Policy Archives

Duty to Serve Final Rule Issued

December 14, 2016/in Policy Duty to Serve

The Federal Housing Finance Agency issued a final rule to implement the Duty to Serve provisions which require Fannie Mae and Freddie Mac to serve three specified underserved markets – manufactured housing, affordable housing preservation and rural housing – by improving the distribution and availability of mortgage financing in a safe and sound manner for residential properties that serve very low-, low- and moderate-income families.

Visit FHFA.gov/DTS for the press release, final rule, fact sheet, public listening session details, timeline and more.

HAC Will provide a summary of the Duty to Serve Rule soon.

Stakeholder Webinar

FHFA will provide a high-level overview of the final rule and answer stakeholder questions via webinar on Monday, Dec. 19 at 2 p.m. ET.

You may submit questions in advance by emailing DutyToServeStakeholders@FHFA.gov with “webinar question” in the subject line. Please submit your questions by COB Thursday, Dec. 15.

Rural Rental Preservation Data Dashboards Launched

October 28, 2016/in Policy

Oct. 28, 2016 – USDA Rural Development/Rural Housing Service has launched a website providing data that can be searched and manipulated by users interested in preservation of rural rental housing. RHS Administrator Tony Hernandez sent the following email to stakeholders.

Subject: Great news and opportunity with MF Property Preservation Dashboards

Multifamily Partners,

I am happy to announce USDA Rural Housing Service has unveiled a set of five dashboards designed to provide key data to help preserve the affordability of USDA’s Multi-Family Housing (MFH) properties. The publicly accessible, user-friendly set – currently available in beta – is designed to help policymakers and industry leaders collect, track and analyze the timeframe for when the USDA mortgages could be paid off exiting USDA’s MFH program. These dashboards and their information can facilitate preservation discussions such as the transfer of properties and other efforts to protect our tenants.

Using this data will help you and the department take strategic action to preserve MF properties as appropriate, using RHS financing tools, including re-amortization, deferring loan payments, seeking new loans for rehabilitation, transferring properties to new owners, or take other actions to preserve affordable rental housing in rural areas.

The beta Property Preservation Dashboards can be publicly accessed on the Tableau Public Website. They complement data resources released by USDA earlier this year, including its rural housing investment data, program exit data, and mapped data overlaid with thousands of other indicators in PolicyMap. The Dashboard enable users to obtain such critical information as the number of USDA MFH properties exist in each state and details on projected dates for mortgage pay-offs.

When using the dashboards, you can narrow the data by location, program and other indicators. The dashboards also feature a user guide and data dictionary.

I am very excited to see the great work you will be able to do with access to this information. Thank you for working with USDA RHS to preserve multifamily properties and improve lives in rural America!

Tony

Tony Hernandez
Administrator
Rural Housing Service

USDA to Help Nonprofits Preserve Rental Housing

October 26, 2016/in Policy

October 26, 2016 – USDA has announced a new effort to increase nonprofit participation in preservation of Section 515 rural rental housing. Changes will take effect on March 1, 2017. USDA’s Rural Housing Service hopes its staff and interested nonprofits will use the intervening time to identify preservation deals. Nonprofits can reach out to USDA Rural Development state offices for additional information and assistance.

The changes include:

Return on Investment (ROI):
- Eligible nonprofits will earn a return based on the investment of their own resources following the ROI methodology.
- Grant funds used for hard costs of construction will be included in the ROI methodology.
- Loans made by nonprofits (aka Developer Loans) to a nonprofit purchasing entity will be included in the ROI methodology subject to certain conditions being met.
Security Value: USDA will include the value of state or local loans provided at favorable rates in the determination of Security Value (loan to value ratio).
Hard Cost Contingency: Hard cost contingency will be an eligible Section 515 loan purpose, allowing it to be included in the ROI methodology subject to certain conditions being met.

USDA Releases Maturing Mortgage Dates for Multifamily Loans

September 20, 2016/in Policy

In an update to the issue of maturing rural multifamily mortgages, USDA released a loan level database of all rural multifamily loans and their projected “exit” or maturity date. These data can be accessed on USDA’s data site.

USDA’s Section 515 rental properties were financed with USDA loans that could be amortized over terms as long as 50 years. Once the USDA loan is paid in full, owners are under no obligation to maintain the properties as affordable housing. After the loan matures, tenants living in these properties are also no longer eligible for USDA’s Rental Assistance.

