FHFA Director Appears before House Committee
On Tuesday, January 26, the director of the Federal Housing Finance Agency (FHFA) Melvin Watt appeared before the House Financial Services Committee to deliver a report on the Agency’s recent activities and outlook for 2015.
The chairman of the committee, Jeb Hensarling (R-TX), used his opening remarks to criticize the Agency and the federal government’s overall role in the housing market: “Within the last 12 months, the FHFA has announced 3 different policies which are harmful to transferring us to a sustainable housing finance system that protects both homeowners and taxpayers”, he began, “…most recently, FHFA has announced it will begin siphoning off taxpayer funds from Fannie and Freddie in order to begin filling government housing slush funds.” Here Chairman Hensarling is referencing the FHFA’s recent announcement that it will begin to fund the Housing Trust Fund (HTF).
The Housing Trust Fund was established in the Housing and Economic Recovery Act of 2008 (HERA) with the purpose of increasing the supply of affordable housing for low-income families by providing grants directly to states for development and preservation of multifamily properties. It was intended to be funded by Fannie Mae and Freddie Mac. When these two government sponsored enterprises (GSEs) were placed into conservatorship by the U.S. Treasury in September of 2008, contributions were suspended.
The announcement that the GSEs will begin to fund the HTF has angered several Republicans sitting on the House Financial Services Committee, especially Ed Royce (R-CA). Representative Royce stated: “In December you announced that the GSEs should begin to put more money into the coffers of housing advocacy groups through the HTF and you made this move despite this move that Fannie and Freddie have not paid back a lot of the money due to the American people.” He then cited the statue from HERA in which the FHFA is required to suspend allocations to the HTF if such payments would:
- Contribute to the financial instability of the GSEs;
- Cause the GSES to be under-capitalized; or
- Prevent the GSEs from successfully completing a capital restoration plan.
Representative Royce highlighted that the GSEs are still undercapitalized and asked about these mandates with regards to the FHFA’s decision to fund the HTF. Director Watt noted that there are several prudential stops that would end funding for the HTF should the FHFA need to draw from Treasury reserves.
Ranking Member Maxine Waters (D-CA) was much more optimistic about the allocation of funds to the HTF. In her opening statement she said “the FHFA has finally abided by another statutory mandate to fund the HTF. This one action will help improve the availability and affordability of rental housing.” Representative Waters has been a strong supporter of the HTF, and worked to authorize it during the debate on HERA.
Many of the other questions Watt faced were focused on the single family aspect of the housing finance market. But his written testimony outlines the Agency’s actions for the affordable multifamily rental housing market:
“Continuing to support affordable rental housing is also an ongoing priority for FHFA and the Enterprises… FHFA’s 2015 Conservatorship Scorecard requires each Enterprise to continue multifamily purchases, but not to exceed a volume cap of $30 billion each for these purchases. This continues the approach taken in the 2014 Conservatorship Scorecard. FHFA has also continued to emphasize the Enterprises’ critical role in the affordable rental housing market by allowing the Enterprises to provide financing for affordable multifamily properties beyond the volume cap. Through this approach, the focus is to support the financing of affordable housing and the housing needs of people in rural and other underserved areas, including areas that rely heavily on manufactured housing.”
Director Watt’s written testimony also touched on the affordable housing goals of the GSEs. In August of 2014, the FHFA issued a proposed rule which raised questions for public comment about how best to set Fannie Mae and Freddie Mac’s housing goals to encourage responsible lending. According to Watt’s testimony, the FHFA is in the process of evaluating comments submitted to the agency and finalizing the rule.
HUD recently issued its own rule which establishes the regulations that will govern the HTF and the formula that will determine how HTF funds are distributed among eligible grantees.
To view Director Watt’s testimony, please
click here
To watch an archived webcast of this hearing, please
click here
Legislation would Bar Funding for The Housing Trust Fund
On Wednesday, January 28, Representative Ed Royce (R-CA) introduced the Pay Back the Taxpayers Act of 2015 (H.R. 574), a bill which would prevent Government-Sponsored Enterprises Fannie Mae and Freddie Mac (the GSEs) from directing funds to the Housing Trust Fund and the Capital Magnet Fund. Representative Edward Royce (R-CA) has been a strong opponent of the Trust Fund, and mentioned his intent to introduce this bill during Tuesday’s hearing.
During the first round of appropriations discussions in the 113
th Congress, Representative Royce submitted an amendment that would have prohibited the use of funds in H.R. 4745, the House appropriations omnibus, for the Housing Trust Fund. While H.R. 4745 was never passed, Representative Royce has not been dissuaded in his attempts to prevent allocations to the Housing Trust Fund: “Coupled with the recent decision by the FHA to reduce mortgage premiums, it appears that the Administration is taking us in the complete wrong direction when it comes to stabilizing housing markets. The Pay Back the Taxpayers Act will preempt payments from the GSEs to housing advocacy groups and instead reroutes them where they belong: with the taxpayers” he said in a press release after Mel Watts testimony to the House Financial Services Committee.
H.R. 574 currently has 12 cosponsors.
To read the text of H.R. 574, please
click here
To read Representative Royce’s press release on this bill, please
click here
President’s Budget will be released on Monday
The Obama Administration’s budget request for fiscal year 2016 will be made public on February 2, 2015. Upon release of the budget, NAHMA will be sending a grassroots action alert asking NAHMA members to contact their elected officials regarding the Project-Based Section 8 request. The Administration’s budget request is critical because it serves as a framework for Congress to compare and complete its own budget, and it also serves as a set of policy recommendations for the upcoming fiscal year.
NAHMA will also be hosting two conference calls outlining our request to Congress and how best to contact your elected officials. These calls will be hosted on February 18 and 20. More information will be distributed as the call dates approach. For a head start, please visit
NAHMA Maps to find your lawmakers; you may also use this recently published
NAHMAnalysis which outlines the leadership and member roster for the Congressional committees and subcommittees with oversight of affordable housing programs.
