Housing Finance Agency seeks funds to expand loan-servicing staff, move homeless grants into HIF and boost housing incentives

The Appropriations - Education and Environment Division heard a detailed presentation from North Dakota Housing Finance Agency officials about rapid growth in loan servicing, the agency’s request for additional staff funded from agency earnings, and a push for larger Housing Incentive Fund and homeless-grant appropriations.

Agency leaders summarized growth and risk

Brandon Detloff, Homeownership Director at the agency, described how the agency issues mortgage revenue bonds, acquires loans from participating lenders and services those loans. "We issue mortgage revenue bonds," Detloff said, explaining the agency’s principal funding vehicle for homeownership programs. He told the committee that the agency has 55 participating lenders and that production has increased: the agency funded 1,982 loans last year and sold a little over $500 million in mortgage revenue bonds.

The agency noted its portfolio-servicing workload has increased and now exceeds typical industry servicing ratios. The Mortgage Bankers Association benchmark cited by agency staff was about 835 loans per FTE in 2024; agency staff said their servicing is about 1,031 loans per FTE and projected they will be short three FTEs by the end of the 2027 biennium and five FTEs under projected growth. Brandon said the agency is requesting positions to close those gaps; the agency characterized the requested servicing and bond-accounting positions as funded entirely from agency earnings, not general fund dollars.

Requests for funds and program changes

Jennifer Henderson, Community Grants and Management Director, explained multifamily and homeless programs the agency administers and said the agency is requesting a $40 million appropriation for the Housing Incentive Fund (HIF) and a $10 million appropriation for the North Dakota homeless grant. Henderson said the agency proposes transferring homeless-grant funding into HIF because HIF is an eligible vehicle for those grants and because HIF already has reporting and audit procedures that the Legislature reviews.

Agency officials reiterated a request for additional FTEs. Brandon said two servicing positions were included in the governor’s recommendation and the agency requested two more servicing-related positions plus a senior bond accountant and a business analyst to support their proprietary loan-servicing platform and complex bond accounting.

Impact, priorities and needs assessment

Agency staff highlighted that lower-than-market interest rates on agency loans produce measurable household savings. The agency estimated that their below-market rate in 2024 returned about $4.3 million to borrowers statewide; since 2020 the below-market differential equated to about $14.6 million. Brandon described downstream economic effects tied to home purchases and said a recent North Dakota State University update to the housing needs assessment suggested the state could need up to 20,000 housing units by the end of 2027.

No formal committee action

Committee members asked several technical questions about FTE counts, potential penalties if servicing work is mishandled (the agency noted FHA audits can require reimbursement and suspension of servicing authority if regulatory obligations are not met), and how agency-paid FTEs would be funded. Lawmakers did not take formal votes during the meeting; the agency will return materials and answer follow-up questions as requested by the committee.

Ending note

Agency leaders said their program activity and loan-servicing responsibilities are expanding and asked the Legislature to consider additional HIF and homeless-grant funding and agency-funded FTEs to maintain servicing quality and keep offering below-market financing to North Dakota homebuyers.