Affordable housing is about access

Five and a half years ago a housing crisis provoked our worst recession since the Great Depression. Since that time, much progress has been made. Home sales are rebounding, foreclosures are down, and homeowner equity is rising.

Despite these signs of improvement, the housing market recovery remains uneven. Six million Americans still owe more than their homes are worth, construction workers are overrepresented among the unemployed, and affordable housing — whether one is buying or renting — remains out of reach for many.

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We have not yet completely turned the page on this crisis, and we need to. If we want to see full economic growth, we must address these lingering effects that undermine access to credit, reduce affordability, and erode trust in our capital markets. Here is how we can begin to do that: Put in place rules of the road that create clarity and transparency.

Clearly, passing housing finance reform legislation offers the most comprehensive solution. Recent progress in the Senate represents a good start. With housing finance reform in place, there would be no question about the existence of a government guarantee, ensuring that we avoid the private gains and public losses of the past system. Housing finance reform would establish clear rules, encourage the return of private capital, and end the outsized influence of Fannie and Freddie. It would implement a housing policy that is appropriately focused on accessibility and affordability and that effectively balances rental housing and homeownership. By far, the most important step the government can take to get housing back on the right track is to pass housing finance reform.

Passing housing finance reform legislation will take time. While that work proceeds, we cannot remain idle. We must take steps to resolve one of the most pressing problems — increasing access to affordable housing.

Whether you are renting or buying, finding affordable housing can be tough. If you have less than perfect credit and want to purchase, it is hard to get a loan.  Currently, the average credit score for loans backed by Fannie and Freddie is above 740. Yet 13 million Americans have scores ranging between 580 and 680 — too low to qualify for a government-backed loan through the government-sponsored enterprises. We also face a shortage of affordable rental housing. According to Harvard’s Joint Center for Housing Studies in 2012, roughly half of all renters spent at least 30 cents of every dollar on housing.

Helping Americans access affordable housing is a top priority for this administration. Through the efforts of the Federal Housing Administration (FHA) and our federal partners, we are hard at work on a number of significant initiatives aimed at increasing access. That is why we recently launched our “Blueprint for Access,” to increase access and affordability while maintaining positive momentum for he insurance fund. The “Blueprint for Access” is a series of policy changes intended to accomplish two things: expand the use of housing counseling and clarify quality assurance policies.

The housing counseling initiative, Homeowners Armed with Knowledge (HAWK), reduces premiums for first-time borrowers who engage in comprehensive housing counseling. On an FHA loan of $180,000, first-time homebuyers can save as much as $9,800 over the life of the loan. HAWK integrates housing counseling into the homebuying process, increasing affordability and enlarging the pool of informed borrowers.

The FHA and the Treasury Department have joined forces to increase the availability of affordable rental housing. Under this partnership, the Federal Financing Bank (FFB) will finance loans in the FHA’s multifamily risk-share programs. This new partnership will provide a source of long-term capital for multifamily housing at rates significantly below those in the tax-exempt bond market.

Cheaper financing costs will stimulate the creation and preservation of more affordable multifamily housing.

At the same time, the Treasury Department is initiating an effort to facilitate the return of the private label securities market, and the independent Federal Housing Finance Agency has taken steps to reduce uncertainty around re-purchase risk. All of these policies have a common goal: identify and remove obstacles to accessing affordable housing.

Taken together, these efforts will support the housing market by increasing access to mortgage credit and increasing the supply of affordable rental housing. But, none of these is a singular cure. Getting back to normal will take all of this and more. In the end even though we can make a difference piece-by-piece, a comprehensive solution, like housing finance reform, would be a whole lot more effective.

Galante is assistant secretary for Housing and Federal Housing Administration Commissioner.