The Housing Assistance Council (HAC) analyzed data on USDA’s multifamily loan portfolio as of the end of March 2016. At that time, there were about 13,830 Section 515 properties with over 416,000 rental units. Nearly two-thirds of the households in these properties receive USDA Rental Assistance. The average tenant household has an income of about $13,600.

USDA calculated a “exit date’ which includes a loan maturity, or estimated payoff date. According to HAC analyses, these projections indicate that an average of 74 properties (1,788 units) per year will leave the program over the next 12 years (2016 – 2027). In 2028, the number properties exiting the program is expected to increase significantly with an average loss of 556 properties (16,364 units) per year through 2032. For the following eight years after 2032, the numbers of properties exiting the program increases for an average loss of roughly 22,500 units per year until peaking in 2040.

For a summary analysis of the updated maturing mortgage estimates see HAC’s Rural Policy Note.

To view an interactive map of properties and estimated exit dates for each property visit HAC’s Mapping Rural America page at https://arcg.is/29638UI.

The data and corresponding data dictionary are available on USDA’s Rural Development Datasets page.

Renewed Attention on Poverty in the U.S.

June 8, 2016/in Policy

A renewed focus on the issue of poverty in the United States was highlighted by the release of Speaker Paul Ryan’s anti-poverty plan titled “A Better Way.” While the nation has generally emerged from the Great Recession, there are still millions of Americans in poverty, and many of those live in rural areas. According to recent data from the U.S. Census Bureau, the rural poverty rate remains higher than the U.S. poverty rate.

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While poverty rates have generally been on the decline, an increasing number of rural communities are experiencing persistently high poverty rates. These areas are often isolated geographically, lack resources and economic opportunities, and suffer from decades of disinvestment. Often forgotten or hidden from mainstream America, these areas and populations have had double-digit poverty rates for decades. Persistently poor counties are those with poverty rates of 20 percent or more in 1990, 2000, and 2010. There were 429 of these persistently poor counties in 2010. Fully 86 percent of them had entirely rural populations. Overall, more than 21 million people live in persistent-poverty counties. Nearly 60 percent of them are racial and ethnic minorities, and the median household income is $31,581, more than 40 percent below the national median. The persistence of poverty is most evident within several predominately rural regions and populations such as Central Appalachia, the Lower Mississippi Delta, the southern Black Belt, the colonias region along the U.S.-Mexico border, Native American lands, and migrant and seasonal farmworkers.

For more information about Speaker Ryan’s anti-poverty plan and Democratic responses, see links below.

USDA FY17 Funding Moves Forward in Senate

May 20, 2016/in Policy

On May 19, 2016 the Senate Appropriations Committee approved a USDA fiscal year 2017 spending bill that had passed the Agriculture Appropriations Subcommittee on May 17. The bill funds most rural housing programs at their FY16 levels, and provides increases requested by the Administration’s budget for Section 521 Rental Assistance, Section 542 vouchers, and Section 538 rental housing guarantees. It also raises Section 515 rental housing to $40 million, higher than either the budget or the House bill. (Details are in the table below.)

The Committee’s report makes clear its concerns about rural rental housing issues, describing the anticipated loss of affordable rental housing due to the “alarming number” of USDA rental housing mortgages that are scheduled to mature in the next few years. It tells the department “to engage affordable housing advocates, project owners, tenants, and others as practicable, to find acceptable and effective long term solutions that will retain projects in the affordable rural housing program.” Meanwhile, it says, it is providing several types of short term assistance:

As an incentive for nonprofits and PHAs to purchase USDA rental properties and keep them in the program, such entities would be allowed to earn a return on investment on their own resources invested in a deal, including proceeds from Low Income Housing Tax Credit syndication, their own contributions, grants, and developer loans at favorable rates and terms.
Property owners would be allowed to receive an asset management fee of up to $7,500 per property (rather than the $7,500 per owner that USDA has been providing).
Section 515 funding would be increased by over $11 million, “to be used for transfers to new owners, and for re-amortizations and other servicing actions that will trigger new, extended restricted use agreements retaining the properties in the program.”
A pilot program, funded at $1 million, would provide technical assistance to facilitate transfers of properties to nonprofits and other new owners.

The bill also requires USDA to report every quarter on the number of Rental Assistance renewals approved, on the amount of RA available, and the anticipated need for RA for the remainder of the fiscal year. The Committee’s report expresses concern about past inaccurate calculations of the amount of RA needed, notes that USDA has implemented a new tool to determine RA needs, and directs the agency to perform a detailed analysis of the tool’s accuracy and to report its findings to the Committee within six months of the bill’s enactment, as well as reporting “immediately” any inadequacies found in the forecasting tool.

