The House of Representatives passed two bills in early March that supporters hope will encourage affordable housing development. HR 4351, the Yes in My Backyard (YIMBY) Act and HR 5931, the Improving FHA Support for Small Dollar Mortgages Act, both passed the House on voice vote with bi-partisan support and have been forwarded to the Senate for consideration.
The YIMBY Act provides incentives to local governments, through their grant making powers, to encourage the adoption of policies which ease restrictions that discourage affordable housing. The Act rewards governments for enacting policies which:
- Establish bonuses for higher density;
- Loosen/eliminate residential height limitations;
- Enable higher density and mixed income communities through the use of tax abatements; and
- Allowing for the donation of vacant land to be utilized for the development of affordable housing.
The Urban Institute conducted a study which found that small dollar mortgage approvals are denied at a disproportionate rate. This denial rate could not be justified by the credit profile of the applicants. The study concluded that lenders’ risk aversion to small donor loans since the financial crisis was a primary reason. The Improving FHA Support for Small Dollar Mortgage Act seeks to correct this disparity. The Act directs the FHA to examine its single-family mortgage policies and identify barriers that restrict access to mortgages of $70,000 or less.
These two bills, when enacted and implemented, should encourage the development of affordable housing and access to loans. Overcoming governmental and institutional barriers and bias is perhaps the greatest obstacle that affordable housing faces. These bills are but small steps in breaking the barriers down.