Housing updates: What's in the 2009 American Recovery and Reinvestment Act of 2009 (ARRA), What some housing advocates are proposing for Illinois
Presented by Hyde Park-Kenwood Community Conference and its website hydepark.org.
Affordable Housing Information home. CECD home. CECD Website.
Visit on the broader scope: recovery.illinois.gov
The city will receive about a billion, of which so far it's been announced the city either can or will spend about $3.5 m for housing-- 1 for foreclosure counseling and $2.5 to turn foreclosed condos into affordable rental units. How much the latter can accomplish likely depends on how much physical work would be needed on the units.
Figures below are from the HUD regional office. 2008's Neighborhood Stabilization component is already pumping $52 m into city, $142 m total statewide) into inter alia buying up foreclosed properties on a scale related to numbers of properties foreclosed, and turning them into rental or rehabbing and reselling -- for the latter the larger part goes to those making up to 120% of area medium--considerably increasing the market as well as incentive to banks-- and the smaller to those making up to 50% of area median.
The Recovery Act adds about $22.5 million to the city's component for Neighborhood Stabilization (Illinois CDBG Nonentitlement- state total $8.5 m).
In addition, the city receives $34 m for Homeless Prevention (Cook $4.22 m, Illinois total $20.286 m, for total of the above for Illinois $70.865). Lead Hazard Reduction a million for University of Il at Chicano HHTS with$2.1 m more to Moline. Tax Credit Assistance to Illinois is $984.676. Grand total of Illinois Entitlement is $214,952,435, plus HERA NSP I Funding $172,509,479 for Illinois and Grand for all in Illinois HERA plus ARRA $387,461,914.
HUD announced in late March 2009 that 75% of funds from the Recovery Act has already been allocated.
By Enterprise Community Partners Inc. public Policy Office, 10 G St. NE, Suite s450, Washington, DC 20002, www.enterprisecommunity.org
617-566-1154. Low Income Housing Provisions of Recovery Legislation
The final agreement between the conferees on the American Recovery and Reinvestment Act was filed February 12. The text is available at www.rules.house. gov. [The House and Senate approved and the legislation was signed by the President.]
The final bill was estimated to cost $787 billion, $30 less than the House bill and about $50 billion less than the Senate bill. yet the bill provides $2 billion more for HUD programs than the Senate-passed bill (but $2.7 billion less than the House-passed version of the bill). We have updated the chart at http:/www.chpp.org/2-3-09hous-prac.pdf with the funding levels in the final bill. The major changes from the Senate bill are the restoration of $2 billion for Neighborhood Stabilization grants (the House bill provided $4.2 billion), the inclusion of the House-proposed $1 billion for CDBG formula grants, and the reduction of public housing capital funds from the $5 billion level in both bills to $4 billion ($3 billion to be distributed by formula and $1 billion through a competition). The final bill retains $1.5 billion for homelessness prevention grants to be allocated through the ESG formula. CBPP estimates of the ESG funding each ste will receive are available at http://www.cbpp.org/1-22-09budes.pdf.)
To respond to the sharp reduction in the funding yielded by Low Income Housing Tax Credits, the conference agreement includes $2.25 billion of HOME funds to "fill the gap" on projects awarded LIHTCs (no funding provided for unrestricted HOME formula grants), and adopts the House-proposed exchange provision. (The exchange provision is explained in our paper available at http://www.cbpp.org/2-2-09hous.htm). The provision allows exchange only of unsold 9% credits from prior years and 40 percent of the 9% credits for 2009, and not 4% credits. The final bill does not include the provision in the Senate bill to "accelerate" the amount of the credit taxpayers can claim in the first three years, or the Senate Finance "credit carryback" provision.
The bill includes an important provision to protect renters (including section 8 voucher holders) in foreclosed properties acquired or rehabilitated with Neighborhood Stabilization funds newly made available or appropriated last year (unless the funds were committed before the bill was signed). Recipients of NSP funds must not discriminate against Section 8 voucher holders. We will post additional information about this provision shortly.
