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April 2024 ยป thefivestar.com 31 April 2024 C O V E R S T O R Y ship accessibility for low-to-moderate income and first-time homebuyers. However, while a subset of the tax credits and subsidies outlined in the proposals require congressional approval and enjoy bi-partisan support, we do not see a serious legislative effort occurring until Q2 of 2025 at the earliest." Carroll also noted that clients of CoreLogic had expressed one other area of concern with the proposal: the need for federal guarantees for construction loan financing. And particularly, Carroll noted, "for single-family starter homes that too often lack adequate collateral, to help scale homeownership opportunity." A statement from the National Multifamily Housing Council (NMHC) also found elements both to praise and to critique in Biden's SotU outline. In par- ticular, the NMHC gave the thumbs up to Biden's Housing Supply Action Plan, which, it said, "demonstrates a focus on increasing housing supply, including support for expansion of the Low-In- come Housing Tax Credit and the newly announced additional Federal invest- ments in increasing housing supply." However, the group expressed disappointment that Biden's administra- tion had "chosen to focus on creating a heightened regulatory regime that will reduce consumer choice by limiting fee for service arrangements." It cited research co-conducted by the Hoyt Advi- sory Services and Eigen10 Advisors, LLC, which found that the United States will need to build 4.3 million more apart- ments by 2035 to keep up with rental housing demand projections. At the same time, "research conducted by the National Association of Home Builders (NAHB) and NMHC found that regula- tions imposed by all levels of government account for an average of 40.6% of multi- family development costs." Rood also noted that the administration's "pilot to reduce the instances and expenses associated with some title insurance policies is evidence of their willingness to take on sacred cows to accomplish its goals of reducing costs to consumers." However, he also cautions that a change to title insurance requirement "certainly will not make title insurance go away, as lenders are unlikely to take added rep/warranty risks lightly." Spotser also noted one other pain point that needs to be addressed: "Technically, to get an FHA loan with a 3.5% down payment, you need a 580 credit score," she explained. "The average loan being issued for FHA is well above 680, which is a very different credit tier. So, we need to be able to figure out how to responsibly provide access within the full range of creditworthy borrowers." What Else Needs to be Done? R ood also noted one area he would like to see the administration address is the current record-high costs to originate a mortgage. "When I was an officer at Fan- nie Mae in the 2000s, we had an initiative to reduce origination costs down to $2,000 from $2,500 at that time," Rood recalled. "Fast-forward 20 years, and the cost to orig- inate is over $12,000! It takes fewer labor hours to assemble an F-150 than it does to originate and close a mortgage. The high costs and low volume mean that an originator is often losing money on nearly every loan they close in this market." Rood added that these high origina- tion costs also put the notion of "junk fees" into a different perspective. "I can assure you the lenders need the money, and the fees are most certainly not 'junk.' A review of the cost-benefit analysis of rules and regulations put in place over the last 15 years at least will likely reveal some meaningful opportunities to lower costs for everyone." CoreLogic's Carroll also targeted the origination costs as a particular pain point, noting that median closing costs for low-income homebuyers have increased from roughly $3,900 in 2018 to $5,100 in 2022, amounting to a 31% increase. "Because most closing costs, particularly those the consumer cannot