Biden’s speech draws mixed reactions from real estate industry

U.S. Vice President Kamala Harris (from left), President Joe Biden and House Speaker Mike Johnson, R-Louisiana, deliver the State of the Union address at the U.S. Capitol in Washington, DC, U.S., Thursday, March 7, 2024 . Election-year politics will be even more focused on Biden’s words and lawmakers’ reactions as he speaks across the country just months before voters decide control of the House, Senate and White House. Photography: Al Drago/Bloomberg

Al Drago/Bloomberg

Real estate industry players had mixed reactions Biden Administration’s Housing Initiative This was mentioned during Thursday night’s State of the Union address.

“On the surface, the president’s proposals all seem reasonable, although it’s unclear what some of them would actually end up looking like if they became law,” LendingTree senior economist Jacob Channel said in an email. “Furthermore, these proposals are unlikely to be adopted.” was universally praised. “

DeMarco, chairman of the Housing Policy Committee, said in a statement that the focus on housing affordability is welcome but ignores the role that directives from all levels of government play in creating inventory shortages.

“Adding more individual, demand-side tax credits and pricing restrictions on legal closing costs will further increase home prices and the cost of providing credit,” DeMarco said. “In short, demand continues to outpace supply, and subsidies are more More demand will push up housing prices.”

Instead, DeMarco said, the White House should examine how a “deep and complex regulatory environment” drives up housing costs and limits supply.

The National Multifamily Housing Council reacted similarly to DeMarco, supporting the expansion Low Income Housing Tax Credit Programbut regulatory relief is sadly lacking.

“We are deeply disappointed that the government has also chosen to focus on establishing a gastrointestinal regulatory regime that will reduce consumer choice by limiting service arrangement fees,” the group’s press release said, as they would undermine the government’s efforts to reduce housing costs. , promoting new housing development and the goal of creating more affordable rental housing to the detriment of renters. “

The NMHC added that the government should not blame housing providers for the affordability crisis as this is counterproductive and fails to solve the problem.

“Increased federal investment in housing supply, as the president proposes, and a regulatory environment that incentivizes more investment in rental housing will have an impact,” the group said.

Supporters of these measures point to the wealth-building effects of homeownership.

The Center for Responsible Lending notes that the down payment assistance the White House wants to provide reflects its previous proposals, as well as equity down payment method That passed Entering the House of Representatives in 2021.

“Targeted first-generation down payment assistance will open doors of opportunity for families who have not benefited from the intergenerational transfer of wealth,” CRL President Mike Calhoun said in the release. “This policy will expand the benefits of homeownership. economic security, which will help close racial homeownership and wealth gaps.”

Meanwhile, Community Home Lenders of America praised Biden’s pitch for a mortgage relief tax credit.

“In an era Mortgage rates hit record highsAffordability initiatives like these are critical to helping first-time and low-income borrowers purchase homes and build intergenerational wealth, CHLA Executive Director Scott Olson said in a statement.

Ed Pinto, co-director of the AEI Center for Housing, said housing affordability would decrease if the credit were implemented.

“This proposal will increase demand for new homes, which are already in short supply, thereby pushing up prices. In addition, many of the 3.5 million beneficiaries would have been able to purchase homes without credit,” Pinto said. “There will be additional purchasing power.” to raise housing prices. “

Pinto added that down payment assistance proposals face the same problem.

But for Down Payment Resource chief executive Rob Chrane, it’s frustrating that existing resources are underutilized because consumers don’t know this kind of help is available.

he pointed First-time Home Buyer Tax Credit 2008-2009it was a success because word got out.


It works because the program is expanded. This message can be used to promote the approximately 1,700 existing DPA programs.

“It’s another simple public service announcement, ‘Down payment assistance is available; see if you qualify.’ That’s news to most people,” Klein said.

Down Payment Resource conducted a study with the Urban Institute and found that nearly 80% of FHA borrowers living in the nation’s 10 largest metropolitan areas who will close their loans in 2022 will qualify for some form of DPA.

But according to the FHA’s annual report to Congress, only 15 percent actually use DPA.

“I’m not saying we shouldn’t do some of these things, but how much does it cost to promote something that already exists?” Chrane asked.

As for the controversial ownership exemption program, Keefe, Bruyette & Woods analyst Bose George issued a follow-up note in a note released ahead of the presentation, saying he did not expect the pilot program to gain any meaningful traction in the market. attraction.

The pilot program will waive lenders’ title insurance policy requirements for limited refinancings purchased by government-sponsored enterprises.

“We expect any title pilots to adopt modest use,” George wrote. “We believe that any attempt to reduce the use of title insurance more broadly is likely to encounter meaningful political opposition related to franchise creep, as The relevant risk will be the GSEs.”

Fitch Ratings analysts Douglas Baker and Christopher Grimes agreed, saying “the product’s end use and impact on title insurance policy issuance and premium volumes remain uncertain.” “Similar efforts have not had a significant impact on the industry, including Fannie Mae’s Title Waiver Pilot, which the American Land Title Association reported was abandoned in August 2023.”

Fitch does not expect the pilot to have any impact on the title insurance companies it rates.

The LendingTree Channel points out that the mortgage industry has opposed eliminating title fees in the past.

“Opponents of the proposal argue it will make the transaction riskier for homeowners,” Channel said. “Of course, many of the people who oppose the measure have a financial incentive to keep insurance premiums high…so, here’s what you get out of it You want.”

The National Fair Housing Alliance believes the Biden administration is not doing enough.

“While the president’s remarks in his speech identified some of the challenges posed by the nation’s fair and affordable housing crisis, there is still much work to be done,” NFHA Executive Vice President Nikitra Bailey said in a statement.

HUD needs to update the Fair Housing Initiative plan to remove administrative barriers, streamline the process, and ensure funds flow to communities faster. The government must crack down on discriminatory tenant screening, especially algorithms and other artificial intelligence that perpetuate bias.

It would require ordering federal home loan banks to increase their investment in affordable housing development by 20% of their profits.

The White House still needs to complete the following work PAVE Working Group on Assessment Bias and ensuring that Fannie Mae and Freddie Mac implement agreements that promote fair housing nationwide, the NFHA said.

Generally, much of what the White House proposes requires congressional approval.

“Given the situation in Congress, the unfortunate truth is that many of the things we need to do to make housing more affordable may not be implemented anytime soon,” Channel said.

Marty Green, principal at the law firm Polunsky Beitel Green, said it’s good that housing is back in the political debate no matter which side Americans are on.

“This industry is critical to our economy and a wealth creator for Americans and cannot be ignored,” Green said. “As the November election approaches, will we see meaningful policy support proposals to address chronic supply shortages?” It’s going to be interesting.” new home. “

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