NAAHL in the News
Uncertainty Clouds Build Back Better ProspectsBy: Monica Hogan, Inside Mortgage News | January 13, 2022
The housing community is looking for signs of negotiations on the Build Back Better agenda, but it’s too early to tell if there’s reason to believe the legislation will pass or how much money for housing will remain in the final version of the bill.
Senate talks on the legislation stalled last month when Sen. Joe Manchin, D-WV, told a cable television news audience he could not support the Build Back Better bill as passed in the House.DOWNLOAD PDF
Pass the Neighborhood Homes Investment ActBy: Bob Walters, Buzz Roberts and Lisa Rice, HousingWire | November 23, 2021
A shortage of affordable starter homes is thwarting aspiring first-time homebuyers and fueling inflation in home prices. At the same time, many urban and rural communities are struggling for stability and vitality. It’s a fact: the homeownership gap between Black and white households is wider now than when the Fair Housing Act was passed in 1968.
The Neighborhood Homes Investment Act (Neighborhood Homes) would begin addressing these challenges by developing or renovating 125,000 affordable homes in economically distressed communities. The House has included it in its revised Build Back Better bill. The Senate should keep or expand it in its version too. The support is clear. This initiative has won backing from 72 bipartisan sponsors in the House and Senate, the White House and stakeholders ranging from civil rights groups and nonprofits to financial institutions and real estate trade associations.DOWNLOAD PDF
Congress Nears Deal on Key Housing BillsBy: George Kromrei, HousingWire | October 14, 2021
As Congress haggles over funding for the social infrastructure package, a Senate Democrat who chairs the Senate Finance Committee promised a key housing provision will make the cut.
Sen. Ron Wyden of Oregon, a Democrat, told attendees of a Housing Oregon virtual conference on Friday that the committee he chairs had an “enormous interest” in the Neighborhood Homes Investment Act.DOWNLOAD PDF
White House Announces Steps to Increase Affordable HousingBy: Donna Kimura, Affordable Housing Finance | September 2, 2021
The Biden administration announced a series of moves aimed at creating, preserving, or selling 100,000 affordable homes for homeowners and renters in the next three years.
The actions include relaunching the Federal Financing Bank (FFB) and restarting its support of the Federal Housing Administration (FHA) Section 542(c) Housing Finance Agency Risk-Sharing Program, which was suspended in 2019. The program will provide low-cost capital to spur development of rental housing in cooperation with state housing finance agencies (HFAs).DOWNLOAD PDF
Can Empty Offices Become Affordable Housing? New Legislation Seeks to TryBy: Andrea Riquier, Market Watch | August 19, 2021
As the 2020 coronavirus lockdowns ground America to a halt, a few early prognostications rang out. “New York is dead,” one pundit declared. “Are we going to work from home forever?” asked the New York Times. And plenty of publications, this one included, predicted that business travel would never go back to what it once was.
One year later, New York is decisively not dead — but some of the other questions remain unanswered. Business travel was just starting to recover when the delta variant sparked a wave of industry event cancellations. And there’s broad consensus that some variation of remote work also is likely here to stay, if not every day of every week.DOWNLOAD PDF
CRA Deal Between Fed, FDIC and OCC Still Not a Slam DunkBy: Brendan Pedersen, American Banker | July 30, 2021
WASHINGTON — Federal bank regulators have their best chance in years to ink common reforms of the Community Reinvestment Act after committing to interagency talks. But resuming negotiations and reaching a deal are two different things, observers warn.
Experts say the formal decision by the Office of the Comptroller of the Currency to rescind its Trump-era CRA rule and rejoin discussions with the other regulators was very encouraging. But several outstanding issues remain before the OCC, Federal Reserve and Federal Deposit Insurance Corp. can develop an interagency CRA plan that has eluded them for years.DOWNLOAD PDF
Agencies Signal New Joint Effort on CRABy: Donna Kimura, Affordable Housing Finance | July 28, 2021
The Federal Reserve Board, the Federal Deposit Insurance Corp. (FDIC), and the Office of the Comptroller of the Currency (OCC) announced that they will work together to update the Community Reinvestment Act (CRA).
“The agencies have broad authority and responsibility for implementing the CRA,” said the agencies in a statement. “Joint agency action will best achieve a consistent, modernized framework across all banks to help meet the credit needs of the communities in which they do business, including low- and moderate-income neighborhoods.”DOWNLOAD PDF
Community Development Influencers: People Who Make A DifferenceBy: Brad Stanhope and Nick DeCicco, Novogradac | July 1, 2021
Influence in affordable housing and community development comes in various forms. There are organizational leaders, elected representatives, thought leaders and more. What they have in common is significant: the ability and drive to use affordable housing, community development, historic preservation and renewable energy tax incentives to better the lives and communities of others.
The Novogradac Journal of Tax Credits this month celebrates leaders in community development, historic preservation, affordable housing, and renewable energy, highlighting their achievements and influence.DOWNLOAD PDF
Biden’s Neighborhood Revitalization Plan Looks to Detroit for InspirationBy: Andrew Ackerman, The Wall Street Journal | May 25, 2021
The Biden administration is looking to a small housing program in Detroit as a possible solution to a big problem: Many crumbling homes in blighted neighborhoods remain vacant because the cost of renovations exceeds the potential selling price.