Some of the tax cuts added in the Senate bill were trimmed sharply to make way to restore components of the bill that were priorities for the Administration, such as additional funding for schools and additional benefits for the unemployed.
The final bill does not include the $15,000 homebuyer credit contained in the Senate bill. Instead, it includes provisions modifying the original homebuyer credit approve last July (increasing the credit from $7,500 to $8,000 and extending it to homes purchased before December 1, 2009) and waives the requirement that the credit be paid back if buyers retain the home as their principal residence for at least 3 years.
Congress is [expected in the week of February 22] to approve the delayed 2009 appropriations fill for HUD and most other agencies....
Here is this organization's chart of Low-income stimulus provisions, in pfd.
The deep contraction in the economy and in the housing market has created devastating consequences for homeowners and communities throughout the country.
Millions of responsible families who make their monthly payments and fulfill their obligations have seen their property values fall, and are now unable to refinance at lower mortgage rates.
Millions of workers have lost their jobs or had their hours cut back, are now struggling to stay current on their mortgage payments - with nearly 6 million households facing possible foreclosure.
Neighborhoods are struggling, as each foreclosed home reduces nearby property values by as much as 9 percent.
The Homeowner Affordability and Stability Plan is part of the President's broad, comprehensive strategy to get the economy back on track. The plan will help up to 7 to 9 million families restructure or refinance their mortgages to avoid foreclosure. In doing so, the plan not only helps responsible homeowners on the verge of defaulting, but prevents neighborhoods and communities from being pulled over the edge to, as defaults and foreclosures contribute to falling home values, failing local businesses, and lost jobs. The key components of the Homeowner Affordability and Stability Plan are:
1. Refinancing for Up to 4 to 5 Million Responsible Homeowners to Make Their Mortgages More Affordable
2. A $75 Billion Homeowner Stability Initiative to Reach Up to 3 to 4 Million At-Risk Homeowners
3. Supporting Low Mortgage Rates by Strengthening Confidence in Fannie Mae and Freddie Mac
1. Affordability: Provide Access to Low-Cost Refinancing fro Responsible Homeowners suffering From Falling Home Prices.-
- Enabling Up to 4 to 5 Million Responsible Homeowner to Refinance [through FM or FM- incl. if owe over 80% of value]
- Reducing Monthly Payments [through lower rate even if not 20% home equity]
2. Stability: Created a $75 Billion Homeowner Stability Initiative to Reach Up to 3 to 4 Million At-Risk Homeowners
- Helping hard-pressed homeowners stay in their homes [via reasonable payments]
- No aid for speculators.. or house-flippers
- Protecting Neighborhoods
- Providing support for responsible homeowners [at risk of default despite being current]
- Providing loan modifications to bring down monthly payments-
Shared effort to reduce monthly's
"Pay for Success" incentive to services
Incentives to help borrowers stay current [balance reduction to principal]
Reaching borrowers early
Home price decline reserve payments [for lenders]
- Institute clear and consistent guidelines for loan modifications
- Other- oversight, judicial modifications, $1.5 million in relocation etc. to renters displaced, $2 billion in neighborhood stabilization funds, flexibility in Hope for Homeowners and other FHA programs.
3. Supporting low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac
Funds and preferred stock purchase agreements, increasing allowable fortfolios, supporting state housing finance agencies, not TARP money.
Update March 4, 2009- from Yahoo News
WASHINGTON – The Obama administration kicked off a new program Wednesday that's designed to help up to 9 million borrowers stay in their homes through refinanced mortgages or loans that are modified to lower monthly payments.
Borrowers, however, are being advised to be patient in their efforts to get help because mortgage companies are likely to be flooded with calls.
Government officials, launching the "Making Home Affordable" program also acknowledge that the initiatives are only a partial fix for a sweeping problem that has helped plunge the U.S. economy into the worst recession in decades. In fact, tens of thousands of homeowners in some of the most battered real estate markets — concentrated in California, Florida, Nevada and Arizona — won't be eligible for the two programs.
