On Tuesday, Feb. 18, President Obama announced the Homeowner Affordability and Stability Plan to help strengthen the nation’s housing market.
Colorado Housing and Finance Authority (CHFA) was pleased to see the President’s plan includes providing the nation’s Housing and Finance Authorities (HFAs), such as CHFA, with much needed liquidity.
Helping HFAs comprised one line in the President’s speech. This is a good first step, and we look forward to learning more about the details of the Administration’s plan.
As we await this information which will be released in the coming weeks, we at CHFA want to remind our nation’s housing policy leaders that HFAs are a critical partner the Administration should further engage and support as they work to improve our nation’s housing problems.
For 35 years, CHFA has been helping people find safe, decent and affordable housing, and pumping millions of dollars into Colorado’s economy in the bargain.
But in the last six months, the collapse of our nation’s financial markets has stalled this important economic engine, and made it harder for thousands of Coloradans who dream of owning their own homes to make that dream come true.
Across the nation, some state HFAs have had to curtail their programs or stop lending altogether. At CHFA, we’ve been fortunate to be able to continue our home finance lending; but we’ve had to increase interest rates on new loans to take into account the higher costs of obtaining capital in today’s market.
That means a lot fewer Coloradans are able to get an affordable mortgage through CHFA, a lot fewer new housing units gets started, and billions of dollars worth of jobs and economic activity have disappeared.
Before the markets imploded last September, Congress acknowledged the vital role and track record of HFAs by doubling the amount of tax-exempt Housing Bonds HFAs could issue between 2009-2011 under the Housing and Economic Recovery Act of 2008 (HERA).
Their goal was to give HFAs more resources, so in turn we could ensure consumers had access to affordable, fixed-rate mortgages to safely stimulate the housing market.
HERA also allowed HFAs to use these tax-exempt Housing Bonds for mortgage refinance to help creditworthy homeowners trapped in sub-prime loans refinance into our safe, fixed-rate products. However, the markets” collapse made it impossible for HFAs to issue the bonds needed to accomplish those goals without help.
Like a star-player sitting on the bench, HFAs and the communities who rely on us to support housing are anxiously awaiting being put back in the game.
HFAs did not contribute to the housing market meltdown. We are not subprime lenders. All of CHFA’s loans are fully documented, fixed-rate mortgages.
CHFA also requires and pays for our customers to attend a Homebuyer Education course to help ensure they are fully prepared for homeownership. Because of this, our single-family loan performance is strong, with delinquency and foreclosure rates well below those in the conventional market.
Through flexible yet prudent underwriting, HFAs have proven over many years that homeownership is not only possible for lower-income families, it is sustainable.
Money provided to the nation’s HFAs would translate immediately into loans. HFAs would use their existing programs and distribution channels to direct funds immediately to working families ready and wanting to buy their first home or refinance out of unsustainable mortgages, and to finance the construction of affordable rental housing. And, since we’re accountable as public agencies, taxpayers will know how their investment was used.
Buying housing bonds would be profitable for the government. HFAs are financially strong and highly rated entities with loan programs that perform very well-better than other loan programs. This is not only a smart thing for the federal government to do, it’s the right thing.
Milroy A. Alexander is executive director and CEO of the Colorado Housing and Finance Authority. EDITOR’S NOTE: This is an online-only column and has not been edited.