The program, Rehabbed and Ready, aims to help solve the problem by covering the gap, so renovations are feasible. Seeking to break the cycle of depressed property values and urban decay, the program has renovated about 90 homes since it began in 2015 with plans for 200 more.DOWNLOAD PDF
Biggest Impediment to Mortgage Growth? Shortage of New Homes.By: Hannah Lang, American Banker | April 27, 2021
WASHINGTON — It is well established that mortgage lenders will need to pivot to new areas of growth as rising rates put an end to the refinancing boom. But the interest rate environment may not be their biggest hurdle.
Lenders have so far been able to navigate around the persistent scarcity in the U.S. housing supply due partly to rock-bottom rates. Yet many worry the low inventory could soon put a strain on the industry and force financial institutions to compete even more intensely for new mortgage business.DOWNLOAD PDF
Comerica Expands Community Development Lending ProgramBy: Comerica Bank | March 17, 2021
DALLAS, March 17, 2021 /PRNewswire/ — Comerica Bank today announced it will expand its community development lending program, specifically as it relates to affordable housing.
Comerica plans to strengthen access to capital assistance for nonprofit and for-profit developers of Low-Income Housing Tax Credit (LIHTC) projects. The program will focus on increasing the availability of affordable multifamily housing for vulnerable communities in the markets Comerica services, providing tax credit lending to fund projects receiving reservations of LIHTC. Andrew Wong, Senior Vice President, Comerica Bank, will oversee Comerica’s support of these projects to bolster development of affordable multifamily housing.DOWNLOAD PDF
Democrats Are Divided Over Biden’s Coming Pick of a Top Bank RegulatorBy: Andrew Ackerman and Ben Eisen, The Wall Street Journal | February 8, 2021
WASHINGTON—A dispute over the choice of a top banking regulator is highlighting fault lines among Democrats—on issues from racial diversity to ties to the Obama administration—as President Biden fills out his leadership team.
Michael Barr, an Obama and Clinton administration alumnus who leads the University of Michigan’s public policy school, is the leading contender to head the Office of the Comptroller of the Currency, which oversees companies including JPMorgan Chase & Co. and Wells Fargo & Co.DOWNLOAD PDF
Progressives Fret Over Biden’s Pick to Oversee National BanksBy: Evan Weinberger and Andrew Ramonas, Bloomberg News | February 5, 2021
President Biden’s choice of financial regulators is proving to be a mixed bag for consumer advocates and progressives eager for tougher oversight of Wall Street after the Trump Administration.
Michael Barr, Biden’s likely choice for Comptroller of the Currency, clashed with progressives as a key architect of the 2010 Dodd-Frank Act and more recently served as adviser to cryptocurrency firm Ripple Labs Inc. and peer-to-peer lender LendingClub. Both companies have run afoul of regulators.DOWNLOAD PDF
Biden Team Faces Pressure Over Who Leads Key Banking RegulatorBy: Kimberly Adams, Marketplace | February 1, 2021
While the Biden administration scrambles to fill thousands of positions throughout federal agencies, the debate over who should occupy one key economic role burst into public view over the last week.
The job? Running the nation’s top bank regulator, the Office of the Comptroller of the Currency.DOWNLOAD PDF
Housing Advocates Laud Cardin-Portman Neighborhood Homes Investment ActBy: Sen. Ben Cardin | January 29, 2021
WASHINGTON – Affordable housing advocated and lenders are applauding new legislation from U.S. Senators Ben Cardin (D-Md.) and Rob Portman (R-Ohio) that aims to revitalize housing in distressed neighborhoods and keep it affordable for low and moderate-income families. The Neighborhood Homes Investment Act (S.98) creates a federal tax credit that covers the cost between building or renovating a home in these areas and the price at which they can be sold. The NHIA would also help existing homeowners in these neighborhoods to renovate and stay in their homes.DOWNLOAD PDF
Yet More on Michael BarrBy: Ben White, POLITICO | January 28, 2021
Via Univ. of Michigan’s Erik Gordon: “It would make as much sense for Stalin to claim Lenin wasn’t Marxist enough as it makes for ultra leftists to claim that Barr isn’t interested enough in consumer protection. Disclosure: Barr and I formerly were on the faculty at the same time at Michigan Law School.”
Via Buzz Roberts , President and CEO of the National Association of Affordable Housing Lenders: “The attacks on Michael Barr are unfair. I have known and admired Michael since the 1990s. He has been a deeply committed and extraordinarily gifted and effective champion for consumers and communities, and especially for the underserved, low-income, and racial minorities.”DOWNLOAD PDF
Fed CRA Plan Seen as Bridging Divide With OCCBy: Brendan Pedersen, American Banker | October 1, 2020
WASHINGTON — While the Federal Reserve’s proposal to modernize the Community Reinvestment Act has key differences from a competing rule by the Office of the Comptroller of the Currency, some observers are still holding out hope that the two agencies can get on the same page.
The agencies have bucked tradition by pursuing separate plans to reform the 1977 anti-redlining law. The Fed’s advance of notice of proposed rulemaking last week made clear the central bank still disagrees with the OCC’s approach to scoring a bank’s combined CRA activities and other issues.DOWNLOAD PDF
Industry Stakeholders Back Fed’s Plan to Revisit CRABy: Yemeng Yang, Inside Mortgage Finance | September 24, 2020
The Federal Reserve’s proposed changes to revamp the decades-old Community Reinvestment Act have been welcomed by both industry representatives and consumer advocacy groups.
