What is the affordable housing world making of the Johnson-Crapo housing finance reform? So far here on Rooflines, Dan Immergluck gave us a good overview of its provisions and cautioned community developers not to ignore it, and economist Dean Baker told us it's an impressively bad worst of both worlds.
The bill was scheduled to be marked up by the Senate Banking Committee on April 29, but was delayed, perhaps for lack of votes to move it out of committee. Meanwhile, what are the various advocacy organizations saying about it?
Few, if any, are leveling the sorts of fundamental, philosophical criticisms Baker has, but they seem to be split between those focusing on its weaknesses in terms of serving underserved populations and ensuring fair credit (primarily those groups who focus on homeownership and fair credit) and those encouraged by improvements over the last offering, the desire for some sort of resolution however imperfect, and the promised funding for affordable housing built into the bill, which is substantial.
The National Community Reinvestment Coalition, one the groups most active in following the housing finance reform process, says the bill is better than the last option, but still has serious flaws. NCRC submitted a letter of concern last week signed by hundreds of community groups, which notes:
We are encouraged that the Johnson-Crapo proposal includes an incentive mechanism to reward institutions that provide access to conventional mortgage credit in underserved communities, but we are concerned that the proposal falls short in a number of crucial ways.
Their concerns include: Communities of color not identified as a traditionally underserved market segment; down payment requirements; no language explicitly requiring institutions that benefit from the government guarantee or securitization platform to provide fair access for all creditworthy borrowers; an option to opt-out of the incentive system; possible interferance with anti-discrimination laws and affordable housing contributions. See the full letter for the details.
In a joint statement via the Home for Good coalition, Leadership Conference on Civil and Human Rights, National Association for the Advancement of Colored People, National Coalition for Asian Pacific American Community Development, National Council of La Raza, National Fair Housing Alliance, National Urban League, and Center for Responsible Lending also expressed concern that the bill would not do enough to make mortgage credit equitably available to communities of color. The bill, they say,
does not provide a forward and inclusive way for communities [of color] to participate in the future housing market even though they will soon comprise the majority of new households in the United States by 2020.
… Provisions in the proposed legislation, including those pertaining to down payment requirements and the responsibility to serve the entire market, may prevent families who could afford a mortgage from obtaining one. The bill lacks provisions to ensure that the housing finance system is fair and non-discriminatory. Moreover, the changes proposed in the reform bill may disadvantage smaller and rural lenders that serve already under-serviced portions of the population.
A post on Enterprise Community Partners' blog strikes a more positive tone, focusing on improvements over the last housing finance reform bill (Corker-Warner), including better addressing multifamily rental, a requirement to serve all eligible borrowers and not cream higher-income borrowers only, and the various funding provisions for affordable housing.
The National Housing Conference too, is very clear that it's beyond time to “move beyond the temporary measures so that credit can flow to create housing opportunity.” Though it has some small, techincal critiques of the bill, NHC took out an ad advocating for its passage, saying it's time to stop kicking the can down the road, with sign-on from for-profit groups like mortgage bankers and Realtors as well as Habitat for Humanity, Housing Partnership Network, and the National Housing Trust.
Speaking at the National Community Land Trust Network conference on Monday, NHC's Ethan Handelman pointed out that with the Budget Control Act still in effect, appropriations are going to stay low and the provisions in the housing finance reform bill are the best chance for any new affordable housing funding out there. (NCLTN and Cornerstone Partnership also had a victory in getting “permanentally affordable housing programs” recognized in the bill, though they aren't necessarily weighing in on its other provisions.)
And the National Low Income Housing Coalition is advocating for speedy passage since the bill would fund the National Housing Trust Fund. From their press release:
The primary purpose of the National Housing Trust Fund is to build, preserve, rehabilitate, and operate rental housing affordable to extremely low income families. Extremely low income is 30% of the area median or less. There is a nationwide shortage of seven million rental homes that are affordable and available to households in this income group. …
“Once funded to scale, the National Housing Trust Fund is the solution to ending homelessness in the United States and assuring housing stability for low wage earners and poor people who are elderly or who have a disability, “said Crowley. “The Johnson-Crapo bill offers real hope to some of our nation’s most vulnerable and underserved citizens. I urge the Senate to act swiftly to pass this landmark legislation.”
We'll keep an eye on the bill's progress as it moves forward.
May 5: Edited to add:
National People's Action says:
“Relying on market-based solutions puts the fox of Wall Street in charge of the hen house. We’ve seen that movie and it doesn't have a happy ending for our economy. Without strong goals and enforcement, communities of color and low and moderate income families get fewer and worse opportunities. It's a recipe for widening inequality and racial disparities and must be rejected.
We do need a fully funded housing trust fund to help the more than 7 million Americans without affordable housing, and we applaud the Senators for including it. But we also need affordable housing goals that ensure all Americans have access to high quality credit. Congress needs to realize we need ‘both and’ not ‘either or.’”
And community bankers are concerned about provisions that would be biased against smaller independent lenders.