HUD vows to protect LGBTQ from housing discrimination

The U.S. Department of Housing and Urban Development (HUD) announced Thursday it will administer and enforce the Fair Housing Act to prohibit discrimination on the basis of sexual orientation and gender identity.

In a memorandum, HUD notes the policy set forth in President Joe Biden’s Executive Order 13988 on Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation, which directed executive branch agencies to “examine further steps that could be taken to combat such discrimination.”

HUD offices and recipients of HUD funds will enforce the policy immediately, said Jeanine Worden, acting assistant secretary of HUD’s Office of Fair Housing and Equal Opportunity.

“Housing discrimination on the basis of sexual orientation and gender identity demands urgent enforcement action,” Worden said. “Every person should be able to secure a roof over their head free from discrimination, and the action we are taking today will move us closer to that goal.”

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Specifically, the memorandum directs the following:

  • HUD will accept and investigate all jurisdictional complaints of sex discrimination, including discrimination because of gender identity or sexual orientation, and enforce the Fair Housing Act where it finds such discrimination occurred 
  • HUD will conduct all activities involving the application, interpretation, and enforcement of the Fair Housing Act’s prohibition on sex discrimination consistent with its conclusion that such discrimination includes discrimination because of sexual orientation and gender identity
  • State and local jurisdictions funded by HUD’s Fair Housing Assistance Program (FHAP) that enforce the Fair Housing Act through their HUD-certified substantially equivalent laws will be required to administer those laws to prohibit discrimination because of gender identity and sexual orientation
  • Organizations and agencies that receive grants through the Department’s Fair Housing Initiative Program (FHIP) must carry out their funded activities to also prevent and combat discrimination because of sexual orientation and gender identity. 
  • FHEO regional offices, FHAP agencies, and FHIP grantees are instructed to review, within 30 days, all records of allegations (inquiries, complaints, phone logs, etc.) received since Jan. 20, 2020, and notify persons who alleged discrimination because of gender identity or sexual orientation that their claims may be timely and jurisdictional for filing under this memorandum.

Sexual identity discrimination will also not be tolerated, HUD officials said. Per the outcome of Supreme Court case Bostock v Clayton County, the Court held that workplace prohibitions on sex discrimination include discrimination because of sexual orientation and gender identity.

“Unfortunately, housing discrimination is the lived reality for many LGBTQ people in our country – and this is especially true for the transgender community,” said Erin Uritus, CEO of Out and Equal Workplace Advocates. “Housing is basic human right. “Thankfully, President Biden is bringing the full force of the federal government to bear so that no LGBTQ American will be denied a roof over their head just because of who they are or who they love.”

Studies have indicated that same-sex couples and transgender persons in communities across the country experience demonstrably less favorable treatment than their straight and cisgender counterparts when seeking rental housing, per HUD officials.

“Enforcing the Fair Housing Act to combat housing discrimination based on sexual orientation and gender identity isn’t just the right thing to do – it’s the correct reading of the law after Bostock,” said Damon Smith, principal deputy general counsel. “We are simply saying that the same discrimination that the Supreme Court has said is illegal in the workplace is also illegal in the housing market.” 

On Tuesday, the Department of Justice withdrew HUD’s appeal of a case postponing the agency’s 2020 Disparate Impact Rule that would have made it harder to bring discrimination claims under the Fair Housing Act.

By withdrawing the appeal, the preliminary injunction under the case Massachusetts Fair Housing Center v. HUD will continue to delay implementation on the rule. According to DOJ court documents, HUD, along with HUD Acting Secretary Matt Ammon voluntarily moved to dismiss the appeal.

The rule, initially enacted in 2013 under the Obama administration, drew significant backlash from the housing industry after changes to the rule were made under former President Trump last year.

Criticism was especially apparent after then-HUD Secretary Ben Carson issued updated guidelines that imposed a specific, five-step approach that required regulators to prove intentional discrimination on the lender’s behalf.

Under HUD’s previous rule, lenders, landlords and other housing providers could be held liable for discrimination against protected classes even if it was not their intent to discriminate. The use of disparate impact was challenged all the way up to the U.S. Supreme Court, which upheld the rule in 2015.


