly a surprising message in an election year.
The goal to aim for. Donovan outlined the desired state of housing markets, in other words, what we’re aiming for. It’s not just making sure that housing is affordable to Americans, but also that they it as a safe investment. That confidence is essential to getting many housing markets stabilized, beyond just the few that are bouncing back or have remained somewhat resilient during the crisis.

The post-interview commentary from Timiraos and Chadbourne is worth sticking around for after the interview. Watch the full interview on C-SPAN.

What happens to crime when public housing is torn down?

noreply@blogger.com (National Housing Conference) — Mon, 09 Apr 2012 14:11:00 +0000

by Maya Brennan, Center for Housing Policy

High rise public housing developments are known for their intractable crime problems. Demolitions and new housing strategies sought to break up the poverty concentrations, improve neighborhood conditions, and improve outcomes for residents. Did those efforts work? What happened to crime after public housing transformations? A recent Urban Institute report uses more than eight years of data to try to answer that question. What the researchers found, like most good research, is hard to express simply but makes a lot of sense.

Any connection between public housing and crime is really a connection between economic distress and crime. So public housing transformation initiatives that successfully disperse poverty have also successfully decreased crime. But when poverty reclusters in already vulnerable neighborhoods, crime may follow.

The added wrinkle of complexity here is that crime rates were trending down during the period studied already, so the story is mainly of crime dropping more than, the same as, or less than expected. But complexities like that don’t lend themselves to easy blog posts, so those who want to dig deeper into the crime trajectories should probably dig deeper into the report itself. (It’s short and clear, I promise.)

One of the big lessons is that communities can help low-income residents escape poverty pockets without spreading crime around the area by ensuring that all local residents regardless of income have access to quality affordable housing in low-poverty areas.

The Population Is Aging – Now Where Will They Live?

noreply@blogger.com (National Housing Conference) — Thu, 05 Apr 2012 13:52:00 +0000

by Maya Brennan, Center for Housing Policy

Surveys consistently have found that more than 90 percent of older adults want to stay in their own home as they age. Now think about where you live. Is it set up to meet the needs of a 65-year-old? What about an 85-year-old? As the population ages, we need to stay a step ahead. What housing challenges do older adults face today, and what additional challenges will they face as their ranks swell? A new report by my colleagues at the Center for Housing Policy tackles these questions and proposes solutions.

Today around 40 million Americans are 65 or older. By 2050, older adults will exceed 88 million people – a 120 percent increase! And people aged 85 and up will more than triple over the same time period. Our nation’s housing is not set up to meet their needs.

Housing affordability and accessibility are already serious challenges for older adults – and will only become bigger problems if we leave them unaddressed. Incomes tend to decline with age, but housing costs keep going up – even more so if you add in the services needed to age in place. Are we doing enough to ensure that the next wave of retirees will have adequate assets to manage these increasing cost burdens?

Aging also brings mobility impairments that can affect older adults’ ability to live in their homes and get around their communities. About one in four older Americans will experience a disability that limits their capacity to enter and exit their home, use the bathroom, or otherwise continue living in the home without modifications. In addition, more than half of all 65+ households live in suburban or rural areas typically requiring a car to get around. What programs can help older adults access services without moving, and are we doing enough to make home retrofits an affordable option?

Looking forward to 2050, policymakers can reshape the housing landscape to better meet the needs of the next wave of the elderly. Modifying regional development patterns, increasing the flexibility of zoning policies, and building housing with aging residents in mind are steps we can start to take now in order to meet the needs of both today’s and tomorrow’s older adults.

It doesn’t take a crystal ball to predict our future housing needs. A rising number of older adults means a greater need for accessible homes and pedestrian- and transit-friendly communities. Meeting these needs, however, will not be easy unless we start working toward it today.

What to really worry about for the Housing Credit and the Volcker Rule

noreply@blogger.com (National Housing Conference) — Mon, 02 Apr 2012 16:59:00 +0000

by Peter Lawrence, Enterprise Community Partners

NHC invites guest blog posters to write on important housing topics. The views expressed by guest posters do not necessarily reflect those of NHC or its members.

As the Administration is approaching the July 2012 deadline to finish drafting regulations implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act, some in the affordable housing community are concerned that the regulations covering the law’s so-called “Volcker Rule,” named for former Federal Reserve Board of Governors Chairman Paul Volcker, would harm a bank’s ability to invest in the Low Income Housing Tax Credit (Housing Credit). A recent Marcus & Millichap alert (not available on the web) addressed this point. Concerns about the Volcker Rule and the Housing Credit, however, are really quite narrow and specific to bank sponsored funds, not bank investments in Housing Credits generally.

