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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 64 January 2025 J O U R N A L Borrower Outcome Highlights • The borrower outcomes in the report are based on 165,643 NPLs since the program began in 2014 that were settled by December 31, 2023, and reported as of June 30, 2024. • NPLs that were sold during the life of the program have resulted in fewer foreclosures as compared to similarly delinquent GSE NPLs that were not sold. • Of the NPL sales on borrower-oc- cupied homes, 47% have resulted in foreclosure avoidance, which exceeded the rates for both non-bor- rower-occupied (44.7%) and vacant (17.7%). • NPLs on vacant homes have had a much higher rate of foreclosure (75.7%) than on borrower-occupied properties (28.9%) and non-borrow- er-occupied properties (31.8%). Fore- closures on vacant homes typically improve neighborhood stability and reduce blight as the homes are sold or rented to new occupants. • The average UPB of NPLs sold was $183,055. STATES PUSHING SHARED HOUSING REFORMS TO TACKLE AFFORDABILITY A wave of reforms is sweeping across the United States as states adopt legislation to expand shared housing opportunities, aiming to combat rising rents and hous- ing shortages. Historically prevalent in the United States, shared housing declined over the past 70 years due to increasingly restrictive zoning laws. Now, states are reversing this trend with laws that foster affordability and new housing models. Key Developments • In 2024, Colorado, Hawaii, and Washington joined the growing list of states addressing affordability through shared housing legislation. • Microunits in Hawaii and Wash- ington: Both states passed laws requiring local governments to allow microunits—low-cost hous- ing arrangements where residents have private rooms but share common facilities such as kitchens and bathrooms. These laws mirror Oregon's 2023 legislation support- ing microunits. • Colorado's "Golden Girls" Law: Col- orado became the third state, after Iowa in 2017 and Oregon in 2021, to eliminate restrictions on the num- ber of unrelated individuals who can live together in a single home. These reforms ref lect different ap- proaches to fostering affordable shared housing while addressing the unique needs of each state. Microunits: A Cost-Effective Hous- ing Solution Microunits, long restricted by local zoning laws, are gaining traction as a practical way to expand affordable hous- ing options. In Washington, where rents climbed 42% between 2017 and 2023, H.B. 1998 was passed with bipartisan support. The law authorizes microunits in urban areas, potentially generating at least 2,400 low-cost units annually. It also complements H.B. 1042, a 2023 law permitting office-to-residential conver- sions statewide. A Pew Charitable Trusts and Gens- ler study highlighted the financial ben- efits of microunits. Converting an office building in downtown Seattle into microunits with shared facilities would cost $190,000 per unit, compared to $400,000 for a traditional studio apartment. Rents for microunits would average $1,000 per month, significantly lower than the $1,530 monthly cost of a studio in the same area. Hawaii has embraced similar mea- sures. In Oahu, where 13% of offices are vacant, H.B. 2090 allows these spaces to be converted into microunits, easing the state's housing crisis. By reducing parking mandates for these projects, Hawaii makes such developments more financially feasible. Oregon also aims to leverage microunits to meet its am- bitious goal of adding 360,000 housing units by 2033. House Sharing: A Growing Move- ment Colorado's H.B. 1007 removes limits on the number of unrelated people who can share a home, expanding housing options statewide. Cities like Denver had already implemented similar policies, but the law now applies to cities such as Fort Collins and Littleton, where previous regulations allowed only three unrelated individuals per household. Iowa's 2017 law, which prohibits cities from restricting shared housing based on familial relationships, served as a model for Colorado. Oregon followed this trend in 2021. However, restrictive laws persist in some states. In Kansas, for example, a 2022 ordinance bans more than three un- related adults from cohabiting in a single property, a policy now facing a federal legal challenge. Final Thoughts With 22.4 million U.S. households spending 30% or more of their income on rent, shared housing offers an affordable alternative. Co-living pro- viders have already created thousands of rooms nationwide, with rents often far below local studio apartment costs. These housing models also address a mismatch between household sizes and the housing stock: while the median size of homes has grown, the number of people living in them has shrunk. New state laws in Colorado, Hawaii, and Washington signal a shift toward embracing shared housing. As more states follow their lead, millions of cost-burdened Americans could benefit from lower housing costs, and evidence suggests that homelessness would likely decline.