Transcript Document

Housing America’s Future
Garth Rieman
NCSHA
September 27, 2013
Major Issues Affecting Housing
•
•
•
•
Tax legislation
Appropriations
Section 8 reform
Housing finance reform
NCSHA Legislative Update
9/27/2013
2
Quick Overview
• The September 30 end of the fiscal year is
approaching without FY 2014 appropriations
in place.
• The federal debt will reach its statutory limit in
mid-October.
• Short-term and long-term fiscal outlooks are
way out of balance.
• Deep disagreements over how to proceed and
gridlock continue.
NCSHA Legislative Update
9/27/2013
3
Tax Reform
• There is strong support in Congress for
comprehensive tax reform.
• The Chairmen of the House and Senate taxwriting committees are preparing legislation to
be released in the fall.
• Both tax-writing committees have engaged in
extensive efforts this year to educate and solicit
feedback from members both on and off the
committees.
NCSHA Legislative Update
9/27/2013
4
Tax Reform
• House Ways and Means Committee Republicans
are meeting now to develop a tax reform
discussion draft and aiming for markup this fall.
• Senate Finance Committee leaders are planning to
mark up tax reform this year.
• Both committees have held hearings and issued
discussion papers over the last several months.
NCSHA Legislative Update
9/27/2013
5
Risks and Opportunities in Tax Reform
• Potential reduction or elimination of tax
expenditures, including the Housing Credit and
Bond programs, either directly or indirectly
• Opportunity to maintain and strengthen existing
programs
• Potential creation of new programs
NCSHA Legislative Update
9/27/2013
6
Housing Credit Amendments
• Senate Finance Committee member Maria
Cantwell (D-WA) introduced S. 1442, to make the
9 percent Credit rate permanent and to create a
permanent floor for the 4 percent acquisition
Credit rate. The legislation is similar to the bill she
introduced last year.
• House Select Revenue Measures Chairman Pat
Tiberi (R-OH) has not yet introduced a companion
bill in the House.
NCSHA Legislative Update
9/27/2013
7
FY 2014 Appropriations Outlook
• Congress and the Administration are working
on a continuing resolution (CR) to continue
funding HUD, USDA, and other federal
programs after FY 2014 begins on October 1.
• Likely duration is until December 15, when
new appropriations must be enacted to avoid
a government shutdown.
NCSHA Legislative Update
9/27/2013
8
FY 2014 Appropriations Outlook
• The House and Senate disagree on how
much the government should spending on
total domestic discretionary spending in FY
2014.
• The House includes FY 2014 sequestration cuts
in its spending level and the Senate does not.
• This will complicate negotiating final FY 2014
appropriations.
NCSHA Legislative Update
9/27/2013
9
FY 2014 Appropriations
• The House and the Senate both considered
their HUD FY 2014 funding bills in July.
• The Senate HUD appropriations bill provides
nearly $7 billion more for HUD programs
than the House bill.
• Neither chamber voted on final passage.
• House leadership pulled the bill from the floor.
• The Senate failed to achieve the necessary votes to end
debate.
NCSHA Legislative Update
9/27/2013
10
HOME Funding
• NCSHA is seeking increased HOME funding
in FY 2014.
• Funded at $948 million in FY 2013, HOME’s
funding level is down 48 percent from its FY
2010 funding level.
• HOME is at its lowest funding level ever.
NCSHA Legislative Update
9/27/2013
11
HOME Funding
• The House bill provides $600 million.
• The Senate bill provides $1 billion.
• The President’s FY 2014 Budget requests
$950 million.
NCSHA Legislative Update
9/27/2013
12
The House bill would provide:
• $9.25 billion for project-based Section 8
contracts
• $1.26 billion less than the Senate bill and $750
million less than the Administration’s request
• $200 million for contract administration, $65
million less than the Senate bill and the
Administration’s request
NCSHA Legislative Update
9/27/2013
13
The House bill would provide:
• $17 billion for Housing Choice Voucher
renewals
• $570 million less than the Senate bill and $970
million less than the Administration’s request
• $1.35 billion for administrative fees, $340
million less than the Senate bill and the
Administration’s request
NCSHA Legislative Update
9/27/2013
14
Section 8 Reform
• Rental assistance costs are gobbling up more and
more of the HUD Budget.
• Rental assistance programs are complex and
administration of and compliance with them are
difficult and costly.
• The Administration, the BPC Housing Commission,
and an industry coalition have all put forward
reform proposals.
NCSHA Legislative Update
9/27/2013
15
Housing Finance Reform
• Reform legislation has been introduced in both the
Senate and the House.
• The House Financial Services Committee passed a
comprehensive reform bill in July.
• The Senate Banking Committee passed a limited
FHA reform bill last month. It plans to consider
GSE reform this fall.
• President Obama outlined his principles for reform
on August 6.
NCSHA Legislative Update
9/27/2013
16
NCSHA supports housing finance reform
that:
• Establishes a strong affordable housing
mission for the GSEs or their successors.
