[Senate Hearing 117-384]
[From the U.S. Government Publishing Office]
S. Hrg. 117-384
EXAMINING BIPARTISAN BILLS TO INCREASE ACCESS TO HOUSING
=======================================================================
HEARING
before the
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
ON
EXAMINING BIPARTISAN PROPOSALS TO EXPAND AFFORDABLE HOUSING
OPPORTUNITIES
__________
JUNE 24, 2021
__________
Printed for the use of the Committee on Banking, Housing, and Urban
Affairs
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available at: https: //www.govinfo.gov /
______
U.S. GOVERNMENT PUBLISHING OFFICE
48-853PDF WASHINGTON : 2022
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
SHERROD BROWN, Ohio, Chairman
JACK REED, Rhode Island PATRICK J. TOOMEY, Pennsylvania
ROBERT MENENDEZ, New Jersey RICHARD C. SHELBY, Alabama
JON TESTER, Montana MIKE CRAPO, Idaho
MARK R. WARNER, Virginia TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts MIKE ROUNDS, South Dakota
CHRIS VAN HOLLEN, Maryland THOM TILLIS, North Carolina
CATHERINE CORTEZ MASTO, Nevada JOHN KENNEDY, Louisiana
TINA SMITH, Minnesota BILL HAGERTY, Tennessee
KYRSTEN SINEMA, Arizona CYNTHIA LUMMIS, Wyoming
JON OSSOFF, Georgia JERRY MORAN, Kansas
RAPHAEL WARNOCK, Georgia KEVIN CRAMER, North Dakota
STEVE DAINES, Montana
Laura Swanson, Staff Director
Brad Grantz, Republican Staff Director
Elisha Tuku, Chief Counsel
Beth Cooper, Professional Staff Member
Megan Cheney, Professional Staff Member
Dan Sullivan, Republican Chief Counsel
Elie Greenbaum, Republican Counsel
Cameron Ricker, Chief Clerk
Shelvin Simmons, IT Director
Charles J. Moffat, Hearing Clerk
(ii)
C O N T E N T S
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THURSDAY, JUNE 24, 2021
Page
Opening statement of Chairman Brown.............................. 1
Prepared statement....................................... 28
Opening statements, comments, or prepared statements of:
Senator Toomey............................................... 3
Prepared statement....................................... 29
WITNESSES
Lisa Mensah, President and CEO, Opportunity Finance Network...... 5
Prepared statement........................................... 30
Responses to written questions of:
Senator Tester........................................... 44
Senator Cortez Masto..................................... 48
Senator Sinema........................................... 51
Senator Rounds........................................... 51
Nan Roman, President and CEO, National Alliance to End
Homelessness................................................... 7
Prepared statement........................................... 38
Responses to written questions of:
Chairman Brown........................................... 53
Senator Cortez Masto..................................... 54
Senator Rounds........................................... 56
Howard Husock, Adjunct Scholar, American Enterprise Institute.... 9
Prepared statement........................................... 41
Responses to written questions of:
Senator Rounds........................................... 57
(iii)
EXAMINING BIPARTISAN BILLS TO INCREASE ACCESS TO HOUSING
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THURSDAY, JUNE 24, 2021
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Committee met at 10 a.m., in room SD-538, Dirksen
Senate Office Building, Hon. Sherrod Brown, Chairman of the
Committee, presiding.
OPENING STATEMENT OF CHAIRMAN SHERROD BROWN
Chairman Brown. The Senate Committee on Banking, Housing,
and Urban Affairs will come to order.
In our first hearing that I gaveled as Chair, we talked
about how housing is the gateway to opportunity and to building
a middle class, how too many families in our country are locked
out of it.
I said that this Committee, the Banking and Housing
Committee, will focus on housing perhaps more than the
Committee ever has. Since then, I have been encouraged from so
many Members of this Committee in both parties that have taken
that change to heart. We have held hearings on the state of our
Nation's housing and the legacy of racism in the housing
system.
Last week, we heard from three mayors and a county
commissioner about how housing is holding back communities and
families in Pennsylvania, Ohio, Montana, and Arizona. We heard
from the mayor of Bozeman that the city's businesses lose out
on candidates for good-paying salaried jobs because there are
not enough homes. The mayor of Tempe, said that they have had a
900 percent increase in the number of residents without a place
to lay their heads at night. Just in the last 5 years, the
mayor of Akron said most of his housing was built before 1970,
long before we stopped using poisonous lead paint.
These are not isolated problems. Homeowners and renters,
people working minimum or making a steady salary, they are
struggling to find an affordable place to live. This is a
national problem. Members of both parties in these hearings
have asked thoughtful questions.
We will discuss many of these bipartisan proposals today.
Let me just run through a number of them.
We have legislation to expand affordable housing
opportunities: The Family Stability and Opportunity Voucher
Act, introduced by Committee Member Democrat Senator Van Hollen
and Republican off the Committee, Senator Young.
The Choice in Affordable Housing Act, legislation offered
by Senator Cramer, a Member of the Committee, and Senator
Coons.
S.2008, introduced by Senator Reed on the Committee and
Senator Collins to strengthen the U.S. Interagency Council on
Homelessness.
The Yes in My Back Yard Act, offered by Senator Young from
Indiana, Schatz, and Senator Warnock from this Committee,
shedding light on communities' plans to remove barriers to make
housing more affordable and combat discrimination.
We will look at the Native American Rural Homeownership
Improvement Act, introduced by a Committee Member who is
present, Senator Smith, also Committee Members Rounds, Tester,
Cramer, and also Schatz and Thune, that supports lending to
Native Community Development Financial Institutions.
We will talk about a plan from two Committee Members,
bipartisan, Senators Tester and Lummis, the Improving FHA
Support for Small-Dollar Mortgages Act of 2021, something that
will make a huge, huge, huge difference in so many States
including in my neighborhood.
Many of us have read Matthew Desmond's powerful book
Evicted. Inspired in no small part by that book, Senator Bennet
and Senator Portman, one of each party, and I have introduced
the Eviction Crisis Act.
In Ohio, we also know how the addiction crisis has torn
families apart. Senators Casey and Collins introduced the
Grandfamily Housing Act--I have joined them--to help
grandparents caring for grandchildren find the housing support
they need.
The Trafficking Survivors Housing Act of 2021, Senators
Durbin and Blunt--I guess they are not Members of the
Committee. I thought I had a trend going there. I guess I do
not.
More of my colleagues have introduced other bipartisan
housing acts. Senators King and Young, along with Cantwell,
Tester of this Committee, and Kennedy of this Committee, have
introduced the Task Force on the Impact of the Affordable
Housing Crisis Act.
These ideas recognize, all of these together, recognize the
breadth of our housing challenges. And they show how these
problems cut across geographic, racial, and partisan lines.
They tell me, the reason I wanted to be on this Committee
is that the word housing is in the title and everything starts
with housing. Your health care, your access to food, your
schools, your safety, the structure of the house, whether there
is lead paint and lead in the pipes. All of those things
matter.
So we have got lots of work to do in this Committee.
The last thing I will say, on Monday I was talking with
parents from Ohio about the Child Tax Credit, what the
expansion means for the ability to afford childcare and diapers
and transportation and, of course, housing.
One advocate who worked with Northeast Ohio families said
something she hears so often. She said she has talked to
clients, these were her words, whose whole lives revolve around
making their rent. Whose whole lives revolve around making
rent.
We know how many people in this country, we know there are
tens of millions of people who spend half or even more
sometimes of their income in housing costs. One thing goes
wrong, their life can fall apart. We have an obligation to
them.
Senator Toomey.
OPENING STATEMENT OF SENATOR PATRICK J. TOOMEY
Senator Toomey. Thanks, Mr. Chairman.
I would like to begin with a brief aside. I would like to
thank Mark Calabria, the Director of FHFA until yesterday. Mark
is an outstanding American, extremely intelligent,
knowledgeable about housing issues. I think he did an
outstanding job leading the FHFA and I wish him well.
I will say I do think the Supreme Court actually reached
the right decision about the authority of a President to fire
him, even though that is not the policy outcome I prefer. I
think it is the right constitutional decision.
I think the President made a mistake in firing a very, very
good and qualified man who was doing an excellent job. I hope
that the ultimate successor to Mr. Calabria, when one is
nominated and confirmed, will be as dedicated to the important
task of reforming the housing finance in this country as Mr.
Calabria was.
When we had our first housing hearing this Congress, I made
it clear that I am committed to working with all Members of
this Committee to improve access to affordable housing. You may
recall I released a set of principles at the start of this
Congress for reforming the housing finance system.
And as I pointed out before, my principles that I laid out
overlap significantly with the principles that you laid out,
Mr. Chairman, back in September of 2019. So I think there is an
opportunity and we should be working on a bipartisan solution
to comprehensive reform of housing finance which will serve
families and the taxpayers.
I am not sure that today's conversation is going to be
primarily about ways that we can make housing more affordable.
I think today we are going to be discussing a number of
disconnected bills, most of which increase Government spending
and interference in housing markets. I think we would be wise
to remember that there is no guarantee that further Government
spending is going to improve access and affordability of
housing.
The Government already supports a very wide array of
overlapping housing subsidies that have not been very
successful in addressing affordability. We have a mortgage
interest deduction, capital gains exclusion on house sales,
property tax deduction, Government guaranteed and subsidized
mortgages, we have LIHTC, a huge host of HUD programs.
But as with taxpayer subsidies for health care and higher
education, all of these programs tend primarily to contribute
to price escalation. Just last month, we saw that the year-
over-year change in the median home sales price in American was
up nearly 25 percent. That is staggering.
Now I acknowledge that monetary policy is probably the
primary driver of this. But all of these subsidies are
contributing, as well.
So if we want to make housing affordable, I think we ought
to be talking about how Government subsidies foster higher
housing prices and how monetary policy--in particular, the
Fed's extraordinary easy money policy of zero interest rates
and purchasing nearly half-a-trillion dollars a year in
mortgage-backed securities--how those are contributing
significantly to rapid escalation in home prices. And we
certainly know that wages are not growing at 25 percent per
year.
So the experiment of a vast subsidy framework combined with
a hyper-accommodative monetary policy has actually driven up
prices so much it has reduced the affordability of housing in
America.
Congress recently has doubled down on subsidizing housing
and that does not appear to be working so far. Congress
appropriated over $80 billion for housing in response to COVID,
much of it unanimously in the Senate. But much of the money has
not gone out the door yet. Nearly $50 billion was spent on
emergency rental assistance, little of that has reached
landlords or tenants.
Congress spent almost another $25 billion on more HUD
programs through the March 2020 CARES Act and President Biden's
partisan relief bill, but 15 months after the CARES Act was
enacted, less than one-third those funds have been spent.
I think we need a new discussion. I think the measure of
success should not be just how many families are receiving
housing assistance. We should begin focusing on enabling people
to work their way out of poverty and empower them to graduate
from Government support. But unfortunately, we often have the
same conversations on how to expanding existing programs that
are not working very well.
This Administration is ignoring the success of the welfare
reform efforts that directly contributed to poverty reduction
in this country. President Biden's partisan relief bill
provided additional unemployment benefits, letting many people
receive more money not to work than they make working. It also
eliminated the requirement to work or prepare for work as a
condition of receiving many welfare benefits like the Child Tax
Credit.
And just a few weeks ago, HUD unilaterally decided it would
not even study the effectiveness of work requirements for
tenants receiving taxpayer assistance from HUD.
I certainly hope my colleagues will agree we do not want
people to live their entire lives on Government assistance.
This assistance should be temporary, should be transitional.
But after 50 years and literally trillions in Federal housing
support, there has been no meaningful change in home ownership
rates.
HUD's rental programs also are meant to enable self-
reliance in housing. However, according to most recent studies,
we have seen the average length of stay for families across all
HUD assisted housing programs nearly doubled from 1995 to 2015.
At the same time, the average length of stay for voucher
holders grew from just under 1 year to over 6\1/2\ years.
Just expanding the welfare State does not work. I think it
is incumbent on Congress to craft policies that will actually
help these families move on.
Today, we will hear from a witness who will provide an
alternative view to expanding the welfare State. Howard Husock
joins us from the American Enterprise Institute, and he will
provide new ideas to consider for helping families to graduate
from HUD assisted programs.
Key among them is we need not assume that the only way to
reduce poverty is to grow housing programs. Government support
does not always lead to better outcomes.
Before I end my remarks, Mr. Chairman, I just want to
repeat that I welcome and encourage bipartisan compromise on
major housing legislation. As an example, my principles for
housing finance reform lay, I think, important groundwork for a
bipartisan solution to a very large and as yet unresolved
problem.
So I hope we can have bipartisan hearings to discuss
housing finance reform itself. And I think we should dispel the
myth that more spending without reform is necessarily a good
thing for families.
Thank you.
Chairman Brown. Thank you, Senator Toomey.
Lisa Mensah is the President and CEO of the Opportunity
Finance Network, a CDFI network for other CDFIs. She previously
served as Under Secretary of Agriculture for Rural Development
and is the Executive Director of the Aspen Institute's
Initiative on Financial Security.
She held positions at the Ford Foundation and at Citibank.
Welcome, Ms. Mensah.
Nan Roman is President and CEO of the National Alliance to
End Homelessness. She is a nationally recognized expert on
homelessness and has more than 20 years of local and national
experience in the areas of poverty and community-based
organizations.
Welcome, Ms. Roman.
Howard Husock is an Adjunct Scholar at the American
Enterprise Institute. Prior to joining AEI, he held multiple
positions at the Manhattan Institute. He served as Director,
Author, and Executive Education Program Instructor at Harvard's
Kennedy School of Government.
Welcome back, Mr. Husock.
Ms. Mensah, please begin.
STATEMENT OF LISA MENSAH, PRESIDENT AND CEO, OPPORTUNITY
FINANCE NETWORK
[Pause.]
Chairman Brown. I am not sure your mic's on.
Ms. Mensah. Hello.
Chairman Brown. Now it is.
Ms. Mensah. There it is.
So again, whether we are paying rent or securing a
mortgage, too many Americans are in crisis as they seek access
to affordable housing. And this affordable housing crisis has
worsened since the pandemic.
Bold new investments are needed to combat years of
disinvestment, and this hearing gives us an important change to
speak to some key bipartisan steps.
Community Development Financial Institutions, CDFIs, must
play a central role in efforts to rebuild, rehabilitate, and
rethink our housing stock. I want to speak to those three key
themes today.
I am privileged to lead Opportunity Finance Network, a
network of CDFIs operating in low wealth communities across the
Nation. Financing affordable housing has long been a core
business for the CDFI industry. In 2019, certified CDFIs made
more than 600,000 housing loans, totaling more than $56
billion. So CDFIs finance housing in areas of greatest needs.
I want to speak to one example of a great need for housing,
which is on our Nation's Native lands. Mortgage lending on
restricted trust lands is complicated. But CDFIs are
specialized lenders who know how to do it.
This Committee already knows how important the Department
of Agriculture is to providing rural housing. Yet, when USDA's
502 mortgage program struggled to reach Native areas, the USDA
turned to two Native CDFIs in South Dakota, Four Bands and
Mazaska, to implement a bold pilot program to relend 502 funds.
The USDA staff piloted a partnership with these Native
CDFIs. They knew that as lending partners to the USDA, those
CDFIs could deploy the capital responsibly, conduct the
outreach and counseling needed to prepare the buyers, develop a
pipeline, and ultimately put more people on a path to home
ownership. And the results are clear.
Those two Native CDFIs were able to provide 20 loans
totaling more than $2.3 million to first-time Native homebuyers
on Tribal lands.
This pilot was successful because the CDFIs know their
communities and have local market expertise. The low-cost
capital from USDA was precisely what was needed to scale the
program.
So I am very pleased to support the bipartisan bill S.2092
to support the relending pilot's expansion to get more 502
dollars to Native CDFIs. It deserves this body's support and
attention.
In my time as Under Secretary of Rural Development, I
traveled across the country visiting so many rural communities,
including the low-wealth communities that CDFI's serve. And I
saw what many Senators have seen and know to be true, that
housing matters. And I appreciate your sentiments this morning,
Senator, that our lives revolve around this. I applaud the
bipartisan efforts and urge you to keep going.
The housing access challenge is significant but the
answers, I believe, are in front of us and I want to highlight
three areas where new investment is needed.
First, the rebuilding challenge. We need to rebuild
significantly more new units of affordable housing. That is
rental and home ownership. Without major new investments in the
supply home ownership will remain out of reach and renters will
struggle to pay their bills. And we can do this by investing in
what we already have, Section 502 and Section 515 programs at
USDA, and the Capital Magnet Fund at Treasury.
We also need to reduce barriers to building affordable
housing through smart proposals like Senator Warren's bill to
consider land use policies for Community Development Block
Grants.
And we must rebuild a more resilient housing stock that
incorporates greener technology.
Next is rehab. We have to be good stewards of the
investments we have already made. We have to invest in
repairing the existing housing stock. A 2016 USDA study showed
a backlog of nearly $6 billion needed to repair leaky roofs and
drafty windows, and that need has only grown. This is a renewal
of our commitment to rural communities by repairing the
infrastructure. CDFIs can be partners.
Finally, rethinking. We need to rethinking how we can meet
the needs of our communities. One step in the right direction
is the proposed review of the FHA mortgages to ask what more
can be done to encourage mortgages for properties under
$100,000. It is so important to rethink how to encourage the
supply of mortgages and properties that are affordable for
working families.
As we rethink, I want to encourage the Congress to think
about using stronger partnerships with CDFIs. During the height
of COVID-19, CDFIs were financial first responders. They
quickly pivoted their models, offering forbearance to
homeowners and payment relief for renters and landlords. We
want to remain strong partners.
And to enhance and scale our field, we need you to urge
your colleagues to also scale the Treasury funds that come to
CDFIs. We are advocating for $1 billion in annual
appropriations.
So in closing, I want to thank you for the chance to
testify in support of the many strong bills today that would
help address the Nation's housing and infrastructure needs and
I urge you to look to CDFIs as partners. The time is now to
invest in the very core of the communities, the place we call
home.
Thank you.
Chairman Brown. Thank you, Ms. Mensah.
Ms. Roman.
STATEMENT OF NAN ROMAN, PRESIDENT AND CEO, NATIONAL ALLIANCE TO
END HOMELESSNESS
Ms. Roman. [Off microphone.]
Chairman Brown. I think it is still not on. I am sorry, Ms.
Roman.
Ms. Roman. [Off microphone.]
Chairman Brown. I am sorry, the transcriber says it is not
on. She cannot hear. Sorry about that.
Ms. Roman. Test, test. Now? OK.
Chairman Brown. That is good.
Ms. Roman. Do I need to start over?
Chairman Brown. You can start over, sure, and take an extra
minute.
Ms. Roman. Thank you again so much for inviting me to
testify before you today.
The National Alliance to End Homelessness is a nonpartisan,
nonprofit organization committed to finding and implementing
solutions to homelessness.
The Nation is experiencing a homelessness crisis that
appears to have been exacerbated by the COVID pandemic. While
homelessness decreased between 2007 and 2016, it has increased
every year since then. For the first time ever, last year there
were more unsheltered individuals than there were sheltered
individual adults.
Alliance surveys during the pandemic indicate that overall
the number of available beds is down, the number of homeless
people is up, and the number of unsheltered people is up
although some communities have managed to avoid these increases
through strategic use of Federal stimulus funds.
The pandemic, we all hope, is ending but concerns remain
about homelessness. There is a large cohort of youth whose
educations have been interrupted and who may fail to attach to
the job market and become homeless. There is a growing cohort
of aging homeless people who need housing. And many feel that a
rental housing crisis looms in our future, leading to more
homelessness even if the economy is healthy.
