err a eee SG a 2016 POLICY POSITIONSOverview plement affordable near term importance that NAHREP is ‘executive summary of NAREPS Call 2016 CALL TO ACTION IMPROVE ACCESS TO AFFORDABLE MORTGAGE CREDIT Atfcut for minority and frsttime borrowers to ld adress market factors that ae estcting Narrow definitions of crectwerthiness make ie qualify for and obtain a mortgage. Goveerrment regula 00256 to cre for minority Sorrowers Umea eS A ¢ disclosure changes has aleady consequences POLICY PRIORITY ELIMINATE GOVERNMENT PROGRAMS THAT REDUCE AVAILABLE HOUSING INVENTORY ‘The current ational housing market is expen Oma eS PASS COMPREHENSIVE IMMIGRATION REFORM tothe 112 millon fe to allow these ghomecwnership.Ths reform id provisions leportation ele, and migrant and nowimmigrant wok visas.Call to Action Improve Access to Affordable Mortgage Credit Overview ‘Snes the era ofthe financial crs ang martgage meltdown, borrowers have bean raquted te avecome neeasnaly trngent cre slancards nade o aH for 9 home ban, Naraw deiiions af crestworthness make especialy Afcuk for minority and festime borrowers to quay for and aban a morgage. In his environment of ight cred, (gevernment supprt ofthe morgage market proved by the FHA, VA, USDA nd Ginne Mae is tical in providing Hispanie consumers mith acess to aocoabe eed, The GSEs ako play a ruil ale nthe US, housing finance system by Tacltating a secondary market and connecting domestio and alebal captal tothe US. rousing finance mare While the housing market and eccnomy are ona path to recovery we must protect government programs from flor to devnish ther role nthe affordable housing market anid seek additonal averves to improve access to forsee housing, Congess should take whatever action sraseesary to enaurethe goverment programs nave the resources and supoor. secessary lo continue ther affordable Musing actives, Why is this a concern? ‘Goverment equator should adress market factors tha re resticing access to cre orminry baronet 1, Loan Level Price Adjustments (LLPA) and Guarantee Fees (G-fees): The GSES use LPs and Guarantee Fees to cffectvely charge borowers rare for heir morigage ifthe GSES thnikctheris a high rskafdefauk For nstance, 48 borrower witha below average FICO score and a bw down payment will aya substntly higher effective Inerestratfor ther GSE ban han will her borawe's. This apraach has 2 ispropertonstlyharmfl mpgcton frstire and loncome berrowes. acd, Reusing market and eran condtens have mproved tothe Dont whee LLPas and Gees ate now punky hah, feat 2018 the FHA responded to morouig econerc Conditions by reducing ts anal mergageinsurance premium by £0 basis points. The GSEs have yet ow the FHA ee deresse with eduction in ther ov fees, The GSEshave a charter responsibly to "aubelde' pring er ‘mortgage olon-tomocerate oame consumers That doesnot appeartabeadeavatly accurng FHA Underwriting Cetfeation:Enacte in 1853, the False Chis Act was tended to prevent contractors fom Cefauding the goverment ang nas bean amered over te yrs to broadens scope I) 2008 wes urhar amended nee some povsions er addressing franealinstition ana sees Favs. Asa esl e Depot ‘mentef Justice degan tly perates agarst morgage knders ha are disproporienat to therner underwr Ingerters under serany. suggesting te companies ave defrauding he US, Goverment, Lenders have acted FHA ‘or etinitive guidance regacng what consttte Valation\ FHA Craton so tha they cn operate thin et qaselnes however the FHAas net nccated hay are wllng taco a, ne absence of ths cary barks have [equ tox the Fs ending space, Some depositary rsituans can potential eat porfoto bans ta cose lending toners wha would thenwse have used an FA an, Theis nt ah option for naneanclences, who Increasing serve Hspane consumes, and willsimply ext the maket under the weht of ely nes. 3. Greit Scoring of Consumers: Traitenal credit scarng medals, Ie the wisely used Fa Iase Corporation (FICO) ‘model produce india borrower ere sores rat hl lenses and investors deterrse i borrowers 2 good ‘eked 2t what pree. 2015 study bythe CFB noted that 27 percent of tre Hapanic consumer population are ‘ot accurately ralesby the pedomnant cred scorng mechanisms used n te US today and thus ar xohet ‘Hom acess to crest, Tactional models geneal do nt capture wansactios autsie the conventional Barking payment systems, Ths omission pus ‘unbarked,"unscorabe and ‘red iwsbeborowes ata dsacvantage, Soe the good payment istry sing cash Vansactione aera considered nthe ced see, NAHREP Policy Recommendations: + Eliminate LLPAs:Farnie Vae and Freddie Wac shoul eliminate LLPAS to beter eect the ered rk that is covered by mortgage insurance on lw down-payment mergapes. When these risk reducing benefits ae nat ‘actor ino the GSE fees, the consumer effectively charges twice forthe samerisk eduction + ncreasecross-sbsidization: CS shoud alo inrecuce mare erase-subsiization ite the OF fe stuctre ven the una impact of imperfect eet seorng models, the svong creat performance of hee marrgages, {hs ther affordable mousing meson * FHA Cetfiction Guidance: Fih shoul sue cefntive guidance ragarcing HA Certification and what saves arematealand coul cause a volta, Olfeing this conehsve