FHFA extends forbearance period to 18 months

Borrowers with mortgages backed by Fannie Mae and Freddie Mac may be eligible for an additional forbearance extension of up to six months, the Federal Housing Finance Agency announced Thursday.

On Feb. 9, the FHFA extended forbearance plans an additional three months past beyond their initial 12 month expiration. With the latest edict, the agency is now allowing borrowers up to 18 months of coverage.

According to the FHFA, eligibility for the extension is limited to borrowers who are on a COVID-19 forbearance plan as of Feb. 28, 2021. The FHFA said other limits may apply to the extension but did not provide further details.

With the new extension set in motion, some borrowers may now be in forbearance through Aug. 31, 2022.

The FHFA extended its multifamily forbearance policies in December, pushing forbearance options for multifamily mortgages backed by the GSEs to March 31, 2021, though the agency has yet to say whether the latest extension will also be offered to owners of multifamily properties.


From forbearance to post-forbearance: How to make the process effective

To accommodate the large volume of loans still in forbearance, mortgage servicers must have functional, flexible and effective forbearance processes in place. Here are some actionable steps to create that process.

Presented by: FICS

Alongside its forbearance announcement, the FHFA also said the GSEs will be extending the moratoriums on single-family foreclosures and real estate owned (REO) evictions through June 30, 2021 – three months past the previous deadline set for Mar. 31, 2021. The new date matches the moratorium set by HUD for FHA and USDA loans.

According to FHFA director Mark Calabria, borrowers and the capital markets investors both benefit from consistent treatment.

“From the start of the pandemic, FHFA has worked to keep families safe and in their home, while ensuring the mortgage market functions as efficiently as possible,” Calabria said in a statement Thursday. “Today’s extensions of the COVID-19 forbearance period to 18 months and foreclosure and eviction moratoriums through the end of June will help align mortgage policies across the federal government.”

As of Feb. 22, the Mortgage Bankers Association estimates 2.6 million homeowners are in some form of forbearance. The MBA reported on Monday that the portfolios of Fannie Mae and Freddie Mac dipped down to 2.97%. The GSEs have consistently had lower forbearance rates than other owners of mortgages during the pandemic.

Economic data is starting to show some of the effects of long-term moratoriums. Black Knight’s December mortgage monitor report revealed that foreclosure starts hit a record low in 2020, falling by 67% from the year prior as moratoriums protected homeowners.

According to Black Knight, recent forbearance and foreclosure moratorium extensions have reduced near-term risk, but at the same time may have the effect of extending the length of the recovery period.

Based on the rate of improvement to date, Black Knight estimates there could be more than 2.5 million active forbearance plans remaining at the end of March 2021, when the first wave of plans reaches their 12-month expirations.

Source: housingwire.com

Forbearances fall for third week in a row, to 5.22%

The total number of mortgages in forbearance declined seven basis points to 5.22% in the week ending Feb. 14, according to the latest estimate from the Mortgage Bankers Association.

The trade group said 2.6 million homeowners are currently in forbearance plans.

“The share of loans in forbearance has declined for three weeks in a row, with portfolio and PLS loans decreasing the most this week. This decline was due to a sharp increase in borrower exits, particularly for IMB servicers,” said Mike Fratantoni, MBA’s senior vice president and chief economist.

Fannie Mae and Freddie Mac‘s forbearance portfolio continued to express the lowest share of loans, decreasing four basis points to 2.97%. Ginnie Mae‘s share, which include loans backed by the Federal Housing Administration, fell 2 basis points to 7.32%, while the share for portfolio loans and private-label securities (PLS) dropped a full 20 basis points from the prior week, at 8.94%.

The percentage of loans in forbearance for nonbank servicers also dropped 15 basis points to 5.54%, while the percentage of loans for depository servicers decreased 2 basis points to 5.28%.


From forbearance to post-forbearance: How to make the process effective

To accommodate the large volume of loans still in forbearance, mortgage servicers must have functional, flexible and effective processes in place. Here are some actionable steps to create that process.

Presented by: FICS

The MBA’s survey found that of the cumulative exits between June 1, 2020, and Feb. 14, 27.9% of borrowers continued to make their monthly payments during the forbearance period while over 15% of exits represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place.

Overall, the MBA noted that new forbearance requests are also falling – down six basis points to match a survey low.

