Committee Holds Bipartisan Virtual Roundtable on Impact of COVID-19 on Housing Markets
This week, the Subcommittee on Housing, Community Development, and Insurance Subcommittee held a virtual roundtable entitled, “Reviewing the Impact of the COVID-19 Pandemic on U.S. Housing Markets.” The panelists for the virtual roundtable included: Diane Yentel, President and CEO, National Low Income Housing Coalition; Kristy W. Fercho, Vice Chairman, Mortgage Bankers Association; and Jenny Schuetz, Metropolitan Policy Program Fellow, Brookings Institution. Lawmakers on the subcommittee covered a range of topics with the panelists, including the long-term impacts of eviction and foreclosure moratoria, the Federal Housing Finance Agency’s moves towards ending conservatorship, demand for emergency rental assistance, and the impact of Covid-19.
Some notable comments include:
- “The harmful effects of this pandemic on the physical and mental health, financial stability, and overall way of being can be even more devastating when you are unable to pay your rent or mortgage,” – Rep. William Lacy Clay, Chairman of the Subcommittee on Housing, Community Development, and Insurance
- “One of the most important things that we can do to respond to this pandemic, is to keep people in their homes.” – Rep. Maxine Waters, Chairwoman of the House Financial Services Committee
- “Workers who aren’t getting paid because of the health crisis can’t pay their rent or their monthly mortgage, so the CARES Act provided forbearance for mortgage payments and protected renters from evictions.” – Rep. Steve Stivers, Ranking Member of the Subcommittee on Housing, Community Development, and Insurance, said Congress has taken “extraordinary” steps to address the issues and impacts of COVID-19.
- Kristy Fercho noted that MBA members have provided forbearance to more than four million customers and loans in forbearance have grown to more than 8%.
- Jenny Schuetz stated that eviction moratorium put in place by the CARES act, while an attractive short-term solution, it is “not a long-term solution.” Ms. Schuetz also stated the moratoriums could lead to rents accumulating more debt they cannot pay off, and cause ripple effects as the lack of payments are needed for landlords, and it could discourage people from being landlords moving forward.
- Diane Yentel stated the eviction moratoriums approved by Congress offer short-term relief, but there is now a “financial cliff” when rent is owed after the pandemic. Ms. Yentel stated Congress should enact a universal moratorium on evictions during the duration of the pandemic. She also said Congress should provide the $100 billion in renter insurance, as proposed in the HEROES Act.
House Passes Bipartisan Proposals to Improve Paycheck Protection Program
On Thursday, the House considered and passed H.R.6886, the Paycheck Protection Program Flexibility Act of 2020. Introduced by Representative Dean Phillips (D-MN) and Chip Roy (R-TX), H.R. 6886 would give businesses more time and flexibility to make qualifying expenditures for loan forgiveness under the Paycheck Protection Program (PPP), and allow businesses with forgiven loans to defer payroll taxes. It includes new language that would extend the deadline to apply for a PPP loan to Dec. 31 from the current June 30 deadline. The legislation would give businesses seeking full loan forgiveness more time to spend the money–24 weeks instead of eight–and lowers the minimum amount that must be spent on payroll to 60 percent instead of 75 percent. A second similar measure (H.R. 6782) would require the Small Business Administration to issue a report on entities that received more than $2 million in small business aid under the CARES Act.
Last week, Senators Angus King (I-ME) and Steve Daines (R-MT) introduced similar legislation, which would extend the time businesses have to use funds from the Paycheck Protection Program (PPP) and eliminate the limit on using funds for non-payroll expenses. Specifically, the Senate bill would allow businesses to extend the time period, which is currently set at eight weeks–to 24 weeks. The Senate bill would also eliminate the restrictions in the PPP that mandate only 25 percent of the loan can go to non-payroll expenses and would remove the restrictions that limit loan terms to two years. Treasury Secretary Steven Mnuchin has stated that the administration is working on expanding this time-period but stopped short of committing to 24 weeks. Senators Tim Kaine (D-VA), Thom Tillis (R-NC), Debbie Stabenow (D-MI), and Cory Gardner (R-CO.) have already cosponsored the bill. However, Small Business Committee Chairman Marco Rubio (R-FL) said “inadvertent technical errors” in the legislation could actually make it harder for employers to obtain loan forgiveness.
Congresswoman Maloney Unveils Pandemic Risk Reinsurance Program
On Tuesday, Congresswoman Carolyn Maloney (D-NY) introduced the Pandemic Risk Insurance Act of 2020 (H.R. 7011), which would establish a system of shared public and private compensation for business interruption losses and event cancellations resulting from future pandemics or public health emergencies. The bill would seek to ensure that there is sufficient capacity to cover losses and protect the U.S. economy in anticipation of a resurgence of COVID-19 and future pandemics. Similar to the Terrorism Risk Insurance Act, the federal government would serve as a backstop to maintain marketplace stability and to share the burden alongside private industry. The bill states that insurer participation is voluntary–insurers that do participate would offer pandemic-related business interruption and event cancellation coverage, and they would be reimbursed by a federal backstop for some of their losses. Specifically, no losses would be paid under the program until aggregate industry insured losses exceed a $250 million aggregate trigger. The federal share of losses would be 95 percent of insured losses above each insurer’s deductible and the insurer deductible would be defined as “the value of the participating insurer’s direct earned premiums during the immediately preceding calendar year, multiplied by 5 percent.” The bill establishes a $750 billion annual aggregate cap for federal compensation and if losses exceed the cap, the Secretary of the Treasury would be authorized to determine the allocation of pro-rata payments. The Pandemic Risk Insurance Act has been referred to the House Committee on Financial Services for further consideration. A section-by-section summary can be viewed here.
Senator Wyden Releases Affordable Housing Priorities, Including Minimum 4 Percent Housing Credit Rate
Last Friday, Senate Finance Committee Ranking Member Ron Wyden (D-OR) released an outline of affordable housing priorities he will pursue in the next Covid-19 relief bill. The six priorities are focused on preserving and expanding affordable housing and on supporting Housing Credit properties. Notably, Senator Wyden wants to expand incentives for new production include setting a minimum 4 percent the low-income housing tax credit rate and enacting basis boosts for bond-financed projects and developments in rural and Indian/Tribal areas. Specifically, Senator Wyden has said housing compliance deadlines should be suspended for 12 months so housing tax credit developments can move forward. The Senator supports setting a minimum value of 4% for housing tax credits, which would reduce the need for additional gap financing for projects and expand the incentive to produce new units once the economy revives and mentioned his support for closing a housing tax credit provision that allows for the sale of affordable housing projects after 15 years. Senator Wyden has suggested that the U.S. Department of the Treasury provide one-time grants of housing tax credits that could be used to provide owners with missing rental payments during the outbreak and that affordable housing buildings that are not fully leased should still receive the tax credits. To view Senator Wyden’s outline of affordable housing priorities for the next Covid-19 relief package, click here.