White homeownership rate hits nine-year high

Despite an unrelenting COVID-19 virus and economic recession, U.S. homeownership rose in the fourth quarter of 2020 from the same period last year. And it’s reached a record high for white homeowners, but fallen for Black Americans.

The overall homeownership rate in the fourth quarter of 2020 rose 0.7% above that of the fourth quarter of 2019, according to a new report from the U.S. Census Bureau. The share of Americans who own their own home was 65.8% in the fourth quarter of 2020, rising from 65.1% in the same period a year earlier, the Department said in a report on Tuesday.

That percentage is a drop, however, from the third quarter of 2020, which reported a robust 67.4% homeownership.

The homeownership rate for white Americans in the fourth quarter of last year was 74.5% – a nine-year high, and surpassing the fourth quarter of 2019’s rate of 73.7%. Homeownership rates for Black Americans dipped to 44.1%, the lowest rate since the first quarter of 2020.

Hispanic-American homeownership rose to its highest fourth quarter rate in three years, at 49.1%. Asian, Native, Hawaiian, and Pacific Islander homeownership was reported at 59.5% – up from the rate of 57.6% in the fourth quarter of 2019.

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Homeownership in Q4 2020 was highest in the Midwest – about 70.8%, according to the report. The South (67.7%), Northeast (62.6%), and West (60.4%) all reported homeownership rates above 60%, as well. All regions had higher fourth-quarter homeowner rates than in 2019.

The median asking sales price for vacant, for-sale units was $214,600 in the fourth quarter of 2020.

The average U.S. rate for a 30-year fixed mortgage fell to under 2.8% in the fourth quarter, which pushed up home purchases (though a lack of inventory and rising prices have hindered even higher rates of home ownership).

Approximately 89.1% of all housing units were occupied in the fourth quarter of 2020, and 10.9% were vacant. Owner-occupied housing units made up 58.6% of total housing units.

Owners over the age of 65 made up the majority of homeowners in the fourth quarter of 2020 at 80.2%. The under-35 crowd accounted for only 38.5% of homeowners.

It’s conceivable that the total number homeowners increases in the next few years, as well. President Joe Biden is hoping to pass a bill green-lighting a $15,000 tax credit for first-time homebuyers. If the bill is passed, those first-time potential buyers could use the $15,000 essentially as a down payment on the home.

This looms as a solution to prospective buyers looking to take advantage of historically-low mortgage rates brought on by the pandemic and recession.


The 10 Best Closed-End Funds (CEFs) for 2021

A dreadful 2020 for most of the world is mercifully over. But while investors have plenty of hope for 2021, many still have some trepidation. Fortunately, the market’s best closed-end funds (CEFs) – an often overlooked corner of the market – can provide many of us with a solution.

While the head of steam from late 2020 has many confident about this year, some are worried that a 2021 rally is already fully priced in. Meanwhile, downside risks are prevalent. For instance, the vaccine rollout has been slower than anticipated, and Joe Biden’s 100 million shots in his first 100 days as president might be a moonshot we don’t hit.

Then there are the 7 billion people who live outside of the U.S., many of whom are unlikely to get the shot in the first half of 2021, or even this year at all.

By the way, what exactly does the post-vaccine world look like? Have consumers changed their habits? If so, how? How many people will go back to Main Street to eat, drink and shop? Are we at the cusp of a new roaring ’20s, or will fear and uncertainty be a drag on growth? Will a bigger financial catastrophe ensue in the coming months, forcing businesses that have struggled for over a year to finally throw in the towel?

Investors consumed by those uncertainties can lean on the stable income provided by some of the market’s best CEFs. You can learn more about how they work in our closed-end funds primer, but in general, while performance might ebb and flow, CEFs can help balance that performance out with a steady flow of typically robust payouts many times higher than the broader market.

Here are 10 of the best CEFs to buy for 2021. In my work as head research analyst and writer for CEF Insider, I constantly scour the market for the best opportunities in closed-end funds. A few of the following CEFs play on the prevailing themes of the coming year, while others are contrarian bets that still bear consideration giving management’s excellent track records. That can make them invaluable tools for income investors looking to make hay of the coming year, no matter what happens.

