TheMReport

52 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST GOVERNMENT Talking Rural Homeownership The House Financial Services Committee discussed the acute challenges of rural housing. T he Financial Services Committee (FSC) Sub- committee on Housing, Community Devel- opment and Insurance held a hearing entitled, "The Affordable Housing Crisis in Rural America: Assessing the Federal Response." Witnesses included Gideon Anders, Senior Staff Attorney, National Housing Law Project; Stan Keasling, President, National Rural Housing Coalition; David Lipsetz, Chief Executive Officer, Housing Assistance Council; Andres Saavedra, Senior Program Officer, Rural Local Initiatives Support Corporation; and Tanya Eastwood, President, Council for Affordable and Rural Housing. According to a memorandum released by the FSC, rural areas are set apart from urban areas due to several distinct features. For example, rural areas tend to have comparatively high homeowner - ship rates; however, the committee noted that the quality and value of housing is comparatively lower than other areas of the country. "Changes in the rural economy have negatively affected the job markets in many rural areas, con - tributing to higher poverty rates and severe housing affordability issues," the memo noted. "The aging housing stock in rural areas has also resulted in higher rates of residents living in moderately or severely substandard housing that may, for example, lack basic plumbing, and pose a risk to the health and safety of residents. Moreover, racial minorities in rural areas are three times more likely to live in substandard housing, putting them among the worst-housed demographic group in the entire nation." Witnesses proposed solutions to issues faced by rural home - owners. For example, in his state- ment, Gideon Anders proposed an amendment to the USDA Rural Development (RD) single- family direct loan program. Under Section 505(a) of the Housing Act of 1949, RD is autho - rized to extend a moratorium on payments to homeowner borrow- ers whenever the borrower is un- able to continue to make mortgage payments for reasons beyond the borrower's control without unduly impairing his or her standard of living," Anders noted. "In cases of extreme hardship, RD is also au - thorized to forgive interest accrued on the loan during the morato- rium period in order to facilitate the borrower's capacity to resume making mortgage payment." He added, "Borrowers who face hardship, such as the loss of a job or a medical emergency, are frequently unable to resume mak - ing regular mortgage payments at the end of a moratorium, let alone make higher mortgage payments." Making Mortgages More Accessible Senators from across the aisle support changes to QM standards. By Tim Rood T he recently introduced Self-Employed Mort- gage Access Act is an attempt at loosening credit to qualified mortgage applicants who have difficulty conforming to Ability-to-Repay/ Qualified Mortgage (QM) requirements. As the authors of the bill noted, "creditworthy individuals relying on non-tra - ditional income represent up to 42 million Americans, or 30% of the labor force, and are unduly constrained in their ability to obtain a mortgage." The Dodd-Frank Wall Street Reform and Consumer Protection Act's (Dodd-Frank Act) Ability-to- Repay requirements created strict standards defining a QM. Sen. Mark Warner, D-Virginia, said in a statement, "These guidelines of - ten result in a less precise calcula- tion of income for borrowers with non-W-2 income sources, such as rental income, retirement income, or income from self-employment." "Constrained lending to non- traditional borrowers is one of the many adverse consequences of the well-intentioned QM standard. It's time to revisit this concept to ensure that as the labor force con - tinues to evolve that creditworthy households aren't needlessly cut off from mortgage credit. As a result of this standard, private capital has almost universally been unwilling to underwrite or purchase mortgages that do not meet the QM standard given that all other loans lack safe harbor protections."

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