The solution to homeless is housing, notwithstanding other
needs that people may have including for services. Ending
homelessness requires either increasing the supply of housing,
housing that is affordable to lower income people, or
increasing people's wages so that they can afford the housing
that is available.
Many people will need services and we will have to address
the racial disproportionality and disparities that have
resulted in so many people of color becoming homeless. But the
problem will not be solved unless the cost of housing is within
reach of millions of low-income households who cannot afford
housing today.
Fortunately, we have an opportunity before us now to
significantly reduce homelessness. The stimulus funds that you
have provided will, if used strategically, make a serious dent
in homelessness, although they will not end it entirely. We are
deeply grateful for the $14 billion in resources targeted to
turning the ship on homelessness.
Congress has also placed several opportunities on the table
that would definitely help reduce homelessness and that we
support. Senators Van Hollen and Young's bipartisan Family
Stability and Opportunity Voucher Act supplies housing vouchers
for 500,000 families with services to help them locate in high
opportunity communities. This would clearly be enough vouchers
to end family homelessness.
The Choice in Affordable Housing Act, a bipartisan bill
just introduced by Senators Cramer and Coons, would improve the
Section 8 program by providing $500 million to incentivize
landlords to participate in it. I can share that the
homelessness system has learned quite a bit about incentivizing
landlords, as it houses thousands of tenants every year who
maybe do not look that great on paper.
Strategies that have worked include increasing the size of
security deposits, acting as a third party when landlords have
issues with a referred tenant, and immediately providing a
qualified replacement tenant when a referred tenant is evicted.
This bill would support these and other successful strategies
to get people into housing.
Senators Brown and Blunt have proposed the Trafficking
Survivors Housing Act of 2021. Sadly, homelessness is too often
intertwined with human trafficking. This important bill would
task the U.S. Interagency Council on Homelessness to examine
what Federal agencies can do to eliminate that link between
homelessness and trafficking.
And finally, Senators Bennet, Portman, and Brown literally
just reintroduced the bipartisan Eviction Crisis Act.
Everything this bill does to reduce evictions will help to
reduce homeless. We are particularly grateful for the provision
of flexible funding for people who can generally afford their
housing but for whom any economic emergency can result in an
eviction and even homelessness. This bill provides flexible
assistance to break that pattern.
We support all of these helpful bipartisan bills.
I would be remiss if I did not say also that if you ask me
what is the one thing that can be done that would end
homelessness, I would say that it is to provide housing
assistance to every extremely low-income household that needs
it. This definitely also implies increasing the supply of
affordable housing.
In closing, homelessness is not a problem that the
homelessness system can solve alone. The homelessness system is
like an emergency room. We get people who are in crisis and we
can patch them up a bit. But just as the emergency room is not
the solution to the Nation's health problems, the homelessness
system alone is not the solution to the Nation's homelessness
problem.
People who are homeless need more than an aspirin and a
Band-Aid. They need an adequate supply of affordable housing, a
voucher, and access to services.
Thank you so much for inviting the Alliance to speak before
you today, and for your efforts on behalf of people
experiencing homelessness.
Chairman Brown. Thank you, Ms. Roman.
Mr. Husock.
STATEMENT OF HOWARD HUSOCK, ADJUNCT SCHOLAR, AMERICAN
ENTERPRISE INSTITUTE
Mr. Husock. I am pushing this button and it is not going
green. I am paying for this microphone.
It is OK? OK.
Thank you very much, Chairman Brown and Ranking Member
Toomey. I appreciate the opportunity to testify on the
legislation being considered by the Committee, especially
before my hometown of Cleveland Senator Brown.
I will specifically address these proposals related to the
expansion of the housing choice voucher program and the
proposed terms of the Community Development Block Grants.
There is no doubt that too many low-income households find
it difficult to afford housing. But before considering a major
expansion of the housing choice voucher program, we should make
the existing program more effective. Let us keep in mind that
the past year has seen unprecedented spending on Federal
housing initiatives. The American Rescue Plan expanded the
housing voucher program by allocating $5 billion dollars for
70,000 housing vouchers. That was referred to by Secretary
Fudge as a once in a lifetime--once in a generation investment.
$46.5 billion has been allocated for emergency rental
assistance. That rivals the annual HUD budget overall. The New
York Times documented the fact that that rental assistance has
been mired in limbo, in too many cases.
This all to say that our current focus should be on making
sure the money in pandemic housing assistance is distributed as
effectively as possible. But commonsense adjustments can
increase the voucher program's reach specifically without major
new spending while, crucially, providing incentives and
encouragement for low-income households to improve their
economic status.
Fundamentally, low-income households face an income
problem. Providing a coupon that can be used only for rental
assistance limits how they can use this new income while
failing to address the root causes of why their income is low
in the first place. We must not forget the steps it takes to
truly encourage economic mobility for poor households.
Providing skills training, ensuring every child has access to a
high-quality public education, encouraging safe and healthy
communities, and reducing racial barriers.
But we can and should, in the near term, make commonsense
adjustments to the current housing choice voucher program. Let
us not assume that poverty is a life sentence in America. This
suggests that we better allocate vouchers by seeing them as a
transitional program.
That leads me to two very specific proposals. First, the
time has come to allow voucher households to sign the same type
of rental leases as nonsubsidized households take for granted:
a flat rent for a fixed period. As it stands, as a voucher or
public housing tenants earns more income, they pay more rent,
34 cents on each new dollar. This has all sorts of ill effects:
discouraging those who would seek a higher-paying job, the
formation of two-income families, savings in general, including
for potential house purchases.
To make better use of our housing vouchers, we should
follow the example of the housing authority of the State of
Delaware, I did not choose that randomly or for political
reasons, which as part of its Moving to Work program combines
capped rent and savings account escrows with a 5-year ceiling
on housing assistance.
A similar program has been adopted by the housing authority
of San Bernardino, California, which specifically sets out as a
key goal the encouragement of tenants' economic independence,
including what a shift it describes as from ``entitlement to
empowerment.'' Longitudinal studies in San Bernardino report
earned income over that 5-year period for participating
families increased by 31 percent. Full-time employment
increased by 20 percent. And unemployment decreased by 26
percent.
This healthy turnover should be a core part of the voucher
program. Poverty should not be viewed as inevitable and
forever. As things stand now, there is turnover but we need to
increase it. A transition to work and increased income is,
today more than ever, a practical goal, as the Nation enjoys
widespread labor shortages.
Let us resist expanding the program to and giving priority
to low-income single parents, as the legislation suggests. It
is understandable that we respond to need. But we must take
care not to foster need by sending a signal that low-income
single parenthood will qualify one for a subsidized rental
which, in most jurisdictions today, is lifetime eligibility. We
know that the life chances of those born to single mothers in
poverty are such that this is not a choice we should
inadvertently encourage.
The proposal to link Federal CDBG assistance to the
encouragement of affordable housing is, on one level,
understandable. There is too much inflexible zoning around the
country. But the idea that there is a missing middle in our
housing supply is rapidly gaining adherents, and localities are
responding to the fact that children cannot live in the housing
areas that they grew up in.
Minneapolis and Oregon have rolled back single-family
zoning already. Mayor Garcetti of Los Angeles has just
commissioned local architects to develop two-to-four family
housing that is affordable to build. A one-size-fits-all
Washington review of local zoning risks stifling this creative
change.
Woodrow Wilson, he was a Democratic president, observed
that, in the United States, localities are not governed; they
govern themselves. This historic tradition is one we must keep
in mind.
As Jenny Schuetz of the Brookings Institute wrote in 2018
about the idea of linking CDBG to affordability review: HUD's
interest in persuading local governments to reform exclusionary
zoning is admirable. But withholding CDBG would not be
effective mechanism, because exclusionary communities do not
get CDBG funding. It is the low-income communities that are
already providing affordable housing that get that money. Let
us not burden them with costly reviews.
A better approach embraces the spirit of localism and
adaptability of American municipalities and acknowledges the
growing success of State and local movements to increase
housing supply.
I appreciate the opportunity to present my views. Thank you
very much, and I look forward to your questions.
Chairman Brown. Thank you, Mr. Husock.
I will start with Ms. Mensah. In many parts of Mr. Husock's
and my own State, there are lots of homes, including in my
neighborhood, 400 yards maybe from my house, listed for $40,000
or $50,000. They look like affordable starter homes but lenders
generally will not make a mortgage for less than $100,000.
Senators Tester and Lummis, both on this Committee, both
have a bill, the Improving FHA Support for Small-Dollar
Mortgages Act, that would direct HUD to look at the barriers to
financing these small loans through FHA.
Ms. Mensah, how could reducing these barriers to small
loans help more families own their homes they can afford?
Ms. Mensah. Thank you, Senator, for the question.
We support strongly this review. It is clear that markets
do not push toward small in this case. Our CDFIs stand ready to
make these mortgages, but we would benefit as a country from
seeing the FHA do a thorough review and remove any barriers to
being able to increase the supply and affordability of
mortgages of under $100,000. We strongly support this bill.
Chairman Brown. Thank you.
Ms. Roman, evictions--you know better than anybody in this
room, and better than most in the country--can be both the
result and the cause of homelessness. Talk about the Eviction
Crisis Act. As you know, I recently introduced with Senators
Bennet, Portman, and Young, on how to prevent evictions or ease
some of the pain on families when they do happen. Talk about
that.
Ms. Roman. Thank you so much for introducing that bill,
that we are very, very supportive of. The Act will do a lot to
help us understand better what goes on around evictions by
collecting data, understanding when they occur, and therefore
how we can prevent them.
It will also help jurisdictions find ways to prevent
housing crises. Often we see, in the homelessness system,
people that have become homeless because they could basically
afford their rent but something happened, their car broke down
or their child became ill and they could not go to work for a
couple of weeks. Then they could not pay the rent that month
and they entered a downward spiral into eviction and, often,
eventually, into homelessness.
This bill provides the flexible funding that would give
people a couple of hundred dollars so that would not happen to
them; and we end up spending much, much more if they do become
homeless.
Basically, I think it makes eviction the last course for
somebody having a housing crisis, rather than the first thing
that happens to them. And we are very supportive of it.
Chairman Brown. Thank you.
You obviously are commenting about homelessness, how it
puts too many people--in addition putting too many people at
risk of human trafficking. The Trafficking Survivor Housing Act
requires USICH to work with partners and stakeholders and
survivors to study ways to get more survivors safe, affordable
housing.
Talk about that. Why is this so necessary? What happens?
Ms. Roman. I can say that what we see in the homelessness
system is that people who have been trafficked, who are severed
from their ties in the community, or who need services, are
often the people who end up in the homelessness system. People
are trafficked out of the homelessness system and people who
have been trafficked end up in the homelessness system. And I
can also say that being homeless makes people very vulnerable.
But apart from knowing that homelessness and trafficking
are entwined, we do not actually know that much about what
happens. This bill will collect information on that so that we
can see how it plays out and how we can help.
I think the USICH study would help with that. USICH is a
really helpful agency because people who are homeless tend to
have complex needs--needs that must be addressed by a variety
of agencies. USICH helps the Federal Government coordinate to
provide what people need across various agencies like Health
and Human Services and HUD, for example, and in this case the
Department of Justice. And I think that involving USICH and
having that research will help us better understand so that we
can detach homelessness from trafficking.
Chairman Brown. Thank you.
Last question. In rural Minnesota, Northern Minnesota,
Southeast Ohio, or Central Pennsylvania, we know there has
already been a shortage of affordable places to live. By 2027,
it is estimated that we will lose another 21,000 affordable
USDA homes for rural renters just because they are old. How do
we preserve, Ms. Mensah, these affordable units and keep them
affordable in rural areas?
Ms. Mensah. Thank you, Senator.
Thank you for your attention. The Department of Agriculture
is a warrior for these homes and we need more support for the
Agency's work. It is in front of you. The titles are there. We
can increase the support for the rehabilitation and fund the
titles that are in the law. And I urge you to keep the focus on
rural housing.
Chairman Brown. Thank you. Thank you both, all three of
you.
Senator Toomey.
Senator Toomey. Thank you, Mr. Chairman.
You know, as best I can figure, we have considerably more
than doubled the amount of housing spending last year versus
what is ordinary spending.
Mr. Husock, you pointed out that among the many things that
we passed, we passed $5 billion for 70,000 new vouchers. But it
turns out HUD has decided it is not even going to require
verification of citizenship or immigration status, so we do not
know whether these vouchers are even going to eligible
Americans.
But speaking of the vouchers, you raised an interesting
dilemma, it seems to me, and I am wondering if we could discuss
this a little bit. And that is the idea that when the
vouchers--as I understand what you were saying--is that the
rental assistance requires a tenant to pay a fixed percentage
of their income. And so the practical effect of that is it is
equivalent to a very high marginal tax rate for the person, the
more they earn the more they are required by this provision to
pay in rent.
And so it is--all else being equal, it presumably dissuades
people from the extra work and extra effort that is involved in
having more income.
You mentioned a Delaware program, and I am happy to hear
more about that, but in the absence of this kind of arrangement
where you have this percentage of income requirement, do you
necessarily, in the alternative, end up with a cliff where at
some point you have to eliminate the subsidy. So if you do not
sort of phase it down or have this percentage of income, do you
have a cliff where the subsidy disappears and presumably that
creates problems of its own?
Could you share your thoughts on that?
Mr. Husock. Yes, that is certainly true. That is why I
think we ought to focus on new tenants who make a new deal when
they enter the system. And that new deal is I pay a fixed rent
in exchange for accepting a 5-year limit on my overall tenancy.
That is what the State of Delaware does. That is what San
Bernardino does.
I think it is unlikely that we are going to change the
terms for existing tenants, so that is a way to cut that
Gordian Knot, I think.
Senator Toomey. So do I understand you to say that this
arrangement that you are suggesting, and that is in place in
several of these communities----
Mr. Husock. Yes, right.
Senator Toomey. ----for new tenants is an explicit
commitment on their part that it will be for a finite, limited,
defined period of time?
Mr. Husock. Yes, and it is voluntary on their part, at
least to date. But yes, they sign a self-sufficiency type
agreement. They have different terms for it. But yes, it is
voluntary. They sign up for it. And they know that they are
going to get, in a sense they are going to get a deeply
subsidized rent for a 5-year time period.
Senator Toomey. And it is totally independent of their
income? If they go out and they work overtime, they take a
second job, they go to night school and get training and
upgrade their skills, whatever they do to have more income, no
effect on the arrangement?
Mr. Husock. That is right. I think the housing authority in
California asks that they put that additional savings that they
would have paid in rent into escrow. That seems like a useful
idea.
Senator Toomey. But they still own it?
Mr. Husock. They still own it, yes.
Senator Toomey. So this is being done--did you also say in
Delaware and in a city in----
Mr. Husock. Yes, there are 27 Moving to Work communities.
Many of them have these variations on this program. There have
been proposals over the years to give housing authorities
across the country more of this similar type of flexibility.
It was their idea to do this, not HUD's idea. And so if we
increase the number of Moving to Work opportunities, more
people might move to work.
Senator Toomey. Do we have any--do you know how long these
programs have been in place in any of these communities?
Mr. Husock. In San Bernardino, I am familiar with it having
started in 2008, I believe.
Senator Toomey. So that is quite a while.
Mr. Husock. Oh no, there are longitudinal studies by
academic----
Senator Toomey. That is what I was going to ask. What do
they show us? What does the data show about how this has
affected people? What do we know about it?
Mr. Husock. In San Bernardino, earned income for families
in the program increased by an average of 31.4 percent during
the 5 years. Full-time employment increased by 20 percent. And
unemployment decreased by 26 percent.
Senator Toomey. So we know how that compares to a control
group of people who, say, participated in the conventional
programs?
Mr. Husock. I do not know the answer to that.
Senator Toomey. Would that be a useful point of comparison?
Mr. Husock. I think it certainly would be. And PD&R, as
they call it in HUD, could certainly commission that kind of
research and should pay more attention to this really unusual
program that is kind of a stepchild at HUD right now.
Senator Toomey. I do not know why we would not want to at
least get the data and see, you know, is this helping the
people who are participating in it relative to people who are
participating in----
Mr. Husock. Just as we want eviction data, we want moving
up and out data.
Senator Toomey. Right. Right.
Thank you. Thank you, Mr. Chairman.
Chairman Brown. Thank you, Senator Toomey.
Senator Cortez Masto is recognized.
Senator Cortez Masto. Thank you, Mr. Chairman. And thank
you to the panelists.
Let me follow up on Senator Toomey's conversation. I am
curious, Ms. Mensah or Ms. Roman, do you have a comment with
respect to this--let me couch it right--the stepchild program
that is in HUD right now? I am just curious. I think it is
something to explore, but I would like to know, do you have any
comments on the program itself?
Ms. Roman. There are disincentives, obviously, to increased
earnings when you are in the Section 8 program. So I certainly
do not have any objections to looking into ways that that might
work better.
I do think, basically, that if the housing is unaffordable
it is not going to be more affordable after 5 years
necessarily. Obviously, you want people's incomes to go up and
people's incomes do tend to go up. I believe, as Senator Toomey
said, the average length of stay in Section 8 is only 6 years,
as is.
But I think the Moving to Work program was to give
flexibility to agencies to try different structures and that is
what they are doing. It is good to do that.
Senator Cortez Masto. Thank you. I appreciate that. Thank
you for the comments.
Let me follow up, Ms. Roman, with you on the Interagency
Council on Homelessness, a piece of legislation that I have
cosponsored, Senate Bill 2008. What have been the historical
successes of the Interagency Council on Homelessness? And what
are some of the challenges, as well?
Ms. Roman. Well, I think one success has been, for example,
the Mayor's Challenge on Ending Homelessness, which USICH
really orchestrated. This initiative brought together not only
the Federal agencies but also communities, mayors, to set goals
on how many veterans they were going to get housed over a
period of time.
That ended up reducing veteran homelessness by over half in
a few years. Resources from you all had a lot to do with that,
as well.
But you know, coordination is a boring kind of term and
everybody always says we need to coordinate and have
partnerships. We know that, but it is hard to do.
But I think USICH shows that another way to do it is to
really have a boundary spanner, somebody who goes across the
agencies rather than having to have the agencies all agree
about how they are going to partner and just makes the
partnership happen.
Senator Cortez Masto. I appreciate that.
Listen, the one thing I have learned is just what you said,
coordination is such an easy thing to say that should happen.
But it does not always happen. And unfortunately, there are
times when we have to force it through legislation to make sure
everybody is talking with one another.
So I appreciate your comments. Thank you.
Ms. Mensah, let me talk about Native American Rural
Homeownership Improvement Act which my colleague who is sitting
to my right, Senator Smith is responsible for introducing. And
I completely support it. I want to be a cosponsor or a sponsor
on that bill with her.
Let me talk a little bit about the challenges in Nevada
with our tribal communities. There is only one Treasury-
certified CDFI in Nevada. In the past 30 years, we have had
only eight awards to a Nevada-based CDFI. We are the only State
with a single digit award amount to a CDFI in our State. Nevada
does receive investments from regional and national groups, but
awards to the Nevada headquarter groups have consistently
lagged.
So how is your organization addressing the disparate
coverage of CDFIs across the country? And what can we do in
Congress to help address this issue, as well?
Ms. Mensah. Thank you for the question, Senator.
The CDFIs have finally seen more visibility this year as
the Nation has acknowledged that we are necessary partners in
the financial system to get funds, and in this case for
housing, throughout the country. There are 1,000 certified
CDFIs covering all 50 States, but there are not sufficient.
So first of all, I appreciate your increased visibility,
your efforts also to expand funding for us both through
existing channels like the Federal Home Loan Bank, allowing
those existing ones and to encourage the kind of partnerships
that will assist.
I look forward to working with you and your team to
increase the amount of CDFIs in Nevada.
