The Pay for Success Affordable Housing Energy Modernization Act
On Monday, July 14, Representative Dennis Ross (R-FL) introduced H.R. 5104, the Pay for Success Affordable Housing Energy Modernization Act of 2014.
H.R. 5104 would provide HUD with the authority to establish a demonstration program and enter into budget-neutral, performance based agreements that result in reduced energy or water costs for multifamily housing properties until the end of FY 2017. The demonstration program would be capped at 20,000 units in multifamily projects participating in the Project-Based Section 8, Section 202, or Section 811 programs.
To achieve these energy cost-savings on the properties, the bill would allow property owners to raise capital from private investors and philanthropic organizations to make energy and water upgrades to their properties. Proceeds from the energy savings would then be used to repay investors. Once upgrades are implemented, an independent third party will verify the results to HUD; the bill does not specify the identity of this third party.
H.R. 5104 currently has six cosponsors and has been referred to the House Financial Services Committee. NAHMA will review this legislation in consultation with our Regulatory/Legislative Affairs Committee.
To read the text of H.R. 5104, please
click here.
To read a press release from the office of Representative Dennis Ross regarding this legislation, please
click here.
New Housing Finance and GSE Reform Legislation Introduced in House
On July 10, 2014, Representative John Delaney (D-MD) introduced H.R. 5055, the Partnership to Strengthen Homeownership Act. This is a housing finance reform bill that seeks to substantially reduce the federal government’s role in the housing finance market and eliminate the government-sponsored enterprises (GSEs) of Fannie Mae and Freddie Mac.
To do so, the bill establishes an insurance program through Ginnie Mae whereby it makes available the full faith and credit of the United States, while using private sector capital and accurate pricing of government reinsurance. All government guaranteed multifamily mortgage-backed securities will be supported by a minimum of 5% private sector capital, standing in a first loss position. The remaining 95% of the risk will be shared between Ginnie Mae and a private reinsurer.
The GSEs’ current activities would be winded down and this legislation revokes their charter. The GSEs may be sold and recapitalized as entities with different business plans without any of their current unique powers.
For affordable housing, the GSEs’ multifamily business will be spun out as separate entities. Ginnie Mae will be required to create and implement a workable multifamily guarantee that utilizes private sector pricing consistent with the single family model. The current multifamily businesses of Fannie and Freddie will continue to function within the new multifamily housing market as purely private organizations with an explicit government guarantee provided by Ginnie Mae and a private sector reinsurer.
Similar to other housing finance reform bills, a fee will be charged for the insurance that is provided for these government securities. The fees charged will range 10 basis points of the total principal balance of these mortgages and they will be allocated to strengthening affordable housing programs facilitated by the federal government. The funds received will be allocated to the Housing Trust Fund (75%), the Capital Management Fund (15%) and the Market Access Fund (10%).
H.R. 5055 currently has nine cosponsors and has been referred to the House Financial Services Committee. At this time, NAHMA does not anticipate any action by the House on this bill. Major reforms to the U.S. housing finance market have also stalled in the Senate. Still NAHMA will monitor the progress of this and other housing finance reform bills in Congress.
To read the text of H.R. 5055, please
click here.
To view a press release and summary from the office of John Delaney regarding this bill, please
click here.
