Housing.com News, Analysis & Opinion: Housing, Hurricanes, and HUD--Oh My!

Housing & Urban Development has announced its disaster assistance program for Katrina survivors. Overall, this is really decent and helpful to those who are in need, especially pricing the loans at fair market values. While that may price people out of hot areas like D.C., San Fran, etc., it can give them huge opportunities for cheaper areas of the country like the Twin Cities, Denver (Supposedly a "hot city" these days, though I am skeptical), and so on.

The only thing I'm wary of is having to register via calling the infamous FEMA 1-800-number or online. I know some folks who have volunteered as FEMA first-responders, and let me tell you, that is a hellish situation on both sides of the fence. Calls go unanswered, call center employees get overwhelmed, and no one gets results. Not to mention that many of the displaced have nothing resembling Internet access, because they haven't got anything like homes or funds to get it.

Speaking of hellish situations, the Post detailed the nightmarish efforts of Katrina and Rita victims to get their insurance claims verified. This is a serious failure on all counts, particularly due to the fact that there's no oversight governing how insurance appraisers are making their claims or the criteria they use to do so. At the same time, I know from colleagues in the insurance industry how difficult and overwhelming the job can be under the best of circumstances, and these are anything but.

The Post also reported that Freddie Mac is buying $300 million in Gulf Coast mortgages. What's nice about this is that they bought the mortgages when they were no longer required to. This will be a strong boost to the already-salivating crew of developers and investors who want to rebuild the area.

Of course, just to show you that no good deed goes unpunished, the brain trust who promoted Operation Offset didn't pass up a chance to take shots at affordable housing and infrastructure investment:

Tie Rent Subsidies for One Person to Cost of Efficiency Apartments
Recipients of federal housing assistance typically live either in subsidized-housing projects or in rental
units of their own choosing found on the open market. This option would link the rent subsidy for new
applicants from one-person households to the cost of an efficiency apartment rather than a one-bedroom
unit (current law). Savings: $3.1 billion over ten years ($894 million over five years)

Ouch. So, if we're paying to give them a place to live, let's put them in a closet. Even efficiencies are expensive these days, you know.

Impose a Fee on the GSEs Investment Portfolio
Government-sponsored enterprises (GSEs), private financial institutions chartered by the federal
government, are intended to increase the availability of credit for specific purposes, such as housing and
agriculture. Four GSEs--Fannie Mae, Freddie Mac, Farmer Mac, and the Federal Home Loan Bank
System--have used their special borrowing status to acquire and hold large portfolios of securities. This
option would impose a fee of 10 basis points (10 cents per $100 of investments) on the GSEs’ average
daily investment portfolios. This would promote competition in financial markets and recover some of the
federal subsidy retained by those enterprises without reducing their capacity to achieve their public
mission. Savings: $19.9 billion over ten years ($8.8 billion over five years)

Require GSEs to Register with the SEC and Pay Fees
Government-sponsored enterprises (GSEs)--private financial institutions chartered by the federal
government--are intended to promote the flow of credit to targeted uses, primarily housing and
agriculture. Four GSEs, Fannie Mae, Freddie Mac, the Federal Home Loan Bank System, and the Farm
Credit System, are exempt from provisions of the Securities Act of 1933, which requires publicly traded
companies to register the securities they issue with the SEC (a fifth GSE, Farmer Mac, is already subject
to SEC requirements.). This option would repeal those GSEs’ exemption from SEC rules, requiring them
to pay registration fees and to disclose information about their securities. This would help level the
playing field between the GSEs and other firms that issue securities, including issuers of mortgage-backed
securities (MBSs). Savings: $2.7 billion over ten years ($1.3 billion over five years)

I'd be a lot more supportive of this if I had even the slightest confidence that the government was performing that kind of oversight on private mortgage brokers and securities investors.

This is not passed legislation by any means, but really just a bunch of partisan talking heads who are looking for excuses to gut programs they don't like in the name of "savings." However, individual proposals may slip themselves into other bills or law, so if you're looking at government housing investments as a way to rebuild the Gulf, keep your eyes peeled. It may not last.

