Policy Action

In 2008 and 2009, the CLT Network focused our policy activities on the issues of foreclosure and the Neighborhood Stabilization Program, where our efforts, in collaboration with our strategic partners, really helped make a difference in setting federal policy.

As we approach 2011, our focus will remain on foreclosure-related issues, as well as working closely with FHA (see below) to create new mortgage financing options for CLT homebuyers.  For more information about the CLT Networks policy action agenda, check out our public policy agenda for 2009.

CRA

The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII of the Housing and Community Development Act of 1977, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law designed to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.  Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining.

The Act requires the appropriate federal financial supervisory agencies to encourage regulated financial institutions to meet the credit needs of the local communities in which they are chartered, consistent with safe and sound operation (Section 802.). To enforce the statute, federal regulatory agencies examine banking institutions for CRA compliance, and take this information into consideration when approving applications for new bank branches or for mergers or acquisitions (Section 804).

Letter from National CLT Network in support of CRA reform (8/31/2010)
 

FHA

With the high foreclosure rate and financial market issues, mortgage lenders have tightened their underwriting standards. At the same time CLT homeowners continue to out perform the market - in 2008, the CLT homeowner mortgage forclosure rate was 6 times less than the market! Given this performance and the current economic challenges, we need to expand mortgage financing options for CLT homebuyers.

Homebuyers need low cost, flexible mortgage financing. This is a key tool for providing low-income buyers access to CLT homeownership. Fannie Mae mortgages are available to CLT homebuyers, but the current underwriting standards are limiting the access to this resource. FHA mortgage finance products would be a great fit. FHA-insured mortgages have only been accessed by a limited number of CLT homeowners. The National CLT Network and the Shared Equity Coalition have developed recommended changes to FHA guidelines that, if implemented, will make it easier for CLT buyers to access this important loan product.

Meeting with FHA Commissioner Stevens on November 9, 2009

The Shared Equity Coalition, National CLT Network and National NeighborWorks Association met with Commissioner Stevens last month. FHA is working on new underwriting requirements for CLTs. The Network will be following up to support FHA in this process. Meeting Notes

More about FHA and CLTs

HUD

On November 9, 2009, CLT Network Executive Director Roger Lewis met with senior HUD staff.  Here are the meeting notes.
 

SAFE ACT

In December 2009 HUD published rules regarding the SAFE Act.  The SAFE Act is designed to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators.  HUD drafted these rules using broad language; one "side effect" of the SAFE Act is the potential impact on community land trusts and other nonprofit organizations that provide down payment assistance loans (and other types of loans).  Under the draft rules, many states would require nonprofit staff working with buyers to be licensed.  Most nonprofit staff working with buyers have helped to limit the mortgage issues and should not be subject to these licensing requirements.  On 2/23/10 the Network submitted comments to HUD requesting an exemption for CLTs (see letter to HUD).  CLTs should check in with their state licensing entities for local updates.  The following documents provide some helpful background on this newly implemented piece of legislation.

• Title V - S.A.F.E Mortgage Licensing Act (122 STAT. 2810) (7/30/2008)
• Federal Register - 24 CFR Parts 30 and 3400:  SAFE Mortgage Licensing Act,  HUD Responsibilities Under the SAFE Act,  Proposed Rule (12/15/2009)
• Vermont Housing and Conservation Board Comments on proposed rule (2/15/2010)
• Supplemental Comments of Vermont Housing and Conservation Board (2/15/2010)
• Letter to HUD from the Network  regarding proposed rule (2/23/2010)

USDA

USDA 502 Loan Program Proposed Rule
The proposed rule allows USDA to recapture all of its subsidy through the foreclosure or deed-in-lieu process. The result of the proposed rule will not significantly impact CLTs working with the 502 Loan program so the Network did not comment on the rule.

USDA Guaranteed Loan Program Funding Limited
USDA recently issued a notice to its participating lenders that funding for its Guaranteed Loan program will likely be exhausted by the end of April of 2010. See the posted memo for more information.