The Mortgage Bankers Association (MBA) answered a request for information from the Department of Housing and Urban Development (HUD) on eliminating regulatory barriers to affordable housing, saying the lack of affordable rental and ownership housing “has reached crisis proportions in many areas of the country.
“Absent thoughtful and coordinated policy interventions at multiple levels of government, this situation will only grow worse,” MBA cautioned.
In looking at suggestions on the affordable homeownership front, MBA began with recommending new standards for manufactured housing.
“The standards for manufactured housing should be revised to more closely match ‘stick-built’ standards and zoning requirements,” MBA stated in its letter. “The affordability of factory-built homes enables first-time homebuyers, families, and retirees to obtain low-cost housing that is in many cases less expensive than renting or purchasing a site-built home.”
In MBA’s eyes, that would include expanding Federal Housing Administration (FHA) eligibility of manufactured housing sites. MBA’s recommendations include:
- Eliminating the one-time move restriction and replacing it with an inspection requirement following relocation;
- Eliminating the tiered pricing structure and allowing for greater flexibility in the mortgage charge rate;
- Streamlining the process by which the engineer’s certification is obtained;
- Requiring all manufactured home title evidence be completed at and as a condition of closing;
- Aligning flood elevation requirements for existing manufactured homes with those for other types of existing construction.
MBA also suggested HUD look into state and local efforts at deregulation, citing specifically a Minneapolis program which would open single-family residential zoning to duplexes and triplexes, as part of a 2040 comprehensive plan.
“HUD should study the impact of state and local deregulatory efforts like Minneapolis’ to determine which land-use and supply-promoting strategies are most effective in increasing available units eligible for FHA insurance,” the letter stated.
As FHA Commission Brian Montgomery has said in the past year, upgrading FHA technology is a key to progress at the agency, and MBA stated that work is vital to enhancing lender participation in the program.
“MBA has long advocated for Congress to allocate adequate budgetary authority to support a well-functioning and technologically sound FHA insurance program,” the letter stated. “If implemented properly, these upgrades should reduce unnecessary delays and costs in programs crucial to supplying affordable housing in the United States – ultimately offering borrowers greater choices at lower costs. MBA’s lender and servicer members are poised to provide feedback on any upgrades being considered or undertaken by HUD and hope that strong communication and partnership between HUD and external stakeholders results in a streamlined system.”
At the MBA Annual Convention last fall, Montgomery and HUD Secretary Ben Carson announced changes to the use of the False Claims Act by the agency in dealing with mortgage lenders. MBA’s letter stated ongoing changes in that way would benefit credit access.
“In the past decade, the decline in lender participation can be attributed in large part to increased uncertainty for liability under the False Claims Act,” the letter stated. “Over the past year, HUD undertook a rulemaking process to substantially revise the loan-level and annual certifications, along with the FHA defect taxonomy. New versions of the certifications and the defect taxonomy largely reflect the spirit of the changes proposed by MBA and other stakeholders, representing progress toward much improved lender certainty.
“Finally, the recent Memorandum of Understanding (MOU) between HUD and the DOJ (Department of Justice) outlines a framework that should provide for better coordination between the two departments. Together, these reforms should serve as tailwinds to promote greater lender participation in the FHA program, which in turn should promote greater access to credit at lower costs for borrowers.”
Another area of potential impact is TRID, and how revisions to TRID could lower costs throughout the mortgage transaction.
“The rule’s prescriptive timelines and strict cost tolerances have resulted in high ongoing compliance costs and difficulties in disclosing certain products — like construction loans or rehabilitation loans,” the letter stated. “Also, the rule’s lack of clarity has led to excessive due diligence costs that impede the return of the private mortgage-backed securities market. A vibrant and liquid private securitization market would result in greater consumer choice and lower costs.”
Taken together, MBA said the changes can make an impact on affordable housing in the nation.
“While there are no easy fixes to our nation’s affordable housing challenges, the work of the White House Council on Eliminating Regulatory Barriers to Affordable Housing can play an important role in identifying some potential solutions,” the letter stated. “We look forward to working with the council and other stakeholders in addressing our nation’s affordable housing needs.”