Throughout the week, the BPC Housing Commission highlights news items that address critical developments in housing policy. Any views expressed in the content posted on this forum do not necessarily represent the views of the Commission, its co-chairs or the Bipartisan Policy Center.
By Christina Mlynski
“As the debate on housing finance reform moves forward, more attention will be paid to the activities of the Federal Home Loan Banks, and how these institutions fit into the future structure of housing finance. While resolving the conservatorships of Fannie Mae and Freddie Mac is central to the future of the secondary mortgage market, the FHLBanks can be a part of the larger housing reform discussion. Ed DeMarco, current acting director of the Federal Housing Finance Agency, firmly believes such institutions provide secondary mortgage market services to their members such as buying whole loans directly from members and holding them in portfolio.” Read more here.
By Vicki Needham
“In all, 73.7 percent of new and existing homes sold between the January through March quarter were affordable to families earning the U.S. median income of $64,400, according to a National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI), released on Tuesday. The figure is down slightly from the 74.9 percent in the final quarter of last year. The index has not dropped below 70 since the end of 2008.” Read more here.
By Susanna Kim
“Affordable housing advocates are skeptical about the move in some areas of the country to impose work requirements and time limits for residents in public housing. The affordable housing crisis for lower income households has grown so much that waiting lists for public housing assistance have thousands of names and it can take years to move to the front of the list.” Read more here.
By Julie Schmit
“In April, one of every 905 U.S. housing units received a foreclosure filing, market watcher RealtyTrac says. That was the lowest level since February 2007 — near the beginning of the nation’s foreclosure crisis — and down 23% from a year ago. But foreclosure activity is increasing in some states where legal procedures and new laws to protect homeowners had slowed down foreclosures.” Read more here.
By Zachary Warmbrodt and Jon Prior
“Fannie Mae and Freddie Mac have not only become profitable in the post-bailout era, they’re making so much money that they may end up sending $89 billion to the Treasury — which could help ease the urgency of the coming debt ceiling debate. The profits being churned out by the bailed-out mortgage finance giants are impacting an arcane aspect of accounting and tax rules in a way that could allow the two companies to cut big checks to the government in the coming months.” Read more here.
By Kathryn Buschman Vasel
“The Joint Committee on Taxation estimates that 34 million households claimed the home mortgage deduction in 2012, costing the federal government $68 billion in revenue. However, those taking advantage of the deduction skews heavily toward taxpayers along the East and West coasts, according to a recent report from The Pew Charitable Trusts. Homeowners in Maryland claim the deduction at a rate of 37%, with residents in West Virginia and North Dakota at the other end of the spectrum with just 15% taking it.” Read more here.
By Vicki Needham
“Lawmakers and housing industry experts have called for reforms in the mortgage finance system to shift the lead role from the government to the private sector. But any efforts to reduce Fannie and Freddie’s involvement in guaranteeing the bulk of home loans — they hold 31 million mortgages worth $5 trillion — could be undermined by the perception that the agencies have recovered financially.” Read more here.
By Jonathan House
The Wall Street Journal
“The U.S. economy has been slowly adding jobs as it recovers, but Moody’s Analytics estimates about four million more jobs are needed for full employment, the labor market threshold beyond which wage and price pressures are created. Four million jobs would lower the unemployment rate to around 4.5% or 5% from 7.5% currently, according to Moody’s Analytics.” Read more here.
By Amrita Jayakumar
The Washington Post
“Nationally, the share of working Americans who spend more than half their income on housing costs has grown every year since 2008, reaching 23.7 percent of all working households in 2011, according to the Center for Housing Policy, a research group. It was 21.8 percent in 2008. In the Washington region, the percentage shrank: 20.8 percent of working households spend more than half of income on housing, down from 22.5 percent in 2008. The report defines working households as those that average at least 20 hours of work a week and in which total income is no more than 120 percent of the region’s median income.” Read more here.
By Jon Prior and MJ Lee
“Watt’s nomination promises to also provide for a public debate over what role the government should play in helping Americans finance their homes. Despite the heated finger pointing, leaders in neither party have detailed what should replace Fannie and Freddie, which do not make loans but rather buy mortgages and package them into securities that are then sold to private investors with a guarantee.” Read more here.
By Nick Timiraos
The Wall Street Journal
“In an interview on Thursday, Mr. Watt offered few specifics about how he would lead the agency. On the politically charged issue of allowing Fannie and Freddie to modify mortgages by cutting loan balances, Mr. Watt said it was too soon to tell if he would revisit the decision of the Federal Housing Finance Agency’s acting director, Edward DeMarco, against permitting such write-downs.” Read more here.
By John Gittelsohn
“The U.S. House of Representatives is likely to pass a bill this year to reduce the influence of the government-backed Federal Housing Administration, Fannie Mae and Freddie Mac, Representative Scott Garrett said today. Government-backed mortgages have accounted for more than 90 percent of U.S. housing financing since 2008, when the private mortgage market dried up. As housing recovers and the government-sponsored enterprises — Fannie Mae and Freddie Mac — return to profitability, it’s time to rely more heavily on the private sector, said Garrett, a Republican from New Jersey.” Read more here.
By A.D. Pruitt and Dawn Wotapka
The Wall Street Journal
“Housing advocates have been alarmed by the rapid decline in the supply of affordable housing, the result of landlords scooping up low-income properties and converting them to luxury dwellings to capitalize on rising values for multifamily properties. The increased activity of for-profits has made it difficult for nonprofits to remain active buyers; they can’t pay the high price tags or move quickly. “We’re losing affordable units like crazy,” says Cindy Holler, president of Mercy Housing Lakefront, the Chicago office of Mercy Housing, one of the country’s largest nonprofits dedicated to affordable housing.” Read more here.
By Louis Hyman
“In 1933, much as today, private capital was piling up in banks that were too afraid to lend. President Franklin D. Roosevelt tapped James Moffett, a vice-president of Standard Oil Co., to oversee the new agency. Both agreed that capital needed to flow nationally for the economy to reignite. Roosevelt thought that a national mortgage market would be more stable and just. Writing to Moffett, he reaffirmed “that the refunding of existing mortgages in long term, amortized mortgages” would “result in a safer mortgage structure for the country.” Read more here.