The Broader Market

Partially excerpted from Bond Buyer:

by Jennifer DePaul

The liberal think tank the Center for American Progress has proposed a plan to promote a new source of financing for troubled state housing finance agencies — the House America Bond.

A HAB would be a taxable, direct-pay bond, modeled after the Build America Bond program, which was created as part of the American Recovery and Reinvestment Act of 2009….

Jordan Eizenga, a member of the economic policy team at CAP and the author of the proposal, said issuers would not need a 35% subsidy rate, as that rate may have been too generous.

For more, see here.

by Jordan Eizenga

State housing finance agencies play an important role in the provision of affordable housing. As state-chartered institutions, these agencies emerged in the 1960s in response to the failure of private lenders and developers to finance affordable low- and moderate-income housing. With a detailed understanding of the needs of local housing markets, housing finance agencies are uniquely positioned to responsibly underwrite mortgages—often with down payment assistance—for low-income, first-time homebuyers and to finance the development of multifamily affordable rental housing.

Since their creation housing finance agencies have financed the construction of nearly 1 million affordable rental units and approximately 4 million affordable mortgages for low- and moderate-income households. Yet over the past several years, many of them have struggled to raise funds from their traditional source of capital—the tax-exempt bond market—at affordable rates and long maturities to finance their mortgage programs. This has made it more difficult for them to provide affordable mortgages for low- and moderate-income households where the lack of mortgage credit is greatest.

As this issue brief demonstrates, these funding challenges must be resolved if housing finance agencies are to continue to play an effective and central role in supporting their state and local housing markets. In particular, this brief argues for a promising new source of financing for housing finance agencies—what the Center for American Progress would like to call the “House America bond,” modeled after the successful Build America Bond program that was part of the American Recovery and Reinvestment Act of 2009.

For more, see here.

by Peter Swire and Jordan Eizenga

The current structure of the mortgage-servicing industry is such that servicers are responsible to investors and “owe no duty at all to consider the needs and interests of consumers.” That is, the clients of mortgage-servicing companies are investors in mortgage-backed securities for whom the servicers collect monthly mortgage payments from homeowners and, as a result, servicers have no fiduciary responsibility to protect consumers from improper acts and omissions by mortgage servicers.

For the rest of the article, see here.

by Jordan Eizenga

Our still-ailing housing markets need all the first-time homebuyers and affordable rental housing investors we can find. The New Issue Bond Program, which the Department of the Treasury launched in 2009 to help state and local housing finance agencies continue financing housing for working families during the housing crisis, is set to expire at the end of 2011. The program’s imminent expiration threatens access to affordable rental housing and homeownership for many of those hardest hit by the housing crisis.

Fortunately, Treasury has the authority to extend the program beyond its current deadline. With half of all American renters devoting more than a third of their income to housing alone, and with private lenders writing off struggling communities and households that the housing finance agencies are uniquely able to serve, Treasury should extend the existing authority of the New Issue Bond Program so that it remains available through at least the end of 2012.[1]

For more of the article, see here.

by Sarah Rosen Wartell, David Min, and Jordan Eizenga

Our nation’s slowing economic recovery prompted policymakers to consider ways to shore up consumer demand and get our economy moving again. One central focus of these efforts was to find ways to improve the weak housing markets, where hundreds of thousands of foreclosed homes are keeping home values down and depressing household wealth, thus complicating efforts to generate demand and create jobs.

The Obama administration already had in place an important program that had the potential to strengthen the housing market, stimulate the economy, and increase employment. To combat the foreclosure crisis, the administration created the Home Affordable Refinance Program, or HARP for short, shortly after President Barack Obama took office.