Data is as of Jan. 27. Distributions can be a combination of dividends, interest income, realized capital gains and return of capital. Distribution rate is an annualized reflection of the most recent payout and is a standard measure for CEFs. Fund expenses and discounts/premiums to net asset value (NAV) provided by CEF Connect.

1 of 10

BlackRock Science and Technology Trust

BlackRock logoBlackRock logo
  • Market value: $1.3 billion
  • Distribution rate: 4.2%
  • Expenses: 0.92%

This list of the best CEFs for 2021 is going to be a little heavy on the technology side. That might seem counterintuitive given the “smart money’s” focus on value for 2021, but these funds should not only be resilient this year, but fruitful for many years to come as technology continues to dominate daily life.

The BlackRock Science and Technology Trust (BST, $54.04) is the first such tech-oriented fund worth considering, in part because of its tremendous track record. The BST has produced a 311% total return (price plus distributions) since inception in late 2014 – that’s not only better than the S&P 500’s 117% return in that time, but better than the 217% return of the tech-heavy Nasdaq, and the 269% return of the Technology Select Sector SPDR ETF (XLK).   

The secret behind that outperformance is management’s aggressive tech selections. While the top holdings include blue chips such as Apple (AAPL) and Microsoft (MSFT) that appear at the top of cap-weighted tech funds, you also get decent weights in still large but more emergent holdings such as Twilio (TWLO), C3.AI (AI) and Square (SQ).

This strategy is likely to be a long-term winner over time. But its prospects could be better than many expect in 2021 if a slow vaccine rollout and mutant COVID-19 strains extends a heavier-than-normal dependence on the companies BST holds.

Learn more about BST at the BlackRock provider site.

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BlackRock Science and Technology Trust II

BlackRock logoBlackRock logo
  • Market value: $2.8 billion
  • Distribution rate: 3.9%
  • Expenses: 1.30%

That said, even if the Joe Biden administration is able to ramp up the vaccine rollout and we go back to something more closely resembling a pre-pandemic world, certain habits – such as working from home and ordering groceries online – aren’t just going to immediately snap back to pre-pandemic levels.

And thus, the internet will continue to be an important place for companies to attract attention and customers.

Technology really is in a “heads I win, tails I win too” situation with regards to the future, which is why BST and the BlackRock Science and Technology Fund II (BSTZ, $35.66) are great CEF options for 2021.

While BST skews more toward traditional, large-cap companies, BSTZ’s average market cap is a bit smaller, and it’s also more internationally focused (about 60% U.S. stocks versus 70% for BST). Top holdings include not just C3.AI, but also Farfetch (FTCH), U.K. electric vehicle company Arrival and social app Snap (SNAP).

This CEF also goes farther than BST with a lot of private equity bets that provide it access to up-and-coming companies that BST is too big to dig into. That has helped BSTZ roughly double in value since late 2018 inception, and helped it hike its distribution by 15% in late 2020.

Learn more about BSTZ at the BlackRock provider site.

3 of 10

AllianzGI Artificial & Technology Opportunities Fund

Allianz GI logoAllianz GI logo
  • Market value: $927.1 million
  • Distribution rate: 5.6%
  • Expenses: 1.34%

Like BST and BSTZ, the AllianzGI Artificial & Technology Opportunities Fund (AIO, $27.00) is a relatively low-yielding tech CEF – though its 5.6% yield is better than both BlackRock offerings. Over the past year, this young fund has outperformed the Nasdaq Composite by more than 3 percentage points.

Importantly, AIO currently trades at 3% discount to its net asset value. A hallmark of CEFs is that their limited number of shares means that at times, they can trade at premiums or discounts to their NAV. So at the moment, you can buy the assets in AIO for, effectively, 97 cents on the dollar.

AIO has a surprisingly diversified and value-driven investment strategy. While highflying tech companies like NXP Semiconductors (NXPI) and Roku (ROKU) are top holdings, the company’s third and fourth biggest positions – Microsoft (MSFT) and Deere (DE) – are much more value-driven. In fact, AIO has mixed a high-tech portfolio with some non-tech companies – UnitedHealth Group (UNH) is another big position – which looks odd, considering its name, but it gives the portfolio a well-rounded flavor that is compelling to an investor who wants strong returns but also a little diversification.

