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HUD Report Card: 2021 Policy Changes

According to HUD, it took “bold actions” over the past year, and it created a one-page list of the updates that will have an impact on the U.S. housing market.

WASHINGTON – The U.S. Department of Housing and Urban Development (HUD) says it took “bold action … to create strong, sustainable, inclusive communities and quality affordable homes” during 2021, and it published a list of what it considers its major accomplishments:

Home appraisals process. On June 1, President Joe Biden asked HUD Secretary Marcia Fudge to create an interagency initiative to address inequity in home appraisals. HUD sees it as a way to help families of color build wealth. Working in partnership with Ambassador Susan Rice and the Domestic Policy Council, HUD created the Property Appraisal and Valuation Equity (PAVE) Task Force. The Task Force wants to use “all levers at their disposal to root out discrimination in the home appraisal process.” HUD says it will issue a report for Biden documenting “ \the scope of the problem and provide detailed, actionable agency commitments.”

Homelessness. On Sept. 20, Fudge launched House America, a national partnership with other administration officials, mayors, county officials, governors and tribal nation leaders. The goal: Use American Rescue Plan (ARP) resources to re-house at least 100,000 people experiencing homelessness and add at least 20,000 new affordable and permanent supportive housing units into the development pipeline by the end of 2022.

Evictions and foreclosures. Backed by funding under the Consolidated Appropriations Act, HUD says it used the money to prevent evictions in HUD-assisted households and stabilize families struggling because of the COVID-19 pandemic. It also helped homeowners behind on their mortgage to stay in their homes by extending mortgage forbearance. As borrowers leave forbearance, HUD says it continues to work with the Treasury Department to integrate the Homeowner Assistance Fund with new policies released by the Federal Housing Administration (FHA) and, as a result, evictions and foreclosures are well below historic averages.

$5 billion HOME-ARP program. The Office of Community Planning and Development made funding available to 651 state and local governments to reduce homelessness and increase housing stability. The governments used the money to fund rental housing development, acquisition and development of non-congregate shelter, tenant-based rental assistance and supportive services.

Emergency Housing Vouchers (EHVs). As part of ARP, HUD provided 70,000 housing choice vouchers to local Public Housing Authorities (PHAs). The vouchers help individuals and families who are homeless, at risk of homelessness, fleeing or attempting to flee domestic violence, dating violence, sexual assault, stalking or human trafficking. It also helps those who were formerly incarcerated or recently homeless or have a high risk of housing instability.

Student loan debt. The Federal Housing Administration (FHA) updated its policy on student loan monthly payment calculations to provide easier access to single-family FHA-insured mortgage financing for creditworthy individuals with student loan debt. It did so by removing a previous requirement that lenders calculate a student loan monthly payment of 1% of the outstanding student loan balance for student loans that are not fully amortizing. The new policy bases the monthly payment on the actual student loan payment, which FHA says more closely aligns with industry standards.

Fair housing, lending enforcement and access. HUD signed a memorandum of understanding (MOU) with the Federal Housing Finance Agency (FHFA) to collaborate on fair housing with FHFA-regulated entities, including Fannie Mae, Freddie Mac and the Federal Home Loan Banks. The effort, HUD says, will ensure deeper collaboration on fair housing investigations and enable data sharing to further fair housing within the mortgage industry. In addition, HUD published a legal memorandum saying that certain Special Purpose Credit Programs (SPCPs) that are lawful under the Equal Credit Opportunity Act (ECOA) generally aren’t barred by the Fair Housing Act.

Housing supply and access to affordable housing. HUD restarted its Housing Finance Agency (HFA) risk-sharing program with Treasury’s Federal Financing Bank (FFB) on Sept. 1 to develop more affordable rental homes. The program allows HFAs to obtain FHA insurance on multifamily mortgages they underwrite, with HUD and the HFA sharing the risk of any potential loss. FHA says about 20,000 affordable rental homes will be created or preserved through the program through 2027.

HUD also made more single-family homes available to individuals, families and non-profit organizations – rather than large investors – by limiting the sale of certain FHA-insured and HUD-owned properties to homesteaders rather than investors. Finally, HUD released new research on actions that governments can take to increase their housing supply and is developing a Housing Supply Toolkit filled with easy-to-implement strategies to deploy HUD resources.

Furthering Fair Housing (AFFH) requirement. The Department published an interim final rule (IFR) that went into effect on July 31 to restore the Fair Housing Act’s AFFH requirement. Under that restored definition, HUD funding recipients must regularly certify compliance with the Fair Housing Act’s AFFH requirement and commit to steps that fix any fair housing issues in doing so.

Mutual Mortgage Insurance (MMI) fund. HUD announced a historically strong Mutual Mortgage Insurance Fund Report showing that FHA continued to deliver on its mission of enabling homeownership for first-time and low- and moderate-income, and households of color. HUD says the fund is “well positioned to withstand future economic events,” including any pandemic-induced delinquencies still in forbearance. The percentage of first-time homebuyers using FHA insurance reached a new high, and the share of mortgages insured by FHA to minority borrowers reached almost 42%. FHA served double the percentage of Black and Hispanic borrowers compared to those who used other types of mortgage originations.

LGBTQ+ community and housing discrimination. On Feb. 11, HUD announced that the Fair Housing Act bars discrimination on the bases of sexual orientation and gender identity, consistent with President Biden’s Executive Order 13988 and the Supreme Court’s ruling in Bostock v. Clayton County. This decision expanded Fair Housing Act protections to a community that has historically been subject to discrimination. Through its partners, HUD says it’s processed 235 cases alleging sex discrimination due to gender identity and sexual orientation last year.

Housing assistance and supportive services for Native Americans. The American Rescue Plan provides $750 million for assistance for Native Americans and Native Hawaiians, helping reduce housing-related health risks during the pandemic.

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