Federal translation requirements go into effect: at NAA/NMHC's urging, on March 6, the House Financial Services Committee sent HUD a letter requesting that the department withdraw the guidance until it has been revised to incorporate the committee's recommendations.

Firms are reminded that new guidance requiring firms who receive federal assistance to provide written and verbal translations of a broad array of "vital" documents went into effect on March 7. The HUD-issued guidance is meant to accommodate people with limited English proficiency (LEP). At a Feb. 28 meeting, HUD indicated the program primarily applies to owners with project-based Section 8 properties or those that receive HOME or CDBG funds and not those with FHA insurance or those that take Section 8 vouchers. (Agencies that administer the voucher program would have to comply.) HUD is in the process of translating its model lease into eight languages.

NAA/NMHC continue to strenuously oppose the guidance and are taking steps to have it overturned. At NAA/NMHC's urging, on March 6, the House Financial Services Committee sent HUD a letter requesting that the department withdraw the guidance until it has been revised to incorporate the committee's recommendations. Among other things, Congress wants HUD to assume the responsibility for the costs to provide language services to LEP persons and provide owners with a definitive list of documents that HUD will translate. They also want HUD to assume responsibility for the accuracy of HUD documents and services and have HUD clarify that reliance on HUD documents satisfies an owner's obligation to comply with the guidance. Information on the guidance is available at www.nmhc.org/Content./ServeContent.cfm?ContentItemID =4211.

NAA/MRHC Testify For Section 8 Reforms

Congress must reform key elements of the Section 8 voucher program if it hopes to try to meet the nation's growing need for affordable housing. That was the message delivered in testimony on March 9 before the House of Representative's Subcommittee on Housing and Community Opportunity by NAA/NMHC and the National Leased Housing Association (NLHA).

During the testimony, legislators heard that the Section 8 voucher program is one of the most effective ways the country can meet the growing housing needs of America's low- and moderate-income families. Unfortunately, the program is plagued by unpredictable funding shortages and unnecessary administrative burdens that discourage private owners from participating in it and make it difficult for voucher holders to find housing.

NAA/NMHC explained that one of the biggest problems with the Section 8 program is that it costs an apartment owner more to rent to a voucher holder than it does to rent to an unsubsidized resident because of the program's bureaucratic requirements. NAA/NMHC noted that in recent years, the Section 8 voucher program has been thrown into turmoil because of changes the U.S. Department of Housing and Urban Development (HUD) made to the way the program is funded. These changes have caused funding shortfalls in voucher programs across the country and have resulted in short-notice, across-the-board rent cuts in many jurisdictions. Such fiscal instability has a devastating effect on the families served by the program and the property owners that house them.

NAA/NMHC urged Congress to make permanent a new funding formula implemented in the federal FY 2007 budget that bases program funding on the most recent 12 months of voucher leasing and cost data with adjustments for inflation. The prior formula, which has been criticized as arbitrary and unworkable, was based on inflation-adjusted local costs from May 2004 through July 2004.

NAA/NMHC also urged Congress to reform the Section 8 program's duplicative inspection requirements, noting that it can take more than 30 days for an apartment home to be inspected and approved for a voucher holder, during which time the owner collects no rent on the apartment. Other suggestions include streamlining the process for calculating income and rent and making the Section 8 program more consistent with the LIHTC program so they can be used together to increase the nation's affordable housing supply. The full testimony with specific recommendations is available at www.naahq.org/govern_affairs/Issues/.

NAA/NMHC Announce 2007 Legislative and Regulatory Priorities

The NAA/NMHC Joint Legislative Program released its 2007 public policy agenda in March as part of NAA's annual Capitol Conference. Restoring balance to the nation's housing policy such that it recognizes the importance of rental housing and not just homeownership remains the top priority. Other key issues for 2007 include affordable housing, immigration reform, estate tax reform and energy conservation incentives. To address the affordable housing shortage, we will press for reforms to the Section 8 program, full funding for the existing Section 8 vouchers and exit tax relief.

As Congress takes up immigration reform again, NAA/NMHC will urge lawmakers to adopt a comprehensive measure that includes a temporary worker program and an accurate, cost-effective employment verification system. On estate taxes, NAA/NMHC will press lawmakers to reform, not repeal, the law to retain stepped-up basis provisions that benefit heirs of commercial property. Finally, NAA/NMHC will ask Congress to extend and expand existing incentives for energy-efficient and green building. Background and status information on the 30 key issues on NAA/NMHC's 2007 agenda, including terrorism insurance, accessibility, GSE reform, telecommunications policy and more, is available in the annual Legislative and Regulatory Priorities book, which is posted at www.naahq.org/govern_affairs/Issues/.

Terrorism Insurance Extension Urged

NAA/NMHC are working closely with Congress to extend the Terrorism Risk Insurance Act (TRIA) beyond its Dec. 31, 2007, deadline. The law, which makes the federal government the insurer of last resort for terrorism insurance, was enacted in 2002 and extended for two years in 2005.

