At the Mortgage Banking Association's annual conference today, the Federal Housing Finance Agency Director Mel Watt recounted a number of items the agency accomplished in the wake of the financial crisis before signaling the agency's focus for the next year: expanding affordable housing, including single-family rentals.
"In the years since the height of the collapse, many households have grappled with the long tail of the crisis," Watt said. "Workers have faced a protracted economic recovery that has slowly produced more jobs, but little wage growth. This slow recovery has left many families with limited paychecks and less spending power than before."
Despite rising home prices and other indicators of positive change, the "new normal" for America's housing economy keeps many people shut out of homeownership, Watt said, particularly minority populations.
"Some areas of the country have not regained pre-crisis home values – and some are not projected to do so for some time to come. These areas continue to have a significant number of borrowers who are seriously delinquent on their mortgage or who are current in making their payments but are still underwater," Watt said.
"These problems often exist in urban and low-income neighborhoods that were hardest hit by the crisis and where abandoned and vacant homes adversely impact property values and fuel a continuing cycle of disinvestment. Often these are neighborhoods where people of color predominate."
In addition, rising rents further erode the ability of many people, including minorities and Millennials with significant student loan debt, to save up for a down payment. In 2015, over 20 million households were paying more than 30% of their income toward rent, and more than 10 million paid more than 50% of their income on rent.
Looking to the future, Watt said, many people will continue to be renters, not homeowners.
"Because we recognize that not everyone is able to be a successful homeowner, access to affordable rental housing will also continue to be a very high priority for us. Providing access to affordable rental housing has also been a major challenge," Watt said.
"Although the multifamily market has grown by leaps and bounds in recent years, the growth has been concentrated at the top of the market, providing luxury rental units in high-cost cities. So the Enterprises’ research and efforts won’t be limited to access to homeownership. In next year’s scorecard, we’ll also be asking them to explore other ways to more fully support liquidity in the affordable segment of the multifamily market."
The FHFA's focus on affordable housing will also affect its rulemaking in the next year, Watt said. The agency will be focused on manufactured housing, affordable housing preservation and rural housing.
"With the focus on these three segments of the market, we believe this rulemaking can have a real impact on access eligible Enterprise activities for each underserved market in our proposed rule, including ways for the enterprises to support residential economic diversity in these markets."
Watt also listed language accessibility as an important part of serving homeowners and renters.
"Our objective is to work with the Enterprises, the industry, and consumer advocates to look for ways to increase opportunities to lend to borrowers with limited English proficiency, while ensuring that these borrowers are able to understand the terms of the mortgage credit they receive," Watt said.