“The housing market is quite strong, with home sales, home construction, and home price data all testifying to this strength,” Fratantoni said. “Policymakers and the mortgage industry have helped enable this during the pandemic by providing millions of homeowners support in the form of forbearance.”

In the week prior, forbearance was once again extended by the Biden administration, pushing out forbearance and eviction moratoriums an additional three months, through June 30, 2021. This measure only applies to those with a loan backed by the FHA, though Fannie and Freddie recently extended forbearance requests up to 15 months.

Now, data is showing the affects of long-standing moratoriums. Black Knight’s December mortgage monitor report revealed foreclosure starts hit a record low in 2020, falling by 67% from the year prior as moratoriums and forbearance plans protected homeowners.

Based on the rate of improvement to date, Black Knight estimates there could be more than 2.5 million active forbearance plans remaining at the end of March 2021 when the first wave of plans reaches their 12-month expirations.

For four months now, the forbearance portfolio volume has hovered between 5% and 6% — the longest a percentage range has held since the survey’s origins in May.

Source: housingwire.com

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.

Source: housingwire.com

Housing, civil rights groups ask Congress for $25B

A large partnership of housing and civil rights organizations reached out on Monday to congressional leaders advocating for further relief for homeowners in the next COVID-19 stimulus package.  

The letter was signed by representatives of more than 350 housing and civil rights organizations, including American Bankers Association, Mortgage Bankers Association, National Association of Realtors, National Association of Home Builders and the Housing Policy Council, the NAACP, National Urban League, National Fair Housing Alliance and National Consumer Law Center.

The letter calls for $25 billion in direct assistance to homeowners facing hardships as a result of the COVID-19 pandemic, at least $100 million for housing counseling, and just under $40 million for the Fair Housing Initiatives Program.

Of the approximately 3.8 million homeowners past due on their mortgages, over half of them are persons of color, according to Census Bureau.

Recent homebuyers that relied on low- or no-down payment loans from FHA, VA or the Rural Housing Service are at particular risk, the group contends, noting that even six months of forbearance can put borrowers underwater on their mortgages, owing more than their home is worth.

“Moreover, these borrowers are predominantly Black and Latinx families, first-time buyers and low to moderate-income families,” the letter says. “Mortgage payments assistance will be critically important to the nearly 3 million borrowers that remain in long-term forbearance plans from their mortgage servicers. We cannot begin to tackle the racial homeownership and wealth gaps if we do not take steps to prevent a wave of COVID-induced foreclosures and loss of home equity.”

The group is hoping the bulk of the requested $25 billion comes through the recently reintroduced Homeowner Assistance Fund, which can be used by state housing finance agencies. In the letter to Congress, the group states that the HAF can help homeowners by providing direct assistance with mortgage payments and get into affordable loan modifications, while assisting with utility payments, property tax and insurance payments, homeowner association dues and other support to prevent the loss of home equity.

The outreach from housing and civil rights groups comes at a pivotal time for the American housing industry. Recently appointed Treasury Secretary Janet Yellen has said she will play a key role in pushing the Biden administration’s economic agenda on Capitol Hill – which includes aggressive aid distribution in order to avoid an even longer recession.

President Joe Biden has repeatedly said his administration is focused on providing aid for those in need of affordable housing, and his $1.9 trillion American Rescue Plan was recently voted into the budget reconciliation process in order to speed up passage. The plan calls for an additional $30 billion in funding for emergency rental, energy and water assistance for hard-hit households, plus $5 billion in emergency assistance to people experiencing or at risk of homelessness.

All of this at a time in the country where Black homeownership has declined year-over-year, according to a recent Census Bureau report, and the percentage of Americans experiencing housing insecurity has risen to 9.5% – up from 7.2% in late 2020.

“A critical lesson of the Great Recession is that the communities most impacted need targeted, early intervention,” the group wrote in the letter. “Acting now to include these key provisions in the pending COVID-19 relief package will help stem what could be a damaging housing crisis in the U.S. concentrated in low income communities and communities of color.”

Source: housingwire.com

Biden stimulus could worsen affordable housing crisis

The nation’s most influential housing trade groups sent a letter to the House Committee on Financial Services saying any new stimulus package considered would need to have rental assistance, and warned of dire consequences if it does not.

