September 19, 2021

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Mortgage News

White House unveils plan to produce 100,000 affordable homes

The scope of the plan is modest compared to industry estimates of how many new homes will be needed to meet demand. The White House is aiming to provide 100,000 new homes, while a study recently published by the National Association of Realtors found that housing supply is lagging between 5.5 million and 6.8 million units.

Policy makers have been concerned for years about a housing shortage that is making home ownership inaccessible for millions of Americans. The US housing stock has grown by an annual average of 1 percent over the past two decades, up from 1.7 percent from 1968 to 2000, so the June report commissioned and published by the brokers.

To limit the volume of housing supply controlled by large, so-called institutional investors, the White House said Wednesday it would restrict sales of certain single-family homes insured by the Federal Housing Administration, a branch of the HUD, to insured mortgage loans to borrowers low and middle income.

Currently, large investment firms can buy foreclosed FHA-insured real estate from mortgage lenders without HUD intervention. In the wake of the subprime mortgage crisis, the Obama administration allowed the properties to be sold to mutual funds, which they then converted into leases to limit losses on FHA’s books. But many of these buyers were unable to sell the properties even after the market stabilized, reducing the availability of affordable housing for individual homeowners.

In response, the White House said Wednesday that the HUD will develop guidelines next year that will provide for an “exclusive listing phase” during which only government agencies, nonprofits and owner-occupiers can bid on FHA-sponsored properties .

As part of the housing supply growth framework, Treasury and HUD would also revitalize a joint risk-sharing program, which expired in 2019, to allow government housing finance agencies to allocate more low-cost capital to affordable housing developments.

Fannie Mae and Freddie Mac, who are behind roughly half of the residential mortgage market, could reduce their investment in apartment buildings funded by the low-income housing tax credit from $ 1 billion a year to $ 1.7 billion. Expand dollars a year. FHFA also increases the minimum percentage of investments Fannie and Freddie must make in rural areas.

Additionally, the plan would allow community development financial institutions and nonprofit housing associations to raise more money from the Capital Magnet Fund – which provides grants to finance projects that benefit low-income Americans – as another way to boost the construction of more affordable housing. So-called CDFIs serve areas with low and middle income.

The Democrats hailed Biden’s new plan.

“Housing has long been too expensive and difficult to find for many families,” said Senate bank chief Sherrod Brown (D-Ohio) in a statement. “Building more affordable homes – and keeping homes in the hands of homeowners, not investors – is key to lowering housing costs, even for communities that have been denied access to housing for too long.”

Industry associations such as the National Association of Home Builders also praised the setting.

“It is important that the plan contains concrete measures to create incentives for new residential construction,” said Chuck Fowke, chairman of the building association. “We look forward to working with the government to increase the supply of affordable rental homes and single-family homes” for America’s hard-working families. ”

Home prices continued to skyrocket during the pandemic, although much of the rest of the economy was stuttering. And they’re showing no signs of slowing: Home prices rose 18.6 percent year-over-year in June, according to the S&P CoreLogic National Case-Shiller House Price Index – the highest annual rate since the index began in 1987.