But in the meantime, expanding the pilot that Senator Smith
has sponsored will help. It will allow more partnerships to
work with USDA, which is already in your State. So I believe it
is a smart first step and I believe the kind of encouraging of
partnerships with CDFIs with existing programs, run the same
program but in better partnership.
It is expanding programs and it is giving us more funding
and more access to funding. That is what happened in the PPP
program and we believe it could happen in others.
So thank you for your visibility and attention.
Senator Cortez Masto. Thank you.
Chairman Brown. Thank you, Senator Cortez Masto.
Senator Smith from Minnesota is recognized for 5 minutes.
Senator Smith. Thank you, Chair Brown and Ranking Member
Toomey.
I really appreciate this panel. I am grateful to have a few
minutes with you all to talk about this issue.
I always start from the place that if you do not have a
safe, affordable, stable place to live then nothing else in
your life works. Not your education, not your job, not your
family, not your health. Nothing works. And we know that fair
access to home ownership, and housing even, in this country is
still not a promise that is realized for everyone.
And so this is really, I just want to thank you, Ms.
Mensah, for highlighting the work that I have done with Senator
Mike Rounds from South Dakota on the Native American Rural
Homeownership Improvement Act. These bills in Washington all
have such long names.
I am really--it seemed to us, I think what we have learned
from the pilot that we now want to expand nationwide is that
CDFIs, Native CDFIs in this case, because of the ties of
understanding and trust that they have in community are able to
make the connection and bridge the divides and overcome some of
the discrimination that exists when it comes to lack of access
to financing.
So could you just comment--first, do you think that that is
right? Do I have that right?
Ms. Mensah. Yes.
Senator Smith. And then could you comment on what are some
of the other ways, in addition to my bill with Senator Rounds,
that we could deploy and lift up CDFIs to expand home ownership
opportunities in other places in other ways with other Federal
programs?
Ms. Mensah. Thank you so much.
You are precisely right. When the USDA partnered in this
pilot with the two Native CDFIs, Four Bands and Mazaska, you
had the perfect partnership. You had the capital of a USDA
program that I used to be a supervisor of that is a $1 billion
program each year. And you had it positioned to work in Native
areas, where we have had very little success. We were not just
waiting for buyers to quality.
So I believe this is the direction. I fully support your
opportunity. It is a wise expansion of this program.
And I appreciate your question about how would we look for
other places in the Federal Government to expand housing. And I
think people do not always remember that the Department of
Agriculture is a huge and important houser in our rural areas.
And there are so many parts of rural America that are not
touched when we do these interesting moves on vouchers and
things. It just does not have--it does not play out in rural
America.
So I urge you to keep looking at USDA titles, 515 is our
rental title. And I would also encourage the HUD titles to
partner more with CDFIs.
And I want to thank you for your attention to Native areas.
Senator Smith. Thank you. Thank you so much.
As I listened to all of your testimony, I think it really
reveals something that I have come to understand from the many,
many conversations I have had with people in Minnesota which is
that across the board the housing market in this country is
just failing. I mean, it is failing to meet demand, especially
for low-income housing.
And we can see that failure across the spectrum. Ms. Roman,
from lack of access to affordable housing and supportive
housing, transitional housing for people who are experiencing
homelessness all the way up to workforce housing needs in
places like Thief River Falls, Minnesota, where literally the
lack of access to housing is the limiting factor on whether
companies in that community can recruit more folks to work in
their businesses. This is, of course, a complicated problem.
But I want to just, in the minute I have left, come to Mr.
Husock about this. You mentioned Minneapolis and the work that
is happening in Minneapolis around the 2040 plan. This is a
long-term planning work that has been doing to support local
zoning reform. It basically does some pretty innovative things
like saying we should reduce minimum parking requirements for
new housing production. We should legalize triplexes citywide.
We should allow for larger residential buildings to be built
along transit corridors.
And it seems to me that this has the possibility of
addressing one of the challenges we have around affordable
housing, which is that it costs too much. We cannot afford
affordable housing because it costs too much.
Now, I do not support making changes that would increase
people's--that would damage people's safety. But could you just
talk a bit about this, Mr. Husock, and how the Federal
Government can support these kinds of innovative local zoning
reforms?
Mr. Husock. Thank you for the question.
I spent some time in Minneapolis looking at that plan and
it is very innovative. It unfortunately became too
controversial for some reasons. And the surrounding suburban
areas are the ones with the most exclusionary zoning.
Minneapolis city was already doing a pretty good job on
relatively flexible zoning.
But duplexes, triplexes, fourplexes, small five-to-nine
unit buildings, these are prohibited in most jurisdictions.
They used to be our ticket to provide affordable housing that
was naturally affordable because it was a number of units on a
relatively small space. We need to rediscover that formula.
As far as what HUD can do, I am concerned about tying CDBG
funds, as I said in my testimony, because that can be a lot of
red tape and I do not want there to be a formula. But I think
HUD should convene widely on this and help this idea spread,
shine a light on it, including on what is happening in
Minneapolis, what is happening in Los Angeles.
So I am glad to sound a bipartisan note on that.
Senator Smith. Thank you.
I know I am out of time. I just want to mention, I think
the Yes in My Back Yard Act, which some of my colleagues are
working on, is an example of how we can sort of support better
understanding about the impacts of these local zoning policies
and advance them.
So thank you, Mr. Chair. I yield back.
Chairman Brown. Thank you, Senator Smith.
Senator Scott is recognized for 5 minutes from South
Carolina.
Senator Scott. Thank you, Mr. Chairman. Thank you for
holding this hearing, as well, a very important hearing.
Let me just say, before Senator Smith departs, that I
appreciate her cosponsorship of a bipartisan piece of
legislation that I am leading with Senator Durbin, the Lead-
Safe Housing for Kids Act. The commonsense bill would require
HUD to modernize its lead prevention regulations to better
protect children from the harmful risks of lead exposure. Thank
you for being a cosponsor of that important legislation.
Thank you all for being here, as well, to discuss this
really important issue about the housing availability.
While some of the bills being discussed here today could
make small piecemeal improvements to the availability of
housing, they do not address the bigger picture, one that is
the failed State of our housing finance system. The status quo
is not a viable option. No amount of tinkering in the margins
will actually fix it.
The nearly 13 years since the GSEs were placed into
conservatorship, their footprint has continued to grow while
the mortgage market has gotten less diverse as a number of
active private lenders have dwindled. This shortfall of
competition in mortgage financing seems to be leaving too many
Americans behind in their dream of home ownership as a lack of
innovation and product choices has limited mortgage credit
availability to too many credit-worthy households.
It strikes me that the most effective way to responsibly
and sustainably make home ownership affordable and accessible
for a broad range of Americans is for this Committee to get
serious about finally enacting comprehensive legislative reform
of our housing finance system.
Mr. Husock, do you agree that Congress should work in a
deliberative and bipartisan manner on a comprehensive fix for
the many challenges that we face within our system?
Mr. Husock. Thank you very much, Senator Scott, for that
important question.
The Chairman raised an interesting point earlier about that
$40,000 home in Cleveland that cannot get a rehab loan. Well,
when you have a mortgage finance duopoly, as we have in this
country, there is no competition for those small dollar loans.
I understand that we may have to subsidize other actors to get
into that space, but we have to foster competition. And the way
to do that is to expand the secondary market in a way that goes
beyond the existing duopoly.
Senator Scott. Thank you.
I will yield back the balance of my time.
Senator Van Hollen [presiding]. Thank you. Thank you,
Senator, and thank all of you for your testimony here today. We
have a vote on so we are going to be running back and forth.
First, Ms. Mensah, it is good to see you. We had a hearing
the other day, actually, in the Appropriations yesterday, the
subcommittee that oversees the CDFIs with Secretary Yellen. I
just want to thank you for all of your good work on CDFIs and I
am pleased to see the Administration's request supporting an
increase there and grateful for all of your work. We are on the
same page there.
I did want to use this as an opportunity, Ms. Roman, to
talk about the bipartisan legislation that I have introduced
with Senator Todd Young, which would provide vouchers to help
families with young children move to areas of opportunity and
couple them with wraparound services to make sure that in that
transition they have a greater opportunity to succeed.
Could you talk a little bit about why this is an
effective--assuming you think it is an effective--approach and
some of the research that you may have seen that supports that
conclusion?
Ms. Roman. Well, thank you so much, Senator, for
introducing that bill.
Clearly, we have too many homeless families, although
family homelessness has been going down slightly, which is
good, compared to other populations. Many families that are
homeless are very young and have young children. And there is a
lot of evidence, obviously, about how housing instability
affects young children, their educations and their development
generally.
Also, of course, there is a tremendous amount of
information about the consequences of growing up in
neighborhoods where there is not opportunity, where the schools
are not good, where the hospitals are not available, where the
jobs are not there, where the grocery stores are not present,
and relegating homeless and low-income families to these
neighborhoods over generations obviously has its impacts.
So, I think that the scale and the configuration of your
proposal are both extremely exciting. I said earlier, I do not
know if you were here, that if it were targeted it could
certainly end family homelessness altogether. And providing the
assistance to help people, I think, increase their earnings and
be connected with better services, better education, better
support, you have much, much improved outcomes.
We are very, very grateful to you for introducing the bill.
Senator Van Hollen. Thank you for your testimony, your work
in this area. I do not have to, I guess, ask unanimous consent
but I do want to put into the record a document that details
some of the studies that have been done to support this
legislation because it is an evidence-based piece of
legislation.
Mr. Husock, if I can ask you--and I know that you are not a
big fan of vouchers, I was looking at a piece you wrote in 2000
that is entitled ``Let's End Housing Vouchers''.
But I do understand from your testimony today, and some of
your colleagues at AEI have also been positive, as you know,
about the idea of if we are going to have vouchers trying to
help families move to areas of greater opportunity.
If you are going to have vouchers, do you believe those
kind of conditions and wraparound services are the most
effective way to go? Do you agree with the research that has
been done that supports that conclusion?
Mr. Husock. I am familiar with Professor Raj Chetty's work,
which I think you are referring to.
Senator Van Hollen. Yes.
Mr. Husock. And I think that the voucher program, as I said
in my testimony, can be effective. I am a practical person. I
understand the voucher program is here with us and we need to
make it effective. And that is why I favored the flat rate rent
and the transitional character of it.
I do worry about the idea that we are going to give up on
lower income neighborhoods and cast them off as being low
opportunity zones. HUD was originally chartered by the Johnson
administration to make poor neighborhoods good neighborhoods.
And to me, I fear that we are signaling that if you live in a
low-income neighborhood, it is a low opportunity zone. That is
a dispiriting message to give. And I think we have an
obligation in our public services, in our schools, in our law
enforcement, to make every neighborhood a good neighborhood and
every neighborhood a high opportunity zone. So I worry about
the practical dimensions of it.
And I notice in Professor Chetty's work, he found
effectiveness for children aged 13 and younger. Well, are we
going to cast people off when their children get to be 13?
There is a lot of details on this we have to look at. And I
think we have to be empathetic to property owners who may have
different reasons for wanting to participate in the program or
not.
Senator Van Hollen. Well, I look forward to having you back
for another hearing on the idea of making sure that we can
better empower neighborhoods right now that are struggling. And
there is a number of bills that have been introduced. And I
would argue a big part of President Biden's plans, both in
terms of the American Jobs plan but also the American Families
plan, would provide many additional supports and help to
families to be more successful in those areas, including the
school systems.
And I have long worked to try to increase the resources as
well as the reforms and other changes to better empower those
neighborhoods.
But at this moment in time, we have something that seems,
at least through the evidence, to have been shown to be
effective at helping these families. And it seems to me that we
should seize that opportunity.
So at this point in time, there is a vote on. I am going to
recess the Committee briefly, because I have got to go vote.
And Senator Warren will be back shortly to ask some questions.
And I am pleased that we have been joined by Senator Ossoff.
So the Committee is recessed until it is reconvened.
[Recess.]
Senator Warren [presiding]. The Banking hearing is back in
session.
I recognize myself to ask some questions here.
I want to thank our witnesses for being here today.
To address our Nation's housing needs crisis, we need a
bipartisan commitment to take on our Nation's housing needs
headfirst, not just nibble around the edges on them.
I am deeply concerned about comments my Republican
colleagues on this Committee have made about housing
investments, namely that housing does not constitute ``real
infrastructure'' since infrastructure only means ``things like
roads, bridges, ports, airports, and transit.'' Housing is
essential infrastructure.
I agree with Secretary Fudge who told this Committee
several weeks ago that housing ``lays the foundation for a
stronger and more connected society.''
So I want to talk a little about the State of our Nation's
housing. And I want to start out with public housing here.
Ms. Roman, is our Nation's public housing in good shape? Or
do we have a long list of repairs that have been outstanding
for years?
Ms. Roman. Our public housing is not in good shape and we
do have a long list of repairs that have been outstanding for
many years. And we are losing, as a result, public housing
units every year, I think at the pace of about 10,000 a year,
to demolition or disposition. And we have lost, I think, more
than 200,000 units since the 90s.
So yes, that infrastructure is in need of fixing.
Senator Warren. So think about that. We are talking about
our public housing and the fact that we do not spend enough
money on just plain old maintenance and repairs. That means we
are losing about 10,000 units a year, about 200,000 units that
we can count so far, units that families need to be able to
live in.
This means that families are living in unsafe, unhealthy,
and undignified conditions. We need more than $70 billion just
to make public housing safe for the residents who are there.
We are not even talking about the investments we need to
make to upgrade public housing to withstand the impact of
climate change or to incorporate energy efficient upgrades.
This is just to maintain the level of where we are now, to have
this critical source of housing available to us. So even if we
zoom out, the situation on housing is not much better.
Ms. Mensah, is the Nation's housing stock overall in sound
condition?
Ms. Mensah. Thank you, Senator, for the question.
It is not in sound condition. We must be better stewards of
this.
A PolicyMap and Federal Reserve study showed that there
were actually $127 billion of repairs. And when I served as
Under Secretary of Rural Development, we identified $6 billion
in the Nation's rural rental properties.
Stewardship matters. And the CDFIs that I represent stand
ready to be your partners in this effort. We can create loans
for homeowners who want to do this. We can work with
properties. We are the ones who want to do this kind of rehab.
And today, it will be more energy efficient. We will
rebuild greener when we repair.
And there is no reason to not be good stewards of what is
already here. So thank you.
Senator Warren. Thank you.
And I very much appreciate your point but I really want to
underscore what this means. When we do not maintain, what kind
of things are we talking about? We are talking about pest
infestations, plumbing that does not work, structural problems,
electrical problems that can be very dangerous, hearing
problems, leaks. And as you say, we are looking at about $127
billion worth of repairs just to be able to maintain where we
are.
Ms. Roman, if a low-income family living in a crumbling
house wants to move to safe housing, housing that is free of
mold, free of pest infestation, does not have lead pipes, can
they generally find someplace affordable to move?
Ms. Roman. No, because there is not an adequate supply of
affordable housing and the places they will be looking at that
they can afford will probably be as you described, like the
places they are trying to leave.
Senator Warren. Yes. And you know, that is the real problem
here. We are disinvesting in the affordable housing that
exists, losing units year after year. We are not making
investments to produce enough new affordable housing. And while
Congress twiddles our thumbs, we put families at risk. We put
their health at risk.
President Biden recognized the urgency of this need when he
included historic investments in housing in his infrastructure
proposal. And I have said all along frankly, we need to make
bigger investments in housing.
But instead, some in Congress are saying that we can kick
housing out of the infrastructure package altogether in hopes
that Republicans will agree somehow then to vote for the
package. Or that Democrats can go it alone but only if we spend
less than President Biden proposed in his American Jobs Plan
and American Families Plan.
This is unacceptable. We need to be going further than the
President has proposed, not settling for half as much and then
patting ourselves on the back for a job well done. Families
across this country understand the stakes. It is time that
Congress catches up with the needs that our families have in
housing and that we finally make the investments necessary to
turn this crisis around.
Again, I want to thank you very much for being here today
and thank you for your work.
Thank you, Mr. Chairman.
Chairman Brown [presiding]. Thank you, Senator Warren.
Thank you.
Before turning it to the most senior Democrat on this
Committee, Senator Reed of Rhode Island----
Senator Reed. The oldest.
Chairman Brown. I want to announce that his staff, James
Ahn, this is his last day or last hearing for sure, his last
day is tomorrow. He has been serving for better than a decade.
I have worked with him, and my staff has worked with him for
years now. He even looks out for my grandchildren in his boss's
home State of Rhode Island.
But Mr. Ahn, most significantly, I mean it is significant
he is a public servant. But the work that he was here, maybe
the only personal staff still here from the Dodd-Frank days.
And he was helpful in that legislation. And Jack Reed played a
major, major role. It should be called the Reed-Frank bill, but
it is not.
And James was new then, and James was not able to get Jack
Reed's name in the title apparently.
Anyway, Senator Reed is recognized for 5 minutes.
Senator Reed. Thank you very much, Mr. Chairman.
I join you in saluting James. He has been an extraordinary
asset, not just to my office but to the Committee. We will miss
him but we will still be calling upon him.
Thank you all for your testimony. This is absolutely a
critical topic. Everywhere I go in Rhode Island, everywhere we
go around the country, affordable housing, affordable housing
is the cry.
Ms. Roman, I believe Senator Cortez Masto touched on this
but Senators Collins, Van Hollen, Senators Cortez Masto,
Klobuchar and I have introduced the S.2008, which is extending
the life of the Interagency Agency Council on Homelessness.
Could you comment on how critical that is?
Ms. Roman. Yes, thank you so much for introducing that. I
did talk a little bit about it before to just say that people
who are homeless generally have complex issues. We talk about
the need for cooperation and partnership and everybody agrees
with that but it is hard to make it happen.
USICH sort of makes it happen through being a boundary
spanner, going among agencies and pulling together what is
needed from each one to really address homelessness. I think it
is a pretty inexpensive way to really improve outcomes.
They also share information with the States and localities
on best practices and so forth, which is also extremely helpful
and creates those partnerships.
As long as we have homeless people, it would be good to
have USICH so I appreciate your efforts there.
Senator Reed. Thank you very much.
It is a holistic problem. It is not just one thing. And you
need interagency cooperation.
Looking at numbers around for Medicaid, for example, the
homeless average $14,723 a year higher than the average
Medicaid recipient who presumably is in housing. That is just
$8,200. That is an example of some of the costs that are not
borne by the housing system but borne by the health care
system.
I concur, that is why we are trying to push the
legislation. Thank you.
Ms. Mensah, Capital Magnet Fund, it is a competitive
affordable housing grant that is funded outside of the
appropriations process, which is good. And in addition, it
allows grants for economic development, service facilities such
as daycare centers, workforce development.
Could you discuss the importance of anchoring affordable
housing around economic development activities like daycare
centers and other things that allow people to work?
Ms. Mensah. Senator Reed, thank you for your question.
The Capital Magnet Fund is a very valuable tool for both
housing and the economic development activities. We support
expanding the Capital Magnet Fund to provide over $12 billion
over the next 5 years. We are in full support of this.
It is incredibly efficient. And I think what was so wise
about this was not just its unique funding mechanism, but its
targeting of the way partners join CDFIs.
Capital Magnet Fund awardees have leveraged over $18
billion in the past 5 years of funding. That is over three
times the requirement. And they have completed projects through
this that has been 28,000 units of affordable housing,
including 4,500 home ownership.
So this is a program that has worked. We thank you for your
early championship of this program. But it is time now, as I
spoke in my testimony, to expand what we know works.
So I thank you for your attention to this. It is the
knitting together of home ownership and economic activities
that will transform our communities.
Senator Reed. I concur. I was at a celebration earlier of
14 separate units in Providence, Rhode Island funded from the
Affordable Housing Trust Fund, which we also developed as well
as the Capital Magnet Fund. And these now are first-rate
housing.