Unlike the House bill, the Senate’s version does not allow use of Section 542 vouchers for tenants in properties whose mortgages mature.

The House committee passed its F17 Agriculture appropriations bill, H.R. 5054, in April (as reported in the HAC News, 4/20/16). The House bill provides steady or increased funding levels for USDA’s rural housing programs. It increases Section 523 self-help technical assistance funding to $30 million and raises Section 502 direct to $1 billion. Section 521 Rental Assistance and Section 542 vouchers would receive amounts that, according to the Administration’s budget, will allow for renewal of all current aid, new RA for new farmworker housing properties, and new vouchers for tenants in properties leaving the Section 515 program for any reason, including mortgage maturity. It also includes Administration language that would extend voucher eligibility and allow USDA to set priorities for voucher distribution.

The House Committee’s report tells USDA to provide it with a list of criteria used to define “rural in character” in determining what places are considered rural and therefore eligible for housing program funding.

NOTE: When this table was first posted there was an error in the Senate bill’s figure for Section 502 direct. It has been corrected. The Senate bill provides $900 million, not $1 billion, for Section 502 direct.

USDA Rural Dev. Prog. (dollars in millions)	FY16 Approp.	FY17 Budget Proposal	FY17 House Cmte. Bill (H.R. 5054)	FY17 Senate Cmte Bill (S. 2956)
502 Single Fam. Direct Self-Help setaside	$900 5	$900 0	$1,000 5	$900 5
502 Single Family Guar.	24,000	24,000	24,000	24,000
504 VLI Repair Loans	26.3	26.3	26.3	26.3
504 VLI Repair Grants	28.7	28.7	28.7	28.7
515 Rental Hsg. Direct Lns.	28.4	33.1	35	40
514 Farm Labor Hsg. Lns.	23.9	23.9	23.9	23.9
516 Farm Labor Hsg. Grts.	8.3	8.3	8.3	8.3
521 Rental Assistance	1,390	1,405	1,405	1,405
523 Self-Help TA	27.5	18.5	30	27.5
533 Hsg. Prsrv. Grants	3.5	0	5	3.5
538 Rental Hsg. Guar.	150	230	200	230
Rental Prsrv. Demo. (MPR)	22	19.4	22	22
542 Rural Hsg. Vouchers	15	18	18	18
Rural Cmnty. Dev’t Init.	4	4	4	4

Section 502 Guarantee Program Regs Revised

May 4, 2016/in Policy

Following is the text of an email announcement USDA Rural Development sent to stakeholders on May 3, 2016 regarding the Section 502 guarantee program.

A final rule amending the Section 502 guaranteed loan regulation (7 CFR 3555) was published on May 3, 2016 and will be effective on June 2, 2016. The following sections were changed:

3555.101 Loan Purposes: The Agency is making the “Streamlined-Assist” refinancing option, which has been successfully tested in a pilot, a permanent program feature. The streamlined-assist refinance differs from traditional refinance options in that there is no requirement for an appraisal, a credit report, or the calculation of debt-to-income ratios, as long as the borrower is of low or moderate income and has been current on their first mortgage for the previous twelve months. A new appraisal is required for direct loan borrowers who received a subsidy for the purposes of calculating subsidy recapture. The borrower must receive a tangible benefit to refinance under this option. A tangible benefit is defined as a $50 or greater reduction in their principal, interest, taxes and insurance (PITI) which includes the annual fee payment on the new guaranteed loan when compared to the existing PITI including the annual fee payment.
3555.108 Full Faith and Credit: The Agency is expanding its lender indemnification authority as per a recommendation by the Office of Inspector General. If a loan originator did not follow Agency guidelines in underwriting a loan, and then sells it to another lender, and the loan defaults because of the underwriting deficiency, the Agency will require the originator to indemnify or repay the Agency the amount of any loss claim associated with the loan. The old indemnification authority applied if a loss claim was paid within 24 months of origination. The expanded authority is if the loan defaults within 60 months of origination.
3555.109 Qualified Mortgage: The Agency has defined what a “qualified mortgage” is, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Any loan guaranteed by the Agency is a qualified mortgage as long as the originator did not charge the borrower points and fees above the limits established by the Consumer Financial Protection Bureau.

Additional guidance will be provided with Handbook HB-1-3555 updates which will be published on June 2, 2016.

Questions regarding this announcement may be directed to the National Office Division at 202-720-1452. [HAC note: The contact person listed in the Federal Register notice about the rule change is Lilian Lipton, USDA RD, 202-260-8012.]