March 29, 2019

NAHMA and Industry Colleagues Meet with HUD Multifamily Leadership

On Tuesday, March 26, NAHMA joined with other real estate industry associations in a quarterly meeting with Senior HUD Officials from the Office of Multifamily Housing. The meeting covered a range of policy topics, but the groups started by expressing our united concerns regarding the new REAC inspection protocols. A joint industry letter was also delivered to the HUD Secretary Carson. In the meeting, HUD stated their goal is to move forward implementing the policy, which went into effect this week.  Below, please find a brief synopsis of key policy updates discussed in the meeting below and please visit NAHMA’s Emerging REAC Issues webpage to stay updated.  

• REAC Physical Inspections
  1. NAHMA and Industry Letter – Joint letter to Secretary Carson urging HUD to withdraw new physical inspection notice policy
  2. Points of Contact – The new 14-day policy proceeds, and the remaining Listening Sessions will take place in the next few weeks. HUD said the owners should verify they have the correct person of contact updated in IREMS because REAC inspectors will call the POC with the inspection date by phone and send a follow-up email.
  3. Inspector Capacity – The Industry pushed back on REAC policy, inspector’s capacity to implement based on understaffing/inadequate training, as cited by recent GAO audit.
  4. Demonstration Program – A notice announcing a demonstration program to test a new REAC model will be issued in 3rd quarter 2019 or sooner to announce a pilot of a new inspection model beginning in 4th quarter 2019. HUD’s Office of General Counsel has determined that REAC will need to do rulemaking to change inspection protocols; therefore, the demonstration will be voluntary nationwide with Region 3 given preference (to read a summary of the planned demonstration program, please view NAHMA’s Philadelphia REAC Listening Session Summary or view HUD’s presentation slides on the REAC changes).
  5. Owner Self-Inspections – REAC is working with software vendors on software for owner self-inspections.
  6. Inspection Delays – As shared in a HUD update, HQ recently sent a memo to MF Field Offices on Approving the Delay of a Physical Inspection Beyond the New REAC Inspection Notification Timelines: Field Offices director may provide a delay, upon request, for the following reasons:
     1. Major Rehabilitation: The HUD Field Office may only approve the delay of an inspection for major rehabilitation if the POA informed the Field Office of the rehabilitation before receiving notification of an inspection date. Major rehab/renovation = total cost of $15000/per unit
     2. HUD Approved Repair Plan: The project has a BUD approved repair plan as a result of prior score(s) below 60 and it covers the period during which HUD or an inspector are trying to schedule an inspection.
     3. Presidential Disaster Declaration (PDD): The project is located in an area/county covered by a PDD during the period an inspector is trying to schedule an inspection.
  7. Carbon Monoxide Detection Systems – REAC recently issued the a separate notice to inspectors to inspect for Carbon Monoxide detectors.  

• FY19 Funding – HUD is working to renew all contracts, has enough funding.  A few issues remain from the government shutdown and unfunded PRAC contracts, all relate to owner hold-ups. Either an owner signature is missing or performance reporting will cause delays. The same with service coordinators. 
• PBCAs – HUD recently contacted all PBCAs to begin renegotiating their fees, per the FY19 Appropriations.
• Production – HUD will begin replacing the IT system for development applications submitted from MAP lenders, expect piloting to begin later this year and full release in 2020.  
• Handbook 4350 – The government shutdown stalled the updating of chapters.  A taskforce is currently working to update the 9834-form, with a target for the drafting table release (early spring) and 2020 for updating entire handbook.
• Section 202 FY18 NOFA will be released soon, target early April.  All new FY19 funding, $51 million for capital advance and $10 million for retrofit for aging in place, will come in a future NOFA.
• RAD is reviewing comments 202 RAD for PRACs. Also, only 9 Rent Sup/Rap properties remain unconverted in portfolio and the RAD Office will likely issue a timeframe deadline for retroactive conversions.
• Staffing – Office of Multifamily is has been allocated 110 new positions, currently 66 job actions in process, total hiring for 190 positions nationwide, largely Account Executives.  HUD encourages interested applicants to Check USAJobs to apply.  HUD retirements are only making matter more urgent in the field offices.

Housing Finance Reform Heats Up

This week, President Trump issued a Memorandum on Federal Housing Finance Reform. The memorandum outlined a framework to reform the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac and HUD programs: the Federal Housing Administration and Ginnie Mae. The memo requests the Secretary of the Treasury to develop plans to achieve a series of housing reform goals, including ending conservatorship of the GSEs and defining their roles in promoting affordable housing.  The memo also requests Secretary of HUD to ensure the “primary responsibility for providing housing finance support to low- and moderate-income families that cannot be fulfilled through traditional underwriting.” Both Secretaries are directed to specify if the recommended reforms require legislation or can be enacted by regulation. 

In addition to the President’s memo, the U.S. Senate Banking Committee held a two-day hearing on housing finance reform. The hearings largely focused on Committee Chairman Mike Crapo’s (R-ID) previously released outline for reforming Fannie Mae and Freddie Mac. In his opening remarks Chairman Crapo stated, “Last month I introduced an outline for potential housing reform legislation…This outline sets out a blueprint for a permanent, sustainable new housing finance system that: protects taxpayers by reducing the systemic, too-big-to-fail risk posed by the current duopoly of mortgage guarantors; preserves existing infrastructure in the housing finance system that works well, while significantly increasing the role of private risk-bearing capital; establishes several new layers of protection between mortgage credit risk and taxpayers; ensures a level playing field for originators of all sizes and types, while also locking in uniform, responsible underwriting standards; and promotes broad accessibility to mortgage credit, including in under-served markets.” While the hearing largely focused on issues beyond the scope of affordable housing, a few senators, such as Committee Ranking Member Sherrod Brown (D-OH) and Sen. Bob Menendez (D-NJ) utilized their questioning to highlight concerns about the lack of support in Sen. Crapo’s proposal for affordable housing, specifically the affordable multifamily properties. Topics like Duty to Serve and Affordable Housing Goals were also discussed throughout the hearings. For more information, please view the hearings here.

House Financial Services Committee Advances the Ending Homelessness Act of 2019

This week, House Financial Services Committee Chair Maxine Waters (D-CA) reintroduced the Ending Homelessness Act of 2019, H.R. 1856. The Financial Services Committee also held a markup to advance the bill, which passed along party lines with 32 Democrats voting to advance the bill – 26 Republicans voting against. The legislation will be sent to the full House of Representatives for a final vote. However, due to the spending levels proposed the U.S. Senate and Trump Administration will allow the bill to advance. As provided in the press release, the bill’s key proposals include:

• Provides $13.27 billion in mandatory emergency relief funding over five years to several critical federal housing programs and initiatives, providing the resources that these programs need to effectively address the homelessness crisis in America.
• $5 billion over five years to McKinney-Vento Homeless Assistance Grants, which is expected to provide 85,000 new permanent housing units;
• $2.5 billion over five years to for new Special Purpose Section 8 Housing Choice Vouchers (HCV), which is expected to provide an additional 300,000 housing vouchers and would give preference to those who are homeless or at risk of becoming homeless; 
• $1.05 billion annually in mandatory spending dedicated to the National Housing Trust Fund, which in the first five years of funding is expected to create 25,000 new units affordable to extremely low-income households, with a priority for housing the homeless;
• $500 million over five years in outreach funding to ensure that homeless people are connected to the resources they need and;
• $20 million for states and localities to integrate healthcare and housing initiatives, which provides technical assistance to help state and local governments coordinate their healthcare and housing initiatives that are funded by federal programs.