What’s most admirable about AIO’s portfolio is what it says about management and how it views the world. It understands that technological innovations aren’t the exclusive domain of technology companies. Firms such as UNH, who uses artificial intelligence (AI) to optimize its margins by lowering insurance claims, are also beneficiaries of technology and need to be bought accordingly when they’re the most beaten up.

AIO is a unique fund that combines the best of value investing and growth investing at a time when too many people pit the two against each other, and that makes it one of the best CEFs for 2021, and perhaps long after that.

4 of 10

Columbia Seligman Premium Technology Growth Fund

Columbia Threadneedle logoColumbia Threadneedle logo
  • Market value: $458.0 million
  • Distribution rate: 6.4%
  • Expenses: 1.15%

Columbia Seligman Premium Technology Growth Fund (STK, $28.82) is relatively small but it’s hardly overlooked, given a five-year average premium to NAV of about 3%. But fortunately for new money, STK now trades at a small 2% discount to NAV, providing an excellent entry point for someone looking to buy tech assets slightly on the cheap, and with a strong distribution rate.

The portfolio’s focus on large and reliable tech companies has helped it be a strong wealth creator for years: STK’s top holdings in Lam Research (LRCX), Apple (AAPL), and Teradyne (TER) belie a management style focused on well-established long-term growth prospects rather than the more aggressive speculation found at the margins of BST, or more centrally in BSTZ.

That does mean less price upside for investors – performance falls somewhere in between the Nasdaq-100 and the S&P 500 since inception in late 2009. But importantly, it provides a lot of performance in the form of regular distributions. Not only has STK never cut those distributions, but it has even delivered the occasional special distribution.

If you want exposure to the tech sector but prefer a more conservative portfolio, STK might be one of the best CEFs for your consideration.

Learn more about STK at the Columbia Threadneedle provider site.

5 of 10

BlackRock Enhanced Equity Dividend Trust

BlackRock logoBlackRock logo
  • Market value: $1.6 billion
  • Distribution rate: 7.2%
  • Expenses: 0.87%

If you’re looking for CEFs that really start to live up to their high-yield reputations, you’ll want to look toward funds such as the BlackRock Enhanced Equity Dividend Trust (BDJ, $8.31).

BDJ, with a 7%-plus yield on a distribution that actually went up in 2019, has been gaining investor confidence. A discount to NAV that widened all the way to 23% in 2020 has since narrowed down to about 10% – still a nice discount, but proof that investors are starting to rediscover this fund.

BlackRock Enhanced Equity Dividend Trust is certainly not a technology fund – while the sector is third at about 13% of assets, financials (28%) and healthcare (18%) are much larger pieces of the pie. Its larger holdings include the likes of Citigroup (C), Verizon (VZ) and Bank of America (BAC), all above 3% each.

Its diversification across the economy makes it a compelling CEF bet for 2021, especially if you’d like some contrarian holdings that might accelerate their rebounds this year.

Learn more about BDJ at the BlackRock provider site.

6 of 10

Pimco Dynamic Income Fund

Pimco logoPimco logo
  • Market value: $3.1 billion
  • Distribution rate: 10.2%
  • Expenses: 3.71%*

Closed-end funds can certainly deliver much more yield than 7%, of course, but you have to get a little more exotic, and take on a bit more risk.

One of the best high-yielding CEFs for 2021 could be the Pimco Dynamic Income Fund (PDI, $21.05). This actively managed fund is overseen by one of the largest bond buyers in the world: Pimco, whose $1.9 trillion in assets makes it a major market mover. That position has helped Pimco (and PDI) gain access to bonds and derivatives that most market players can’t access.

In turn, that edge should ensure Pimco remains one of the bond market’s dominant players.

PDI’s strong yield is generated by more than just its portfolio of mortgage-related instruments, investment-grade corporates, junk bonds, EM debt and other issues, but high leverage. Closed-end funds are allowed to take out debt to invest even more money into their selections – a tactic that can lead to more volatile results, sure, but also higher distribution rates and returns.