direction would enable knoe fo oven crest withthe adces confence that they wilt face steep fines frm tne Department of Juste they comply with ‘hove guidelines. + Anemative eredt scoring models: seralves to racional models in use today could provide for advan tertenson of eet to millons of consumers ina safe and sustainable manne. Eves extending ered should be requred ta use best in clas crest evahation tole that score a Sraader Spectrum of conevmere snd are determined be sae, sound far and responsible, NAHREP POLICY CrnaPolicy Priority Address Unintended Consequences of Rulemaking Overview In October 2015, the Consumer Financial Protection Sureau (CFP) implemented TLARESPA Integrated Disclosure (TRIO) rue changes. These changes create a vvee-day etiod where the home buyer is alowed to revew the CGsolsures, Cay feedback from lances expressed conser that these changes could delay the time to close 3 ‘mortgage ean. While recent report fem Ele Mae indicates thatthe ime te close Mas deed nceaseby ten cays ‘ver ma gagean closings ths ime ls year practioner eeoback wauldndeae tat these concems may notbe ae Signicat factor as originallanscipated. Ins NANREP survey of top procusng agent, 87 percent of sponds Indicated that TRIDhas nt been a ignfieant factor eauses them tose a taneacton, However hare are real sks to consumers om downstream impacts of TRI. The regulatory changes introduce new solutes nt.an erie aeady Heavy cen wth dslosures, Lenders ote understandable eancern a tee ably sells lean in the secondary market if teresa minor er made cna dacks.ze. This culé result lenders Seng loans for “craton ane dent pees ata Fraction of te ongnaton valu, This creates addtional costs for te lender which willkely be paases onto the consumes futherneresing the ost of financing, Adionaly concems sill ext with lack of clarity on Ability to Repay (ATA) guidelines fr now dualfed Mortoage (ror-GM) loans. Therules ae clear regarding fr example, deb to nome rates, or GM loans. However for nant bbans the qudelines are nebuloss suggesting that lence use reasonable due igen in determing 8 Sorawers ably to rep. nthe face otis emi leces have taken a conservative proach which na esueain very tle ‘am nang other than that wrsch occurs inthe jum sp0c6 Why is this a concern? White rulemaking eons bythe CFPB are welcomedby the industry the lack fear or wllogness to provide clay has made lenders reluctant to issue loan fr fear of regulatory action. Ths uncase has resulted in application of credit overs by lenders which further tightens credit for otherwise crest worthy borne Lenders can more effectively operate with bright Ines and easy to understand rules, The CFPB shoul be mere colloratvewitn morgage lender, Today, when lenders seek guidance fram the CFPB, he response i verbal ‘rowcing litle documenta ressurance tat he koder wert subject to aovere ect on 1 of he iesues requting clay regarding the use of nomtradional income, suchas esings om sel-employment a tmaorary werk An ncreasing number of consumer. ncling Hispanics and Milena, eam ‘come tough nonrational means, Sice ATR guidlines ae unclear on how ths income may be considered. 3 substantial numberof credit werhy borowers ae beng shut out of hoecueshi. NAHREP Policy Recommendations: + Broader Application of No Acton Letter: vin lenders face uncertainty about oomplance tn &CFPB requ tion, theyshoul beable to sekea No ton eter fom the C=P to remove the uncetany, The CFPBS current polity 09 No Action eters Imits the use to "ereging produc invoking substantial regulstory uncertainty” ‘his very imited scone wil not cover uncertainty about complance related tothe mary existing products and pyaetices nthe morigage marketPolicy Priority Eliminate Government Policies that Reduce Available Housing Inventory Overview -Aforéablehousing invetoryisatrecord lows. Wiha smallzolof homes forsale ertahousing demands onthe rise ‘wi median akg price fr rent neressng 11 perce st yea” slne. Construction of alforgablehoes continues to Descarceand ivestors contre nee outowne occuzarts acros thecounty puchases of eesting hare ston. These cralknges are most event marke Ike Mam, ba where te tend has ives purchasing ave han Sd percent of avaiable omes far sak, Tractanal sng fal cimerccoupant homebuyer are rouinely esses over infovor of estos with cash oles draped clbsings locking many Hspanichomeb.yer fem acces to afforeable housing opportunites. Why is this a concern? Despite the itracuction of mote than milion singlfamiy homes ae rental, vacancies remain at histori ows, further drving rental prices up. This ereatesa challenge far rospectvehormecnrers who wish to save fra down Dayrent but are spending 30 ~50 percent ofthe income an rent. Single family oroperty dsposiion stategies that prvtize absentee imestors digpropartionael sisentranchise Hispanie homebuyers who currently represen 69 percent of theret hamecwershipgrowthin ihe US. LaWs, regulations, and buses practices assocated with single family property dspositon programs should provide sundart opportunites fr sales to ner accupats, Fk nate sales programy the Dstessed asset StabI2ai05 Program (DASP), nas sold more than 100,000 distressed mertgage loans to