Washington Hotline - October 9, 2009

Industry Meets with Rep. Barney Frank to Discuss Draft Housing Preservation Bill

During last week's joint Multifamily Finance Subcommittee/Housing Credit Group meeting, Claudia Kedda, NAHB's Director of Multifamily Finance, provided an update on the draft "Housing Preservation and Tenant Protection Act of 2009." This legislation, which House Committee on Financial Services Chairman Barney Frank (D-MA) is planning to introduce, would encourage the preservation of federally assisted affordable housing.

A draft bill is circulating among industry groups and has been the focus of two hearings already; the first hearing’s sole witness was HUD Secretary Shaun Donovan, and the second hearing’s witnesses were mostly nonprofit housing groups. The draft bill would remove some statutory and regulatory barriers to preservation, create incentives for owners to remain in HUD programs and establish incentives for preservation entities to acquire and rehabilitate these properties. Additionally, the bill protects tenants from displacement due to mortgage maturity, prepayments and opt-outs.

A summary of the preservation bill discussion draft is available here.

While the bill would provide some important and needed tools to facilitate the preservation of affordable rental housing, it also contains four specific provisions that would undermine the ability or desire of housing developers to participate in these transactions.

The four provisions are:

1. A right of first purchase by a preservation entity if an existing owner does not renew a project-based rental assistance contract; if there is any full payment, expiration, prepayment or termination of a mortgage for the housing; or if there is any termination or expiration of use restrictions of affordability requirements for the housing 
2. Third party beneficiary status to Housing Assistance Payment Contracts granted to residents
3. Limited participation in the new preservation program for certain Section 515 owners, and 
4. Disclosure of a significant amount of owner financial information, which would be posted on HUD’s web site.

NAHB, along with a coalition of industry groups, has expressed strong opposition to these provisions to Chairman Frank and to HUD Secretary Donovan. The industry groups met with Chairman Frank on Sept. 15 and worked out solutions to the four provisions above. Additional comments on other parts of the draft bill were submitted to the Committee staff subsequently. NAHB staff will continue to work with industry groups, Chairman Frank and the Committee as the bill moves forward.

View the full Multifamily Finance Subcommittee issues update here.

For more information, contact Claudia Kedda at ckedda@nahb.com or x8352.

New FHA Condo Approval Process Effective Next Month; Changes Anticipated

In June, HUD released Mortgagee Letter 2009-19 providing guidance on the new FHA approval process for Condominium projects. The letter allows lenders to determine project eligibility, review project documentation and certify to compliance of Section 203(b) of the National Housing Act and 24 CFR 203 of HUD’s regulations. This new approval process was to be effective for all case numbers assigned on or after Oct. 1, 2009. However, FHA recently told lenders that the new effective date is Nov. 2, 2009. The site condo and manufactured housing condo project changes that have already taken effect are not affected by this delay.

Before the new effective date, NAHB expects that several changes will be made to the policy as originally stated in Mortgagee Letter 2009-19. For example, FHA has stated that the concentration limit for FHA-insured loans in a project will be increased to 50% from the previously stated 30%. In addition, the pre-sale requirement will be reduced to 30% from 51%. Other changes are expected regarding the transfer of control to the condo owners association and the acceptance of temporary certificates of occupancy.

There are a number of complex and confusing issues, which have not been addressed publicly by HUD/FHA staff. If they become effective, these policy changes would have a highly detrimental impact on potential purchasers of condominiums, which are frequently the most affordable way to achieve homeownership.

Joe Robson, NAHB’s 2009 Chairman, expressed grave concerns regarding this matter to FHA Commissioner David Stevens at a meeting on Sept.2. Commissioner Stevens was also questioned by members following his presentation to NAHB’s Executive Board on Sept. 30. In a follow-up letter to Commissioner Stevens, Mr. Robson offered to convene a stakeholder meeting to work with HUD staff to develop a more workable set of policies to help FHA mitigate the condo-related risk it perceives.

NAHB will continue to monitor this situation.

For more information, e-mail Bill Renner, or call him at 800-368-5242 x8597.

Important Win for Homebuilders Facing Fair Housing Accessibility Lawsuits

In a ruling favorable to the multifamily industry, a judge in the U.S. District Court for the District of Colombia on Sept. 28 dismissed a lawsuit filed in 2006 by the Equal Rights Center (ERC) against Post Properties alleging violation of the Fair Housing and Americans with Disabilities Acts. Post Properties owns and manages apartment communities across the U.S. ERC is a civil rights organization that has filed many lawsuits against multifamily builders and owners alleging non-compliance with Fair Housing accessibility requirements. 

The ruling is based on the concept of constitutional "standing," which requires a plaintiff to prove an injury to maintain a lawsuit. The court reasoned that although organizational plaintiffs such as ERC can establish standing "either on its own behalf, or on behalf of its members," ERC filed its case alleging that it had sustained injuries that entitled it to bring the lawsuit.  ERC did not allege any of its individual members suffered a concrete injury. The court noted that the alleged organizational injury sustained by the ERC, the voluntary redirection of financial resources to litigate against Post, was “self-inflicted.” ERC suffered no injury traceable to Post’s conduct. Thus, the District Court appropriately dismissed the lawsuit on summary judgement. 

