• Payton Legal Group

How, and why, we should solve housing’s affordability problem

America’s affordability crisis is worsening. Its reasons are manifold, whether a product of the “k-shaped” recovery that has left 28% of renters owing back rent on their homes, or rapid house price appreciation driven by demand for new homes that rapidly outpaces supply. But what can the US mortgage industry do in the face of these challenges to help to create the affordability so many Americans need?


At the MBA’s recent CREF21 conference, a panel of mortgage experts broke down the affordability question and offered a few concrete solutions. Tony Love, SVP of affordable housing and FHA lending at Bellwether Enterprise Real Estate Capital, facilitated a wide-ranging discussion with John Gilmore, managing director of real estate finance at Walker & Dunlop LLC, Sarah Garland, director of debt and structured finance at CBRE capital markets, and D. Edward Greene, managing director of affordable housing finance at Lument. They all emphasized the unique challenge this country faces and offered a few novel routes to improving the overall picture.


“The problem is really bad and it’s growing,” said Garland. “And there’s no unified approach on how to address it all, either. There are lots of successful programs out there but I think we, as a group, need to come together and figure out how we’re going to tackle this growing shortage.”

Garland paid particular attention to gentrifying cities and urban cores where there’s a huge need for affordable housing. She emphasized the knock-on effects for those economies as workers are priced out of their homes and forced to live further and further from their jobs. The other panelists highlighted how acutely this affordability crisis is being felt in rental housing.


As the conversation turned to solutions, Gilmore highlighted how effective the low-income housing tax credit program (LIHTC) has been in delivering housing through a private-public partnership. While he believes the program needs to be reworked a little bit to reflect changing conditions since its initial introduction, he explained that it’s one of the more efficient delivery vehicles for new and more well-maintained affordable housing stock.


“We need to figure out ways to continue to expand it,” he said.


Ongoing costs and maintenance issues have been a longstanding problem in affordable housing. D. Edward Greene highlighted to the panel how the industry has addressed these challenges. The agencies, in the past 10 years, have come out with programs that serve to lower costs beyond the standard bank credit enhancement. Now, he believes agencies must come up with workforce housing products. The outsized impact of the COVID-19 pandemic on working-class families, in


Greene’s opinion, calls out for programs that serve these people.


“I think the lenders are responding through innovation. I read almost daily about a new pilot program that has been tested, and I applaud them for doing that,” Greene said. “However, it seems like that the crisis is outpacing that.”


In discussing necessary solutions, the panel highlighted the need for more unified action across the industry. While many different solutions have been pioneered in different areas, the scale of the issue requires a clearer unified definition and singular approach. Clear definitions of low and middle income, for example, should be built with a knowledge of the frequency with which middle-income earners fall through the cracks.


For Graham, this might take more direct government involvement, either with an expansion of the tax credit program or action by municipalities lowering building fees that can be onerous for an affordable housing development. She and the other panelists emphasized that any government effort could help to marshall the significant amounts of private and investor capital ready to invest in affordable housing. Major corporations like Google and Amazon are setting up affordable housing funds, while ESG-rated mortgage backed securities are generating demand on public markets.

Tony Love, who moderated the discussion, drove home one final point that should get lenders, governments, and individual mortgage pros invested in delivering affordable housing for more Americans.


“As we focus on repairing the economy, it seems to me that housing is one of those segments of the economy that can really act as a stimulus,” Love said. “There was a recent study that showed for every dollar that the public invested in affordable housing, the investment returned a 24-time multiplier, between direct and indirect impact on the on the regional economy. I think that’s one of the things that policymakers are probably going to be looking at, when they’re starting to focus in on this infrastructure initiative. Hopefully, affordable housing will be part of that.”

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