Housing groups including CCIM Institute, Council for Affordable and Rural Housing, Institute of Real Estate Management, Manufactured Housing Institute, Mortgage Bankers Association, National Affordable Housing Management Association, National Apartment Association, National Association of Home Builders, National Association of Housing Cooperatives, National Association of Realtors, National Leased Housing Association and National Multifamily Housing Council sent a letter to Rep. Maxine Waters, D-Calif., chair of the committee, and Rep. Patrick McHenry, R-N.C., the ranking member, outlining their concerns.

In the letter, the trade groups urged Congress to move beyond “one size fits all” federal housing policies in favor of a more tailored approach. President Joe Biden’s American Rescue Plan stimulus proposes a continuation of previously passed policies for the rental sector such as an extension of federal eviction moratoriums. However, the letter states this approach could threaten the stability of the rental sector.

It proposes, instead, a rental assistance plan be considered.

“We strongly support the inclusion of additional rental assistance in the Americans Rescue Plan,” the letter states. “Without additional robust, direct rental assistance – beyond the newly proposed $25 billion – housing providers may never fully recover outstanding debt – whether through the eviction process or otherwise – and the housing affordability crisis will be exacerbated in the long- and short-term. This could devastate the industry and hurt America’s most vulnerable renters.”


Making housing more affordable by bridging the affordable supply gap

In the last few years, the number of existing single-family homes for sale has decreased. But home prices have increased. To make homeownership a possibility for everyone, there needs to be a higher supply of affordable homes.

Presented by: Fannie Mae

The apartment industry faces an estimated nearly $60 billion in lost rent for 2020, according to a recent study released by the Urban Institute and authored by Moody’s Analytics Chief Economist Mark Zandi and Falling Creek Advisors Owner Jim Parrott.

The letter explains this places a heavy financial strain on many in the rental industry, including “mom and pop firms.”

“Functioning under reduced revenue for almost a year has drained reserves, caused deferred maintenance and capital improvements and placed many housing providers on the precipice of economic ruin,” the analysis states.

Other economists agree that the rental space is being heavily hit, creating concerns for the housing market.

“There are some things that are of concern from a policy perspective and that, in the housing sector, is actually in the rental space,” Fannie Mae Chief Economist Doug Duncan recently told HousingWire. “There is the risk of a significant increase in the level of evictions in that space. The difficulty is targeted these policies so that they don’t distort normal behavior patterns. The devil will be in the details of how that gets put in place. Unemployment is definitely higher among the renter population than among the owner population.”

Congress continues to negotiate the stimulus package as Republicans seek to slim down the $1.9 trillion package to about $600 billion. The White House, however, remains unmoving on that front. The House passed the bill as a budget resolution, meaning it did not need any votes from the Republican party. The Senate could do the same, however it would require every one of the Democratic Senators on board with the new package.

“Renters need additional assistance, including emergency housing vouchers to ensure people in rural, and suburban and urban communities can remain stably housed,” Waters said in a committee hearing titled: More than a Shot in the Arm: The Need for Additional COVID-19 Stimulus. “More funding is needed for persons experiencing homelessness, who face even greater health risks as a result of the pandemic.”

“We must also address the reality that homeowners across America face a foreclosure crisis if Congress does not step in to support modifications before the pandemic ends,” she said. “And this Committee will also need to come to the aid of businesses and their workers who are barely staying afloat, including small businesses, minority-owned businesses, and sectors hit hard like the airlines.”

Source: housingwire.com

HUD extends waivers for FHA reverse mortgages

In a bid to aid borrowers, the Department of Housing and Urban Development announced on Wednesday a series of temporary waivers that will allow servicers to use alternative methods when servicing FHA-insured forward and reverse mortgages.

Rather than conducting face-to-face interviews, HUD’s waiver will allow substitute methods for servicers to conduct borrower interviews for FHA-insured forward and reverse mortgages when performing early default interventions, specifically for borrowers in danger of foreclosure.

Alternative methods HUD listed included phone interviews, video calling services and other conference technology.

HUD also said it is waiving the $5,000 property charge payment arrearages cap for reverse mortgage borrowers who are behind on payments.

Under existing policy, when a borrower fails to make two consecutive payments on a HECM repayment plan, the plan fails and servicers may only offer the borrower a new repayment plan if the borrower’s total arrearage is less than $5,000. The new waiver will allow servicers to evaluate impacted borrowers regardless of how far behind they are.


