President Obama recently signed into law the Housing Opportunity Through Modernization Act of 2016, a bipartisan bill loaded with fixes to existing HUD programs.
In February, the bill, which amended the U.S. Housing Act of 1937 (among other HUD-modifying laws), passed the House. In mid-July, it passed the Senate. It was supported by Republicans and Democrats, by industry influencers, homebuilder groups, and the National Association of Realtors, because the aim of the legislation is so universally palatable: it increases access to affordable rental housing, provides assistance to low-income renters, and encourages increases in homeownership.
“This legislation will put homeownership in reach for more families, and we applaud Congress’ work to take us there,” said NAR President Tom Salomone in February. “There is tremendous demand for affordable housing, and (the Housing Opportunity Through Modernization Act of 2016) offers fresh opportunities for creditworthy borrowers to become homeowners when they choose to.”
According to the Whitehouse, the bill:
Protects low-income renters
The bill contains provisions to modify several programs administered by HUD, including core rental assistance programs, like Housing Choice Vouchers, homelessness prevention and assistance programs, and Federal Housing Administration (FHA) mortgage insurance for condominiums.
What it means for renters: The modified assistance programs will effectively guard voucher holders and low-income renters from economic factors beyond their control, having the dual effect of allowing landlords to retain otherwise exemplary tenants.
Streamlines HUD programs
The bill includes provisions to help streamline the administration of HUD programs. The bill also expands flexibility between public housing operating and capital funds, and provides additional flexibility to public housing agencies to conditionally approve housing voucher units with non-life threatening deficiencies in order to allow families immediate access.
What it means for renters: The change to HUD programs, specifically the Housing Choice Voucher Program, will allow tenants to move into their new units more quickly, making it easier for voucher holders to compete against fair-market rate renters who don’t have to worry about inspections.
Makes condo purchases easier
The bill eases restrictions on the purchase of condominiums with FHA insurance.
What it means for first-time homebuyers: Retooling FHA condo restrictions will improve the position of first-time homebuyers as well as condo owners planning to sell. This will be especially beneficial in markets like Miami, where condo inventory is above normal levels, but FHA approval is well below.
Improves loan guarantee efficiencies
The bill provides the Secretary of Agriculture with the authority to delegate some loan guarantee approval and execution functions under the guaranteed rural housing loan program.
What it means for lenders and homebuyers: Delegating “some” loan guarantee approval will streamline loan processing times and improve efficiencies for homebuyers and lenders.