On September 25th, the U.S. Government Accountability Office (GAO), often called the “congressional watchdog,” issued a report on reverse mortgages.
Reverse mortgages allow seniors to convert part of their home equity into payments from a lender while still living in their homes. Seniors run the risk of defaulting and losing their homes if they don’t continue to pay taxes and meet other conditions.

The study found

• The vast majority of reverse mortgages are made under the Federal Housing Administration’s (FHA) Home Equity Conversion Mortgage (HECM) program with a growing percentage ending because borrowers defaulted on their loans.
  While death of the borrower is the most commonly reported reason why HECMs terminate, the percentage of terminations due to borrower defaults increased from 2% in 2014 to 18% in 2018, mostly due to borrowers not meeting occupancy requirements or failing to pay property taxes or homeowners insurance. Only about 22% of borrowers received an option for a repayment plan to help prevent foreclosures.
• FHA’s monitoring, performance assessment, and reporting for the HECM program have weaknesses.
• FHA has not conducted on-site reviews of HECM servicers since fiscal year 2013 and has not benefited from oversight efforts by the Consumer Financial Protection Bureau (CFPB). CFPB conducts examinations of reverse mortgage servicers but does not provide the results to FHA because the agencies do not have an agreement for sharing confidential supervisory information. Without better oversight and information sharing, FHA lacks assurance that servicers are following requirements, including those designed to help protect borrowers.

Following is an overview of the GAO’s recommendations;

• The FHA Commissioner;
  • should take steps to improve the quality and accuracy of HECM termination data.
  • should establish, periodically review, and report on performance indicators for the HECM program.
  • should develop analytic tools, such as dashboards or watch lists, to better monitor outcomes for the HECM portfolio.
  • should evaluate FHA’s foreclosure prioritization process for FHA-assigned loans.
  • should develop and implement procedures for conducting on-site reviews of HECM servicers.
  • should work with CFPB to complete an agreement for sharing the results of CFPB examinations of HECM servicers with FHA.
  • should collect and record consumer inquiries and complaints in a manner that facilitates analysis of the type and frequency of the issues raised.
  • should periodically analyze available internal and external consumer complaint data about reverse mortgages to help inform management and oversight of the HECM program.
• The CFPB Director should work with FHA to complete an agreement for sharing the results of CFPB examinations of HECM servicers with FHA.

To view the report in its entirety, please click here.

On September 10th, the National League of Cities issued a report titled “Housing Market Conditions Across America’s Cities”

In this report, every medium and large city in America was analyzed, and includes tailored recommendations for strengthening each type of housing market.

This report discusses;

• The different demographic and economic characteristics that define (6) local housing markets.
  • High Opportunity Cities
  • Growing Cities
  • Rent-Burdened Cities
  • Multi-Family Deficit Cities
  • Wealth Pocket Cities
  • Transit-Desiring Cities
• Which cities belong to which clusters
• Tailored solutions to the housing crisis

“Every day, I talk with local leaders from across the country. No matter the initial topic of our conversation, we often come back to one question: What is keeping them up at night? Without fail, the answer to that question involves the safety, security, and dignity of their community members. More times than not, those factors center around residents’ access to and the availability of quality housing.”
Clarence E. Anthony CEO and Executive Director National League of Cities

To view the full report, please click here.

Plywood was a pet peeve of my late father-in-law, Robert Klein. This “temporary” solution often became permanent resulting in the deterioration of individual streets and sometimes entire neighborhoods. This led him to found Secureview and advocate nationally for an aesthetic yet secure alternative, polycarbonate, which was termed clearboarding.

A recent Op-Ed in the Joplin Globe, advocates for the elimination of plywood due its negative effect on blight and discusses the clearboarding alternative.

To view the article, please click here.

As discussed in a recent article from MarketWatch, “A new working paper authored by researchers at Boston University and Stanford University investigates the ways in which foreclosures exacerbate a housing bust and reduce prices for non-distressed homes. The researchers also investigated foreclosure mitigation approaches and proposed a novel way through which government officials could stem the onset of future housing downturns.’

Abstract
This paper uses a structural model to show that foreclosures played a crucial role in exacerbating the recent housing bust and to analyze foreclosure mitigation policy. We consider a dynamic search model in which foreclosures freeze the market for non-foreclosures and reduce price and sales volume by eroding lender equity, destroying the credit of potential buyers, and making buyers more selective. These effects cause price-default spirals that amplify an initial shock and help the model fit both national and cross-sectional moments better than a model without foreclosure. When calibrated to the recent bust, the model reveals that the amplification generated by foreclosures is significant: Ruined credit and choosey buyers account for 25.4 percent of the total decline in non-distressed prices and lender losses account for an additional 22.6 percent. For policy, we find that principal reduction is less cost effective than lender equity injections or introducing a single seller that holds foreclosures off the market until demand rebounds. We also show that policies that slow down the pace of foreclosures can be counterproductive.

To view the article, please click here.

To view the Paper, please click here.

Last month, Governing Magazine issued a report titled “Addicted to Fines”
The article discusses a large scale analysis of fine revenues to date, constructing a database from thousands of annual financial audits and reports filed to state agencies.
The results showed that for hundreds of mostly small cities and towns, fines are a critical source of funding, at times accounting for more than half of all general revenues.

To view the report in its entirety, please click here.

For earlier reporting including a US Supreme Court decision and local issues arising as a result, please click here

In a recent Op-Ed in the Baltimore Sun, Peter Duvall, community revitalization coordinator for Strong City Baltimore discussed new legislation being proposed by Councilman Kris Burnett. This legislation would “target the hard-to-track owners of vacant properties and subject them to fines if they don’t post signs on the abandoned houses identifying themselves and providing contact information.”