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HUD will also waive the requirement for servicers to obtain a signature on an occupancy certification from a HECM borrower. While HUD requires mortgagees must continue to obtain the HECM borrower’s annual certification, the physical signature requirement is temporarily eliminated.

“President Biden has made it clear that protecting the health, safety, and homeownership security of the nation’s most vulnerable populations, including seniors, are urgent and immediate priorities,” said acting HUD secretary, Matthew Ammon. “The policy waivers issued today are another important step in addressing these priorities.”

HUD had previously released several variations of these waivers originally announced on Dec. 17, 2020 but were set to expire Feb. 28, 2021. However, with no clear route of the virus and the deployment of a vaccine, this latest set of temporary waivers is not set to runout until Dec. 31, 2021.

According to a release, the agency hopes to align these waivers with President Biden’s “Day One” request to provide aid to homeowners struggling from COVID-19. Prior to that request, the FHA extended its foreclosure and eviction moratorium for borrowers with FHA-insured single family mortgages through March 31, 2021.

FHA also extended the deadline for borrowers financially impacted by COVID-19 to request a new forbearance from their mortgage servicer through March 31, 2021.

Source: housingwire.com

IMF: CFPB mortgage servicer complaints drop in Q4

Mortgage servicers received less complaints at the Consumer Financial Protection Bureau (CFPB) in the fourth quarter of 2020, according to data from Inside Mortgage Finance.

The data showed that mortgage protests overall decreased by 6.7% in the fourth quarter, while complaints about loan modifications dropped 10.1%, servicing concerns dropped 6.7% and criticisms about applications fell 8.6%.

But while these complaints were down for the final quarter of the year, overall in 2020, the CFPB saw an increase of 8.2% in mortgage-related complaints.

This revelation comes after the CFPB’s new Acting Director Dave Uejio promised swift action against mortgage servicers in an upcoming regulatory crackdown. Uejio told CFPB staff in an email that the bureau will direct its attention to mortgage servicers, promising “aggressive action” to ensure companies follow the law.

The greatest areas of concern for Uejio surrounded servicers’ handling of CARES Act forbearances such as failing to process accounts or providing homeowners with incorrect or incomplete information.


Mortgage servicers take steps to support borrowers amid COVID-19

As call volumes have spiked to a level not seen since last April, lenders and servicers need to prepare for a significant increase in their workload as they help borrowers through difficult times.

Presented by: Computershare Loan Services

But this comes in direct contrast to another government agency’s view. In October 2020 at the Mortgage Bankers Association Annual convention, Federal Housing Finance Agency Director Mark Calabria took the opportunity to recognize the effort servicers were making to help borrowers in forbearance and even thanked them.

And this week, the FHFA touted its accomplishments under the CARES Act, pointing out the low levels of foreclosures and delinquencies. In its blog, the FHFA said the CARES Act provided an option for homeowners with federally backed mortgages to request forbearance for up to 180 days, but said that even borrowers of non-covered mortgages were offered a similar option from their servicers.

The FHFA stated that while the true effects of the CARES Act may not be fully known for months to come, clearly borrowers saw a benefit as evidenced by the low level of delinquencies on credit reports.

“During 2020, mortgages reported to the credit bureaus as having payments 30 or 60 days past due plunged to 1%,” the FHFA states. “The percentages over the past year for mortgages that were 90 to 180 days past due (0.6 %) and mortgages in the process of foreclosure, bankruptcy or deed-in-lieu (0.3 %) remained flat.  As a result of these trends, the median credit score of mortgage borrowers, as measured by VantageScore on borrowers of active mortgage loans, has actually risen slightly in 2020. In contrast, the share of accounts that were reported as more seriously past-due rose sharply in 2009 after the Great Recession and consumer credit scores also suffered.”

Source: housingwire.com

FHFA appoints general counsel to create “world-class regulator”

The Federal Housing Finance Agency appointed Clinton Jones as its new general counsel, saying this was the next step in turning the FHFA into a “world-class regulator.”

Jones will step into the role immediately, taking the place of Alfred Pollard, who will retire from the FHFA at the end of March.

“Alfred has served admirably as General Counsel to every FHFA Director,” FHFA Director Mark Calabria said. “I am grateful for his wise counsel, hard work, and dedication to the Agency. Clinton’s long-standing career in public service, in-depth legal expertise in housing policy and executive leadership skills will help bolster FHFA’s work as a world-class prudential regulator.”