In an advance notice of proposed rulemaking issued on Monday, the Fed introduced a new framework to evaluate large retail banks’ mortgage lending performance: a retail test and a community development benchmarkDOWNLOAD PDF
Fed Ready to Unveil Its Own Anti-Redlining Reforms for BanksBy: Evan Weinberger, Bloomberg Law | September 18, 2020
The Federal Reserve is set to release its own ideas for revamping anti-redlining rules for banks after another banking regulator’s approach came under attack for lacking focus on low-income neighborhood lending.
The Fed on Sept. 21 plans to unveil its rulemaking plans for the Community Reinvestment Act, a 1977 law that requires assessments of bank lending to low-income communities. It comes just five months after the Office of the Comptroller completed new rules that were as panned by community groups for emphasizing a bank’s overall performance over branch lending to specific areas.DOWNLOAD PDF
OCC’s Final CRA Rule Weakens Affordable Housing and Community Development IncentivesBy: Buzz Roberts, Novogradac | July 2, 2020
In the first major Community Reinvestment Act (CRA) regulatory reform in 25 years, the Office of the Comptroller of the Currency (OCC) released a final rule on implementation of the CRA that will weaken incentives for bank financing for affordable housing and community development (CD).
Many banks will stay involved for other reasons, but CRA will be less of a factor. The OCC’s action surprised most observers in two respects.DOWNLOAD PDF
Senators Introduce Tax Credit to Revitalize Distressed HomesBy: Donna Kimura, Affordable Housing Finance | July 1, 2020
Sens. Ben Cardin (D-Md.) and Rob Portman (R-Ohio) have introduced legislation to create a tax credit that would encourage the revitalization of distressed single-family homes.
The Neighborhood Homes Investment Act (NHIA) is based on the low-income housing tax credit (LIHTC) and New Markets Tax Credit. These longtime programs have successfully financed affordable multifamily rental housing and economic development projects, but they can’t get to the problem that the new legislation seeks to address, says Benson “Buzz” Roberts, president and CEO of the National Association of Affordable Housing Lenders.DOWNLOAD PDF
Battle Lines Harden Over Low-Income Lending RulesBy: Andrew Ackerman, The Wall Street Journal | June 26, 2020
House Democrats are mounting their first significant challenge to a Trump administration overhaul of rules that affect the way banks make billions of dollars in loans, investments and donations to customers in low- and moderate-income areas.
Even if successful in the House, any legislative measure faces an uphill battle in the GOP-controlled Senate. But the effort signals Democrats may seek to scrap the administration’s overhaul if the party scores significant electoral victories in November.DOWNLOAD PDF
OCC Goes It Alone on Anti-Redlining Rule RewriteBy: Evan Weinberger, Bloomberg Law | May 20, 2020
The Office of the Comptroller of the Currency issued a sweeping rewrite of a key anti-redlining law that stepped back from a few controversial proposed changes.
The OCC on Wednesday issued new rules for determining banks’ compliance with the Community Reinvestment Act, a 1977 law aimed at boosting lending and investment in low- to moderate-income communities.DOWNLOAD PDF
OCC Releases Final CRA RuleBy: Donna Kimura, Affordable Housing Finance | May 20, 2020
A final version of a rule updating the Community Reinvestment Act (CRA) is drawing strong criticism from affordable housing and community development leaders.
The concern is the rule published by the Office of the Comptroller of the Currency (OCC) could diminish low-income housing tax credit (LIHTC) investment and other key activities by banks. The rule goes into effect Oct. 1, with a phase-in period for the new requirements.DOWNLOAD PDF
Regulators ‘Full Steam Ahead’ on CRA Reform Despite Coronavirus PandemicBy: Brendan Pedersen, American Banker | April 8, 2020
WASHINGTON — The Office of the Comptroller of the Currency is plowing ahead on Community Reinvestment Act reform, drawing pushback from leaders of banking and community groups who say their members and regulators should be focused on emergency coronavirus relief.
The comment deadline on the CRA proposal issued by the OCC and the Federal Deposit Insurance Corp. was set to expire Wednesday, and there was no sign of an extension. In fact, Comptroller of the Currency Joseph Otting said in a statement emailed to American Banker on Monday that “slowing the rulemaking would only delay relief and support that communities across the country need.”DOWNLOAD PDF
Multifamily Lenders Highlight Challenges During Coronavirus CrisisBy: Christine Serlin, Affordable Housing Finance | March 23, 2020
The situation for the affordable and market-rate lending environment remains very fluid during the nation’s coronavirus outbreak, and it’s changing hour by hour, not even day by day, says Don King, executive vice president and head of the Multifamily Finance Groupat Walker & Dunlop.
“A lot of sponsors are anxious to take advantage of the low interest rates so we have seen an uptick in calls, interest, and potential activity,” says Philip Melton, executive vice president and national director of affordable and Federal Housing Administration lending at Bellwether Enterprise. “At the same time, we have concerns.”DOWNLOAD PDF
Top U.S. Regulator Said to Lobby Bank CEOs on Overhaul of Low-Income Lending RulesBy: Andrew Ackerman, The Wall Street Journal | February 21, 2020
WASHINGTON— Joseph Otting, a top U.S. regulator, is personally lobbying bank chiefs to win support for his signature initiative: an overhaul of rules governing hundreds of billions of dollars in lending to low-income areas.
