USMI Roundup: Developments in Housing Finance

Autumn has arrived and Congress is in high gear as House and Senate Democrats work to advance their bipartisan infrastructure bill, despite being at odds over the size and scope of the budget reconciliation package. In addition, on Congress’ near-term to-do list is addressing the nation’s debt ceiling. The Administration’s housing access and affordability efforts have also gathered steam, most notably with the White House, Federal Housing Finance Agency (FHFA), and U.S. Department of Housing and Urban Development (HUD) making several announcements related to housing supply and fair lending last month, including a Memorandum of Understanding (MOU) announced on fair lending enforcement between FHFA and HUD.

September also marked the start of Hispanic Heritage Month, which runs through October 15. This month provides an opportunity to recognize the significant contributions and influence of Hispanic Americans to the history, culture, and achievements of the United States. In honor of Hispanic Heritage Month, USMI dove deeper into today’s Hispanic homeownership market and how it will shift in the future. We further detail these and more developments below.

Hispanic Homeownership: How the Hispanic Population Growth Helps Drive the Homeownership Market
Hispanic Heritage Month Industry Leader Q&A: Marisa Calderon
Developments at FHFA
White House Plan to Address Housing Supply Agenda
Budget Reconciliation Package Makes Progress
Nominations and Confirmations
What We’re Watching: Housing Finance Strategies and National Housing Conference Panels
What We’re Reading: MBA Path to Diversity Scholarship Q&A

Hispanic Homeownership: How the Hispanic Population Growth Helps Drive the Homeownership Market. On September 15, the first day of Hispanic Heritage Month, USMI published a blog post on Hispanic homeownership, the impact this demographic is having in today’s market, and the various challenges this population faces in attaining the American Dream of owning a home. Over the last few years, the Hispanic population has been a key component in the growth of the homeownership market in the U.S., and it is projected to be the demographic group leading this segment of the industry for the next several decades. We also referenced data from our 2021 National Homeownership Market Survey, which provides greater insights into perceptions and challenges pertaining to the housing market and homebuying process. This blog post was also posted in Spanish, and was featured in National Mortgage Professional and Insurance News Net.

Hispanic Heritage Month Industry Leader Q&A: Marisa Calderon. In honor of Hispanic Heritage Month, USMI reached out to Hispanic leaders in the mortgage industry to discuss their work and perspectives on the goal of increasing Hispanic homeownership in America. Marisa Calderon, Executive Director of National Community Reinvestment Coalition’s (NCRC) Community Development Fund and a housing and financial services industry veteran, recently shared with USMI her thoughts on these issues and others, relating to the mortgage finance sector in 2021 and beyond. Read the full Q&A here.

Developments at FHFA. Under Acting Director Sandra Thompson, FHFA has announced a number of changes and proposals designed to increase access and affordability for borrowers. 

  • On August 11, FHFA announced that Fannie Mae will consider 12 months of positive rental payment history in its risk assessment processes for loans that would otherwise be ineligible for acquisition due to thin or nonexistent borrower credit history. Speaking about the announcement, Acting Director Sandra Thompson said, “[w]ith this update, Fannie Mae is taking another step toward understanding how rental payments can more broadly be included in a credit assessment, providing an additional opportunity for renters to achieve the dream of sustainable homeownership.”
  • On September 7, FHFA announced that the government sponsored enterprises (GSES or Enterprises), Fannie Mae and Freddie Mac, will be required to submit Equitable Housing Finance Plans to the Agency by the end of 2021. The plans will aim to identify and address barriers to sustainable housing opportunities, including the GSEs’ goals and action plans to advance equity in housing finance for the next three years. FHFA released a Request for Input (RFI) on the Enterprises Equitable Housing Finance Plans that is due on October 25. FHFA also held a listening session on September 28 soliciting additional input from stakeholders. Speakers detailed several recommendations for FHFA to enhance the plans, as well as other actions FHFA and the GSEs might take to combat the racial homeownership gap and possible fair lending violations, including focuses on targeted down payment assistance, reviewing and reassessing loan level pricing adjustments (LLPAs), and additional changes to the GSEs’ final capital rule than those that were proposed by FHFA in September 2021 among others.
  • On September 14, the FHFA and the U.S. Department of the Treasury suspended certain provisions added to the Preferred Stock Purchase Agreements (PSPAs) with Fannie Mae and Freddie Mac on January 14, 2021. In the announcement about the suspended provisions, Acting Director Sandra Thompson said, “this suspension will provide FHFA time to review the extent to which these requirements are redundant or inconsistent with existing FHFA standards, policies, and directives that mandate sustainable lending standards.”
  • Lastly, on September 15, FHFA announced that it is seeking comment on a Notice of Proposed Rulemaking (NPRM) that would amend the Enterprise Regulatory Capital Framework (ERCF) for Fannie Mae and Freddie Mac. The proposed amendments would “refine the prescribed leverage buffer amount (PLBA) and the capital treatment of credit risk transfers (CRT) to better reflect the risks inherent in the Enterprises’ business models and to encourage the distribution of credit risk from the Enterprises to private investors.”