When Calabria first took over as head of the agency, he focused on mortgage giants Fannie Mae and Freddie Mac and their future in conservatorship. But Calabria also expressed his hope that he could make the FHFA an agency of progressive thinkers.

“I want it to be in a spot where, for instance, if you’re a young lawyer coming out of law school and you have an offer from the Fed or the OCC, that you may be willing to entertain an offer to come work at FHFA,” Calabria told HousingWire at the time. “I think it’s critical that we have a deep research function and are viewed as cutting-edge thinkers.”


Mortgage servicers take steps to support borrowers amid COVID-19

As call volumes have spiked to a level not seen since last April, lenders and servicers need to prepare for a significant increase in their workload as they help borrowers through difficult times.

Presented by: Computershare Loan Services

Calabria said the hiring of FHFA Senior Advisor for Economics Lynn Fisher, who previously served as vice president of economics at the Mortgage Bankers Association, early on in his tenure, was in pursuit of this goal.

Since 2019, Jones has served as a senior advisor at FHFA. Prior to joining the agency, he served for 24 years in various senior legal roles at the U.S. House of Representatives Committee on Financial Services, including General Counsel, Parliamentarian, and, most recently, Senior Counsel for the Housing and Insurance Subcommittee. Jones was also a vice president at Fannie Mae and an attorney advisor for the U.S. Department of Housing and Urban Development. He has been adjunct faculty at Howard University since 1990.

Until now, Pollard had been the only general counsel to serve the agency since it was formed in 2008, and served as general counsel to its predecessor, the Office of Federal Housing Enterprise Oversight. He has also served on several presidential mortgage fraud task forces and as a member of the Administrative Conference of the United States. In 2014, Pollard was named by National Law Journal as one of “America’s 50 Outstanding General Counsel.”

Source: housingwire.com

Marcia Fudge vows to end discrimination as HUD secretary

Marcia Fudge, President Joe Biden’s nominee for secretary of Housing and Urban Development, on Thursday vowed to end discrimination in housing should her nomination be approved by the U.S. Senate.

During her testimony to the Senate Committee on Banking, Housing and Urban Affairs on Thursday, Fudge said part of her priorities for HUD, “will require us to end discriminatory practices in the housing market, and ensure that our fair housing rules are doing what they are supposed to do: opening the door for families, especially families of color who have been systematically kept out in the cold across generations, to buy homes and punch their ticket to the middle class.”

She spoke of making sure the playing field is leveled and righting past wrongs, rather than simply ensuring everyone is treated the same way when it comes to homeownership opportunities.

Days after taking office, Biden signed several new executive orders that address racial equity, including a memorandum that directs HUD to both mitigate racial bias in housing and advance fair housing laws.

In a memorandum, Biden called on HUD to examine changes the Trump administration made last year to several rules, including “Preserving Community and Neighborhood Choice” and “HUD’s Implementation of the Fair Housing Act’s Disparate Impact Standard.” The agency will examine whether the Trump administration’s rules harmed access to fair housing.

If confirmed, Fudge would be the first Black woman to serve as HUD secretary in more than 40 years. Fudge’s previous work with the housing industry includes introducing legislation to help states and cities enact a speedier, more efficient process for abolishing vacant and abandoned properties.

Fudge received pushback from Republican Senators for some of her previous comments where she said, “Republicans don’t care about people of color, even a little bit. But if they do, I am willing to listen.”

However, Fudge, a U.S. Representative from Ohio, said her track record is one of bipartisanship and that she is committed to working across the aisle in her new role.

“I have the ability and the capacity to work with Republicans and I am committed to doing just that.”

The housing industry expressed its support of Fudge’s nomination, writing to the Senate Banking Committee in support of approving her.

“On behalf of the Mortgage Bankers Association, I write to support the nomination of the Honorable Marcia Fudge to serve as the next Secretary of the Department of Housing and Urban Development,” MBA President and CEO Robert Broeksmit wrote. “Since holding her first elected position as the mayor of Warrensville Heights, Ohio, and throughout her representation of Ohio’s 11th congressional district, Congresswoman Fudge has consistently supported the development of affordable housing. This experience will serve her well as HUD’s highest ranking official…I respectfully urge this committee and, in turn, the full Senate to approve Congresswoman Fudge’s nomination as swiftly as possible.”

Source: housingwire.com

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.”

Source: housingwire.com