Pimco Dynamic Income Fund has put up remarkable returns compared to your average bond fund – a roughly 192% total return since 2012 inception versus 31% for the Bloomberg Barclays US Aggregate Bond Index. That performance hasn’t come in nearly as straight a line, but PDI has made up for it by delivering occasional payout growth and special distributions.

* Includes a 1.99% baseline expense and 1.72% in interest expenses.

Learn more about PDI at the PIMCO provider site.

7 of 10

Cohen & Steers Quality Income Realty Fund

Cohen & Steers logoCohen & Steers logo
  • Market value: $1.7 billion
  • Distribution rate: 7.8%
  • Expenses: 2.00%*

A contrarian play of 2021 is in real estate. While some people expect a rebound as more people get vaccinated and get out of their homes, the pandemic taught the world that a lot of office space is unnecessary, and that some of America’s physical store footage is superfluous.

That has some people wondering what’s going to happen to all those office buildings and strip malls.

Whatever will happen, it seems pretty clear that a lot of real estate holders are set for bankruptcy – which is why real estate investment trusts (REITs) were one of the worst sectors of 2020, and one of the slowest to recovering.

But that makes REITs compelling now – or at least the babies that are being thrown out with the bathwater are. Not all real estate is going to go fallow for years, and really good real estate investors will know which is which.

That makes the Cohen & Steers Quality Income Realty Fund (RQI, $12.30) one of the best CEFs for 2021 – well, if the REIT market rebounds.

The strongest performer of all CEFs in 2019, RQI has a tremendous track record; since its inception in 2002, RQI has returned 426% to beat the SPDR Dow Jones REIT ETF’s (RWR) 372%. Currently, the fund holes a good blend of infrastructure, self-storage, healthcare, industrial and other real estate, led by American Tower (AMT), Public Storage (PSA) and Welltower (WELL).

Better still, it trades at a tidy 5% discount to NAV. Compare that to a premium it fetched through much of the late 2010s because its portfolio kept crushing the real estate market. Credit goes to management’s acumen for that.

* Includes a 1.11% baseline expense and 0.89% in interest expenses.

Learn more about RQI at the Cohen & Steers provider site.

8 of 10

Cohen & Steers REIT and Preferred and Income Fund

Cohen & Steers logoCohen & Steers logo
  • Market value: $1.1 billion
  • Distribution rate: 6.7%
  • Expenses: 1.96%

Similar to RQI, the Cohen & Steers REIT and Preferred and Income Fund (RNP, $22.30) has a strong portfolio of high-performing real estate that’s hand-picked by a management team who knows the industry.

Unlike RQI, RNP is diversified out of REITs by including preferred stocks in other sectors (mostly finance) to help it in thin years for real estate. The CEF’s 6.7% yield isn’t quite what you get from RQI, but it’s a dependable monthly payout stream that has never been cut, not even during the 2007-09 financial crisis nor the 2020 bear market.

Instead of being rewarded with a premium for its historical strength and reliable payouts, RNP trades at a 4% discount to NAV. If real estate recovers quickly, the discount on this CEF should disappear.

Learn more about RNP at the Cohen & Steers provider site.

9 of 10

BlackRock Muniyield Quality Fund II

BlackRock logoBlackRock logo
  • Market value: $317.8 million
  • Distribution rate: 4.6%
  • Expenses: 2.29%*

Amid 2020’s counterintuitively strong year for stocks, you might be concerned that equities across the board are in for an eventual correction, and you might want to diversify into bonds.

Tax-free municipal bonds are one strong option, and the 4.6%-yielding BlackRock Muniyield Quality Fund II (MQT, $14.09) is one of the better options out there for you.

Importantly, this is a high-quality portfolio; more than 90% of holdings are investment-grade, including nearly 80% in A-rated bonds or better. Instead, its relatively high yield distribution rate (remember that municipal bond yields are lower than most other bonds, but make up for it through tax exemptions) is a result of a high (37%) use of leverage.

Meanwhile, you can get these municipal bonds for roughly 95 cents on the dollar at present.

* Includes a 0.92% baseline expense and 1.37% in interest expenses.