And basically, it is not only providing housing, it is
stabilizing the neighborhood.
Ms. Mensah. Exactly.
Senator Reed. Which was just on the precipice of beginning
to slide. So thank you for that.
And just a final question, Ms. Roman, I was struck in your
written testimony, the analogy that the homeless system is like
an emergency room. We patch you up and we figure out what is
going but we have got to send you someplace. And the present
system is not the solution.
I will just give you 11 seconds. What is the solution?
Ms. Roman. Well, the solution is housing. We need housing
to send people to. And the faster we get them into the housing,
the better off they are. Being homeless is terrible for your
health. We have seen that during COVID. Unsheltered people, for
example 50 percent of them are trimorbid, they have mental
health, substance abuse, and physical illnesses. We need to get
people into housing.
Senator Reed. Thank you.
Thank you, Mr. Chairman. Thank you all.
Chairman Brown. Thank you, Senator Reed.
There is one Member we are awaiting and I have a couple of
other questions so I will take the liberty to, I guess, do a
second round and a question for each of you.
Ms. Mensah, many of the lowest income homeowners in rural
areas, we talked about the problems of housing in rural
America, depend on the USDA 504 program to make critical
repairs and improve the efficiency of their home to save on
monthly bills. Talk to us about the 504 program, especially the
grants that are available through that program to help
homeowners in rural areas stay in their homes.
Ms. Mensah. This is one that brings me to tears when you
see the successes that have happened with this program. Elderly
residents getting ramps so that they can get into their homes,
better heating, better efficient systems. It is exactly what we
need.
The only problem with the 504 program, it has been too
small. So I would urge your attention to this.
In some ways, rural housing does not have the attention of
the Nation but it is experienced painfully by the people who
are part of rural America. So I appreciate the attention.
My feeling is that the tools are there within USDA. They
can be partnered as appropriate, like we saw with the 502
Relending Pilot. But they are there and they just need your
attention and an increase. These are powerful, smart pieces of
legislation that already work.
Chairman Brown. Thank you, Ms. Mensah.
Ms. Roman, I have introduced a bill with Pennsylvania
Democrat Bob Casey and Maine Republic Susan Collins to support
housing for grandfamilies, grandparents raising their
grandchilden, often after traumatic circumstances. We would
provide funds to repair and maintain apartments for
grandparents and grandfamilies, if you will, and provide
service coordinators to help connect these families to
services.
Talk about why this is important, to support families that
so often could end up afflicted by homelessness.
Ms. Roman. I will say, among homeless individual women,
women who are homeless but not with their families--the most
common situation is that they have children and the children
are staying with another family member. They are often families
that are very poorly resourced, as well, and at risk.
So, think this would be tremendously helpful. Obviously,
there is help that needs to be provided to the parents but to
be able to support the grandparents to take care of families, I
think would make a real difference in homelessness situations.
Chairman Brown. There is one more Senator that I am
awaiting, but we cannot really wait too much longer. But would
each of you just like to summarize any thoughts each of the
three of you want to give to the Committee? And then, if the
Senator who may or may not be returning has not arrived, I will
adjourn. But if he has, I would like to give him the
opportunity.
Mr. Husock, you want to start on that?
Mr. Husock. Sure. I appreciate the opportunity, Senator
Brown.
I think the thrust of my remarks is let us view our housing
programs not in isolation to our general assistance programs
for people of low-income. The issues involve giving incentives
to improve their lives over time, trusting them to improve
their lives over time. When we remark that after 5 years they
will still be in the same situation, that is a pessimistic view
of America and I do not share it. I think that we should look
to uplift through incentives. I think we should be careful in
providing programs that may provide disincentives for upward
mobility.
Just a quick comment on eviction. We have to be careful.
Many of those--if you look at Matthew Desmond's wonderful book
which the Chairman referenced, among the heroes of that book
were low-income landlords who were struggling to pay their
bills and were dealing with tenants who were causing
significant problems not just I paying their rent but for other
tenants, starting fires, other things like that.
So the housing ecosystem is a complex ecosystem and we need
to look at it holistically rather than saying let us just stop
evictions. No, let us study the situations that lead to
evictions and try to assess those, both for owners and for
tenants.
Thank you, very much.
Chairman Brown. Mr. Husock, thank you for those comments
and insight.
Ms. Roman.
Ms. Roman. I think really it is housing that is the
solution to homelessness. We have a fairly sizable homelessness
system. It is not inexpensive. And it is, I think, the tip of
the iceberg in terms of what homelessness costs us in other
areas, health care, policing, education.
To end homelessness we just need to focus on getting people
experiencing homelessness into homes. That will solve the
problem of homelessness.
Chairman Brown. Thank you, Ms. Roman.
Ms. Mensah, thank you.
Ms. Mensah. Thank you, Senator.
I think what was interesting about being invited to address
this hearing was that it had the word bipartisan in our title,
as you were seeking to increase access to housing. And I think
there are so many practical ideas that can go a long way to the
real unfinished work we have.
But if I could leave you with one thought, it is that
America is a complex place. And its localities are very
different. And an army of Community Development Financial
Institutions stands ready to be a smart partner to the work of
finishing what is unfinished in providing housing.
I am so appreciative of the attention to Native housing. So
rarely do we get a moment to speak to our Tribal areas.
I am appreciative to the focus on rural housing. So rarely
do we get a chance to focus on this.
And in all of this, I feel like the Nation can do better to
turn to our CDFIs in the jobs of rebuilding and rehabilitating
and rethinking our housing stock. And I want to thank you for
the attention to make this case today.
Chairman Brown. Thank you.
What excited me about this hearing is there are probably 20
of my colleagues, roughly half Democrats and half Republicans.
I spoke to a number of them today. I spoke to Tester and Reed
and Coons and Collins and Cramer and Young and Van Hollen, and
a number of them have bipartisan bills. These are not, you
know, this is an investment of $100 billion in public housing.
It is not the big rental assistance we did in the most recent
bill.
But it will make a significant difference and it is
something that this Committee, I am hopeful, can do. That is,
to me, why this is one of the--I mean, it was exciting to do
this hearing and be a new Chair and look at the history of
structural racism from black coats to Jim Crow to redlining to
the Trump administration locking in discriminatory housing
practices and how we address that.
But today, to me, was just a very uplifting time that we
can do a lot of things bipartisanly, taking the ideas of the
three of you and many of my colleagues.
So thank you for being here.
The Senate Committee on Banking, Housing, and Urban Affairs
is adjourned.
[Whereupon, at 11:27 a.m., the hearing was adjourned.]
[Prepared statements and responses to written questions
supplied for the record follow:]
PREPARED STATEMENT OF CHAIRMAN SHERROD BROWN
In our first hearing I gaveled as chair, we talked about how
housing is the gateway to opportunity, and to building a middle class
life--and how too many families are locked out of it.
I said that this Committee, the Banking and Housing Committee, will
focus on housing, perhaps more than the Committee ever has.
Since then, I've been encouraged to see Members of our Committee,
of both parties, take that charge to heart.
We've held hearings on the state of our Nation's housing, and on
the legacy of racism in our housing system.
And last week, we heard from America's mayors about how the lack of
affordable housing is holding back communities and families in all
parts of the country.
We heard from the Mayor of Bozeman, Montana, that the city's
businesses are losing out on candidates for good-paying salaried jobs
because there are no homes potential workers can afford to move their
families into.
We heard from the Mayor of Tempe, Arizona, that they've had a 900
percent increase in the number of residents without a place to lay
their heads at night, in just in the last 5 years.
We heard from the Mayor of Akron, Ohio, that most of their housing
was built before 1970, long before we stopped using poisonous lead
paint.
These aren't isolated problems. Homeowners and renters, people
working minimum wage or making a steady salary--they're all struggling
to find an affordable place to live.
This is a national problem. And our Members of both parties have
asked thoughtful questions, listened to our witnesses, and are already
working on solutions.
We'll discuss some of those bipartisan proposals today. Many of
them are proposals that the Members of our Committee have introduced in
past Congresses--and it's unfortunate that they have not been
considered before today.
These ideas take steps to bring down housing prices for families,
and they tackle the housing needs of renters, aspiring homeowners, and
Native communities.
All of the bills we'll discuss today are bipartisan, and all of
them have at least one cosponsor from this Committee.
We have legislation to expand affordable housing opportunities:
The Family Stability and Opportunity Voucher Act (S.1991),
introduced by Senators Van Hollen and Young, which will help
half a million more families afford a home, including in areas
with greater opportunities
The Choice in Affordable Housing Act (S.1820), legislation
from Senators Cramer and Coons, to encourage more landlords to
participate in affordable housing programs.
We'll examine a bill, S.2008, introduced by Senators Reed and
Collins and others to strengthen the U.S. Interagency Council on
Homelessness, and we'll look at the Yes in My Back Yard Act (S.1614),
offered by Senators Young, Schatz, and Warnock, that sheds light on
communities' plans to remove barriers to making housing more affordable
and combat discrimination.
We'll look at the Native American Rural Homeownership Improvement
Act (S.2092), introduced by Senators Smith, Rounds, Tester, Cramer,
Schatz, and Thune, that supports lending to Native Community
Development Financial Institutions, to increase Native American home
ownership in rural communities.
We'll talk about a plan from Senators Tester and Lummis--the
Improving FHA Support for Small-Dollar Mortgages Act of 2021--to
encourage more small-dollar mortgages.
Many of us have read Matthew Desmond's powerful book Evicted.
Inspired in no small part by that book, Senators Bennet and Portman
have reintroduced the Eviction Crisis Act, which I'm also proud to
cosponsor.
In Ohio we also know how the addiction crisis has torn apart so
many families. It's one of the reasons I joined Senators Casey and
Collins to introduce the Grandfamily Housing Act, to help grandparents
who are caring for their grandchildren find the housing and support
they need to help children thrive, after often traumatic circumstances.
I also have a bill, the Trafficking Survivors Housing Act of 2021
(S.2049), with my friends Senators Blunt and Durbin to identify ways to
help survivors of human trafficking find safe housing and rebuild their
lives.
And more of our colleagues have introduced other bipartisan housing
bills just this week.
Senators King and Young, along with Senators Cantwell, Tester, and
Kennedy, have reintroduced their bill, the Task Force on the Impact of
the Affordable Housing Crisis Act, to research the effects of
unaffordable housing on families.
These ideas recognize the breadth of our housing challenges. And
they show us how these problems cut across all geographic and racial
and partisan lines. Every one of these bills is bipartisan.
Of course these bills alone won't solve all our housing problems.
They're not a substitute for the generational investment we need in our
housing infrastructure.
We must take the opportunity for something far more transformative:
We can build more homes people can afford, and we can improve the
homes we already have and make them more affordable.
We can make houses and apartment buildings more energy efficient
and bring down people's utility bills.
We can remove lead that poisons our kids.
And we can hire American workers to do it all--these are jobs that
can't be shipped overseas.
The bills we'll consider today won't accomplish that on their own.
These ideas are a downpayment on our commitment to start solving the
problems we can, on a bipartisan basis.
On Monday, I was talking with parents from Ohio about the Child Tax
Credit, and what the expansion we passed will mean for their ability to
afford childcare and diapers and transportation and, of course,
housing.
One advocate who works with Northeast Ohio families said something
that she hears so often from Ohioans--she said their whole lives
revolve around making rent.
Think about what it's like to live with that stress.
On this Committee, we have an opportunity to make people's lives
better through better housing policy
All of us should get to define what home looks like for us. And
people should be able to find it and afford it without that crippling
stress every single month. Today, we will consider bipartisan ideas to
make it so for everyone.
______
PREPARED STATEMENT OF SENATOR PATRICK J. TOOMEY
Mr. Chairman, thank you.
As I made clear at our first housing hearing this Congress, I am
committed to working with all Members of this Committee to improve
access to affordable housing. You may recall I released a set of
principles at the start of this Congress for reforming the housing
finance system. And as I pointed out before, my principles overlap with
the principles you laid out in September 2019, Mr. Chairman.
We must work in a bipartisan manner toward comprehensive reform
which serves families and the taxpayers. But we aren't here today to
talk about ways we can make housing more affordable. Instead, we are
asked to discuss a number of unrelated bills, most of which increase
Government spending and interference in housing markets.
We would be wise to remember there is no guarantee that further
Government support will improve access to housing. The Government
already supports a whole array of overlapping housing subsidies that
have done little to address affordability: mortgage interest deduction,
capital gains exclusion on home sales, property tax deduction,
Government guaranteed and subsidized mortgages, LIHTC, a host of HUD
programs.
As with taxpayer subsidies for health care and higher education,
all of this support for housing is only leading to price escalation.
Just last month, the year-over-year change in median home sales price
has grown to nearly 25 percent. We know wages aren't growing 25 percent
year-over-year.
If we want to make housing affordable, we should be talking about
how Government subsidies, and how monetary policy--the Fed's easy money
policy of low interest rates and its purchase of nearly half-a-trillion
dollars in mortgage-backed securities annually--are causing rapid home
price inflation. The experiment of a vast subsidy framework combined
with accommodative monetary policy have done little to address
affordability.
Congress recently doubled down on subsidizing housing and it
doesn't appear to be working. Congress appropriated over $80 billion
for housing in response to COVID, but much of this money hasn't gone
out the door yet. Nearly $50 billion was spent on emergency rental
assistance, but little of this is reaching landlords and tenants.
Congress spent almost $25 billion on more HUD programs through the
March 2020 CARES Act and President Biden's partisan relief bill, but 15
months after the CARES Act was enacted, less than one-third those funds
have been spent. And none of the money from the Administration's
flagship spending bill has actually been delivered to any family.
We need to start a new discussion. The measure of success shouldn't
just be how many families are receiving housing assistance. We should
begin focusing on enabling people to work their way out of poverty and
empower them to graduate from Government support.
But we appear to be having the same conversations and doubling down
on the same unworkable ideas that only grow the welfare State. This
Administration is ignoring the success of those welfare reform efforts
that directly contributed to poverty reduction in this country.
President Biden's partisan relief bill provided additional
unemployment insurance benefits, letting many people receive more money
than they would working. It also eliminated the requirement to work or
prepare for work as a condition of receiving many welfare benefits like
the child tax credit. And just a few weeks ago, HUD unilaterally
decided it wouldn't even study the effectiveness of work requirements
for tenants receiving taxpayer assistance from HUD.
I hope my colleagues would agree we don't want people to live their
entire lives on Government assistance. Assistance must be temporary and
transitional. But after 50 years and trillions in Federal housing
support, there's been no meaningful change in home ownership rates--64
percent in 1970 compared to 65.8 percent in 2020.
HUD's programs also are meant to enable self-reliance in housing.
However, according to most recent studies, we've seen the average
length of stay for families across all HUD assisted housing programs
nearly double from 1995 to 2015. In that same time, the average length
of stay for voucher holders grew from just under 1 year to over 6\1/2\
years.
Expanding the welfare State doesn't work. It's incumbent on
Congress to craft policies that actually support families.
Today, we will hear from a witness who will provide an alternative
view to expanding the welfare State. Howard Husock joins us from the
American Enterprise Institute, and he will provide new ideas for
helping families graduate from HUD assisted programs. Key among them:
we need not assume that the only way to reduce poverty is to grow
housing programs, and Government support does not always lead to better
outcomes.
Before I end my remarks, I want to repeat that I welcome and
encourage bipartisan compromise on major housing legislation. As an
example, my principles for housing finance reform lay the important
groundwork for a bipartisan solution to an as-of-yet unresolved
problem. I still hope we can have bipartisan hearings to discuss
legislative improvements.
We need to dispel the myth that more spending without reform helps
families. I welcome a discussion of novel ideas to advance affordable
housing. I want to hear new suggestions for helping families succeed
and am eager to advance legislation that promotes those ideas.
______
PREPARED STATEMENT OF LISA MENSAH
President and CEO, Opportunity Finance Network
June 24, 2021
Thank you for holding this hearing entitled ``Examining Bipartisan
Bills To Increase Access to Housing''. My name is Lisa Mensah,
President and CEO of the Opportunity Finance Network (OFN). I am
pleased to be here today to testify about how community development
financial institutions (CDFIs) can drive major new investments in rural
and tribal housing, and how CDFIs can contribute to the rebuilding of
our Nation's infrastructure.
OFN is a national network of CDFIs: mission-driven community
development banks, credit unions, loan funds, and venture capital funds
investing in opportunities that benefit low-wealth communities across
America. For nearly 40 years, CDFIs have provided responsible,
affordable capital where it is needed most: CDFI customers are 84
percent low-income, 60 percent people of color, 50 percent women and 26
percent rural. In FY2019, CDFIs in our network financed $7.9 billion in
loans, including roughly $2.2 billion in loans that supported rural
communities. \1\
---------------------------------------------------------------------------
\1\ Opportunity Finance Network, ``Impact Performance'', https://
ofn.org/impactperformance.
---------------------------------------------------------------------------
Nationwide, the more than 1,200 CDFIs certified by the U.S.
Treasury Department's CDFI Fund manage more than $222 billion. CDFIs
are experienced housing lenders with deep expertise reaching low wealth
markets. In fiscal year (FY) 2019, certified CDFIs made more than
600,000 housing loans totaling more than $56 billion. \2\ CDFIs have
cumulatively developed or rehabilitated more than 2.1 million housing
units. With cumulative net charge-off rates of less than 1 percent,
CDFIs lend prudently and productively in markets underestimated by
mainstream banks. \3\ CDFIs are specialized lenders who can reach deep
into communities and provide services that are tailored to each market
across the country.
---------------------------------------------------------------------------
\2\ Opportunity Finance Network, ``2019 CDFI Fund Annual
Certification Reporting Database'', Accessed November 19, 2020.
\3\ Opportunity Finance Network, ``Impact Performance'', https://
ofn.org/impact-performance.
---------------------------------------------------------------------------
This is a unique moment with the opportunity to commit to
addressing the Nation's housing issues and to tend to the problems that
we have left unaddressed for too long. The COVID-19 pandemic has
exacerbated existing problems in affordable housing and now is the time
to invest and go deeper into the communities across the country that
have faced decades of underinvestment.
The United States has an insufficient stock of affordable housing
and the stock that does exist is aging and in need of repair. We must
also be good stewards of the investments that have already been made.
In 2016, the U.S. Department of Agriculture (USDA) estimated the 20-
year capital needs of the USDA multifamily portfolio were $5.6 billion.
\4\ A 2010 HUD-sponsored assessment of the Nation's public housing
capital needs determined that approximately $21 billion was needed for
unmet maintenance and repairs, and that the overall public housing
stock is aging, with 51 percent of public housing units having
completed their last construction before 1975. \5\ Completing these
repairs not only preserves the investment already made into affordable
housing and improves the quality of life for residents of these
properties but will also make the buildings more energy efficient and
reduce future utility costs.
---------------------------------------------------------------------------
\4\ USDA, ``USDA Rural Development Multi-Family Housing
Comprehensive Assessment'', March 1, 2016, https://www.rd.usda.gov/
sites/default/files/USDA-RD-CPAMFH.pdf.
\5\ Urban Institute, ``The Future of Public Housing'', Benny
Doctor and Martha Galvez, October 21, 2019, https://www.urban.org/
sites/default/files/publication/101482/
the20future20of20public20housing20public20housing20fact20sheet-0.pdf.
---------------------------------------------------------------------------
CDFIs are the adaptable partners the Federal Government needs to
address the wide range of housing issues unique to each community. The
rural, urban, and Native communities where CDFIs work need a local
approach to meet their needs. CDFIs have decades of on-the-ground
experience working on the full spectrum of housing issues, from
constructing affordable rental housing, to renovating outdated housing
stock and making properties more energy efficient, to construction of
senior housing, to providing mortgages, technical assistance, and
facilitating downpayment assistance on the path to home ownership.