Mr. Otting, the comptroller of the currency, has reached out to some of the country’s most prominent bank chief executives this month. They include JPMorgan Chase & Co.’s James Dimon, Bank of America Corp. ’s Brian Moynihan and more than a dozen other bank chiefs, according to people briefed on the conversations.DOWNLOAD PDF
Proposed CRA Regulations Prompt Concerns for Future of Affordable Housing, Community Development Investment and LendingBy: Brad Stanhope and Teresa Garcia, Novogradac | February 2020
There is plenty of concern about the Community Reinvestment Act (CRA) regulations proposed Jan. 9 by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), starting with the “single-metric test.”
“The test would aggregate the dollar volume of all of a bank’s CRA activities on its balance sheet and divide that by the bank’s domestic retail deposits,” said Buzz Roberts, president and CEO of the National Association of Affordable Housing Lenders (NAAHL).DOWNLOAD PDF
Potential Housing Finance Reform Puts Fannie, Freddie in the SpotlightBy: Brad Stanhope, Novogradac | February 2020
When the Great Recession hit in 2007 and 2008, Fannie Mae and Freddie Mac were collateral damage–entering conservatorship in 2008 and changing the marketplace for investing in low-income housing tax credits (LIHTCs).
Housing finance reform is possibly on the menu for 2020, but insiders suggest it won’t be nearly as drastic.DOWNLOAD PDF
Revamp of Investment Rule Could Benefit Richer DistrictsBy: Jim Saksa, CQ News | January 28, 2020
Before releasing a controversial proposal to overhaul a decades-old law that encourages banks to lend in poor and neglected neighborhoods, Comptroller of the Currency Joseph Otting went on a cross-country tour selling the changes he had in mind.
“While [the Community Reinvestment Act] has driven trillions of dollars in investment since 1977, more needs to be done to ensure banks are motivated to maintain and increase investment, lending and services in rural areas, including Native American communities like the ones we visited today,” Otting said during an August visit to Native American pueblos in New Mexico.DOWNLOAD PDF
Will Regulators Ever Find Common Ground on CRA Reform?By: Brendan Pedersen, American Banker | January 9, 2020
WASHINGTON — More than two years after efforts began to modernize enforcement of the Community Reinvestment Act, regulators appear as divided as ever on how to proceed.
On one side are the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp., which jointly issued a proposal last month, while on the other is the Federal Reserve Board, which appears to have significant reservations about the plan.DOWNLOAD PDF
Those objections were first detailed this week by Fed Gov. Lael Brainard, who delivered an indirect but sharp critique of several elements of the proposal. For now, the two sides appear far apart.
CRA Reform Proposal to Target Mortgage ActivityBy: Yemeng Yang, Inside Mortgage Finance | December 19, 2019
Banking regulators last week unveiled a sweeping plan to modernize the Community Reinvestment Act, including major changes to how mortgage lending activity is qualified. The move has some community lending groups unsettled.
The proposal, issued jointly by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp., would block banks from getting CRA “credit” from originating loans to middle- and upper-income borrowers residing in low- and moderate-income neighborhoods. The regulators would only assess banks’ distribution of mortgage lending to LMI borrowers.DOWNLOAD PDF
Reactions to CRA Plan Signal Long Fight AheadBy: Brendan Pedersen, American Banker | December 15, 2019
WASHINGTON — Bank regulators moved the needle this week on efforts to reform the Community Reinvestment Act, but their sweeping proposal could set in motion a bruising battle to come.
Clear fault lines had already appeared before the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. released their 240-page notice of proposed rulemaking, with the Federal Reserve refusing to sign on to the document and Democratic lawmakers criticizing the plan even before it was unveiled.DOWNLOAD PDF
CRA Proposal Draws Concerns from Affordable Housing LeadersBy: Donna Kimura, Affordable Housing Finance | December 13, 2019
A proposal to overhaul the longstanding Community Reinvestment Act (CRA) could pose new risks for community development investments.
The plan released by federal regulators Thursday is raising significant concerns for affordable housing and civil rights leaders who fear the proposal will weaken the CRA’s original purpose of expanding financial opportunity and spurring investment in underserved areas.DOWNLOAD PDF
Overhaul of Anti-Redlining Law Sparks Rift Among Financial RegulatorsBy: Renae Merle, The Washington Post | December 13, 2019
A proposed overhaul of a 40-year-old anti-redlining law has created a rift between three powerful financial regulators.
The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp. (FDIC) have unveiled an ambitious plan for updating the 1977 Community Reinvestment Act, which would give the banking industry new flexibility on meeting government-mandated goals for investing in poor neighborhoods.DOWNLOAD PDF
What Treasury, HUD Housing Finance Reform Plans Could Mean for Affordable Multifamily HousingBy: Buzz Roberts, Novogradac | October 2019
The Trump Administration’s Sept. 5 plan for housing finance reform is really two reports–one from the Treasury Department and one from the U.S. Department of Housing and Urban Development (HUD)–and covers two pathways–one legislative and one administrative.
Here’s what they might mean for affordable multifamily housing.