On August 31, 2020, USMI submitted a comment letter on FHFA’s Proposed Rule on ERCF emphasizing the importance of constructing a balanced, transparent, and analytically justified post-conservatorship capital framework for the GSEs.

White House Plan to Address Housing Supply. On September 1, the White House announced a plan to increase affordable housing supply as part of President Biden’s “Build Back Better” agenda. While Congress works on the budget reconciliation and bipartisan infrastructure bills, the White House’s plan includes provisions such as relaunching the Federal Financing Bank and HUD risk sharing program, increasing Fannie Mae and Freddie Mac’s low-income housing tax credit investment cap, and making funding available for affordable housing production under the Capital Magnet Fund.

Budget Reconciliation Package Makes Progress. A $3.5 trillion reconciliation bill passed the House Budget Committee on September 25. The House Financial Services Committee (HFSC) held a markup in mid-September for its portion of the Build Back Better Act. The bill, passed by a vote of 30-24 on September 14, would provide for $322 billion in funding for new and existing federal housing programs, including: $90 billion for new rental assistance; $80 billion to address public housing capital backlog; $80 billion in housing supply investments; and $10 billion in first-time, first-generation homebuyer down payment assistance (DPA).

Nominations and Confirmations. On September 13, the White House announced that President Joe Biden intends to nominate Alanna McCargo for President of the Government National Mortgage Association (Ginnie Mae) at HUD and she is scheduled to testify before the Senate Committee on Banking, Housing, and Urban Affairs on October 7. USMI welcomed the decision and cited McCargo’s extensive experience in mortgage policy.

On September 21, the Senate voted 49-48 to discharge from the Senate Committee on Banking, Housing, and Urban Affairs the nomination of Rohit Chopra to head the Consumer Financial Protection Bureau (CFPB), and voted 50-48 to confirm him as CFPB Director on September 30. Lastly, the Committee also announced it would hold a hearing on October 5 to vote on several nominees, including Julia Gordon to serve as Federal Housing Administration (FHA) Commissioner.

What We’re Watching: Housing Finance Strategies and National Housing Conference Panels. On September 20, USMI President Lindsey Johnson joined a Housing Finance Strategies panel with several other housing industry leaders to discuss the Biden Administration’s changing regulatory environment, the transition to digital mortgages, and the remote workforce in the housing industry. The program is available here.

On September 30, Johnson joined a National Housing Conference (NHC) panel for a conversation on Fannie Mae and Freddie Mac’s role in affordable homeownership, housing reforms, and closing the racial homeownership gap. Johnson specifically shared the results from USMI’s 2021 National Homeownership Market Survey, which was released earlier this year. Watch the panel here.

What We’re Reading: MBA Path to Diversity Scholarship Q&A. USMI is proud to partner with the Mortgage Bankers Association (MBA) in support of their Path to Diversity Scholarship program, which has a strong record of increasing diverse representation in the housing finance industry. USMI President Lindsey Johnson spoke with MBA NewsLink for a Q&A session about the scholarship and its impact. Read more here.

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