CDFIs already work with a variety of public and private resources.
Existing programs at Treasury, the Department of Agriculture, the
Department of Housing and Urban Development and throughout the Federal
Government need new investment to address the scale of the problem.
CDFIs need a strong partnership with the Federal Government to continue
to meet the moment and serve their communities.
Housing Challenges Facing Rural and Tribal Communities
Rural America--home to about 20 percent of the U.S. population and
covering more than 90 percent of the U.S. landmass--is diverse
economically and demographically. \6\ Rural America is not a monolith,
and its housing needs vary in different communities. In some rural
communities, outmigration and population loss are key drivers of the
housing challenges, while other rural communities have experienced
rapid growth and changes to the labor markets that have increased
demand for affordable housing. Many rural communities are also located
in ``areas of persistent poverty''--defined as communities with a
poverty rate of greater than 20 percent for three decades in a row.
According to Partners for Rural Transformation, of the 395 persistent
poverty counties in the U.S., eight out of ten are nonmetro and the
majority (60 percent) of people living in persistent poverty counties
are people of color. \7\
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\6\ U.S. Census Bureau, ``Measuring America: Our Changing
Landscape'', December 16, 2016, https://www.census.gov/newsroom/press-
releases/2016/cb16-210.html.
\7\ Partners for Rural Transformation, ``Transforming Persistent
Poverty in America: How Community Development Financial Institutions
Drive Economic Opportunity'', March 2020. https://
www.ruraltransformation.org/wp-content/uploads/2020/03/Transforming-
Persistent-Poverty-in-America-Policy-Paper-PRT-FINAL.pdf.
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Aging housing stock puts pressure on the supply of both single and
multifamily affordable housing. According to the National Low Income
Housing Coalition, nearly 30 percent of rural households experience at
least one major housing problem, such as high cost, physical
deficiencies, or overcrowding. These problems are found throughout
rural America but are particularly pervasive among several geographic
areas and populations, such as the Lower Mississippi Delta, the
southern Black Belt, the colonias along the U.S.-Mexico border, Central
Appalachia, and among Native Americans and farm workers. \8\
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\8\ Housing Assistance Council, Leslie R. Strauss, ``USDA Rural
Rental Housing Programs'', https://nlihc.org/sites/default/files/AG-
2021/04-15-USDA-Rural-Rental-Housing-Programs.pdf.
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Below are some key issues impacting access to affordable housing in
rural markets:
Housing cost increases outstrip income growth. While
housing costs are still relatively low in some rural markets,
there are some communities where increased housing costs
coupled with stagnant income growth is creating an
affordability crisis. For example, in the Rio Grande Valley
where OFN member ``Come dream, Come build'' (Cdcb) works,
housing prices increased as they have throughout Texas. During
the 10-year period from 2011 to 2020, the median sales price in
the Brownsville-Harlingen MSA increased 70.8 percent, from
$101,300 to $173,000. However, rising home prices in
Brownsville-Harlingen have far outpaced the modest growth in
incomes. Median income in 2019 was $37,900, less than three-
fifths of the statewide median income of $64,800, making this
community one of the least affordable in the State. \9\
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\9\ Come dream, Come build, ``The Myth of Affordability in the
RGV: Homeownership Fact Sheet'', March 3, 2021. https://img1.wsimg.com/
blobby/go/28825c06-7c1e-41eb-8bf1-b2e39c412309/
Myth%20of%20Affordability%20Homeownership%20fact%20sheet.pdf.
Housing quality and aging housing stock. Nowhere are the
challenges to the Nation's aging housing stock more prevalent
than in rural communities. In too many rural communities,
housing lacks adequate plumbing and kitchen facilities as well
as facing conditions of overcrowding. The adequate housing that
does exist is often unaffordable because rural incomes are
below the national median income. \10\
---------------------------------------------------------------------------
\10\ Come dream, Come build, ``The Myth of Affordability in the
RGV: Homeownership Fact Sheet'', March 3, 2021. https://img1.wsimg.com/
blobby/go/28825c06-7c1e-41eb-8bf1-b2e39c412309/
Myth%20of%20Affordability%20Homeownership%20fact%20sheet.pdf.
Limited home ownership opportunities for rural communities
of color. For the millions of people of color living in rural
America, access to home ownership is also an issue of racial
equity. There are more than 2,000 rural and small-town census
tracts where racial and ethnic minorities make up the majority
of the population--many who experience limited access to home
ownership opportunities due to lending practices and housing
policies that historically excluded rural people of color. \11\
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\11\ Housing Assistance Council, ``Rural America Is More Diverse
Than You Think'', https://ruralhome.org/rural-america-is-more-diverse-
than-you-think/.
Increased housing cost burdens. Nearly one-fourth of the
Nation's most rural counties have seen a sizeable increase this
decade in the number of severely cost-burdened households--
defined as spending at least half their income on housing. \12\
The National Low Income Housing Coalition found that 47 percent
of rural renters are cost burdened--spending more than 30
percent of their income for their housing--with nearly half of
that group being severely cost burdened. \13\ These housing
cost burdens highlight the shortage in affordable rental and
home ownership units for low-income populations and the
pandemic has exacerbated this issue.
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\12\ Housing Assistance Council, ``Rental Affordability Crisis
Continues'', February 6, 2020, https://ruralhome.org/rental-
affordability-crisis-continues/.
\13\ Housing Assistance Council, Leslie R. Strauss, ``USDA Rural
Rental Housing Programs'', https://nlihc.org/sites/default/files/AG-
2021/04-15-USDA-Rural-Rental-Housing-Programs.pdf.
Expiring affordability provisions. Many loans for rural
multifamily properties financed through USDA programs are
reaching maturity. USDA estimates that the pace of mortgage
maturities will increase starting in 2028. USDA projects that
more than 16,000 rental homes will be lost each year between
2028 and 2032, and 22,000 homes will be lost annually in the
following years. \14\ When USDA loans reach maturity, property
owners are no longer required to meet affordability standards;
many may convert their properties to market-rate housing or
stop operating the property altogether. This will result in a
significant reduction in the available affordable housing stock
in rural communities. Compounding the issue, low-income tenants
are no longer eligible for USDA rural rental assistance once
the loan matures. A lack of available rental units and limited
access to home ownership opportunities will intensify existing
housing cost burdens for rural families.
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\14\ National Low Income Housing Coalition, ``Housing Needs in
Rural America'', https://nlihc.org/sites/default/files/Housing-Needs-
in-Rural-America.pdf.
Limited access to smaller dollar mortgages. While there are
rural markets where housing costs have increased significantly,
there are still markets where home prices are relatively low
and borrowers, especially first-time homebuyers, need access to
smaller balance loans that are not typically financed by
traditional lenders. Accessing small dollar mortgage lending
continues to be challenging because of the limited availability
of mortgages under $100,000. The Urban Institute found that
``only one in four low-cost homes sold was likely to be
financed with a mortgage. In 2019, 26.7 percent of home sales
nationwide were for homes priced below $100,000. Of those, only
23.2 percent were purchased with a mortgage, compared with 73.5
percent of homes priced at or above $100,000.'' \15\
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\15\ Linna Zhu, ``Making FHA Small-Dollar Mortgages More
Accessible Could Make Homeownership More Equitable'', Urban Institute
Blog, April 22, 2021. https://www.urban.org/urban-wire/making-fha-
small-dollar-mortgages-more-accessible-could-make-homeownership-more-
equitable.
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Housing Challenges in Tribal Communities
Tribal communities experience many of the same housing issues
facing other rural communities but also have unique obstacles. In rural
America, racial and ethnic minority groups are more likely to live in
substandard housing than White residents. For instance, the rate of
housing without basic plumbing on rural tribal lands is up to 10 times
the average national rate. \16\ According to Prosperity Now, the home
ownership rate for Native American households is around 54 percent,
while the rate for White households is 72.1 percent. \17\ A study from
the Federal Reserve Bank of Minneapolis' Center for Indian Country
Development found that Native households often face higher mortgage
costs when seeking to buy a home, especially when those loans are made
on reservation lands. \18\ One of the major challenges to increasing
Native home ownership is access to affordable mortgages.
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\16\ Housing Assistance Council, ``Taking Stock: Rural People,
Poverty, and Housing in the 21st Century'', December 2012. http://
www.ruraldataportal.org/docs/HAC-Taking-Stock-Full.pdf#page=55.
\17\ ``Prosperity Now, Scorecard Homeownership & Housing'',
https://scorecard.prosperitynow.org/data-by-issue#housing/outcome/
homeownership-rate.
\18\ Federal Reserve Bank of Minneapolis, ``The Higher Price of
Mortgage Financing for Native Americans'', Donna Feir and Laura
Cattaneo, September 27, 2019, https://www.minneapolisfed.org/news-
releases/2019//link.aspx?-id=3A72BEC46859433BAA0CACAB5084ABD3&-z=z.
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According to a 2017 study commissioned by the Department of Housing
and Urban Development, lenders report that prepurchase counseling,
particularly counseling provided by organizations familiar with the
unique challenges of lending on tribal trust land, is critical to
getting borrowers mortgage ready. CDFIs exemplify this unique approach
by combining technical assistance with access to capital. In the same
study, lenders reported that lending on tribal trust land can be
complicated and time-consuming and specifically recommended working
with CDFIs, Tribes, and lenders that already have a presence in the
community. \19\
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\19\ ``Mortgage Lending on Tribal Land: A Report From the
Assessment of American Indian, Alaska Native, and Native Hawaiian
Housing Needs'', January 2017, https://www.huduser.gov/portal/sites/
default/files/pdf/NAHSG-Lending.pdf.
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CDFIs Provide Access to Capital in Rural Communities
Addressing the access to capital issues in rural communities
requires on-the-ground partners like CDFIs that understand the local
markets and can develop targeted solutions. Data from the CDFI Fund
shows that CDFI lending in rural markets has grown from $358 million in
FY2005 to more than $2.8 billion in financing closed in FY2019. \20\
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\20\ Transaction Level Reporting (TLR) data from the CDFI Fund.
This data reflects the data reported only by CDFIs that are Financial
Assistance awardees within their 3-year reporting cycle.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
CDFIs play a vital role in America's housing finance system. Below
are examples of CDFIs providing innovative and tailored solutions to
address their communities housing challenges and meet the needs of
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local borrowers:
FAHE, a network of affordable housing lenders based in
Berea, Kentucky, and working throughout Appalachia, launched
the MicroMortgage Marketplace pilot project in 2020. The pilot,
in partnership with the Homeownership Council of America (HCA)
and the Urban Institute provides small-dollar mortgages under
$100,000 in Louisville and parts of Southern Indiana. The
program also offers underwriting flexibility, simplifies the
loan process, and reduces many of the fees and costs in the
process. Fahe is underwriting, funding, and servicing the loans
through the MicroMortgage Marketplace while HCA will manage
product development, market testing and capital partnerships,
and create distribution channels that can scale across the
country.
Come Dream, Come Build (cdcb), based in Brownsville, Texas,
provided relief to their borrowers impacted by the COVID-19
pandemic and also administered the City of Brownsville's
pandemic housing assistance programs. In 2020, cdcb continued
to increase access to affordable home ownership, providing 73
households with smaller dollar mortgages with a median home
sales price of $104,000. \21\
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\21\ Come dream, Come build, ``Myths of Affordability in the
RGV'', March 3 2021, https://img1.wsimg.com/blobby/go/28825c06-7c1e-
41eb-8bf1-b2e39c412309/
Myth%20of%20Affordability%20Homeownership%20fact%20sheet.pdf.
HOPE Credit Union based in Jackson, Mississippi and working
throughout the Delta region has financed the development of
affordable housing throughout the region. Mortgage lending is a
key component of HOPE's strategy to close the racial wealth gap
in the Deep South. Over the last 10 years, HOPE's mortgage
portfolio almost quadrupled from nearly $34 million in 2010 to
$127 million at the end of 2020. In 2020, 86 percent of HOPE's
mortgages were made to people of color, primarily Black
borrowers, and 83 percent were made to first time homebuyers.
HOPE employs tailored solutions to meet the credit needs of
borrowers including manually underwriting loans, considering
nontraditional indicators of credit repayment history, and
discounting deferred student debt. \22\
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\22\ HOPE, Comment Letter to the Bureau of Consumer Financial
Protection, May 10, 2021, http://hopepolicy.org/manage/wp-content/
uploads/2021.5.10-HOPE-CFPB-Regulation-X-Comment.pdf.
Oweesta, based in Longmont, Colorado, is a Native
intermediary lender. One Oweesta member, Four Directions
Development Corporation is a Maine-based CDFI serving the
Passamaquoddy Tribe, Penobscot Nation, Houlton Band of
Maliseets, Aroostook Band of Micmac, and any enrolled Native
American from a federally recognized tribe in Maine. This CDFI
helps tribal members purchase, improve, and access equity from
on reservation residential properties. Four Directions works to
provide credit counseling and is uniquely suited to working on
tribal lands and navigating the process of working with the
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Bureau of Indian Affairs.
Southern Mutual Financial Services Over the past 50 years,
Southern Mutual Help Association (SMHA) and the subsidiary
CDFI, Southern Mutual Financial Services have developed 1,421
new or renovated affordable homes in rural Louisiana. SMHA's
work in affordable housing has generated over $454.1 million in
local income and an additional $67.5 million in State and local
tax revenue. SMHA has invested nearly $19.4 million in
affordable mortgage and business loans directly to Louisiana
families, $16.5 million of which was made possible through
working with private partners like IBERIABANK, reaching an
additional 214 families.
Building Strong, Vibrant Communities--Housing as Infrastructure
Housing is an essential element of infrastructure and is the
starting point for the built environment. Affordable housing is a long-
term investment that is needed to help support American families and
revitalize communities. Investing in housing helps families achieve
self-sufficiency and generates economic growth. The National
Association of Home Builders estimates that, for every single-family
home constructed, 2.90 jobs are created and $129,647 in taxes are
generated. Building an average rental apartment is estimated to
generate 1.25 jobs and $55,909 in tax revenue. \23\
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\23\ National Association of Home Builders, ``National Impact of
Home Building and Remodeling: Updated Estimates'', 2020, https://
www.nahbclassic.org/generic.aspx?sectionID=734&genericContentID=272642.
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Housing is the key link between all other infrastructure
investments. The availability and condition of housing stock has just
as significant of an impact on a community as the condition of its
roads and bridges. The availability of affordable housing near jobs
reduces the strain on transportation infrastructure. The need for
additional investment is clear, America is facing a significant housing
shortage.
Leveraging Federal Resources to Finance Rural Housing
The Federal Government is a critical partner in ensuring access to
safe quality housing options in rural communities. Access to capital is
a challenge for many of the lenders working to address affordability
and supply issues in rural housing markets. Rural CDFIs receive less
capital from Community Reinvestment Act-motivated banks. In 2019, only
34 cents of every dollar borrowed by rural CDFIs was from a bank. In
contrast, over 60 percent of borrowed funds from urban CDFIs were
supplied by banks. \24\ Adding to the challenge, philanthropic
resources are often less available in rural markets. From 2010-2014,
grant making in Appalachia, the Mississippi Delta, and the Rio Grande
Valley was around $50 per person--well behind the national average of
$451 and $4,096 in San Francisco. \25\
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\24\ OFN data.
\25\ Partners for Rural Transformation, ``Transforming Persistent
Poverty in America: How Community Development Financial Institutions
Drive Economic Opportunity'', November, 2019, https://fahe.org/wp-
content/uploads/Policy-Paper-PRT-FINAL-11-14-19.pdf.
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Federal investment to support housing in rural areas lags
investment in urban communities. Programs that provide grants, loans,
credit enhancements like those at USDA are a critical lifeline to
finance affordable housing in rural communities but are inadequately
funded. These programs are oversubscribed and highly competitive and
must be expanded to meet the growing demand. Additionally, investing in
programs and proven solutions that build the capacity of CDFIs will
increase the development and preservation of affordable housing in
rural communities and across the country.
Policy Recommendations
The following are OFN recommendations to increase access to
affordable housing in rural and tribal communities:
Provide $1 billion in annual appropriations for the CDFI
Fund. The Federal Government put a downpayment on the CDFI
industry in H.R.133. More investments at this scale are needed.
An annual appropriation of $1 billion for the CDFI Fund is
critical to strengthening CDFIs to continue assisting in the
long-term recovery of low-wealth communities. To truly achieve
an inclusive recovery, the Federal Government must increase the
supply of capital to CDFIs, mission based responsible lenders
that are adept at channeling those resources into distressed
communities. This investment will also broaden the reach and
impact of the Federal Government's investments and help expand
access to credit and safe, affordable lending in underserved
rural communities.
Pass The Native American Rural Homeownership Improvement
Act. USDA's Section 502 Direct Loan Program is an important
source of mortgage financing for low- and very low-income
families living in rural communities, and the program could
help address the relatively low home ownership rates in rural
Native communities. USDA currently operates a pilot program in
South and North Dakota, where the Department has partnered with
two Native CDFIs to leverage their deep ties in local
communities and deploy Section 502 loans to eligible Native
borrowers.
This bill would expand this pilot program and create a national
relending program within the Section 502 Direct Loan Program to help
deploy these mortgage loans in Native communities. Specifically, the
relending program would create a $50 million annual set-aside within
the Section 502 program, allowing Native CDFIs to relend this money to
eligible Native homebuyers. Because of CDFIs' vast experience operating
on Tribal land and their ability to provide financial and homebuyer
education, their participation will improve utilization of the USDA
loans and help more Native families achieve the dream of home
ownership.
Pass the Improving FHA Support for Small Dollar Mortgages
Act of 2021. Limited access to small dollar mortgages is
putting affordable home ownership opportunities out of reach
for many borrowers, especially first-time homebuyers, borrowers
in rural communities and borrowers of color. OFN supports the
creation of a study of Federal Housing Administration lending
to understand how HUD could better reduce barriers to home
ownership.
Pass the American Jobs Plan. The American Jobs Plan
includes several housing provisions, including the bipartisan
Neighborhood Homes Investment Act (NHIA). Offering $20 billion
worth of NHIA tax credits over a 5-year period is expected to
result in over 500,000 homes built or rehabilitated, \26\
creating a pathway for more families to buy a home and start
building wealth. No other Federal tax incentive addresses the
problem of development costs that exceed market values for
owner-occupied homes in distressed neighborhoods, a common
problem in smaller cities and rural areas.
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\26\ American Jobs Plan Fact Sheet https://www.whitehouse.gov/
briefing-room/statements-releases/2021/03/31/fact-sheet-the-american-
jobs-plan/.
OFN also supports expanding the Capital Magnet Fund (CMF) to
provide $12 billion over the next 5 years. CMF is incredibly efficient.
CMF awardees have leveraged $18.6 billion over the past five rounds of
funding, over three times the requirement. Completed projects funded
through CMF awards have created 28,100 affordable units, including
4,500 home ownership units. \27\ The CMF has supported a wide variety
of housing, including senior housing. OFN member New West Community
Capital, formerly Idaho-Nevada CDFI, leveraged their CMF award to help
build the 55-unit River Place Senior Apartments in Sparks, Nevada. \28\
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\27\ CDFI Fund FY2020 CMF Award Book https://www.cdfifund.gov/
sites/cdfi/files/2021-04/FY-2020-CMF-Award-Book--022221.pdf.
\28\ CDFI Fund Impact Story, https://www.cdfifund.gov/sites/cdfi/
files/documents/revised-nevada-idaho-cdfi-cmf-impact-story-042717.pdf.
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The infrastructure bill must also include significant funding to
address the capital backlog for maintenance of existing housing. The
$300 million included in the AJP is a good starting place but is
insufficient to meet the current need. OFN supports increasing the
funding levels across various rural housing programs, including $700
million in Section 515 Rental Housing Loans, $1.4 billion in
Multifamily Housing Revitalization and $2.1 billion in Rental
Assistance.