• Requires engagement with state HFAs as
key partners.
• Involves government backing to ensure
liquidity and affordability.
NCSHA Legislative Update
9/27/2013
17
The Protecting American Taxpayers and
Homeowners Act (PATH Act; H.R. 2767)
• Introduced by House Financial Services Committee
Chair Jeb Hensarling (R-TX).
• Eliminates Fannie Mae and Freddie Mac over five
years and completely privatizes most of the
housing finance market (both single-family and
multifamily).
• Establishes the National Mortgage Market Utility
to facilitate the mortgage securities market.
NCSHA Legislative Update
9/27/2013
18
PATH Act – GSE Wind Down
• Requires the GSEs to substantially lower their
market presence during five-year transition.
• Repeals affordable housing goals and the Housing
Trust Fund.
• Requires GSEs to increase guarantee fees annually
so they are competitive with private market.
• Decreases loan limits by $20,000 each year.
NCSHA Legislative Update
9/27/2013
19
PATH Act – FHA Reform
• Separates FHA from HUD and makes it its own
independent agency.
• Limits FHA’s mission to helping first-time
homebuyers and low- and moderate-income
buyers (115 percent of AMI). Removes these
limits during economic downturns.
• Increases minimum down payment for non-firsttime homebuyers to 5 percent.
• Reduces FHA insurance coverage on individual
loans by 10 percent each year to 50 percent.
NCSHA Legislative Update
9/27/2013
20
Housing Finance Reform and Taxpayer
Protection Act (S. 1217)
• Introduced by Banking Committee Members Bob
Corker (R-TN) and Mark Warner (D-VA), with
bipartisan cosponsorship.
• Gradually eliminates Fannie Mae and Freddie Mac
over five years and replaces them with Federal
Mortgage Insurance Company (FMIC).
• FMIC responsible for providing explicit federal
reinsurance of MBSs.
NCSHA Legislative Update
9/27/2013
21
Housing Finance Reform and Taxpayer
Protection Act (continued)
• Private market covers at least 10 percent of all
principal losses on MBSs.
• FMIC only allowed to insure QMs that meet
conforming loan limits ($417,000).
• GSE multifamily operations transferred to FMIC.
• FMIC would collect user fees on all guaranteed
securities, to be used to support affordable
housing initiatives.
NCSHA Legislative Update
7/21/2015
22
FHA Solvency Act of 2013
• Introduced by Banking Committee Chair Tim
Johnson (D-SD) and Ranking Member Mike Crapo
(R-ID).
• Implements several reforms to help FHA shore up
its finances.
• Gives FHA the authority to increase its annual
premiums up to 2.05 percent.
• Increases FHA’s capital ratio from 2 to 3 percent,
and requires FHA to increase premiums when it is
below the ratio.
• Provides FHA additional indemnification authority.
NCSHA Legislative Update
7/21/2015
23
Administration Housing Finance Reform
Principles
• In a recent speech, the President laid out his four
principles for housing finance reform:
• The bulk of the risk must be in the private sector.
• Current GSE business model should be eliminated.
• Preserve access to safe and simple mortgage
products (30-year fixed-rate loans).
• Ensure housing remains affordable for first-time
homebuyers.
• Obama has praised the approach taken by
Corker/Warner but is said to have concerns about
affordability.
NCSHA Legislative Update
9/27/2013
24
Outlook
• The full House may consider the PATH Act, but the
Senate is likely to take a different approach.
• Hensarling has expressed a willingness to compromise.
• Johnson and Crapo working on their own GSE reform
bill.
• Uncertainty about whether the House or Senate will
consider Committee-passed bills.
NCSHA Legislative Update
9/27/2013
25
FHFA Plan to Reduce
GSE Multifamily Lending
• FHFA August 9 notice seeks suggestions for
reducing GSEs’ multifamily lending.
• Asks if it should consider specific policy changes,
including:
• Eliminating short-term lending (5 years),
• Simplifying and standardizing GSE loan products,
• Re-imposing loan limits or restrictions on maximum
rents, and
• Limiting GSE multifamily activity to new loans.
NCSHA Legislative Update
9/27/2013
26
Risk-Sharing/Ginnie Mae Proposal
• Would authorize Ginnie Mae securitization of FHA-HFA
Multifamily Risk-Sharing loans.
• Would result in lower interest rates for Risk-Sharing
loans, reducing the cost of financing rental housing
developments, making it possible to achieve lower
rents and reach even lower income tenants.
• The Congressional Budget Office (CBO) estimates the
proposal would result in $20 million in mandatory
savings over 10 years ($2 million annually).
• The President’s FY 2014 Budget includes NCSHA’s
proposal.
NCSHA Legislative Update
9/27/2013
27
Questions?
NCSHA Legislative Update
9/27/2013
28
Housing America’s Future
Garth Rieman
NCSHA
September 27, 2013