At a Feb. 28 Senate hearing, the Coalition to Insure Against Terrorism (CIAT), in which NAA/NMHC are represented, and other real estate organizations testified in support of a permanent extension of modernized TRIA program, or at least until such time that Congress declares terrorism no longer a threat. The CIAT testimony cited research showing that $15 billion in real estate transactions had been stalled or cancelled after September 11 because of uncertainty about future availability of terrorism insurance. A CIAT representative again testified at a House of Representative's field hearing on March 5 in New York City, during which both Mayor Michael Bloomberg and Sen. Charles Schumer (D-N.Y.) said TRIA should be extended indefinitely and expanded to include coverage for domestic acts of terrorism and attacks involving nuclear, biological, chemical or radiological weapons.

Both House and Senate leaders have identified terrorism insurance as a top priority and have said that Congress will move quickly on legislation early in 2007. At the Senate hearing, Senate Banking Committee Chairman Christopher Dodd (D-Conn.) and key members of his committee emphasized the need for a long-term, public-private solution to the nation's terrorism insurance challenge--well before the scheduled expiration of the federal backstop on Dec. 31. House Financial Services Committee Chairman Rep. Barney Frank (D-Mass.) also has indicated his support for timely action on terrorism insurance issues this year, perhaps moving a bill sometime in April. NAA/NMHC will work closely with Congress on this necessary legislation.

Coast Hurricane Housing Bill Moves Forward

A key House committee passed a Gulf Coast Hurricane Housing bill (HR 1227) on March 7, with several provisions that would benefit apartment owners who housed evacuees from Hurricanes Katrina and Rita. Among other things, the bill would reimburse apartment owners for losses incurred when FEMA announced it would not honor its lease commitments under the agency's Section 403 city voucher program. It also authorizes housing voucher assistance for evacuees living in other parts of the country who might otherwise lose their assistance in September. Securing financial relief for owners who generously housed the hurricane evacuees only to suffer from Lost revenue from broken leases is a priority for NAA/NMHC. Congressional sponsors will now seek to have the measure included in upcoming legislation expected to pass the full House and Senate.

Subprime Lending Scrutinized

In what should be viewed as good news for the apartment sector, it appears that the days of easy credit for would-be homeowners with poor credit may be ending. Escalating foreclosures among subprime loans are causing federal regulators and housing investors to clamp down on aggressive lending practices. A recent study by the Center for Responsible Lending predicts that one in five subprime mortgages originated in 2005 or 2006 will end in foreclosure--double the projected foreclosure rate for subprime loans made in 2002. On March 2, federal regulators issued a proposed set of guidelines for adjustable rate subprime mortgage products that would direct lenders to more closely consider whether borrowers could repay such loans, to ask them for more documentation and to provide more information in advertising about the risks of adjustable-rate mortgages. The proposal expands a separate set of final guidelines on nontraditional mortgages issued in September to include a class of loans not explicitly covered in that guidance. That document outlined appropriate underwriting standards, risk management policies and consumer protections. Senate Banking Committee Chairman Christopher Dodd (D-Conn.) and House Financial Services Committee Chairman Barney Frank (D-Mass.) praised the guidelines. Both have called for a new set of guidelines to cover subprime adjustable-rate mortgages (ARMs), and said the proposal is an important step.

Meanwhile, in late February, Freddie Mac announced that it would stop buying subprime ARMs that are likely to impose a payment shock on the borrower that could result in foreclosure, including loans with initial "teaser" rates that reset to higher rates in subsequent years.

Family Medical Leave Act Changes Recommended

NAMNMHC recently submitted comments to the U.S. Department of Labor (DOL) in response to a long-awaited notice (71 FR 69504) soliciting input on possible revisions to its Family and Medical Leave Act (FMI&) regulations. The FMLA has been on DOL's regulatory agenda since 2002, and the department said it is reviewing the effectiveness of the regulations to respond to prior stakeholder concerns and legal challenges to the rules over the past 12 years. It is generally believed that DOL has delayed addressing these critical FMLA issues because of the intense, and very public, reaction to revisions it made in 2004 to federal overtime regulations.

The Dec. 1 notice, however, is a clear signal that DOL may be prepared to take on FMLA revisions despite potential protests from labor and consumer rights organizations and some congressional Democrats. In the comments, NAA/NMHC urged DOL to pursue a formal rulemaking to address problematic regulatory provisions. Specifically, NAA/NMHC raise questions about how the regulations determine who qualifies as an eligible employee for FMLA leave and what qualifies as a serious health condition. NAMNMHC note that the department's expansive definition of a serious health condition is both contrary to congressional intent and overly burdensome for employers.

Information compiled by NAA/NMHC Joint Legislative Staff: Senior Vice President for Government Affairs Jim Arbury; Vice President of Housing Policy Lisa Blackwell; Vice President of Capital Markets and Technology David Cardwell; Vice President of Operations and Risk Management Policy; Vice President of Communications Kim Duty; Vice President of Tax Jennifer Bonar Gray; Vice President of Environment Eileen Lee; Vice President of Building Codes Ron Nickson; Chief Economist Mark Obrinsky; and Senior Director of Employment Policy & Special Counsel Betsy Feigin Befus.