Finally, the AJP includes the creation of a Community
Revitalization Fund at the Department of Housing and Urban Development
to support the financing of assets that complement affordable housing,
such as health care clinics, parks, workforce development, or other
essential human services. The program should leverage the expertise of
CDFIs and partner with them to administer the funding.
Increase technical assistance and capacity building for
rural mission lenders. The Federal Government should invest in
building the capacity of local affordable housing and community
development organizations deeply rooted in rural places. With
existing Federal programs oversubscribed and fewer
philanthropic and bank resources flowing to rural communities,
the Federal Government should provide funding for technical
assistance to build the capacity of rural mission lenders.
Increase funding for USDA Rural Housing Programs. Low-cost,
long-term financing to support both home ownership and rental
housing is not readily available from other sources. Congress
should increase funding for Federal affordable housing programs
serving rural populations. According to the National Low Income
Housing Coalition, funding for USDA's Section 515 Rural Rental
Housing Loan Program has been cut by more than 95 percent over
the past few decades, limiting the ability of rural communities
to attract private-sector capital and other Federal resources.
Despite the growing need in rural America, there has been no
new construction of rural rental homes under the Section 515
program since 2012. \29\
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\29\ https://nlihc.org/sites/default/files/AG-2021/04-15-USDA-
Rural-Rental-Housing-Programs.pdf
Preserve affordability on properties with expiring
mortgages. There is a brewing crisis of affordability for
thousands of rural multifamily properties with expiring Federal
subsidies. USDA rental assistance subsidies should be decoupled
from Rural Development loan programs to continue to subsidize
the housing after the loans are repaid. There is a precedent
for this: the Government Accountability Office noted that when
the Department of Housing and Urban Development (HUD) faced a
similar loss of affordable housing subsidies, Congress
authorized the department in 2011 to continue providing rental
assistance at properties after contracts expired. \30\
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\30\ Government Accountability Office ``Rural Housing Service
Better Data Controls, Planning, and Additional Options Could Help
Preserve Affordable Rental Units'', Report to the Subcommittee on
Agriculture, Rural Development, Food and Drug Administration, and
Related Agencies, Committee on Appropriations, U.S. Senate, May 2018.
https://www.gao.gov/assets/gao-18-285.pdf
Allow Government sponsored enterprises (GSE) equity
investments in CDFIs. Many CDFIs still lack access to the
capital markets supported by the housing finance system. In
part because of this lack of access, CDFI housing lenders
experience liquidity challenges that inclusion in more
mainstream sources of housing finance could help solve.
Allowing Fannie Mae and Freddie Mac to make direct equity or
equity-like investments in CDFIs will enable CDFIs to manage
risk and their balance sheets more effectively. These flexible
investments would provide much needed liquidity to support the
specialized lending done by CDFIs and support training and
technical assistance needed to build the capacity of lenders
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working in difficult-to-serve markets.
Support and expand affordable housing tax credits The low-
income housing tax credit (LIHTC) has proved to be a valuable
tool to help finance affordable housing construction The
bipartisan Affordable Housing Credit Improvement Act (AHCIA) of
2021, would expand and strengthen LIHTC, our Nation's primary
tool for developing and preserving affordable housing. Passing
the AHCIA could result in the financing of over an additional 2
million affordable homes in the next decade, support the
creation of nearly 3 million jobs, and generate more than $346
billion in wages and business income and nearly $120 billion in
additional tax revenue.
The AHCIA would increase LIHTC allocations by 50 percent over
current levels for the 9 percent credit. This allocation increase will
be phased in over 2 years, provide a basis boost to help LIHTC better
serve hard-to-reach communities including rural, Native American, and
high-poverty areas. It would simplify and align rules, and enable
States to maximize affordable housing production and preservation by
lowering the threshold of Private Activity Bond financing required to
trigger the maximum amount of 4 percent Housing Credits.
Allow CDFIs to pledge nonhousing collateral for Federal
Home Loan Bank advances. Allowing CDFIs to make better use of
FHLB membership would enable nondepository CDFIs to leverage
their existing portfolio to make more loans. A 2015 GAO report,
Federal Home Loan Banks: Collateral Requirements Discourage
Some Community Development Financial Institutions from Seeking
Membership, noted that collateral restrictions discouraged some
nondepository CDFIs from seeking membership. Under current law,
CDFIs can only pledge long-term home mortgage loans of at least
5 years.
Thank you for the opportunity to speak with you today. I look
forward to your questions and to continuing to work with you to address
our significant affordable housing challenges.
______
PREPARED STATEMENT OF NAN ROMAN
President and CEO, National Alliance to End Homelessness
June 24, 2021
Chairman Brown, Ranking Member Toomey, and Members of the
Committee, thank you for inviting me to testify before you today. I am
Nan Roman, President and CEO of the National Alliance to End
Homelessness (the Alliance). I am honored that you have invited the
Alliance to testify before you on Bipartisan Bills that Increase Access
to Housing.
The National Alliance to End Homelessness is a nonpartisan,
nonprofit organization committed to preventing and ending homelessness
in the United States. It was founded in 1983 by a group of national
leaders from both parties, deeply disturbed by the appearance of
thousands of Americans living on the streets of our Nation. In its
early years it focused on meeting the emergency and service needs of
this emerging population. Soon, however, as it became apparent that
emergency measures would not solve the problem, we turned our attention
to more permanent solutions. Today, the bipartisan Alliance Board of
Directors and our thousands of nonprofit, faith-based, private and
public sector partners across the country devote ourselves to the
affordable housing, access to services, and livable incomes that will
end homelessness.
Thank you for inviting the Alliance to appear before the Committee
to discuss where we stand in the effort to end homelessness, what
remains to be done, and the role of Congress in achieving the goal.
Homelessness
The Nation is experiencing a homelessness crisis that appears to
have been exacerbated by the COVID pandemic. While homelessness
decreased between 2007 and 2016, it increased slightly every year
between 2016 and 2020. The Point in Time count that takes place in
January (and is the only enumeration that includes people who are
unsheltered as well as sheltered) was not fully conducted in 2021 due
to the pandemic. As a result, it is not clear where the size of the
population now stands. However, the Alliance surveyed all of the
Nation's Continuums of Care (CoCs) several times during the pandemic,
and respondents reported the following: the number of shelter beds
significantly decreased as shelters followed CDC guidance to
``decompress;'' though many people from shelters and unsheltered
locations were placed in motel/hotel rooms for quarantine and
isolation, fewer beds were gained through this strategy than were lost
through decompression; and most CoCs believe that unsheltered
homelessness has increased. Many jurisdictions are now closing their
motel/hotel rooms, which will increase the demand for shelter beds even
more. Even prior to the pandemic, as reported in the most recent Annual
Homelessness Assessment Report to Congress (AHAR Part 1, 2020), for the
first time ever there were more unsheltered individual adults than
sheltered individual adults. \1\
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\1\ Adults on their own not with family members.
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As a result of these factors, it is our belief that unsheltered
homelessness has likely increased, and it is possible that overall
homelessness has increased. However, it is also important to note that
some jurisdictions have managed to avoid these increases, and the
problem would be much worse were it not for Federal stimulus funds.
While overall and unsheltered homelessness appear to be up, the
numbers are down for certain subpopulations. The 2020 AHAR Part 1 shows
a slight decrease in families, veterans, and youth. Further, both
through our CoC surveys and in anecdotal evidence from the field, it
appears that the number of families with children that are homeless has
decreased significantly during the pandemic. This could be a result of
families staying doubled up with friends and family due to reluctance
to enter congregate facilities during the pandemic.
Also, on the subject of subpopulations, it will be important to
address two key demographic groups moving forward. The first is youth.
Widespread homelessness in the modern era first emerged in the early
1980s, largely as a result of the developing deficit of low-income
affordable housing. But also contributing was a sizable cohort of youth
and young adults who failed to attach to the job market due to the
recessions of the late 1970s/early 1980s, and who became homeless as a
result. This was the largest group of people experiencing homelessness
at the time, and remains a large group today. There is a similarly
disproportionate cohort of young people now--young people whose
educations have been interrupted, and who may have failed to graduate
from high school. While the fears of a major recession post-COVID may
have diminished, there are still concerns about how people with less
than a college education will fit into the job market--including this
youth cohort. We could face a new wave of homelessness moving forward.
The second issue is the aging of the homeless population. Work by Dr.
Dennis Culhane at the University of Pennsylvania and others has
revealed that: (1) the homeless population ages much faster
physiologically than chronologically and in effect becomes senior at
age 50 or 55, not 65; (2) the homeless system is not prepared to deal
with an aging population; and (3) without housing the health costs of
this group are significantly high. Moving this cohort into housing
would generate significant public savings, not to mention saving
people's lives.
It should also be noted that while fears of a recession may have
diminished, concerns about a rental housing crisis have increased. The
end of the eviction moratorium and a likely increase in evictions, as
well as the pricing out of first time homeowners from the market and
the resulting pressure on the rental market, will make it harder for
extremely low income households to find housing.
Given all of these issues, what can and should be done to reduce
homelessness in our Nation? Homelessness is driven by the mismatch
between what people earn and what housing costs. Lack of affordable
housing causes homelessness, and, notwithstanding any other problems
they may have, people who have a home are not homeless. This is not to
say that people experiencing homelessness do not have other problems or
that they do not require services. Many do. People with disabilities
including mental illness, substance use disorders, physical
disabilities, and illnesses are more likely to be poor and therefore
unable to afford housing. People with criminal justice or foster care
histories are more likely to struggle to find and afford housing, and
therefore to become homeless. People of color who have been subjected
to historical and systemic housing discrimination, inferior health and
behavioral health care, lack of access to good hospitals and schools,
who are paid less, have fewer savings, and have weaker support
networks, are also more likely to become homeless. Housing is not the
only problem. But it also must be said that the vast majority of people
in these categories are NOT homeless--they are housed. It is the
affordability of housing that drives homelessness.
Fundamentally, what needs to be done to end homelessness in our
Nation is to increase the supply of housing that is affordable to lower
income people, or to increase people's wages so that they can afford
the housing that is available. Many people will definitely need
services, and we will have to address the racial disproportionality and
disparities that result in so many people of color becoming homeless.
But the problem will not be solved unless the cost of housing puts it
within reach of the millions of low income households that cannot
afford it today.
An Opportunity
This is where we stand on homelessness, but we also have a very
significant opportunity at the moment to make a serious dent in the
problem.
The pandemic has taught us some things about the importance of
housing. We have learned that you cannot quarantine if you do not have
a home. We have learned that housing is, indeed, a social determinant
of health. We have learned that millions of Americans who have a home
live paycheck-to-paycheck, and that any crisis could create housing
instability and cause them to lose that home.
The stimulus funds provide a significant opportunity to reduce the
number of people experiencing homelessness. These funds will not solve
the problem entirely. But I believe they could reduce it. And I believe
that the types of funds that have been provided are the right resources
to get many people experiencing homelessness into housing.
We are grateful for the $4 billion that Congress and the White
House provided in the CARES Act to fund services and housing for people
experiencing homelessness. We are grateful for the $5 billion for
Emergency Housing Vouchers that ensure that up to 70,000 households can
obtain and afford a permanent place to live--ending their homelessness.
We are grateful for the $5 billion in HOME funds that will allow
jurisdictions to take advantage of the unusual confluence of available
hotel, motel, commercial, and retail stock that can be quickly and
affordably converted to housing targeted to people experiencing
homelessness. We are grateful for the Emergency Rental Assistance and
other prevention funds that will help ensure that a new generation of
homelessness does not emerge from this pandemic. These resources may
not be sufficient to end homelessness, but there is a real opportunity
to take a U-turn, from 5 years of increases in homelessness, to a
steady decrease--if these resources are used strategically.
And I would be remiss if I did not say that if we were to provide
every low income household who needed one with a housing voucher, and
to take measures to increase the supply of affordable housing to meet
the demand, this would, at a minimum, end homelessness. And ending
homelessness would eliminate the economic costs, the social costs, and
the human costs of allowing more than half-a-million people to be
homeless every night in one of the wealthiest and most compassionate
Nations in the world.
I hope we will move in this direction, which will allow our Nation
and its citizens to thrive. And Congress has given us considerable
tools, as I have said, in the stimulus bills. Several other critical
proposals are on the table that would also help, and the Alliance
supports them and urges their passage.
Senators Van Hollen and Young's bipartisan Family Stability
and Opportunity Vouchers Act would expand the supply of housing
vouchers to 500,000 additional families; 100,000 new vouchers
every year for 5 years. The vouchers would be targeted to
pregnant people or families with a child under six who are
homeless, unstably housed, living in an area of concentrated
poverty, or at risk of having to leave an area of opportunity.
Services would help the families locate in high opportunity
communities if they so choose.
The Choice in Affordable Housing Act is also a bipartisan
bill, just introduced by Senators Cramer and Coons. It would
help to improve the Section 8 program by reducing burdensome
bureaucratic guidance, and by providing $500 million to
incentivize landlords to participate in rental assistance
programs. I can share that the homelessness system has learned
quite a bit about how important it is to have tools that
incentivize landlords when seeking rental units in tight rental
markets and for high-need households. Since the onset of
Housing First approaches, and as a result of the adoption of
Rapid Re-Housing for people who are likely to get back on their
feet with shorter term assistance, we have learned how to be
more competitive for the housing that is available. Among the
strategies that have been successful in convincing landlords to
rent to homeless households have been: relationship building
with landlords and landlord groups; reserving multiple units
from one landlord or group; increasing the size of the security
deposit; acting as a third party the landlord can call for help
in addressing problems with any tenant who has been referred;
and assisting to ease the eviction of a referred tenant and
providing a suitable replacement tenant in order to avoid
vacancy. This bill would provide the hard-to-find flexible
funding that is needed for such strategies.
Senators Schatz and Young also have a bipartisan bill to
reduce ``Not in My Back Yard,'' or NIMBY, activities. These are
policies and processes that delay or prevent the development or
creation of affordable housing. Their bipartisan ``YES in My
Back Yard,'' or YIMBY, Act would discourage the use of
discriminatory land use policies and remove barriers to making
housing more affordable. Jurisdictions that receive Community
Development Block Grant Funds would have to report on their
efforts to make it easier for affordable housing to be
developed, including loosening restrictions in areas zoned
single family, reducing minimum lot sizes, streamlining or
shortening permitting processes, and eliminating or reducing
off street parking requirements. These steps would help
jurisdictions use Federal resources to increase the supply of
affordable housing more quickly.
Senators Brown and Blunt have proposed the Trafficking
Survivors Housing Act of 2021. Homelessness is, sadly, too
often intertwined with human trafficking. People who are
homeless are vulnerable to being trafficked. People who have
been trafficked are vulnerable to becoming homeless. Stable
housing is essential in protecting people from trafficking and
helping them recover from it. This important bill would task
the U.S. Interagency Council on Homelessness (USICH) to examine
what different Federal agencies can and should do to eliminate
the link between homelessness and trafficking. I should mention
as well that USICH has been an incredibly valuable partner in
bringing Federal agencies together to solve problems of
homelessness--an issue that does not fit neatly beneath any
single agency's umbrella, given its housing, health, education,
employment, and other ramifications. USICH has done a terrific
job, in both Republican and Democrat Administrations, of
bringing Federal agencies together in the partnerships that are
so essential to solving human problems. For this reason, we are
also grateful to Senator Reed for his bill that would
permanently authorize USICH.
We strongly supported Senators Bennet and Portman's
bipartisan Eviction Crisis Act of last session, and given that
communities now have extensive experience with emergency rental
assistance, we urge that it be introduced again and funded to
scale. Anything that reduces evictions helps to reduce
homelessness. Often people are able to afford their rents but
are living paycheck-to-paycheck. If something interrupts their
income--their car breaks down, or a child is sick and they
cannot go to work--they cannot pay the rent and are threatened
with eviction and sometimes homelessness. This of course has
enormous human costs to those who experience it, and can also
be very costly to public systems if the household does not
quickly get back on its feet. This bill provides such flexible
assistance, among many other helpful provisions that would
reduce evictions.
And finally, Senator Young has a bipartisan bill to create
a Task Force on the Impact of the Affordable Housing Crisis.
This important bill would create a bipartisan Task Force to
evaluate and quantify the impact of housing on other Government
programs and costs, and to make recommendations to Congress on
how to better address the affordable housing crisis so as to
improve life outcomes for all residents of our Nation.
All of these bills would help ensure safe and stable housing for
American's most vulnerable households, including those experiencing
homelessness. We urge their passage.
In closing, as the gap between what housing costs and how much low
income people earn continues to grow, homelessness will continue to
grow. This will be exacerbated by the difficulty people have accessing
mental health treatment, substance use treatment, disability support
and other services. Moving forward, the significant youth and young
adult, and older adult age cohorts also have the potential, if not
addressed, to increase homelessness, as do ongoing racial
disproportionality and disparities. We can re-house homeless people
faster, and indeed the homeless system is doing that. But the number of
homeless people keeps going up because more and more people are falling
into homelessness for the reasons above.
Homelessness is not a problem that the homeless system can solve
alone. The homeless system is like an emergency room. It receives
people who are in crisis, and can patch them up a bit. But just as the
emergency room is not the solution to the Nation's health problems, the
homeless system, alone, is not the solution to the Nation's
homelessness problem. The solution is an adequate supply of affordable
housing, and access to services for those who need them. And as hard as
the homeless system works, that emergency room does not have enough
beds for everyone. Four out of every ten people who become homeless are
unsheltered.
What would solve this problem? It would be solved by vouchers and
an increased affordable housing supply, along with better access to
services for those who need them. At the end of the day, people who are
housed are not homeless, despite any other issues they may have.
We have substantial housing resources on the table right now, and
if we use them strategically, we can reduce homelessness significantly.
I am convinced of that. But we will not end it. We really must address
the affordable housing crisis if we are to solve the problem of
homelessness.
Thank you for inviting the Alliance to speak before you today, and
for your efforts on behalf of the Nation.
______
PREPARED STATEMENT OF HOWARD HUSOCK
Adjunct Scholar, American Enterprise Institute
June 24, 2021
Greetings. Thank you, Chairman Brown and Ranking Member Toomey. I
appreciate the opportunity to testify on the legislation being
considered by the committee. It is an honor to submit my testimony and
answer questions for today's hearing. I will specifically address those
proposals related to the expansion of the housing choice voucher
program and the proposed terms of the Community Development Block
Grants (CDBG).
My name is Howard Husock, and I am an adjunct scholar at the
American Enterprise Institute, where I focus on local government, civil
society, and urban housing policy. Before joining AEI, I was vice
president for research and publications at the Manhattan Institute and
director of case studies in public policy and management at the Harvard
Kennedy School. I am the author of America's Trillion-Dollar Housing
Mistake: The Failure of American Housing Policy and a forthcoming book,
The Poor Side of Town-and Why We Need One. I have spent my career
committed to thinking and writing about housing policy and its
implications, particularly for the urban poor.
My forthcoming book argues for a ``poor side of town.'' It combines
a critique of more than a century of housing reform policies, including
public and other subsidized housing and exclusionary zoning, with the
idea that simple low-cost housing--a poor side of town--helps those of
modest means build financial assets and join in the local democratic
process. This is a deeply important book to me, and I encourage
everyone listening today to consider its implications.
Too many low-income households find it difficult to afford housing.
