The Conference of State Bank Supervisors (CSBS) and the Federal Housing Finance Agency (FHFA) have signed onto a memorandum of understanding to formally share information between each other related to nonbank mortgage companies.

“The [MOU] establishes substantive information sharing protocols between state financial regulators and FHFA, improving the ability to coordinate on market developments, identify and mitigate risks, and ultimately, further protect consumers, taxpayers, and the nation’s housing finance system,” a joint announcement from CSBS and FHFA said.

The agreement, signed on Tuesday, is significant due to the regulatory roles of both bodies. CSBS is a conference of the primary regulators of nonbank mortgage companies at the state level, while FHFA is both regulator and conservator to the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, the most important counterparties for nonbank mortgage entities.

“While each supervisory agency maintains specific authorities related to the mortgage industry, only state financial regulators have complete prudential authority over nonbank mortgage companies,” the joint announcement said.

The MOU should lead to a more collaborative relationship between CSBS entities and FHFA according to Lise Kruse, North Dakota’s commissioner for financial institutions and CSBS board chair.

“Information sharing between state regulators and federal supervisors is common sense given our shared interest in a vibrant, stable mortgage marketplace,” Kruse said. “Establishing information sharing opens the door to a more collaborative oversight process that is beneficial to all involved.”

The MOU is seen as an important step for maintaining oversight over all the involved entities according to Sandra Thompson, the director of FHFA.

“The development of an information sharing framework is an important milestone that will better equip both FHFA and state regulators to oversee our respective regulated entities,” Thompson said. “Improved communication leads to better coordination, which in turn leads to better outcomes for consumers, market participants, and taxpayers.”

CSBS entered into a nondepository-focused MOU with the Consumer Financial Protection Bureau (CFPB) in 2011 which covers all 50 states, the District of Columbia and Puerto Rico. It also entered into a similar MOU with the U.S. Department of Housing and Urban Development (HUD) in 2013.

FHFA also routinely collaborates on information sharing with the CFPB through multiple MOUs, and entered into a formal MOU with HUD overseeing the GSEs in 2021 signed between Thompson and Former HUD Secretary Marcia Fudge with a focus on fair housing enforcement.

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Affordability has been a chief topic of concern in the housing industry for the past several years, and the lack of affordable options in the state of Colorado is pushing that state’s school districts into action.

Leaders in Colorado districts are entering the housing market in a variety of ways, including engaging in partnerships with developers, constructing tiny homes and even becoming landlords, according to a story published by the Denver Post.

Getting more involved in housing

“School districts in Colorado’s pricey high country are leading such efforts, but at least one metro Denver district — the Douglas County School District — is eyeing a partnership with developers to turn district land into housing for its employees,” the story explained. 

Leaders in other counties explain why the move is necessary: raising teacher salaries doesn’t work since funding for the state’s K-12 programs doesn’t allow for wages to rise commensurately with housing costs, necessitating more affordable options for housing.

“We’re solving for an issue that is much more systematic,” said Tony Byrd, superintendent of the Summit School District serving the micropolitan area of Breckenridge, in an interview with the Denver Post. “Frankly, the cost of living vs. wages makes it such that if we are going to staff our schools… for many districts we have to jump in and do it.”

An expensive noncoastal market

According to data from real estate research firm Zonda, Colorado stands as one of the most expensive non-coastal housing markets in the United States.

“Potential buyers in expensive noncoastal markets, but also in many metros across the country, have had to get creative to find paths to homeownership,” said Ali Wolf, chief economist at Zonda in October. “Those looking to buy are considering their options such as buying a smaller home, moving farther from a central business district, stretching their budget, looking for creative financing, and even uprooting their lives and moving to a more affordable market elsewhere in the country.”

The state is also experiencing a shortfall of housing inventory, as is the case with many major housing markets across the country. Rents also remain challenging according to data the Post cites from Zillow. On the extreme high end, median rent in Aspen is $35,000 according to recent estimates. But all the ski towns have an affordability issue.

“In Frisco, the median rent is $5,500 and in Breckenridge it’s about $6,000. By comparison, the median rent in Denver is $2,169, according to Zillow,” the report said.

Traditional methods aren’t enough

Leaders have turned to more traditional means for increasing teacher salaries, including local levies asking voters for a tax increase to fund additional salary increases or district investments. While some of these have worked, they still often fail to unlock enough additional funding to offset the increases in housing costs.

The state’s Douglas County, which is part of the Denver-Aurora-Lakewood metropolitan statistical area, recently saw voters approve a tax levy that would increase teacher salaries by an estimated 9.2%.

“Even then, our starting salary will be about $50,000 and you just can’t live in Douglas County for $50,000,” Douglas County School District Superintendent Erin Kane told the Denver Post.

The district is now exploring “using some of our district land and partnering with developers to potentially do housing that would be inexpensive for our teachers and staff to access,” Kaine told the outlet.

The actions of these districts in Colorado is not unprecedented. Earlier this year, a district in the state of Florida began exploring a similar measure to bring in more teachers, one that would see a former junior high school in St. Petersburg, Fla. being targeted for redevelopment into an affordable housing apartment complex.

Read the rest of the Denver Post article here.

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