House Committee hearing discusses sustainable housing finance with FHFA Director
This week, the House Financial Services Committee heard testimony from Mel Watt, Director of the Federal Housing Finance Agency (FHFA), which oversees federal home loan banks and government-sponsored enterprises (GSEs). Former Congressman Watt discussed the future of Fannie Mae and Freddie Mac under federal conservatorship and called for reform ahead of a fiscal deadline at the end of this calendar year.
“I want to reiterate that these conservatorships are not sustainable and they need to end as soon as Congress can chart the way forward on housing finance reform,” testified Director Watt during the hearing. The GSEs, which have been under FHFA conservatorship since the 2008 financial crisis, have operated under a capital buffer requirement that is scheduled to expire at the end of 2017.
House Financial Services Committee Chairman Jeb Hensarling (R-TX) said in his opening remarks, “the GSEs are today as big as they were before the financial crisis. They represent a virtual government monopoly in housing finance that lacks meaningful competition or innovation. Taxpayers remain on the hook for $5.3 trillion. Underwriting standards are being eroded. I fear a number of the mistakes that led to the 2008 crisis are being repeated today. Clearly it is time – in fact it is well past time – for Congress to enact sustainable housing finance reform with private capital at its center. It is time to get off the boom, bust, bailout cycle.”
His democratic counterpart on the Committee, Ranking Member Maxine Waters (D-CA), agreed with the need for reform, but also highlighted the importance of credit access and other housing affordability measures: “The American people know what’s important in the housing finance reform debate: an explicit, paid-for government backstop, a mission to promote affordability, the 30-year fixed rate mortgage, a robust housing trust fund, strong federal oversight, support for the multifamily housing market, and equal market access for our community banks and credit unions.”
The Senate has also held recent hearings with Director Watt on housing finance reform, but consensus is unlikely to come easy in either Chamber. A recording of this week’s hearing is available
here.
President nominates Assistant Secretary for Public and Indian Housing
The President has announced the nomination of Robert Hunter Kurtz of Virginia to be HUD’s Assistant Secretary for Public and Indian Housing. Kurtz is currently serving as Deputy Chief of Staff for Policy and Programs at HUD and has housing policy experience at local and Federal levels dating back to the George W. Bush Administration.
Kurtz’s nomination has been received by the Senate Committee on Banking, Housing and Urban Affairs. So far, the Committee has approved five HUD nominees for consideration by the full Senate, four of whom have been confirmed.
Trump Administration Proposes Debt Relief and Reforms to Flood Insurance Program
On October 5, The Trump Administration requested that Congress cancel a share of the National Flood Insurance Program’s (NFIP) debt. In addition to the debt forgiveness, the Administration proposed several reforms to NFIP for Congress to enact. The reforms aim to improve NFIP future solvency, maintain affordability for low-income individuals, and boost private participation in the flood insurance market.
The reforms and debt cancelling are highlighted in a
letter to the Senate from Mick Mulvaney, the Director of the Office of Budget and Management (OMB). There is no guarantee that Congress will consider the Administration’s request. The current authorization for NFIP was temporarily extended until December 8, 2017, and Congress is currently examining proposals in both the House and Senate to reform and reauthorize NFIP for another five years.
Bipartisan Group of Senators introduce Lead-Safe Housing for Kids Act of 2017
In late September, a group of bipartisan Senators introduced legislation to protect children in federally-assisted housing from lead exposure. The Lead-Safe Housing for Kids Act of 2017 would require HUD to adopt prevention measures and update its lead regulations to protect against lead exposure, which disproportionately affects the health of children. The bill would update HUD requirements to complement the agency’s rule on lead-safe housing finalized earlier this year.
Specifically,
S. 1845 prohibits the use of visual assessments for low-income housing constructed prior to 1978 (when lead was phased out of most paints) and requires the use of risk assessments to identify lead hazards before a family moves into the home; provides a process for families to relocate on an emergency basis, without penalty or loss of assistance, if a lead hazard is identified in the home and the landlord fails to control the hazard within 30 days of being notified; and requires landlords to disclose the presence of lead if hazards are found in the home.
The bipartisan legislation, sponsored by Senator Richard Durbin (D-IL), was referred to the Senate Committee on Banking, Housing, and Urban Affairs and has gained 5 cosponsors. Currently, no similar bill has been introduced in the House of Representatives.