private investors, often subsidiaries of lbige Wall Sueetfnaneialnsttutons, singe 2070, These sales have preventes the properties fm entering the alonalhousing inventory and berg aval for purchase by hersebuyes NAHREP Policy Recommendations: + Asset Disposition Strategies: FA andthe GSEs shoul ube asset disposition strategies that nla strong provisions designes to maximize the opportunty for owner occupants te keep or purchase a propery slloan ol progreme shoulé be perioccal evaluated for ellectveness and possible further provements + Study BASP: UD shouki conduct an in-depth study on DASP io determine the program's pars on homeow trap and to compare costs ang rests in elation fo ore tachional propery daposion stratapea, such = REO. HUD shoul alo colt ane ease tothe puble gala thal povies mereased transparency onthe amount and types of foreclosure aera ves that investors prove NAHREP POLICY CrnaaT i Policy Priority Pass Comprehensive Immigration Reform Overview While the numberof unarhotzed immigrants inthe US. has stabilized over the pas few yeas, 11 2mallon Undocumented ndvual remain inthe US, without permanent slats, Ths gue eraned rately stable sine 2012 ard represenis near 4 percent of the vel US population. Curent new wrdocumertea immigrston > Mexco sata net zo, Snee the vast majanity of the undocumented mmigrats aleacy present nthe US. are Hispang, mith more tan 80 percent coming tor Mei, hessue sce something that als wh NAHREPS pure In a previous Congress, the Senate passed 2 bill for comprehensive immigration reform, Despite strong pute sentiment o pass comorehensiveimmigraton reform, aeampanion billstaledin the House, became mired partisan plies and was never brought vp for a vole, Wile NANREP s generally supportive ofthe Presidents “migration Decountabilty Execctve Aen” which snauld provide 2 temsorary reprieve from ceporation for near § millon ‘Undocumented sida, these imrgrans remain woul permanent statu and unable a uly contbueto ‘he econ Why is this a concern? ew Research Center estimates indicate tha 5.1 percent of the U.S. bor force fs comprised of unautheried invmigrats. fh an inreasinglyantimmigrartpoleal climate, is important fo understand that they pay taxes purchase goose, and generate housing exrenstures, However they flen mut do so ate higher cost, exsting na Shadow economy where they are a risk of beng exploited due to thew status. In fac the sttue on Taxation and Foonemic Paley notes that undocumented immigrants contribute $11.64 bon state ard lcal taxes gure veh woul increase by $2.1 billon under comprehensive migration frm. NAHREP has cleulses thatthe millon undocumented immigrants were to buy homes $500 bilan neal este ‘vansaetons and an addtional $239 bilon n eignation fees, real estate comenissions, and related consumer spancing would be generated aver the nex five years. These esimates are based on previcus homeawnershp rates among feregnbors househols. In 2077, fer exarmak 52 percent of foregn-bom hausenoleers ewe thar hermes Heme purchases by newly legalzed immigrants would generate an sddkionel $180 bllon in indirect consumer spending based cn th average $60,000 n associated purchases estimated by the National Assciation of REALTORS. ‘The US. economy's fueled by the contributions of immigrent workers and entrepreneurs. This is evident even inthe Fortune 600 where according tthe Partners fora New American Szonamy, more than 40 percent af compares sere founded by immigrants or ehlren af migrants, incensed level of migration ae projected help the US conor bolstering ts wererce an accountng fr as much a 40 percent ef the ereasein US. employment Inthe Midwest alone the ntrodueton of approximately ane milion immigrants ove the past 10 years has reversed ‘he 50 year population detnein that egjon.Theresuling mpact of immsgaton reform on Hisparichameownershp ‘would be fein states wth lange Hispanic popuston, cling Calf. Florida, Arizona, Neveda, New Mexico. ino, Texas, New York, anc New Jersey Hispanic homeownership woul ako sigica'lyinerease in states that nave been experiencing the greatest population growsh wshin the past decade including Nerth Catala, Suh Carolina, Georgia, and othe states he South NAHREP Policy Recommendations: NAEP cals on Congress ta pase comprenensveimmigratoneeform which shoul inclu provisions {or aderessing + Deportation Relief Until permanent esaton exstsfr the 17.2 millon undocumented india intheUS, deportation rit must bean azive comanent of any executive action piece of gislaion, + Immigrant Vieas: Curent vies caps ate antiquated and do not adres the backlog o legate requests to immigfate tothe county, a2 well as legmize unauthor zed persons akeady nthe county, Re‘orms sous provide stats for undecurente immigrants and address the current backlog of arly and employment-based visa application, + Nonimmigrant visas: Viork vleted visas and quest woke programs should be an essential element to an ‘overlleferm package. The exci inclusion af legal residency would erable qualification for varus fnarcial inetuments celading morigages, (athe aiding te housing “eee, + Road to citizenship: permanent soit for thse whe Seok sttus and choose to become aS ctizen.