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Politics & MoneyReal Estate

What Biden’s infrastructure plan does for housing

Proposed $213 billion could help low- and middle-income homeowners

President Joseph Biden’s $2 trillion infrastructure plan represents the most sweeping national investment in decades. The “American Rescue Plan,” unveiled Wednesday, includes $213 billion allocated for housing, with a focus on low- and middle-income homeowners and prospective homebuyers.

Specifically, the plan calls for the construction and rehabilitation of over 500,000 homes in low- and middle-income areas. According to Biden, two million affordable homes and commercial buildings would be built and renovated over the next decade as part of the initiative.

Biden is also calling on Congress to eliminate exclusionary zoning laws, which he says inflates housing and construction costs – an issue that has crippled homebuilders across the country for more than a year.

Biden wants homes upgraded through “block grants” – annual sums awarded by the federal government to a state or local body to help fund a specific problem – and through extending and expanding home and commercial efficiency tax credits.

Officials said extending and expanding the efficiency tax credits would be done through the Weatherization Assistance Program, the nation’s largest residential whole-house energy efficiency program.


How servicers can stay ahead of Biden’s potential regulatory changes

Among the unknowns servicers face in 2021 are changes that could affect lender-placed insurance (LPI). Servicers must have the flexibilities in place to keep up with the latest changes to remain compliant and efficient while still providing an optimal borrower experience.

Presented by: Proctor Loan Protector

Stakeholders in the housing industry praised the $213 billion initiative, but cautioned that it wouldn’t cure many existing ails.

“It’s a historic amount of money, but we have a historic-size problem, and even this amount of money is not going to solve the problem,” said David Dworkin, president of the National Housing Conference. “We have to keep in mind – when we talk about infrastructure, there’s not a great history of infrastructure investment succeeding without housing investment. They really need to go hand in hand to positively impact communities. So I think the housing component of the bill is very important.”

Dworkin added that home construction is “a highly effective jobs program” and “a leveraged economic stimulus” – besides creating construction jobs, a newly-built homes become an economic stimulus itself.

“People who move into new homes spend money on those homes that they wouldn’t otherwise spend,” Dworkin said. “In the first year alone in a new home people, are spending a ton of money on paint, furniture, barbeques – things that will stimulate the economy in a constructive way. Home building and new homes are a much more effective stimulus than cash, which usually just sits in saving accounts.”

“While a lack of inventory and rising prices continue to limit opportunities for homeownership – especially for younger Americans and minority populations – policies that support nationwide housing affordability are now more important than ever,” said Charlie Oppler, President of the National Association of Realtors.

In a statement, the White House said the infrastructure plan “will invest in America in a way we have not invested since we built the interstate highways and won the Space Race.”

Other elements of the American Rescue Plan include $621 billion toward transportation infrastructure, $400 billion for elderly and disabled care, $300 billion into drinking water and electric grid improvements, and $580 million invested into domestic manufacturing. Specifically, the White House is hopeful the investment into manufacturing will create more jobs in that field.

Sunia Zaterman, executive director of the Council of Large Public Housing Authorities, said the CLPHA will lobby Congress to ensure that the housing provisions of the infrastructure plan are “fully funded and remain central to the bill.”

“The centrality of public and affordable housing means its impact reaches beyond shelter – it is also critical to other key elements of the American jobs plan including expanding broadband, improving childcare, and increasing health care opportunities,” Zaterman said in a statement. “Public housing authorities are the most efficient delivery mechanism for these critical services because of their understanding of local needs, especially the needs of underserved communities of color.”

The plan could see months of roadblocks, especially considering the Biden Administration intends to fund the spending by raising the corporate tax rate from 21% to 28%, an effort sure to meet Republican resistance. Combined with measures designed to stop offshoring of profits, the White House said the tax hike would fund the entire plan within 15 years.

That tax hike would essentially roll back tax cuts from former President Donald Trump’s 2017 bill, which capped the amount of state and local taxes that could be deducted from federal income taxes at $10,000.

While Biden said he hopes to “win Republican support” for the bill, Democrats could attempt to pass the bill through budget reconciliation, an option that does not require any Republican support in a chamber split 50-50 by party (Vice President Kamala Harris being the tie-breaking vote). It would be similar to the passing of the American Rescue Plan, which Democrats passed without a Republican vote.

“The only opportunity for bipartisan support we see is the surface transportation component of the package, which might need to be split off from the rest because elements of it might not be able to pass through the reconciliation process,” said Alec Phillips, chief political economist with Goldman Sachs.

House Speaker Nancy Pelosi told the Democratic caucus she would like the pass the plan by July 4.

Affordable housing has long been a point of focus for Biden and his team, vowing prior to his election to introduce a tax credit for first-time homebuyers upwards of $15,000, reintroduce sharper regulatory teeth to agencies such as the Consumer Financial Protection Bureau, alter a spate of restrictive zoning laws to increase development, build millions of units of affordable housing, and cap payments for certain renters.

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