In general, the plan reaffirms two pillars of the current housing finance system. First, unlike previous proposals, the Trump plan would keep Fannie Mae and Freddie Mac at the heart of the system rather than replace them with new government sponsored enterprises (GSEs). Although the plan does call for a greater role for private competitors, that would mostly come from scaling back the GSEs’ footprint. Other entities could apply for GSE charters, but the plan does not depend on their stepping forward. In any case, only Congress could allow for new GSE charters.DOWNLOAD PDF
Bill Seeks to Create ‘Neighborhood Homes’ Tax CreditBy: Donna Kimura, Affordable Housing Finance | June 24, 2019
Lawmakers have proposed a federal tax credit that would fuel the rehabilitation of deteriorated single-family homes in distressed neighborhoods.
Introduced by Reps. Brian Higgins (D-N.Y.) and Mike Kelly (R-Pa.), the Neighborhood Homes Investment Act (NHIA) seeks to build on the success of the low-income housing tax credit (LIHTC) for multifamily housing properties.
It gets to the core of a challenging problem: Many distressed neighborhoods have a large number of single-family homes, says Buzz Roberts, president and CEO of the National Association of Affordable Housing Lenders.DOWNLOAD PDF
Congress Dangles Tax Credits to Boost Supply of Affordable HousingBy: Job Prior, American Banker | June 18, 2019
The 2017 federal tax overhaul sharply reduced banks’ tax rates, but it also provided less incentive for banks to invest in affordable housing.
As banks’ tax bills have declined, the tax credits used by developers to build more affordable housing have simply become less attractive to banks.
Yet the supply of affordable rental properties continues to shrink, so now some lawmakers are proposing legislation that aims to renew banks’ interest in the tax credits and bring more affordable homes to markets that badly need them.DOWNLOAD PDF
Four Years, $13 Million and Dozens of Hands: How ‘Affordable Housing’ Gets Made in AmericaBy: Andrea Riquier | May 22, 2019
The apartment building at 410 Cedar St. in Washington, D.C., is undergoing a multiyear restoration that aims to keep it affordable for its current residents and for generations to come.
Jennifer Sumler has lived in her apartment building on Cedar Street in the Takoma section of Washington, D.C., for her entire life, but the sound she heard one late November evening a few years ago was like nothing she’d ever experienced.
“All of a sudden the sky got dark and there was a ‘Wizard of Oz’ moment,” recalled Sumler, who’s 50. “Leaves started to whip up. There was this ferocious wind. Then there was this noise. It was loud and really otherworldly.”DOWNLOAD PDF
Groups Push ‘Access and Affordability’ in Letter on GSE ReformBy: Scotsman Guide | March 1, 2019
Twenty-eight organizations in the real estate industry, including the National Association of Realtors (NAR), Mortgage Bankers Association (MBA) and the National Association of Affordable Housing Lenders (NAAHL), sent a letter Friday to the Federal Housing Finance Agency urging for reforms to Fannie Mae and Freddie Mac.
The letter, addressed to acting FHFA director Joseph Otting, highlights the need for reforms to the government-sponsored enterprises (GSEs) that prioritize access and affordability in the mortgage market. According to a message from the NAR, the letter was crafted after “months of collaboration on essential GSE reform principles that promote stability in the housing finance system.”DOWNLOAD PDF
We Already Know What to Do About the Housing CrisisBy: Buzz Roberts, Impacting Our Future/USA Today | March 2019
Wouldn’t it be great to have a way to build and renovate affordable apartments that could bring government, the private sector and local communities together as partners; that could produce quality homes that would fit local needs and improve neighborhoods; that could serve families, the elderly and even the disabled and the homeless well for decades; that Republicans, Democrats, developers and communities could all get behind?
We already have that. It’s called the Low Income Housing Tax Credit, and it may be one of America’s best kept secrets. Since 1987, this “Housing Credit” has produced over three million affordable apartments and now accounts for about 30 percent of all apartments with similar rents. Harvard University called the Housing Credit America’s most successful affordable housing development policy ever.DOWNLOAD PDF
Experts Say Some OZ Investments Should be CRA EligibleBy: Mark O'Meara, Novogradac | February 5, 2019
The Community Reinvestment Act (CRA) of 1977 provides a framework for financial institutions, state and local governments and community organizations to promote banking services to all members of a community.
“The CRA remains the primary driver of bank financing,” according to Local Initiatives Support Corporation’s (LISC’s) comments in response to the advance notice of proposed rulemaking (ANPR) pertaining to reforming the CRA regulatory format. “CRA has been a critical, if not the most critical, resource available to facilitate the flow of private capital into underinvested communities. It has been successful not only for the communities and community residents that have benefited from these investments, but also for the banks–who have managed to find new and profitable investment opportunities that generally perform as well or better than other bank investments.”DOWNLOAD PDF
Three Keys to CRA ModernizationBy: Buzz Roberts, Novogradac | February 2019
Modernizing Community Reinvestment Act (CRA) rules presents both threats and opportunities for community development, which under CRA includes affordable housing, economic development, neighborhood stabilization and revitalization, community services, and disaster area recovery.
The Office of the Comptroller of the Currency’s (OCC) advance notice of proposed (ANPR) rulemaking last August attracted more than 1,500 public comments. Here are three key issues whose outcome will determine CRA’s future role in community development.DOWNLOAD PDF
Affordable Housing Insiders Keep Close Eye on CRA Reform ProposalsBy: Brad Stanhope, Novogradac | February 2019
The Community Reinvestment Act (CRA) has been around for more than 40 years and its current regulations are 23 years old.
