November 17, 2014
HUD has released the Annual Report to Congress Regarding the Financial Status of the Mutual Mortgage Insurance Fund Fiscal Year 2014. It appears that things are looking up for the FHA, particularly after last year’s mandatory appropriation from the Treasury, the first in the FHA’s 80 year history. For those of you who are not housing finance nerds, the Mutual Mortgage Insurance Fund (MMIF) is the financial backbone of the FHA’s single-family mortgage insurance program. When it is in bad shape, the FHA is in bad shape.
As Secretary Castro notes in his forward to the report,
November 13, 2014
BadCredit.org profiled an article of mine in Brooklaw Professor Pushes for Privatization of Fannie Mae/Freddie Mac. The profile opens,
Since the end of the Great Recession, policymakers, academics and economists have been struggling with a very difficult question — what should we do with Fannie Mae and Freddie Mac? Should the government continue its role in providing mortgage credit to millions of American?
Fordham University Associate Professor of Law and Ethics Brent J. Horton made a proposal in his forthcoming paper “For the Protection of Investors and the Public: Why Fannie Mae’s Mortgage-Backed Securities Should Be Subject to the Disclosure Requirements of the Securities Act of 1933“:
“The best way to reduce risk taking at Fannie Mae is to subject its MBS offerings to the disclosure requirements of the Securities Act of 1933,” Horton writes.
However, Brooklyn Law School Professor of Law David Reiss believes “the problems inherent in Fannie Mae’s structure are greater than those that increased disclosure can address.”
In his response, titled “Who Should Be Providing Mortgage Credit to American Households?” Reiss points to increased privatization as one way to address the question of what to do with Fannie Mae and Freddi Mac.
November 12, 2014
The Department of Housing Urban Development released Part 1 of The 2014 Annual Homeless Assessment Report (AHAR) to Congress. Part 1 provides Point-in-Time Estimates of Homelessness. Its key findings include,
- In January 2014, 578,424 people were homeless on a given night. Most (69 percent) were staying in residential programs for homeless people, and the rest (31 percent) were found in unsheltered locations.
- Nearly one-quarter of all homeless people were children under the age of 18 (23 percent or 135,701). Ten percent (or 58,601) were between the ages of 18 and 24, and 66 percent (or 384,122) were 25 years or older.
- Homelessness declined by 2 percent (or 13,344 people) between 2013 and 2014 and by 11 percent (or 72,718) since 2007. (1)
The report notes that in “2010, the Administration released Opening Doors: Federal Strategic Plan to Prevent and End Homelessness, a comprehensive plan to prevent and end homelessness in America.” (3) The plan had four goals:
- Finish the job of ending chronic homelessness in 2015
- Prevent and end homelessness among Veterans by 2015
- Prevent and end homelessness for families, youth, and children by 2020
- Set a path to ending all types of homelessness (3)
HUD claims success on all four fronts:
The number of individuals experiencing chronic homelessness declined by 21 percent, or 22,892 people, between 2010 and 2014.
The number of homeless veterans declined by 33 percent (or 24,837 people) since 2010, and most of the decline was in the number of veterans staying in unsheltered locations.
Since 2010 the number of homeless people in families has declined by 11 percent (or 25,690 people).
Overall, homelessness has declined by more than 62,000 people since 2010 (62,042), a 10 percent reduction since the release of Opening Doors. (3)
In many ways, the success of American housing policy comes down to the question — can all Americans have a safe and affordable place to call home? The Administration answers this question in the affirmative. And this report appears to demonstrate that the Administration’s plan to end homelessness is working.
While I am skeptical of claims that we have finally figured out how to systematically address homelessness, I am happy to see that it is trending downward over the last few years. This report was authored by some serious people, including Dr. Dennis Culhane of the National Center on Homelessness among Veterans at the University of Pennsylvania, so there is reason to trust these numbers. One can hope that this trend continues, but given the financial insecurity so many households face, I am worried that it will not.
November 11, 2014
Pericles, the greatest orator of Athens, had this to say more than 2,400 years ago when commemorating the sacrifices of his city’s soldiers during the Peloponnesian War:
Our form of government is called a democracy because its administration is in the hands, not of a few, but of the whole people. In the settling of private disputes, everyone is equal before the law. Election to public office is made on the basis of ability, not on the basis of membership to a particular class. No man is kept out of public office by the obscurity of his social standing because of his poverty, as long as he wishes to be of service to the state. And not only in our public life are we free and open, but a sense of freedom regulates our day-to-day life with each other. We do not flare up in anger at our neighbor if he does what he likes. And we do not show the kind of silent disapproval that causes pain in others, even though it is not a direct accusation. In our private affairs, then, we are tolerant and avoid giving offense. But in public affairs, we take great care not to break law because of the deep respect we have for them. We give obedience to the men who hold public office from year to year. And we pay special regard to those laws that are for the protection of the oppressed and to all the unwritten laws that we know bring disgrace upon the transgressor when they are broken.
That sounds like a city worth fighting for millennia ago and a society to aspire to today.
November 7, 2014
MainStreet.com quoted me in Housing Activists Claim Airbnb Cuts Into Affordable Apartment Inventory in Manhattan. The story opens
Popular and trendy neighborhoods in Manhattan accounted for 30% of units booked as private rentals on AirBnB.com, according to information subpoenaed by New York Attorney General (AG) Eric T. Schneiderman that Airbnb fought against releasing.
Those neighborhoods include the Lower East Side, Chinatown, Chelsea, Hells Kitchen, Greenwich Village and SoHo. “Removing rental units from the marketplace by operating them as illegal hotels damages the availability of housing,” said Roxanne Earley, a blogger with the Association for Neighborhood & Housing Development (ANHD).
Another tidbit from the AG’s report based on subpoenaed records is that commercial users of the home-sharing website collected $168 million in rent last year, controlled one in five AirBnb units and one in three bookings. “Although Airbnb is marketing itself as a company that helps the majority of its hosts make some extra money to keep their homes, the reality is that a multi-billion dollar business is helping a small portion of commercial users rake in a disproportionate amount of profit,” Earley told MainStreet.
“The markup on short-term rentals is much higher than that of long-term residential use of apartments and this has resulted in landlords breaking the law and using their units, sometimes whole buildings as illegal hotels,” said Earley.
And that’s eating into affordable housing units that city residents could be living in. “Commercial users earn an incredible markup on short term rentals and take units that may otherwise be affordable off of the market for long term occupancy,” Earley said.
The existence of rent regulation is unique to cities like New York and San Francisco and further complicates the Airbnb factor. Administered by a court or public authority, rent regulation limits the changes in price that can be attached to renting a home, which balances the negotiating power of landlord to tenant.
“If rent regulated apartments become profit-centers, tenants may also be incentivized to hang on to their apartments longer than they would otherwise, negatively impacting the availability of affordable housing for those who would use it purely for their own personal residence,” said David Reiss, professor at Brooklyn Law School.