Learn more about MQT at the BlackRock provider site.

10 of 10

Pimco Municipal Income Fund

Pimco logoPimco logo
  • Market value: $369.7 million
  • Distribution rate: 4.6%
  • Expenses: 1.91%*

The Pimco Municipal Income Fund (PMF, $14.25) yields a similar 4.6%, but it certainly does not trade at a discount at the moment. In fact, it very rarely does. PMF has traded at a premium to NAV for most of its history, and the only consolation is that its current 6% premium is less than its five-year average of about 9%.

For a long while, that premium was in part justified by its long history of stable distributions. But then, PMF cut payouts for the first time in early 2017, then again last year.

The upside? Pimco Municipal Income now offers a much more sustainable payout, and despite those cuts, it has delivered superior total returns to its rivals – it has returned 106% over the past decade, roughly doubling the 54% return of the iShares National Muni Bond ETF (MUB) in that same time.

This is still a Pimco bond product, which alone makes it worthy of a closer look. And again, despite its payout declines, it has delivered solid performance over the long term. That makes PMF one of the best CEFs for income investors not just in 2021, but farther down the road.

* Includes a 1.17% baseline expense and 0.74% in interest expenses.

Learn more about PMF at the Pimco provider site.

Michael Foster is the head research analyst and writer for CEF Insider, a newsletter dedicated to high yielding closed-end funds. For more great income ideas, check out Michael’s latest free special report, Indestructible Income: 5 Bargain Funds with Safe 9.7% Dividends.


Potential impacts of Biden’s $15,000 tax credit

The housing industry is keeping a close eye on the Biden administration’s proposal of a first-time homebuyer tax credit of $15,000. If passed, the funds — which would help cover a down payment — could be accessed immediately by the buyer at the closing table.

$1.9 trillion American Rescue Plan — is more of a possibility now that both Senate races in Georgia went to Democrats.

Ralph DiBugnara, president of Home Qualified and senior vice president at Cardinal Financial, sees an obvious positive impact of the tax credit but is still wary of parts of the bill, which includes an increased rate on long term capital gains.

“The real estate market is so hot that hurting investors now may not have a big effect, but long term it could cause major issues,” DiBugnara said. “Real estate Investors tend to buy more real estate in even in bad markets as a long-term strategy. If it becomes more expensive for them to do so, because of taxes, I believe some will shift strategies long term so when market cools there will be a lot less of them to support home buying.”

Lawrence Yun, chief economist at the National Association of Realtors, thinks Biden’s tax credit will need to get support from around 60 senators — a majority needed to pass it into law — if Democrats choose not to use budget reconciliation. And, the possibility certainly exists that Republicans will ask for a smaller credit number.

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“Having a few Republican Senators on board will help change the public perception of working across the aisle,” Yun said. “That means getting what the Biden administration wants along with items favorable for Republicans, such as expanding high speed internet access to rural areas and a tax break for small businesses.”

For builders, Yun said preserving the 1031 Exchange to incentivize land sales is important for the future of the housing market. An extra $15,000, he said, certainly won’t help the already low inventory of homes available.

“Only with added supply will the homebuyer tax credit be effective in boosting homeownership and enlarging the middle class,” Yun said. “Without supply, home prices jump much higher with no meaningful gain to new homeownership.”

Ruben Gonzalez, Keller Williams chief economist, said it’s hard to comment on anything definitive at the moment but thinks Biden’s tax credit will garner bipartisan support.

“The challenge with the credit right now is that demand is already really strong with mortgage rates so low, and most evidence is showing that high earners have increased savings during the pandemic,” Gonzalez said. “The first-time home buyer tax credit seems like a good candidate for bipartisan support, but right now it’s still unclear if we are genuinely going to see bipartisan efforts in Congress.”

But past bipartisan support for similar tax bills seems to point things in a positive direction, DiBugnara said, of passing.

“I do believe, with the Democratic-led Senate, most of what is President Biden’s tax plan will come to fruition,” he said. “The [$15,000] credit seems to be one of the easier proposals of the tax plan to get passed, because it will stimulate the already hot real estate market and align with a low interest rate market. The majority of both parties have been in agreement with that.”