“I think it’s needed,” said Tony Alfieri, managing director of tax credit investors at RBC Capital Markets. “[CRA regulations] have been out there over 40 years and change is needed because the banks’ operating landscape has changed dramatically. It’s also needed [to improve] efficiency.”
The CRA requires three agencies–the Office of the Comptroller of the Currency (OCC), the Federal Deposit Investment Corporation (FDIC) and the Federal Reserve (Fed)–to oversee whether depository institutions meet the credit needs of their surrounding communities, particularly low and moderate-income neighborhoods. One of the biggest factors in that is affordable housing, which has increasingly been defined by investment in low income housing tax credit (LIHTC) equity.DOWNLOAD PDF
Recovery from Shutdown Will Be Long and DifficultBy: Adriel Bettelheim, POLITICO | January 25, 2019
After 35 days of mass furloughs, bureaucratic inertia and a culminating wave of airport delays, nine shuttered federal agencies began laying plans to creak back to life Friday after President Donald Trump announced a short-term deal to reopen the government.
It won’t happen overnight.
The shutdown froze court cases, curtailed drug reviews and food safety inspections and sidelined investigations into matters like Facebook’s data security practices. The IRS fell behind on preparations to handle millions of tax returns. The E-Verify system the Homeland Security Department runs to help businesses determine whether employees are eligible to work in the United States went offline. And the EPA twice scuttled a public hearing on a proposal to roll back a major climate rule for future power plants.DOWNLOAD PDF
Will This Be CRE Lenders’ New Best Friend?By: Andy Peters, American Banker | October 29, 2018
Commercial real estate lenders could be getting a shot in the arm at just the right time. Low-income communities across the country are set to benefit from a new federal rule designed to encourage economic development. Tax benefits will accrue to investors who put money into projects located in thousands of districts designated as Opportunity Zones. That in turn could stimulate more construction lending at a time when overall CRE lending has stagnated.
Projects that otherwise would not get a second glance may now be appealing, said Roger Shumway, chief credit officer at the $1.3 billion-asset Bank of Utah in Ogden. “I see it opening up some areas that we haven’t had before,” Shumway said. “I can see it helping us quite a bit.”DOWNLOAD PDF
OCC Launches CRA ModernizationBy: Buzz Roberts, Novogradac | October 2018
The first overhaul of Community Reinvestment Act (CRA) regulations in a generation began with the Office of the Comptroller of the Currency’s (OCC) publication of an advanced notice of proposed rulemaking (ANPR) Sept. 5.
The final policy could reshape how banks finance affordable housing and other community development activities.
The OCC is one of three federal agencies responsible for CRA. OCC oversees national banks, the Federal Reserve Board supervises state-chartered banks that are members of the Federal Reserve System and the Federal Deposit Insurance Corporation (FDIC) examines other state-chartered banks. It is unusual for one agency to go it alone on a major regulatory initiative, suggesting that the Fed and FDIC are not yet on board, but OCC hopes the three agencies will unite when it’s time to propose a specific plan.DOWNLOAD PDF
Treasury Recommends CRA ModernizationBy: Buzz Roberts, Novogradac Journal of Tax Credits | June 2018
The Treasury Department has recommended that federal banking regulators significantly update how they implement the Community Reinvestment Act (CRA) to reflect sweeping industry changes and serve communities better. The next move is up to the three federal banking agencies.
Under the new leadership of Joseph Otting, the Office of the Comptroller of the Currency (OCC) has made modernizing CRA a top priority, which it has promised to start soon by publishing an advance notice of proposed rulemaking (ANPR), perhaps in concert with the Federal Reserve Board (FRB) and the Federal Deposit Insurance Corporation (FDIC). CRA policies are normally set jointly by the three banking agencies to promote consistency. After the ANPR is published and public comments are received and reviewed, a proposed rule would be the next step and then, following another round of comments, a final rule.DOWNLOAD PDF
Draft Senate GSE Reform Bill Would Scale Back Affordable Housing LendingBy: Buzz Roberts, Novogradac Journal of Tax Credits | March 2018
A widely leaked draft Senate bill would overhaul the secondary mortgage market and scale back commitments to affordable mortgages.
Offices of the senators working on the draft, Bob Corker, R-Tenn., and Mark Warner, D-Va., say the draft is not final and neither senator has formally committed to it.
The draft bill is the newest attempt at housing finance reform, the last big unfinished business of financial system reform in the aftermath of the Great Recession. After the Federal Housing Finance Agency (FHFA) took Fannie Mae and Freddie Mac–the so-called government sponsored enterprises, or GSEs–into conservatorship in 2008, the Treasury Department invested $187 billion to keep them operating and to support the housing market. The GSEs since returned to financial health and paid $271 billion in dividends to Treasury, but they remain in conservatorship.DOWNLOAD PDF
Low Income Housing Tax Credit Gets Boost from Spending BillBy: Brian Collins, American Banker | March 26, 2018
WASHINGTON — Congress approved a significant increase in the Low Income Housing Tax Credit program in passing a trillion-dollar budget bill last week.
This is the first increase in the tax credit in “over a decade,” Sen. Maria Cantwell, D-Wash., a longtime champion of the program, said in a press release.