For more information, contact Jeff Augello at 800-368-5242 x8490.

HUD Publishes Final 2010 Fair Market Rents

HUD published final fiscal year 2010 fair market rents (FMRs). FMRs are used to determine payment standard amounts for the Housing Choice Voucher program, to determine initial renewal rents for some expiring project-based Section 8 contracts and to determine initial rents for housing assistance payments (HAP) contracts in the Moderate Rehabilitation Single Room Occupancy (SRO) program. The FMRs went into effect on Oct. 1, 2009.

NAHB Comments on GSE Duty to Serve Underserved Markets

On Aug. 4, the Federal Housing Finance Agency (FHFA) published an Advance Notice of proposed rulemaking and request for comment (ANPR) on Fannie Mae and Freddie Mac's (GSEs) duty to serve underserved markets. The Housing and Economic Recovery Act of 2008 established a duty for the GSEs to serve three underserved markets: manufactured housing, preservation of affordable housing and rural areas. NAHB submitted comments in response to the ANPR and will have a second opportunity comment once the Proposed Rule is published. 

The purpose of establishing the duty to serve requirement is to increase the liquidity of mortgage investments and improve the distribution of investment capital available for mortgage financing in those markets. The GSEs are required to provide leadership to the market in developing loan products and flexible underwriting guidelines to facilitate a secondary market for mortgages on housing for very low-, low- and moderate-income families with respect to manufactured housing, affordable housing preservation and rural markets.

For more information, contact Claudia Kedda at 800-368-5242 x8352.

Resource: HUD Releases List of Difficult Development Areas for 2010

The Department of Housing and Urban Development (HUD) released a Notice designating ‘‘Difficult Development Areas’’ (DDAs) and ‘‘Qualified Census Tracts’’ (QCTs) for the Low Income Housing Tax Credit (LIHTC) program. 

HUD makes new DDA designations annually and is making new designation of QCTs at this time on the basis of revised metropolitan statistical area (MSA) definitions published by the Office of Management and Budget (OMB). In accordance with the Gulf Opportunity Zone (GO Zone) Act of 2005, the authorization for GO Zone DDAs expires on Dec. 31, 2010 and consequently, this will be the last designation of GO Zone DDAs.

Some items to note:

• HUD does not have new data at the tract level, so the list of QCTs changes only if OMB designates new metropolitan areas. For this reason, the 2009 and 2010 list of QCTs changed only in Arizona.
  
• Most metropolitan DDAs are in California, the Northeast, or in the Gulf Opportunity Zone where they receive special treatment due to effects of Hurricane Katrina.
  
• A provision in the Housing and Economic Recovery Act of 2008 allows states to grant a 30 percent boost to areas outside of the QCTs and DDAs published by HUD.
  
• HUD provides protection for areas removed from the list of QCTs and DDAs, effectively locking in the QCT or DDA designation for LIHTC applications meeting certain conditions outlined by HUD. For more information, view pg. 51561 of last year's Notice that addresses QCTs and DDAs listed in 2009 and not 2010.

For more information, contact Paul Emrath at 800-368-5242 x8449.

Calendar: Construction Forecast Conference, Multifamily Marketing Webinar, and More...

October
 

Plan to Attend Construction Forecast Conference on Oct. 21 Plan to attend the 2009 Fall NAHB Construction Forecast Conference & Webcast on Oct. 21 in Washington, D.C. — or watch it on the Web — to get the latest facts, insights and analysis of the housing industry. Panels of nationally recognized experts at the day-long conference will discuss economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys. For more information and to register, visit www.nahb.org/cfc.

Marketing Multifamily Housing in Today's Complex Environment Thursday, October 22, 2009 2:00 - 3:00 pm ET Hosted by NAHB Multifamily, the one-hour web seminar Multifamily Marketing in Today's Complex Environment will help you learn how to increase occupancy and retain customers in apartment and condominium communities by reinvigorating accelerated and conventional marketing strategies. Register Now! Date:  Thursday October 22, 2009 Time:  2:00 p.m. Eastern Daylight Time Costs: NAHB Multifamily Members: Free              NAHB Members: $100              Non NAHB Members: $125 To gain FREE access to all NAHB Multifamily webinars, become an NAHB Multifamily Council member or join a local Multifamily council in your area. National marketing professionals will: Tell you how to position your marketing efforts in a complex market for maximum impact. Illustrate how to better connect with your target market via social networking and maintaining a fresh online presence. Evaluate case studies and real life scenarios that are specific to the current marketing environment. Moderator: Garry Benson, Principal and President, Garrison Partners Consulting Speakers: Jon Gollinger, Founder and Chief Executive Officer, Accelerated Marketing Partners, LLC. and David J. Tufts, President, The Marketing Directors For more information about this webinar, contact Sheronda Carr at scarr@nahb.org or call her at 800-368-5242 x 8168.

Registration is open for the 2010 International Builders Show Jan.19-22 For a limited time, NAHB members can receive a complimentary 4-day exhibit registration, giving them access to the hottest exhibit floor in the building industry for absolutely no charge! Purchase a one or two day education pass, giving you access to education on the days you select and 4-day pass to the exhibit floor. And remember, education sessions are FREE on Friday!