Volcker originally conceived of the rule to ban proprietary trading by commercial banks whereby deposits are used to trade on the bank's personal accounts. However, banks’ ability to invest in Housing Credit funds is permitted under the rule, as the Act specifically includes an exemption for investments permitted under the Part 24 Public Welfare Investments authority derived from National Bank Act and related Office of the Comptroller of the Currency (OCC) regulations. However, there is some question as to whether the Volcker Rule permits banks to sponsor Housing Credit funds, as some banks who have invested in Housing Credit funds do. Dodd-Frank specifically allows banks to sponsor funds involving the Historic Rehabilitation Tax Credit, but it is uncertain whether the general ban on sponsoring funds in the rule also applies to the Housing Credit.

The Housing Credit is the single largest federal program for development and preservation of affordable housing. Investment by banks in Housing Credit properties helps the program function—the Housing Credit is a proven and reliable (though not required) way to meet Community Reinvestment Act (CRA) obligations. Fortunately, banks ability to invest in Housing Credits is permitted, with clarification needed only around sponsorship.

Peter Lawrence is the Senior Director for Public Policy & Government Affairs at Enterprise Community Partners, a member of the National Housing Conference's Leadership Circle. For 30 years, Enterprise has introduced solutions through public-private partnerships with financial institutions, governments, community organizations and other partners to create opportunity for low- and moderate income people through affordable housing in diverse, thriving communities.

The pitfalls of "short funding" Section 8

noreply@blogger.com (National Housing Conference) — Thu, 29 Mar 2012 14:16:00 +0000

by Michael Bodaken, National Housing Trust and National Housing Conference Board of Governors

NHC invites guest blog posters to write on important housing topics. The views expressed by guest posters do not necessarily reflect those of NHC or its members.

For reasons that fall well beyond this commentary, the federal government is sharply reducing so-called "discretionary" spending. Nevertheless, President Obama's proposed FY 2013 budget fails the test of reducing the deficit while avoiding harm to our nation's neediest.

HUD's budget proposal for next year would "short fund" the Project-Based Section 8 program by over $1 billion. The bulk of this shortfall would be met by not funding housing contracts for a full 12 months. As many as 920,000 apartments may be "short funded" under this proposal. (See my PowerPoint presentation on the consequences of this decision that I shared at NHC's Annual Budget Forum in Washington last month.)

Short funding is short sighted. Appropriators from both parties have expressed concern over this proposal (as have numerous groups in the affordable housing space). Sen. Murray (D-WA), chair of the Senate THUD Appropriations Subcommittee, and Sen. Collins (R-ME), the ranking member, expressed concerns that short funding contracts could lead to perverse incentives for owners to opt out of the program or under invest in property conditions. House THUD Appropriations Subcommittee Chair, Rep. Latham (R-IA), has asked HUD for more specifics on how this proposal will be implemented.

Here are 5 reasons why short funding Project-Based Section 8 contracts is misguided:

Short funding contracts will NOT reduce federal expenditures. Short funding merely kicks the can down the road. At a recent appropriations hearing, Rep. Olver (D-MA) expressed concern about making up this shortfall in the upcoming FY 2014 budget. We cannot gamble that these funds will be replenished given the political uncertainty concerning future expenditures.
Short funding contracts will harm vulnerable residents. Anything less than full, 12 month funding will increase rent burdens on fixed-income populations, delay critical repairs to affordable housing, and limit a property owner's ability to provide supportive services to their elderly and disabled tenants. The average income of families that will be affected by short-funding is less than $12,000 annually. 64% of households are either elderly or non-elderly disabled.
Short funding contracts increases both risks and costs to owners, lenders and investors as it becomes increasingly uncertain whether property owners will be able to meet their debt servicing obligations. Tens of thousands of Section 8 apartments are rehabilitated with the low income housing tax credit every year. HUD's proposal will undermine investor confidence in these transactions.
Short funding contracts will hurt the FHA. More than half of all Section 8 properties are FHA insured to the tune of $14 billion. Without ongoing rental income, owners will be unable to continue payments on existing debt and the FHA will be left holding the tab.
Jobs, jobs, jobs...according to HUD, the Section 8 program supports 100,000 private sector jobs annually.

As HUD itself observed two years ago: "Annual funding should be predictable, timely and sufficient to fund rental contracts for a full 12 months." HUD must act as a fair and consistent partner by honoring the contracts it has entered into with property owners. Full 12 month funding of the Section 8 program is crucial for Section 8 residents, properties, investors, and the owners of over 1.2 million apartments across the U.S.

Michael Bodaken has served as the president of the National Housing Trust for more than 13 years. Under his guidance, the Trust has become the primary national nonprofit intermediary dedicated to the preservation and improvement of affordable multifamily homes. The National Housing Trust preserves and revitalizes affordable apartments to better the quality of life for the families and elderly who live there.