The program currently provides states and local LIHTC-allocating agencies with nearly $8 billion in annual budget authority to issue tax credits for the acquisition, rehabilitation or new construction of rental housing targeted to lower-income households.
The Cantwell provision will increase the allocation of LIHTCs by 12.5% over the next four years, at a cost of nearly $3 billion.DOWNLOAD PDF
Republican Tax Plan Could Grind Affordable Housing Construction to a Virtual HaltBy: Andrea Riquier, MarketWatch | November 8, 2017
The tax plan proposed by Congressional Republicans will likely decimate production of new affordable rental housing, even as housing shortages across the country are driving rents higher and taking ever-larger shares of Americans’ incomes.
The plan released last week by the House Ways and Means Committee preserves a well-regarded program called the Low Income Housing Tax Credit — but effectively guts it. That’s because about half of all low-income housing credit development is done in conjunction with private activity bonds, a financing method that the plan scraps.
Private activity bonds are tax-exempt bonds issued by municipal government entities for special projects, often involving a private developer. In each of the five years after the recession, an average of about $5 billion of PABs were issued for housing, according to the Council of Development Finance Authorities. Issuance surged to $14 billion in 2016.
What’s more, the other half of all affordable housing deals, which rely purely on the tax credit program, would become more expensive as tax rates go down and make tax credits worth less.
“It’s shocking. It’s devastating,” said Michael Novogradac, who runs an accounting consultancy that tracks the tax credits. Novogradac estimates the changes together will result in a reduction of about two-thirds of new affordable housing units each year for the next decade.
Banks to Trump: Spare Affordable Housing ProgramsBy: Alan Kline, American Banker | March 15, 2017
Under construction on a parcel of land in Boston’s inner city that has been vacant for more than four decades is a $21 million, five-story apartment complex that will eventually house 40 low-income families or individuals.
Boston Private Bank is providing much of the financing, though Esther Schlorholtz, its director of community investment, said it could not do so without a fair amount of government support.
To cover the costs of building and operating the property and still keep rents affordable for tenants, the developer needed to obtain several layers of financing assistance that included two different types of tax credits and zero-interest loans or grants through two federal programs administered by the U.S. Department of Housing and Urban Development.
Those federal programs, Schlorholtz said in an email, “are key to making the entire financing work. They fill the project gap that no one else funds.”
But will those programs, which bankers and housing advocates say are crucial to helping solve the country’s chronic shortage of affordable housing, be around much longer?
The Trump administration’s budget for fiscal 2018 calls for slashing HUD’s budget by 13% from current levels, largely by eliminating the Community Development Block Grant program and the HOME Investment Partnerships Program.
Thomas FitzGibbon, a former executive with MB Financial in Chicago and now an independent consultant, said that to make projects affordable for both the developer and residents, banks need programs like HOME and block grants to close deals. He added that if the programs are eliminated or curtailed, some banks could have trouble meeting their Community Reinvestment Act obligations.
“Under CRA, one of the things banks are challenged to do is drive capital into capital-starved markets, and it can be hard to do that without some kind of government subsidy,” he said.
Benson “Buzz” Roberts, the president and CEO at the National Association of Affordable Housing Lenders, said that the programs have provided a strong return on their investments. Citing HUD’s own numbers, he said that every dollar of HOME funds invested in the development of low- and moderate-income housing since 1992 has brought in $4.26 of private investment. In all, it has helped developers build, fix up or acquire more than 1.2 million homes and apartments.
“That’s a lot of production,” he said. HOME “has had a tremendously positive effect on distressed communities, and it’s been very cost-effective.”DOWNLOAD PDF
Trump Tax Plan, Not Even On Drawing Board, Is Already Roiling Rental HousingBy: Andrea Riquier, MarketWatch | February 28, 2017
Developers, financiers, and owners of low- and moderate-income rental housing are scrambling for patches for lost equity
The housing development known as A.O. Flats, announced in March 2016, was hailed as exactly what Boston needed: affordable rental homes in a mixed-use building, just steps from a transit station. It would mean 78 middle-class families and residents – nurses, teachers, service workers – could afford to rent in Jamaica Plain, one of the city’s most sought-after neighborhoods, an area where 2-bedroom apartments are renting for about $2,000 per month, according to Zillow.
A.O. Flats was in a sweet spot, according to Bart Mitchell, president of The Community Builders, the nonprofit housing developer behind the project. “People embraced the idea of housing production being needed near transit, in a neighborhood for people with higher incomes but having it be for moderate incomes as well.”
The project was supported by the City of Boston and The Community Builders and had funding through a national initiative called the Low Income Housing Tax Credit, a program that’s enabled more than 43,000 housing units to be built over the past three decades.
But in November, after Donald Trump’s surprise victory, planned construction on A.O. Flats came to a screeching halt. The LIHTC distributes federal tax credits to the states, which work with developers to determine the best projects to meet local needs — everything from apartments to senior housing.
Prospect of Tax Reform Upends Affordable Housing FinanceBy: Kristin Broughton, American Banker | January 12, 2017
The mere whiff of corporate tax reform is said to be causing delays in bank-backed financing for low-income housing projects amid a severe U.S. shortage of affordable units.
Investments by banks in housing developments have hit snags in the two months since Republicans swept the elections, according to bankers, auditors and affordable-housing advocates.