"It's not intended to prevent every foreclosure or to help every homeowner," a senior Treasury Department official told reporters. "It's really targeted at responsible homeowners."
There was also skepticism that banks would be willing to participate.
"I've just seen so many of the programs not work," said Pava Leyrer, president of Heritage National Mortgage in Randville, Mich. "It gets borrowers hopes up. They call and call for these programs and we can't get anybody to do them."
The Obama administration's program has two parts: one to work with lenders to modify the loan terms for up to 4 million homeowner, the second to refinance up to 5 million homeowners into more affordable fixed-rate loans.
For the modification program, borrowers who are eligible will have to provide their most recent tax return and two pay stubs, as well as an "affidavit of financial hardship" to qualify for the loan modification program, which runs through 2012.
Borrowers are only allowed to have their loans modified once, and the program only applies for loans made on Jan. 1 2009, or earlier. Mortgages for single-family properties that are worth more than $729,750 are excluded.
Lenders could reduce a borrower's interest rate to as low as 2 percent for five years. Rates would then rise to about 5 percent until the mortgage is repaid.
If the plan works as intended, it could be a big plus for borrowers like Nick Kavalary, a network cable installer who lives outside Milwaukee.
Kavalary, 42, has been struggling with JP Morgan Chase & Co. to get a loan modification. He was finally approved for one this year, but it only cuts his interest rate to about 9.8 percent from 10.75 percent. Even at the lower rate, he said, making the payment is nearly impossible.
"If I can't pick up a second job, I'm going to lose this house," he said. "With the job market being the way it is, nobody's hiring nobody."
For the refinance program, only homeowners whose loans are held by Fannie Mae or Freddie Mac are eligible and have until June 2010 to apply.
Consumers should contact their loan servicer — the company that sends out their monthly bill — to find out if their mortgages are held by Fannie or Freddie. The two mortgage finance companies own or guarantee almost 31 million home loans — more than half of all U.S home mortgages.
Many mortgage brokers, however, are critical. They argue the fees imposed by Fannie and Freddie over the past year make it difficult for borrowers to afford to refinance. The two companies, which are now government controlled, have yet to detail how they will implement the plan, or whether any fees will be rolled back.
Meanwhile, action to put in place another part of Obama's housing plan is expected soon on Capitol Hill.
House Democrats agreed Tuesday to narrow proposed legislation that gives bankruptcy judges the power to change the terms of mortgage loans for debt-strapped borrowers.
In the latest version of the bill, judges would have to consider whether a homeowner had been offered a reasonable deal by the bank to rework his or her home loan before seeking help in bankruptcy court. Borrowers also would have a responsibility to prove that they tried to modify their mortgages.
A full vote in the House could come as early as Thursday.
Protections for Renters in Foreclosed Buildings- HB 3863/SB 2230 sp. Will Burns.
Additional notice to renters in bldg. foreclosure has been filed or completed. That rent be accepted and properties be maintained for health and safety. Additional protections and time for renters including notification within two days.
Enhanced Municipal Authority to Address Foreclosures including notice to authority, authorization for land banks and recoup of costs (liens with priority). HB 1195/SB 1409
Fair Housing for Seniors- HB 3607. Amends the Illinois Assisted Living and Shared Housing Act to comply with the Fair Housing Act and the Illinois Human Rights Act.
Non-Profit Rental of Condos and Townhouses- HB 821 (protect right of nonprofits to do so)
Permissive Authority to Create Dedicated Funding Stream for County Affordable Housing Trusts Fund- SB 1398. $5 recording surcharge on real estate related documents.
Housing Opportunity Tax Incentive Expansion- HB 2470.
Encourages landlords to participate in the federal Housing Choice Voucher (Section 8) Program (via voucher conversion and expanding "opportunity areas."
Energy Assistance/Rental Housing Support Program- HB 2632/SB 1629. Tenant and landlords in Illinois Rental Housing Support Programs eligibility for winter heating assistance
Affordable Housing in the Capital Budget- $100 million over 5 years proposed
Homeless Service Provider Funding- $12.4 million vs current $9.1 for Emergency Food and Shelter Program.