Before considering a major expansion of the housing choice voucher
program, we should make the existing program more effective. What's
more, the past year has seen unprecedented spending on Federal housing
initiatives. The American Rescue Plan expanded the housing voucher
program by allocating $5 billion dollars for 70,000 housing vouchers,
referred to by Secretary Fudge as a ``once in a generation
investment.'' \1\ In the two most recent COVID relief packages, over
$46.5 billion has been spent on emergency rental assistance, which
rivals the annual HUD budget. As Jason DeParle of the New York Times
has documented, the rental assistance aid has been mired in both
political and practical problem in its distribution leaving renters and
rental property owners in limbo. \2\ Another $300 billion dollars
(which includes tax credits) in ``housing infrastructure'' has been
proposed by the Biden administration, much of it that has little to do
with incentivizing upward mobility or emphasizing the transitional
natures of these programs. \3\ This all to say that our current focus
should be on making sure the money in pandemic housing assistance is
distributed as effectively as possible. Commonsense adjustments can
increase the voucher program's reach without major new spending while,
crucially, providing incentives and encouragement for low-income
households to improve their economic status.
---------------------------------------------------------------------------
\1\ U.S. Department of Housing and Urban Development, ``HUD
Announces $500 Billion Dollars To House People Experiencing
Homelessness'', press release, May 17, 2021, https://www.hud.gov/press/
press-releases-media-advisories/HUD-No-21-087.
\2\ Jason DeParle, ``Federal Aid to Renters Moves Slowly, Leaving
Many at Risk'', New York Times, April 25, 2021, https://
www.nytimes.com/2021/04/25/us/politics/rental-assistance-pandemic.html.
\3\ The White House, ``Fact Sheet: The American Jobs Plan Will
Produce, Preserve, and Retrofit More Than 2 Million Affordable Housing
Units and Create Good-Paying Jobs'', May 26, 2021, https://
www.whitehouse.gov/briefing-room/statements-releases/2021/05/26/fact-
sheet-the-american-jobs-plan-will-produce-preserve-and-retrofit-more-
than-2-million-affordable-housing-units-and-create-good-paying-jobs/.
---------------------------------------------------------------------------
Fundamentally, low-income households face an income problem.
Providing a coupon that can be used only for rental assistance limits
how they can use this new income while failing to address the root
causes of why that income is low in the first place. We cannot forget
the steps it takes to truly encourage economic mobility of poor
households--by providing the skills training needed for the 21st
century, ensuring that every child has access to a high-quality public
education, encouraging safe and healthy communities, and reducing
racial barriers.
But we can and should make some commonsense adjustments to the
current housing choice voucher program. We should not assume that
poverty is a life sentence in America. That suggests that we better
allocate vouchers by seeing them as a transitional program. That leads
me to two proposals.
First, the time has come to allow voucher households to sign the
same type of rental leases as nonsubsidized households enjoy: a flat
rent for a fixed period. As it stands, as voucher or public housing
tenants earn more income, they pay more rent--34 cents on each new
dollar. This has all sorts of ill effects: discouraging those who would
seek a higher-paying job, the formation of two-income families, and
savings.
To make better use of our housing vouchers, we should follow the
example of the Housing Authority of the State of Delaware, which as
part of its Moving to Work program combines capped rent and savings
account escrows with a 5-year ceiling on assistance. \4\ A similar
program has been adopted by the housing authority of San Bernardino,
California, which specifically sets out as a key goal the encouragement
of tenants' economic independence, including what it calls a shift from
``entitlement to empowerment.'' Longitudinal studies out of San
Bernardino reports the following positive results.
---------------------------------------------------------------------------
\4\ Delaware State Housing Authority, ``What Is Moving to Work?'',
https://laborfiles.delaware.gov/main/det/one-stop/MTW%20Program.pdf.
---------------------------------------------------------------------------
We have seen positive outcomes since implementation, including:
Earned income for families in the program increases by an
average 31.4 percent during their 5-year term of assistance;
Full-time employment increased by 20 percent;
Unemployment decreased by 26.5 percent. \5\
\5\ Housing Authority of the County of San Bernardino, ``2021
Moving to Work Annual Plan'', May 22, 2020, https://
14icnrm1xwspvm3t3c7830p2-wpengine.netdna-ssl.com/wp-content/uploads/
2020/08/2021-mtw-annual-plan-05.22.20-for-public-comment.pdf.
This healthy turnover should be a core part of the voucher program.
Poverty should not be viewed as inevitable and forever. Indeed, as
matters stand, the U.S. Department of Housing and Urban Development
(HUD) reports an 8 percent turnover rate annually among voucher units.
In years past, that rate has reached as high as 15 percent. \6\ Steps
to increase turnover while improving the situation of voucher
households should be key goals of the program. A transition to work and
increased income is today, more than ever, a practical goal, as the
Nation enjoys widespread labor shortages.
---------------------------------------------------------------------------
\6\ U.S. Department of Housing and Urban Development, Office of
Policy and Research, ``Assisted Housing: National and Local'', https://
www.huduser.gov/portal/datasets/assthsg.html#2009-2020-data.
---------------------------------------------------------------------------
Second, we should resist expanding the program and be cautious in
giving priority to low-income single parents, as is suggested. It is
understandable that we seek to respond to need. But we must take care
not to foster need by sending a signal that low-income single
parenthood will qualify one for a subsidized rental--which is, in most
jurisdictions, a lifetime eligibility. The life chances of those born
to single mothers in poverty are such that this is not a choice we
should inadvertently encourage. Indeed, a time-limited program for
young married couple might be a better option.
The proposal to link Federal CDBG assistance to the encouragement
of affordable housing is, on one level, an understandable response to
the inflexible zoning found in too many municipalities. But there are
several reasons not to adopt this approach and to proceed with caution.
The idea that there is a ``missing middle'' in our housing supply
is rapidly gaining adherents, as officials respond to concerns that
young adults cannot afford to live in the towns where they grew up and
public servants cannot afford to live in the towns they serve. Cities,
such as Minneapolis, and States, such as Oregon, are already beginning
to move away from strict large-lot single-family zoning. States like
California have seen the proliferation of the YIMBY (``yes in my
backyard'') movement, which has successfully sought to make the
economic case for loosening restrictive zoning to increase housing
supply in the State's most high-cost cities.
A one-size-fits-all Washington review of local zoning risks
stifling this creative change. Woodrow Wilson, a Democratic president,
observed that, in the United States, localities are not governed; they
govern themselves. This historic tradition brings with it democratic
accountability. And perhaps most importantly, CDBG eligible communities
are largely those already providing a great deal of affordable housing.
As Jenny Schuetz of the Brookings Institute wrote in 2018 about
then-Secretary Ben Carson's proposed rule revision to make receipt of
HUD funds, particularly from the CDBG program, contingent on local
zoning reform, ``HUD's interest in persuading local governments to
reform exclusionary zoning is admirable. But withholding CDBG would not
be an effective mechanism, because exclusionary communities receive
very little CDBG funding.'' \7\
---------------------------------------------------------------------------
\7\ Jenny Schuetz, ``HUD Can't Fix Exclusionary Zoning by
Withholding CDBG Funds'', Brookings Institution, October 15, 2018,
https://www.brookings.edu/research/hud-cant-fix-exclusionary-zoning-by-
withholding-cdbg-funds/.
---------------------------------------------------------------------------
A better approach embraces the spirit of localism and adaptability
of American municipalities and acknowledges the growing success of
State-level movements to increase housing supply. HUD may want to
provide useful models and technical assistance to zoning officials,
rather than subjecting them to costly review.
I appreciate this opportunity to present my views. Thank you very
much, and I look forward to your questions.
RESPONSES TO WRITTEN QUESTIONS OF SENATOR TESTER
FROM LISA MENSAH
Q.1. Improving FHA Support for Small-Dollar Mortgages Act--
There are many challenges in Montana related to the
availability and affordability of homes, especially with home
prices going up 57.5 percent in the last decade. But there are
still many areas of my home State where the average price of a
home sold is below or near $100,000. I'm very concerned that
folks trying to buy those homes may struggle to access a
mortgage, which is why I have been working to address barriers
to home ownership for these families, including improving the
availability and timeliness of appraisals in rural areas, and
it's why Senator Lummis and I introduced the Improving FHA
Support for Small-Dollar Mortgages Act. Why is it so important
for folks to be able to have access, and what do you see
causing some of these problems?
A.1. Access to affordable home ownership is part of OFN's
commitment to affordable, responsible financial products and is
crucial work of the CDFI industry. Home ownership is key to
building wealth, and significant gaps remain in the market.
CDFIs are experienced housing lenders committed to closing that
gap with deep expertise reaching low wealth markets. In fiscal
year (FY) 2019, certified CDFIs made more than 600,000 housing
loans totaling more than $56 billion. CDFIs have cumulatively
developed or rehabilitated more than 2.1 million housing units.
Limited access to small dollar mortgages continues to put
affordable home ownership opportunities out of reach for many
borrowers, especially first-time homebuyers, borrowers in rural
communities and borrowers of color. OFN Members have developed
products and services to better serve this market, including:
FAHE, a network of affordable housing lenders based
in Berea, Kentucky, and working throughout Appalachia,
launched the MicroMortgage Marketplace pilot project in
2020. The pilot, in partnership with the Homeownership
Council of America (HCA) and the Urban Institute
provides small-dollar mortgages under $100,000 in
Louisville and parts of Southern Indiana.
Come dream, Come build (cdcb), based in
Brownsville, Texas provided relief to their borrowers
impacted by the COVID-19 pandemic and also administered
the City of Brownsville's pandemic housing assistance
programs. In 2020, cdcb continued to increase access to
affordable home ownership, providing 73 households with
smaller dollar mortgages with a median home sales price
of $104,000.
HOPE Credit Union, based in Jackson, Mississippi,
and working throughout the Delta region, has financed
the development of affordable housing throughout the
region. Mortgage lending is a key component of HOPE's
strategy to close the racial wealth gap in the Deep
South. Over the last 10 years, HOPE's mortgage
portfolio almost quadrupled from nearly $34 million in
2010 to $127 million at the end of 2020. In 2020, 86
percent of HOPE's mortgages were made to people of
color, primarily Black borrowers, and 83 percent were
made to first time homebuyers.
Oweesta, based in Longmont, Colorado, is a Native
intermediary lender. One Oweesta member, Four
Directions Development Corporation, is a Maine-based
CDFI serving the Passamaquoddy Tribe, Penobscot Nation,
Houlton Band of Maliseets, Aroostook Band of Micmac,
and any enrolled Native American from a federally
recognized tribe in Maine. This CDFI helps tribal
members purchase, improve, and access equity from on
reservation residential properties. Four Directions
works to provide credit counseling and is uniquely
suited to working on tribal lands and navigating the
process of working with the Bureau of Indian Affairs.
Southern Mutual Financial Services Over the past 50
years, Southern Mutual Help Association (SMHA) and the
subsidiary CDFI, Southern Mutual Financial Services
have developed 1,421 new or renovated affordable homes
in rural Louisiana. SMHA's work in affordable housing
has generated over $454.1 million in local income and
an additional $67.5 million in State and local tax
revenue. SMHA has invested nearly $19.4 million in
affordable mortgage and business loans directly to
Louisiana families, $16.5 million of [No more
information provided.--Ed.]
In addition to a $1 billion appropriation for the Community
Development Financial Institutions Fund in FY22 that would
bolster CDFI efforts such as these, OFN supports the creation
of a study of Federal Housing Administration lending to
understand how the Department of Housing and Urban Development
could better reduce barriers to home ownership.
Q.2. Access to Housing--What are the greatest challenges that
you see in your communities to access and affordability of
housing?
A.2. Rural America--home to about 20 percent of the U.S.
population and covering more than 90 percent of the U.S.
landmass--is diverse economically and demographically. Rural
America is not a monolith, and its housing needs vary in
different communities. In some rural communities, outmigration
and population loss are key drivers of the housing challenges,
while other rural communities have experienced rapid growth and
changes to the labor markets that have increased demand for
affordable housing. Many rural communities are also located in
``areas of persistent poverty''--defined as communities with a
poverty rate of greater than 20 percent for three decades in a
row. According to Partners for Rural Transformation, of the 395
persistent poverty counties in the U.S., eight out of ten are
nonmetro and the majority (60 percent) of people living in
persistent poverty counties are people of color. Aging housing
stock puts pressure on the supply of both single and
multifamily affordable housing. According to the National Low
Income Housing Coalition, nearly 30 percent of rural households
experience at least one major housing problem, such as high
cost, physical deficiencies, or overcrowding.
Below are some key issues impacting access to affordable
housing in rural markets:
Housing cost increases outstrip income growth.
While housing costs are still relatively low in some
rural markets, there are some communities where
increased housing costs coupled with stagnant income
growth is creating an affordability crisis.
Housing quality and aging housing stock. Nowhere
are the challenges to the Nation's aging housing stock
more prevalent than in rural communities. In too many
rural communities, housing lacks adequate plumbing and
kitchen facilities as well as facing conditions of
overcrowding. The adequate housing that does exist is
often unaffordable because rural incomes are below the
national median income.
Limited home ownership opportunities for rural
communities of color. For the millions of people of
color living in rural America, access to home ownership
is also an issue of racial equity. There are more than
2,000 rural and small-town census tracts where racial
and ethnic minorities make up the majority of the
population--many who experience limited access to home
ownership opportunities due to lending practices and
housing policies that historically excluded rural
people of color.
Increased housing cost burdens. Nearly one-fourth
of the Nation's most rural counties have seen a
sizeable increase this decade in the number of severely
cost-burdened households--defined as spending at least
half their income on housing. The National Low Income
Housing Coalition found that 47 percent of rural
renters are cost burdened--spending more than 30
percent of their income for their housing--with nearly
half of that group being severely cost burdened. These
housing cost burdens highlight the shortage in
affordable rental and home ownership units for low-
income populations and the pandemic has exacerbated
this issue.
Q.3. Where are there gaps in resources from Federal programs?
A.3. Federal investment to support housing in rural areas lags
investment in urban communities. Programs that provide grants,
loans, credit enhancements, like those at USDA, are a critical
lifeline to finance affordable housing in rural communities but
are inadequately funded. These programs are oversubscribed and
highly competitive and must be expanded to meet the growing
demand.
The key resource for CDFIs, the Community Development
Financial Institutions Fund in the Department of the Treasury,
is also consistently oversubscribed. In the most recent funding
round, applicants requested three times the available funding.
A robust Federal appropriation of $1 billion for the CDFI Fund
in FY22 would help alleviate the demand for these resources.
Q.4. Leveraging Investments--There are significant housing
needs all across the country, and it is clear that the Federal
Government needs to be doing more to address these challenges.
But we are not going to be able to spend our way out of this
problem all on our own--public-private partnerships will be
critical to fixing this shortage, and we already have a number
of examples of successful Federal programs.
How can partnerships leveraging Federal dollars improve the
availability and affordability of housing?
A.4. Community Development Financial Institutions demonstrate
the potential of public-private partnerships. As private-sector
institutions, they leverage Federal resources to extend capital
and credit to help people and communities underserved by
mainstream finance join the economic mainstream. In addition to
direct support to the CDFI Fund, CDFIs can improve the
availability and affordability of housing with improved access
to Federal lending and guarantee programs. Opportunity Finance
Network strongly supports CDFI access to lending programs
across the Federal Government. CDFIs have proven that they are
effective stewards of Federal resources and sound lenders that
pose minimal risk to investors, including the Federal
Government. Data demonstrates the success, safety, and
soundness of CDFIs.
For example, data shows that OFN membership, which includes
mostly nondepository CDFIs, have low loan loss rates--a
cumulative 0.79 percent from 1999-2018 that outperformed the
0.92 percent loan loss rate of FDIC-insured institutions in
that same time. OFN data also indicates a 1.34 percent
delinquency rate greater than 90 days among OFN members in
2018. CDFIs have been and can continue to be effective partners
in relending and direct loan programs to improve home
ownership, including the Federal Home Loan Bank System and the
pilot under USDA's 502 Relending Program. OFN applauds
expansion of this model.
Q.5. Housing in Tribal Communities--We are not doing enough to
address the dire lack of housing for many Indigenous
communities.
What do you see as the most important programs and
investments to address these challenges?
Where are there areas we need to be doing more? Or new,
innovative programs and ideas we could be using?
A.5. Native American CDFIs are a critical resource for
expanding financial services in Native American communities,
including supporting home ownership in those markets. The CDFI
Fund's Native American CDFI Assistance (NACA) Program provides
capacity-building and financial assistance resources to
institutions serving Native Americans, Alaska Natives, and/or
Native Hawaiian communities. This is the CDFI Fund's only
program that funds sponsoring organizations in the very early
stages of forming CDFIs, leveraging Federal resources to build
CDFIs in Native communities, as well as supporting Native-
serving CDFIs of all sizes and stages of development. A robust
Federal appropriation of $1 billion for the CDFI Fund in FY22
will strengthen the growing network of CDFIs serving Native
communities, including providing home ownership opportunities
for Native American home buyers.
In addition, OFN strongly supports the passage of the
Native American Rural Homeownership Improvement Act (S.2092).
The bill would extend the incredibly successful pilot program
nationwide which would allow Native CDFIs to make these loans
to their target markets across the country.
Native American homebuyers would be assisted by many of the
Federal resources that OFN supports to increase access to
affordable housing in rural and tribal communities:
Pass the Improving FHA Support for Small Dollar
Mortgages Act of 2021. Limited access to small dollar
mortgages is putting affordable home ownership
opportunities out of reach for many borrowers,
especially first-time homebuyers, borrowers in rural
communities and borrowers of color. OFN supports the
creation of a study of Federal Housing Administration
lending to understand how HUD could better reduce
barriers to home ownership.
Pass the American Jobs Plan. The American Jobs Plan
includes several housing provisions, including the
bipartisan Neighborhood Homes Investment Act (NHIA).
Offering $20 billion worth of NHIA tax credits over a
5-year period is expected to result in over 500,000
homes built or rehabilitated, creating a pathway for
more families to buy a home and start building wealth.
Increase technical assistance and capacity building
for rural mission lenders. The Federal Government
should invest in building the capacity of local
affordable housing and community development
organizations deeply rooted in rural places. With
existing Federal programs oversubscribed and fewer
philanthropic and bank resources flowing to rural
communities, the Federal Government should provide
funding for technical assistance to build the capacity
of rural mission lenders.
Increase funding for USDA Rural Housing Programs.
Low-cost, long-term financing to support both home
ownership and rental housing is not readily available
from other sources. Congress should increase funding
for Federal affordable housing programs serving rural
populations.
Allow Government sponsored enterprises (GSE) equity
investments in CDFIs. Many CDFIs still lack access to
the capital markets supported by the housing finance
system. In part because of this lack of access, CDFI
housing lenders experience liquidity challenges that
inclusion in more mainstream sources of housing finance
could help solve. Allowing Fannie Mae and Freddie Mac
to make direct equity or equity-like investments in
CDFIs will enable CDFIs to manage risk and their
balance sheets more effectively. These flexible
investments would provide much needed liquidity to
support the specialized lending done by CDFIs and
support training and technical assistance needed to
build the capacity of lenders working in difficult-to-
serve markets, including native American homebuyers.
------
RESPONSES TO WRITTEN QUESTIONS OF
SENATOR CORTEZ MASTO FROM LISA MENSAH
Q.1. How is Opportunity Finance Network addressing the
disparate coverage of CDFIs across the country?
A.1. Opportunity Finance Network strongly supports resources
that build capacity of CDFIs, both new and existing, to enter
and serve new markets. We pioneered the CDFI Coverage Map to
help the industry see, understand, and improve upon the
distribution of its lending and investing activities. Our own
lending and investment programs, including the Finance Justice
Fund and Grow with Google, focus on ``going deeper'' to reach
smaller CDFIs and increase CDFI coverage across the Nation.
Two key items on our advocacy agenda that would address the
disparity in coverage include strong support for the Community
Development Financial Institutions Fund and reform to the
Community Reinvestment Act.