The sense that tax reform is within reach for the first time in decades “immediately slowed things down,” said Rob Likes, national manager for community development at KeyBank. “We’re hearing about that from our clients and from the market.”
What’s the connection? The affordable housing market relies heavily on subsidies through the low-income housing tax credit program. Developers use the credits to fund as much as 70% of the cost of new housing projects. Banks make equity investments in the projects by buying the tax credits and in return claim a range of tax benefits over a 10-year period.
“Different banks are approaching this differently,” said Buzz Roberts, CEO of the National Association of Affordable Housing Lenders, whose members include several large and regional banks.
Some banks have taken a “bit of a pause” on making new investments, Roberts said, describing it as a “prudent” move as banks wait for clarity on corporate rates (and thus potential tax savings) drop. Such decisions leave last-minute gaps in financial plans that have taken years to finalize, observers said.DOWNLOAD PDF
Panel Discussions Focus on Housing Policy in Next AdministrationBy: Shannon Rieger, Harvard Joint Center for Housing Studies | December 20, 2016
From tax reform to fair housing, the incoming Trump administration and new Congress are likely to adopt policies that could greatly affect housing, particularly affordable subsidized housing, noted speakers at a conference held in Boston last week. Organized by The New England Housing Network, a broad coalition of housing and community development organizations from the six New England states, the December 16th event focused on what the new administration and Congress will “do about the unmet need for affordable housing in our country” and what advocates can do to encourage a robust federal affordable housing agenda in 2017.
Speakers, including national experts, state officials, and leading advocates from throughout New England, touched on a variety of issues, including tax reform, the future of Government Sponsored Enterprises (GSEs), infrastructure initiatives, anti-poverty programs, and fair housing policies. Everyone noted that many current programs and initiatives are threatened and that much of the discussion is speculative because there is tremendous uncertainty surrounding the Trump administration’s plans, as well as the likelihood that Congress may not support the new administration’s policies. Nevertheless, panelists discussed several potential strategies for bringing together an effective coalition to advocate for affordable housing at a particularly challenging time.
Discussants also noted that Treasury Secretary designate Steven Mnuchin and key members of Congress appear to significantly disagree on GSE reform. Mnuchin has said he is interested in seeing that Fannie Mae and Freddie Mac are taken out of “government ownership,” restructured, and privatized. However, Congress has not demonstrated support for a “recap and release” of the GSEs. These disagreements may impede any efforts to reform GSEs, noted several panelists.
The conflicting perspectives about both issues within the Republican Party will make it hard to substantially change the tax code or restructure the GSEs, said Benson “Buzz” Roberts, President and CEO of the National Association of Affordable Housing Lenders. He also noted that “inertia is the most powerful third party in the United States”, and may slow down or even block substantial changes in tax policy or GSE reform in the next several years.DOWNLOAD PDF
Will Ben Carson Put Julián Castro’s HUD Legacy in Jeopardy?By: Bill Lambrecht, San Antonio Express-News | December 17, 2016
Housing and Urban Development Secretary Julián Castro returns to San Antonio next month out of government for the first time in more than seven years, leaving behind an agency whose missions could be threatened by Congress and the new administration.
President-elect Donald Trump’s campaign vow to make “inner cities” a beneficiary of $1 trillion in infrastructure work over a decade brings a measure of hope to advocates of affordable housing.
Federal budgets could pose the biggest threat to HUD, given a return of spending caps next year and Trump’s promise to divert non-defense spending to the Pentagon.
But Benson “Buzz” Roberts, who heads the National Association of Affordable Housing Lenders, said he is encouraged by Trump’s pronouncements about investing.
The goal of investment might best be reached through the new infrastructure spending Trump talks about, coupled with an investment tax credit to rehab homes in downtrodden areas, Roberts said.
“The president-elect has spoken about trying to attract investment in distressed neighborhoods and the importance of making those neighborhoods good places to live,” Roberts said. “He has said he is committed to helping these neighborhoods, so I take him at his word.”DOWNLOAD PDF
Housing Advocates Seek New Tax Credit to Renovate Run-Down HomesBy: Brian Collins, National Mortgage News | December 8, 2016
Affordable housing advocates are seizing on President-elect Donald Trump’s call for tax reform, hoping that a new tax credit program to revitalize run-down homes in distressed neighborhoods will be attractive to the incoming administration.
The National Association of Affordable Housing Lenders is pushing an initiative to create the Neighborhood Homes Tax Credit, which will provide tax incentives for the renovation and construction of owner-occupied homes.
“It is a strategy to revive distressed neighborhoods with significant poverty that have a lot of single-family homes that are in tough shape,” said Buzz Roberts, president and chief executive of NAAHL.DOWNLOAD PDF
Brown ‘Open to Figuring Out’ GSE ReformBy: Ian McKendry, American Banker | December 1, 2016
The debate over housing finance reform appears to have new life as both Democrats and the next administration appear ready to take up the issue.
“I am very open to figuring out how we do this. I am just not sure where the [Trump] administration is,” said Sen. Sherrod Brown, D-Ohio., on Thursday while referencing comments Treasury Secretary-designate Steve Mnuchin made a day earlier.
Mnuchin said that the issue was on his top 10 list of things to deal with, pledging to “get it done reasonably fast.”DOWNLOAD PDF