Supportive Housing Service- $3 million
More information in http://www.ilga.gov, http://www.HousingMatters.net (Housing Action Illinois).
Legislative update June 2009
Based on material from Interfaith Open Communities, www.IOCillinois.org. Illinois:
Passed by both houses: Tenant Protections in Foreclosures HP 3863. Tenants must be notified of building foreclosure; the receiver/new owner must accept tenant payments; 30 days notice for termination.
Passed by both houses: Amendment to Housing Opportunity Tax Incentive Act, HB2470. Certain housing authorities can now use the Rental Housing Initiative for units including parts of East Hyde Park-- poverty cap changed from 10% to 12%.
Different versions passed, chambers negotiating to put parts of HP1195 in a final SB268. Enhanced Municipal Authority to Address Foreclosures-Municipal Land Bank , and Foreclosure Counseling. Allows a home-rule municipality to establish an authority to issue bonds for acquiring foreclosed residential property. Requires IHDA to establish a foreclosure education and prevention program.
May be passed in fall: Non-profit rental of condominiums, HB821. Would prevent condo boards from prohibiting post facto rental when the unit is owned by a non-profit entity for purposes of providing affordable housing.
Other: Drastic cuts in housing subsidies are likely if a state budget supported by revenue is not passed.
The state capital budget is likely to have $100M for an affordable housing capital budget line, $30M for housing for veterans with disabilities; $14M for specific programs-- 11.7 to demolish LeClaire Courts public housing (opposed by ph advocates) and money for Bickerdike Zapata apartments, Bethel New Life senior housing, Youth Build of Lake County, and Austin Peoples Action Center.
The state capital budget passed in July included $130m for housing. Info pending.
National Housing Trust Fund. Was supposed to be funded from Fannie Mae and Freddie Mac. Efforts underway to find alternative funding.
Section 8 Voucher Reform (SEVRA). Has to be passed to become permanent--chances said to be good. Would provide full funding to public housing authority vouchers and add 150,000; improved portability.
HUD budget- would increase funding for Housing Choice Vouchers, Section 8 Project-Based Rental Assistance, funding fro National Housing Trust Fund.
HUD enforcement of fair housing to governments using CDBG, HOME, Emergency Shelter Grants to submit a consolidated plan that "affirmatively furthers fair housing." HUD rejected Westchester County's plan, and a court decision upheld this. Reporting requirements from HUD have been much strengthened.
July 18, 2009. The House Appropriations Committee approved a bill that would increase Section 8 spending to $27 b or 10% adding 3.4 million people to eligibility. The added funding came from a Republican-identfied savings of $800 m expected from modestly lowering subsidies in the seniors guaranteed reverse mortgage amount.
Spring 2010 legislative update.
Drawn from a summary by Ken Oliver, Interfaith Open Communities
Federal budget. 2011 request is $41.5, returning to 2009 levels. But included is an increase in tenant-base vouchers to $19.5 and Homeless Assistance grant of 2 billion. CDBG grants stay the same at $4.4 billion.
Census and Poverty: redefine as "supplemental information" the 1964 method to include the cost of housing and assistance
1. Section 8 reforms stalled- will try again
2. Housing trust- needs a way to finance
3. Housing Tax Credits- H.r.4687- temporary expansion plus prevention of loss due to delayed projects and preservation credits
State budget. Gov. Quinn's budget includes a 78% cut in homeless services and significant to all social services. Income tax increase and pension reforms are proposed.
Passed: expansion of property tax incentive for choice vouchers- opportunity areas, incl. 3 tracts in East Hyde Park
Protection for tenants in foreclosed rental property: 30 days notification
tenants receiving subsidies eligible or Energy Assistance Act benefit
Municipalities can appoint a receiver for distressed condo properties
Proposed: HB5523-Protect victims of domestic abuse in cases of eviction- passed House
HB5734- foreclosure protection to participants in Making Home Affordable- passed House
HB5163-asisted living units subject to fair housing low- in committee
Sb3001- non home-rule counties power to establish housing trust funds- lost in Senate