NAR Calls for Stronger Measures to Achieve Affordability

The National Association of REALTORS® has been warning about the growing housing affordability crisis, and it’s asking the Department of Housing and Urban Development to step in and consider a series of policy proposals to address it head-on.

NAR made a call for a series of initiatives ahead of its Policy Forum, which is expected to attract more than 400 people in Washington, D.C., to address national housing affordability and inventory concerns on Thursday.

NAR has vowed support of federal policies that increase affordable housing supplies, preserve the mortgage interest deduction, and stabilize the Government Sponsored Enterprises—Fannie Mae and Freddie Mac—to ensure liquidity in the mortgage markets.

“While housing affordability is impacted by factors like restrictive local zoning regulations and increased labor and material costs, America’s REALTORS® commend the administration for steps it has already taken to address the housing affordability crisis, including finalizing the FHA condo rule, restructuring the Waters of the U.S. regulation, and creating the Qualified Opportunity Zone program,” says Vince Malta, NAR’s president.

In a letter to HUD, dated Jan. 31, NAR highlighted several key initiatives that it believes could be created or reformed to incentivize the private sector to add more low-to middle-income housing, including:

  • Mortgage market liquidity: Refocus the mission of Fannie Mae and Freddie Mac on liquidity in the mortgage markets for low- and middle-income home buyers.
  • Improve underwriting criteria: Consider whether the underwriting criteria used by FHA and the GSEs are restricting access to mortgage credit for first-time home buyers, who often times are saddled with student loan debt.
  • Update private flood insurance regulations: The private flood insurance market is offering higher quality coverage at more affordable prices than the National Flood Insurance Program (NFIP), in several cases, NAR notes. “Yet, due to decades old regulations, FHA only allows NFIP coverage resulting in otherwise suitable home loan transactions failing to close and in direct conflict with all of the other federal lending authorities, which mandate acceptance of certain private flood insurance,” NAR writes. “Updating these regulations would remove the conflict with other agencies and meet FHA’s twin objectives of affordability as well as sustainability.”
  • G-Fee Reductions: A G-fee reduction could occur 6 months after purchase through payments credited against homeowner’s principle, NAR notes. The fee is not capitalized into the price and it builds capital against a default, thus protecting the GSEs and taxpayers.
  • Incentivize YIMBY: Foster a “Yes in My Backyard” mindset by encouraging states and localities that receive federal dollars to reform high-density zoning and other land-use rules.
  • Improve LIHTC: “The Low-Income Housing Tax Credit (LIHTC) has been a very successful program which produces affordable housing in the United States,” NAR notes in the letter. “The amount of tax credits allocated to each state should be increased by 50% over current levels. Changes should also be made to incentivize the construction or preservation of affordable housing.”
  • Unnecessary Fees: The VA, FHA and the GSEs have increased premium fees that help fund other programs. “Federal loan insurance should be sufficient to cover the risk of the loan and nothing further,” NAR writes. “Artificially increasing the cost of housing is unfair to those purchasing a home, and can prevent otherwise eligible buyers from qualifying for a home.”

“Although NAR believes there is no single solution to promoting affordability and increasing housing supplies,” the letter states. The association holds “that a broad-based policy approach to bring safe, decent and affordable housing can be achieved.”

Read the full letter to HUD.

(Republished from REALTOR® Magazine)