The Community Development Financial Institutions Fund has
taken steps to build the national coverage of CDFIs including:
A longstanding, statutory Technical Assistance (TA)
grant program, aimed at building the capacity of
emerging CDFIs to strengthen their organization and
financial ability to serve their markets. Technical
assistance funds can be used by emerging CDFIs that
target areas not well-served by existing CDFIs.
Similarly, the Small and Emerging CDFI Assistance
component of the Fund's Financial Assistance (FA)
program provides younger, smaller CDFIs--those more
likely to be in markets new to CDFIs--with specialized
opportunities for support.
The Persistent Poverty Counties (PPC) set aside
provides strong CDFIs of all sizes and maturity with
resources to target counties suffering deep and
persistent poverty.
The Fund's Native American CDFI Assistance (NACA)
Program provides capacity-building and financial
assistance resources to institutions serving Native
Americans, Alaska Natives, and/or Native Hawaiian
communities. This is the CDFI Fund's only program that
funds sponsoring organizations in the very early stages
of forming CDFIs, leveraging Federal resources to build
CDFIs in Native communities.
Robust support for the Community Development Financial
Institutions Fund is the best way to increase coverage of CDFIs
across the county. Congress must support at least $1 billion in
CDFI Fund grants in the FY22 Appropriations bill.
The Community Reinvestment Act (CRA) has been a critical
tool to extend the financial services system into underserved
markets. However, its impact has been uneven across the Nation.
Longitudinal data from the past dozen years illustrates the
painful gap between bank investment in CDFIs serving rural
markets compared to bank investment in CDFIs serving urban
markets.
For rural CDFIs, capital borrowed from banks in 2018
comprised 31 percent of total borrowed funds. For urban CDFIs,
capital borrowed from banks comprised 52 percent of total
borrowed funds. OFN's comments to the Federal regulators
considering reform to the CRA highlighted a number of
improvements that would improve the distribution of CRA
investment, particularly in supporting CDFIs in rural areas.
Q.2. With regards to the Native American Homeownership
Improvement Act, is the tribal CDFI now serving North and South
Dakotas able to offer mortgages to tribes in other communities?
Or are other tribal CDFIs able to provide mortgages to other
communities?
A.2. The current pilot program is authorized only in North and
South Dakota. With the passage of the Native American Rural
Homeownership Improvement Act (S.2092) the program would be
extended nationwide which would allow Native CDFIs to make
these loans to their target markets across the country. OFN
strongly supports this bipartisan bill.
Q.3. I appreciate Opportunity Finance Network's support of a
pending bill I'm leading, which would enable Treasury-certified
nondepository CDFIs to pledge non-housing collateral to gain
advances from a Federal Home Loan Bank.
Can you speak to how many CDFIs are members of Federal Home
Loan Banks?
A.3. As of December 31, 2020, 64 CDFIs were members of the
Federal Home Loan Bank System.
Q.4. How has membership in a FHLBank benefited CDFIs?
A.4. Since the Housing and Economic Reform Act (HERA) provided
CDFIs the opportunity to become members of the Federal Home
Loan Bank System, CDFI FHLB members have gained access to long-
term funding, which allowed more high-impact loans to be made
to creditworthy borrowers in underserved communities. Since the
beginning of this partnership, FHLBs have seen enormous growth
in CDFI memberships. According to FHFA's 2018 Report on Low-
Income Housing and Community Development Activities of the
Federal Home Loan Banks, CDFI membership has grown almost 4.6
times since 2011. The report also shares that annual FHLB
advances to CDFIs have grown from $59 million in 2013 to $221.5
million in 2018. FHLBs recognize the value CDFIs provide in not
only serving low to moderate-income communities but helping
achieve their mission of ``supporting housing finance and
community investment.'' Additionally, several FHLBs, including
the FHLB of New York, remain active in trying to recruit more
CDFI members. CDFIs have also been able to utilize grants from
the Affordable Housing Program (AHP) to make high impact loans
in distressed communities.
Q.5. How would including small business, small agriculture and
community development loans as collateral help CDFIs?
A.5. Opportunity Finance Network appreciates Senator Cortez
Masto's support of legislation to improve CDFIs' capacity to
access and use Federal Home Loan Bank System advances. Allowing
CDFIs to make better use of FHLB membership would enable
nondepository CDFIs to leverage their existing portfolio to
make more loans. A 2015 GAO report, ``Federal Home Loan Banks:
Collateral Requirements Discourage Some Community Development
Financial Institutions From Seeking Membership'', noted that
collateral restrictions discouraged some nondepository CDFIs
from seeking membership. Under current law, CDFIs can only
pledge long-term home mortgage loans of at least 5 years. A
change in collateral requirements would likely incent
additional CDFIs to seek membership, as well as enabling
additional loans to be pledged from those CDFIs that are
already members, allowing them to make more loans in
underserved communities. As noted above, CDFIs use FHLB
membership and advances to increase their lending in low-income
and low-wealth communities.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SINEMA
FROM LISA MENSAH
Q.1. What solutions should Congress be considering to address
the supply chain challenges that make building materials for
new housing stock unavailable or excessively expensive?
A.1. CDFIs fill an important role in housing affordability.
They are experts in dealing with challenges posed by economic
disruption, including pandemic-related uncertainty in the
supply chain. Using this experience in markets that other
lenders cannot reach, CDFIs pull together capital stacks to
make loans and investments in their communities. A $1 billion
appropriation for the Community Development Financial
Institutions Fund can help CDFIs and their communities better
weather changes in the housing market.
Q.2. What tools, trainings, and resources are available to
better prepare lenders to work with tribal communities in
Arizona, particularly in navigating challenges associated with
tribal trust land?
A.2. Native American CDFIs are a critical resource for
expanding financial services in Native American communities,
including supporting home ownership in those markets. The CDFI
Fund's Native American CDFI Assistance (NACA) Program provides
capacity-building and financial assistance resources to
institutions serving Native Americans, Alaska Natives, and/or
Native Hawaiian communities. This is the CDFI Fund's only
program that funds sponsoring organizations in the very early
stages of forming CDFIs, leveraging Federal resources to build
CDFIs in Native communities, as well as supporting Native-
serving CDFIs of all sizes and stages of development. As local
institutions with deep roots in their communities, CDFIs have
expertise in tackling the unique challenges of their markets,
including issues related to tribal trust land.
A robust Federal appropriation of $1 billion for the CDFI
Fund in FY22 will strengthen the growing network of CDFIs
serving Native communities.
The Center for Indian County Development of the Federal
Reserve Bank of Minneapolis provides a clearinghouse for
research, tools and resources for both lenders and tribal
governments working to improve access to capital in Native
American communities. Their research found that Native American
CDFIs were most successful in serving those communities. These
findings reinforce the success of CDFIs' local market-driven,
place-based model in serving their communities.
The Center provides resources for lenders and tribal
governments partnering with financial institutions, including a
Tribal Leaders Handbook on Homeownership and Reservation
Profiles that include Home Mortgage Disclosure Act (HMDA) to
help lenders understand market gaps.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR ROUNDS
FROM LISA MENSAH
Q.1. Do you believe the 502 relending model could also be
effective to improve the deployment of other Federal direct
loan programs in partnership with Native CDFIs, including the
Native American Direct Loan program for Native American veteran
borrowers?
A.1. Yes, Opportunity Finance Network strongly supports CDFI
access to lending and credit enhancement programs across the
Federal Government. CDFIs have proven that they are effective
stewards of Federal resources and sound lenders that pose
minimal risk to investors, including the Federal Government.
This success is why the 502 program has been extremely
effective in bringing capital to the Native American
communities in which the pilot is authorized. CDFIs are active
participants in the Federal Home Loan Bank system, the U.S.
Department of Agriculture Intermediary Relending Program, and
the Small Business Administration 7(a) program, among others.
CDFIs have been and will continue to be effective partners in
relending and direct loan programs and OFN applauds expansion
of this model.
Q.2. In addition to the Native American Rural Homeownership
Improvement Act, what other financing opportunities should we
consider to assist potential Native American home buyers that
are struggling in their home ownership process?
A.2. Native American CDFIs are a critical resource for
expanding financial services in Native American communities,
including supporting home ownership in those markets. The CDFI
Fund's Native American CDFI Assistance (NACA) Program provides
capacity building and financial assistance resources to
institutions serving Native Americans, Alaska Natives, and/or
Native Hawaiian communities. This is the CDFI Fund's only
program that also funds sponsoring organizations in the very
early stages of forming CDFIs, leveraging Federal resources to
build CDFIs in Native communities, as well as supporting
Native-serving CDFIs of all sizes and stages of development. A
robust Federal appropriation of $1 billion for the CDFI Fund in
FY22 will strengthen the growing network of CDFIs serving
Native communities, including providing home ownership
opportunities for Native American home buyers.
Native American homebuyers would be assisted by many of the
Federal resources that OFN supports to increase access to
affordable housing in rural and tribal communities:
Streamline the Section 184 Loan Guarantee program
by ensuring tribally sponsored CDFIs are automatically
eligible to be lenders after gaining Treasury
certification.
Pass the Improving FHA Support for Small Dollar
Mortgages Act of 2021. Limited access to small dollar
mortgages is putting affordable home ownership
opportunities out of reach for many borrowers,
especially first-time homebuyers, borrowers in rural
communities and borrowers of color. OFN supports the
creation of a study of Federal Housing Administration
lending to understand how HUD could better reduce
barriers to home ownership.
Pass the American Jobs Plan. The American Jobs Plan
includes several housing provisions, including the
bipartisan Neighborhood Homes Investment Act (NHIA).
Offering $20 billion worth of NHIA tax credits over a
5-year period is expected to result in over 500,000
homes built or rehabilitated, creating a pathway for
more families to buy a home and start building wealth.
Increase technical assistance and capacity building
for rural mission lenders. The Federal Government
should invest in building the capacity of local
affordable housing and community development
organizations deeply rooted in rural places. With
existing Federal programs oversubscribed and fewer
philanthropic and bank resources flowing to rural
communities, the Federal Government should provide
funding for technical assistance to build the capacity
of rural mission lenders.
Increase funding for USDA Rural Housing Programs.
Low-cost, long-term financing to support both home
ownership and rental housing is not readily available
from other sources. Congress should increase funding
for Federal affordable housing programs serving rural
populations.
Allow Government sponsored enterprises (GSE) equity
investments in CDFIs. Many CDFIs still lack access to
the capital markets supported by the housing finance
system. In part because of this lack of access, CDFI
housing lenders experience liquidity challenges that
inclusion in more mainstream sources of housing finance
could help solve. Allowing Fannie Mae and Freddie Mac
to make direct equity or equity-like investments in
CDFIs will enable CDFIs to manage risk and their
balance sheets more effectively. These flexible
investments would provide much needed liquidity to
support the specialized lending done by CDFIs and
support training and technical assistance needed to
build the capacity of lenders working in difficult-to-
serve markets, including native American homebuyers.
------
RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN BROWN
FROM NAN ROMAN
Q.1. I understand that HUD has initiated a study of alternative
rent structures through the Moving to Work demonstration
program. Are you aware of the status of that study?
A.1. With regard to the Moving to Work demonstration study, we
are told that the second cohort will be studying both stepped
and tiered rents as an alternative to the Brooke rent model.
The ten agencies conducting the study have been selected and
are in the pre-implementation stage of the study--on-boarding
into the MTW program.
The Alliance recognizes that the Brooke rent model,
limiting housing costs to 30 percent of the household's income,
provides life-altering relief to people with extremely low
incomes who are able to access these programs. We hope, of
course, that the days where most eligible people do not receive
the deep subsidies that HUD now has in its toolkit are nearing
an end. As long as most eligible people receive no help from
HUD's rent subsidy programs, however, it is important to gather
more information about whether shallower forms of subsidy, that
cost less money and could therefor reach more people with
whatever sum is appropriated, achieve benefits that are
worthwhile. I encourage the Committee to follow up with HUD
about this research, and to help clear the way for findings to
be discussed and evaluated.
------
RESPONSES TO WRITTEN QUESTIONS OF
SENATOR CORTEZ MASTO FROM NAN ROMAN
Q.1. Does the National Alliance to End Homelessness support a
Federal law that would require all landlords accept income from
VA benefits, SSDI, Social Security and vouchers? Such a law
would ban discrimination based on source of income.
A.1. The Alliance supports such legislation. Reducing and
ending homelessness will require significant federally funded
rental assistance through various Federal programs for those
most in need. If landlords can reject a tenant using such
assistance simply on the basis of its source, those already
disadvantaged in a housing market with insufficient supply will
be even further discriminated against. Certainly, it will
impede progress on ending homelessness.
Also, source of income discrimination can mask more
invidious kinds of discrimination, such as those based on race,
ethnicity, or gender, since people of color and women are more
likely to be unemployed due to employment discrimination, and
need to rely on these programs.
At the same time, it is important for housing authorities
and others who run voucher programs to operate the programs in
a manner that works for property owners, ensuring that owners
understand the program, that tenants know their
responsibilities, that inspections take place quickly, and that
the rent is paid on time.
Q.2. Can you explain how a lack of stable housing for children
and their parents makes people vulnerable to human trafficking
and abuse?
A.2. For several reasons, homelessness and lack of stable
housing make children and their parents vulnerable to human
trafficking. People who experience homelessness are traumatized
and desperate, making them vulnerable to traffickers' efforts
to trick, lie to, or defraud them into situations they cannot
then escape. They may also be more willing, out of desperation,
to enter situations and work that is inhumane, illegal, or
otherwise unacceptable.
Also important is that people of color are more likely to
be homeless and trafficked because of historical and system
racism, discrimination, and inequity that leave them more
vulnerable to otherwise unacceptable life options. Permanent
housing is a key part of any solution. For more on the
connection of trafficking and homelessness, please see the
blogpost on the Alliance's website, The Intersection of Human
Trafficking and Homelessness, and the resources cited there.
Q.3. Senator Brown's bill, the Trafficking Survivors Housing
Act (S. 2049), would require the Interagency Council on
Homelessness publish a report on the needs of victims of human
trafficking. Which Federal agencies do you think need to
collaborate better to break the link between homelessness and
human trafficking?
A.3. Key Federal agencies to address trafficking and
homelessness are already part of the U.S. Interagency Council
on Homelessness: the Departments of Housing and Urban
Development; Health and Human Services; Justice; and Labor; as
well as the Domestic Policy Council. Each of these has
responsibility for important parts of any solution, and the
need to coordinate in that regard.
Q.4. What are some of the challenges that the Interagency
Council on Homelessness needs to address now?
A.4. The U.S. Interagency Council on Homelessness, since it was
overhauled during the early years of the George W. Bush
administration, has been key to coordinating the Federal
response to homelessness. The Council can only be as effective
as its Federal agency members want it to be, and as it is
resourced to be. It does not control agency budgets, so it must
use its persuasive powers to advance best practices, new ideas,
and outcomes. And it must make the most of the ability to
coordinate strategies among the various agencies as no single
Federal agency can end homelessness on its down. The Members of
the Council itself must be committed to coordinating to end
homelessness. The fact that Council is again made up of agency
Secretaries is a tremendous boost.
Challenges moving forward include hiring a new Executive
Director and filling vacant staff positions that were left
unfilled in the previous Administration. Ensuring that the key
agencies involved in ending homelessness are working together
and have formal relationships to fund housing (HUD and VA) and
services (HHS and VA) is a challenge. Also a challenge is
enhancing the role of the Department of Labor in connecting
people experiencing homelessness to employment. A critical
challenge is how to address the fact that homelessness has been
increasing since 2016, and that, tragically, unsheltered
homelessness is also going up: this year for the first time
ever, there were more unsheltered individuals than sheltered
individuals. And finally, emerging challenges are how to
address the aging of the homeless population, and a large youth
cohort that may fail to attach to the labor market and become
homeless post-COVID.
Q.5. What development incentives work best to build more homes
for victims of human trafficking, low-income families, veterans
and elderly individuals, people with disabilities and
unaccompanied youth?
A.5. Making funding available is, of course, the first thing
that is necessary. This includes not only capital funding for
acquisition, construction, and rehabilitation; but also
operating subsidies, usually through rental assistance. People
with incomes that are low enough to make them vulnerable to
homelessness can not afford to pay rent that will cover the
ongoing operation of housing: utilities, maintenance, security,
and other costs.
It would be helpful to have more formal relationships
between HUD and HHS to ensure that services accompany housing,
in particular for older adults and people with disabilities. At
present developers may be less likely to build for these
tenants because the services are not readily available to the
them. Federal funding incentives that encourage jurisdictions
to remove zoning, permitting, and approvals processes that slow
down the development of affordable housing and raise its cost
should also be considered.
Q.6. The design of the Family Stability and Opportunity
Vouchers Act (S.1991) is to make awards competitively. Do
competitive programs give greater access to communities that
already have the resources to hire grant writers and have more
matching funds? How can competitive programs ensure that funds
reach communities that may have more need for affordable
housing but less infrastructure to prepare and compete for
grants?
A.6. Competitive programs can definitely favor communities with
more resources, reinforcing historical and systemic racially
discriminatory trends. The Alliance is strongly supportive of
HUD's Continuum of Care (CoC) program, which is a competitive
program. Some aspects of that program's success are relevant to
this question. There is strong technical assistance for
communities to help them achieve better outcomes, and thus
perform better in the competitive environment (the CoC
competition is based in good part on strategic use of funds and
past performance). The CoC process also involves bringing a
wide range of community partners to the table, all of which can
contribute to better performance.
Every CoC is required to collect client level
administrative data which allows it to objectively prove its
outcomes, rather than having to have a professional grant-
writer describe them.
Making eligible matching funds as flexible as possible and
including public funds, can help even the playing field. In the
CoC funding, other Federal funds count as a match, if
homelessness is prioritized (unlike in many other Federal
funding programs). This means that, for example, State policy
makers can prioritize using Medicaid as part of coordinated
work on homelessness, and achieve the same results in the
competition as another, wealthier, community would achieve
through its local tax base. Medicaid is, of course, one of the
largest Federal programs, extremely important to constructing a
comprehensive response to homelessness, and generally supplies
more Federal funding to poorer States.
Simplifying the grant application process as much as
possible is also helpful. To the greatest extent possible,
criteria for awards should be based on concrete, objective
indicators, rather than on the quality of prose in an
application.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR ROUNDS
FROM NAN ROMAN
Q.1. Do you believe the 502 relending model could also be
effective to improve the deployment of other Federal direct
loan programs in partnership with Native CDFIs, including the
Native American Direct Loan program for Native American veteran
borrowers?
A.1. The Alliance has generally found that even deeply
subsidized home ownership models do not reach people whose
incomes are so low that they are at risk of or experiencing
homelessness. That being said, it is clear that reservations
and other tribal lands can prove an exception. The Alliance
would appreciate the opportunity to work with Senator Rounds
and others to improve the overall housing situation for Native
Americans, a group with one of the highest rates of
homelessness.
Q.2. In addition to the Native American Rural Homeownership
Improvement Act, what other financing opportunities should we
consider to assist potential Native American home buyers that
are struggling in their home ownership process?
A.2. As with most Federal housing programs, the programs are
not funded to the scale necessary to solve the problem they are
meant to address. Experience with the existing programs, we are
told, indicates that they are well designed but underfunded.
Again, the Alliance would be happy to work with the Senator and
convene national partners to explore this issue further.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR ROUNDS
FROM HOWARD HUSOCK
Q.1. Do you believe the 502 relending model could also be
effective to improve the deployment of other Federal direct
loan programs in partnership with Native CDFIs, including the
Native American Direct Loan program for Native American veteran
borrowers?
A.1. I am not qualified to provide a knowledgeable answer.
Q.2. In addition to the Native American Rural Homeownership
Improvement Act, what other financing opportunities should we
consider to assist potential Native American home buyers that
are struggling in their home ownership process?
A.2. I am not qualified to provide a knowledgeable answer.