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I got clued in to a fabulous blog run by Affordable Housing & Finance. It's slickly designed, well written, and has a lot of coverage of the struggles hurricane survivors are facing in finding affordable living accomodations. Housing & Urban Development has announced its disaster assistance program for Katrina survivors. Overall, this is really decent and helpful to those who are in need, especially pricing the loans at fair market values. While that may price people out of hot areas like D.C., San Fran, etc., it can give them huge opportunities for cheaper areas of the country like the Twin Cities, Denver (Supposedly a "hot city" these days, though I am skeptical), and so on. The only thing I'm wary of is having to register via calling the infamous FEMA 1-800-number or online. I know some folks who have volunteered as FEMA first-responders, and let me tell you, that is a hellish situation on both sides of the fence. Calls go unanswered, call center employees get overwhelmed, and no one gets results. Not to mention that many of the displaced have nothing resembling Internet access, because they haven't got anything like homes or funds to get it. Speaking of hellish situations, the Post detailed the nightmarish efforts of Katrina and Rita victims to get their insurance claims verified. This is a serious failure on all counts, particularly due to the fact that there's no oversight governing how insurance appraisers are making their claims or the criteria they use to do so. At the same time, I know from colleagues in the insurance industry how difficult and overwhelming the job can be under the best of circumstances, and these are anything but. The Post also reported that Freddie Mac is buying $300 million in Gulf Coast mortgages. What's nice about this is that they bought the mortgages when they were no longer required to. This will be a strong boost to the already-salivating crew of developers and investors who want to rebuild the area. Of course, just to show you that no good deed goes unpunished, the brain trust who promoted Operation Offset didn't pass up a chance to take shots at affordable housing and infrastructure investment: Tie Rent Subsidies for One Person to Cost of Efficiency Apartments Recipients of federal housing assistance typically live either in subsidized-housing projects or in rental units of their own choosing found on the open market. This option would link the rent subsidy for new applicants from one-person households to the cost of an efficiency apartment rather than a one-bedroom unit (current law). Savings: $3.1 billion over ten years ($894 million over five years) Ouch. So, if we're paying to give them a place to live, let's put them in a closet. Even efficiencies are expensive these days, you know. It gets better: Impose a Fee on the GSEs Investment Portfolio Government-sponsored enterprises (GSEs), private financial institutions chartered by the federal government, are intended to increase the availability of credit for specific purposes, such as housing and agriculture. Four GSEs--Fannie Mae, Freddie Mac, Farmer Mac, and the Federal Home Loan Bank System--have used their special borrowing status to acquire and hold large portfolios of securities. This option would impose a fee of 10 basis points (10 cents per $100 of investments) on the GSEs’ average daily investment portfolios. This would promote competition in financial markets and recover some of the federal subsidy retained by those enterprises without reducing their capacity to achieve their public mission. Savings: $19.9 billion over ten years ($8.8 billion over five years) Require GSEs to Register with the SEC and Pay Fees Government-sponsored enterprises (GSEs)--private financial institutions chartered by the federal government--are intended to promote the flow of credit to targeted uses, primarily housing and agriculture. Four GSEs, Fannie Mae, Freddie Mac, the Federal Home Loan Bank System, and the Farm Credit System, are exempt from provisions of the Securities Act of 1933, which requires publicly traded companies to register the securities they issue with the SEC (a fifth GSE, Farmer Mac, is already subject to SEC requirements.). This option would repeal those GSEs’ exemption from SEC rules, requiring them to pay registration fees and to disclose information about their securities. This would help level the playing field between the GSEs and other firms that issue securities, including issuers of mortgage-backed securities (MBSs). Savings: $2.7 billion over ten years ($1.3 billion over five years) I'd be a lot more supportive of this if I had even the slightest confidence that the government was performing that kind of oversight on private mortgage brokers and securities investors. Which I don't. This is not passed legislation by any means, but really just a bunch of partisan talking heads who are looking for excuses to gut programs they don't like in the name of "savings." However, individual proposals may slip themselves into other bills or law, so if you're looking at government housing investments as a way to rebuild the Gulf, keep your eyes peeled. It may not last.