Sherrod Brown Leads Senate Banking & Housing Committee Hearing On Oversight Of Housing Regulators

8 months ago

On Thursday, the Senate Banking, Housing & Urban Affairs Committee held a hearing entitled, “Oversight of Federal Housing Regulators.”

Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:

https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript

Stay Connected
Forbes on Facebook: http://fb.com/forbes
Forbes Video on Twitter: http://www.twitter.com/forbes
Forbes Video on Instagram: http://instagram.com/forbes
More From Forbes: http://forbes.com

Transcript

00:00:00The Committee on Banking, Housing, and Urban Affairs is called to order.

00:00:05Thanks for the two witnesses joining us.

00:00:07Home is a lot more than four walls and a roof.

00:00:10Home is where you go after a long day at work.

00:00:13Home is where your kids play and do their homework.

00:00:15Home is where you plan for the future and build wealth.

00:00:18Home is how millions of families join the middle class.

00:00:22Our homes are an anchor in our lives, but for too many families around the country,

00:00:26a home they can afford and build their life around just feels out of reach.

00:00:32I hear it in Ohio everywhere.

00:00:33I hear it from people in Lima City, similar to where I grew up in Mansfield,

00:00:38where a new building with 54 apartments for working families just opened.

00:00:42For those 54 apartments, they had 511 interested families.

00:00:47I hear it from rural Washington County in Southeast Ohio, Marietta, Belpre,

00:00:51Churchtown, where they've struggled for years to build 48 homes for seniors.

00:00:56I hear it in Franklin County in Central Ohio, Columbus,

00:00:59where the population's grown by 14% to more than 1.3 million people,

00:01:05but housing supply hasn't kept up, and prices have been rising for years and years.

00:01:11With more people, with not enough homes, 40% of renters in this country

00:01:15are paying more than they can afford for housing.

00:01:18And that county, with its world-class schools, its skilled workforce,

00:01:21its great quality of life, will only continue to grow.

00:01:25I hear these stories from across Ohio.

00:01:27It's not just happening in Ohio.

00:01:30Whether you're in downtown Columbus or Minneapolis,

00:01:33or rural South Dakota or Wyoming or South Carolina,

00:01:36the problem's the same.

00:01:37Housing is too expensive.

00:01:39It has been for years.

00:01:40It's been for far too long.

00:01:42One big reason is we don't have enough of it.

00:01:44For the past decade, rent has gone up and up and up.

00:01:49One in four renters pay more than half their income for rent.

00:01:53And when more than half of your income goes to rent every month,

00:01:56it's hard to juggle all the bills you already have,

00:01:58let alone save for a down payment.

00:02:01High rent stops people from becoming homeowners.

00:02:04So many families think, if only I could come up with the down payment.

00:02:08The money for a down payment is what stands between millions of Americans

00:02:12that dream of home ownership and building generational wealth.

00:02:16That's why my bill to support first-generation homebuyers,

00:02:19the Down Payment Toward Equity Act with Senator Warnock,

00:02:23and the Helper Act aimed specifically at the Down Payment Toward Equity Act

00:02:29is broader, the Helper Act for teachers, firefighters, and police officers

00:02:35to allow them to buy homes in their communities

00:02:37and other sources of down payment assistance.

00:02:39All of that is so important.

00:02:41Secretary Todman, Director Thompson, you know these challenges

00:02:44because your agencies are at the center of our efforts

00:02:48to lower the cost of housing.

00:02:50Your agencies don't build housing,

00:02:52but you're on the front lines of our housing markets.

00:02:55Your job is to make sure there's affordable financing

00:02:58for the housing that builders and housing providers create,

00:03:01that families can get a mortgage to buy their first home,

00:03:04and that as Americans get older,

00:03:06they can still live safely in their homes.

00:03:09And both of your agencies have announced changes

00:03:11that should help increase housing supply and bring down costs.

00:03:15Following calls from Senator Reid and me and others,

00:03:18HUD acted to improve access to financing for affordable rental housing

00:03:22through FHA and the Federal Financing Bank.

00:03:25This will help housing providers in states build and preserve

00:03:28more affordable housing for renters across the country.

00:03:31HUD's long overdue update to loan limits for manufactured housing,

00:03:35its new guidance to support conversion of old office space into homes

00:03:39will open up new housing options, especially in cities like Cleveland.

00:03:44At FHFA, you've eliminated upfront fees

00:03:47that Fannie and Freddie have in the past,

00:03:49charged lower-income first-time home buyers and borrowers

00:03:52who couldn't afford a big down payment to begin with.

00:03:55You've also refocused Fannie and Freddie

00:03:57and the Federal Home Loan Banks on their roles,

00:04:00not just in financial markets,

00:04:01but in helping to support housing that families and communities need.

00:04:05But the fact remains, housing prices are still far too high.

00:04:09They have been for years and years.

00:04:11It will take all of us working together,

00:04:13housing providers, federal, state, and local governments,

00:04:16to lower costs.

00:04:17HUD and FHFA need to do more to be vigilant

00:04:20in ensuring that taxpayer money is actually serving families,

00:04:24not enriching shady landlords and wealthy investors.

00:04:27In Ohio and around the country,

00:04:30Wall Street firms and other outside investors

00:04:33swoop into communities, they buy up properties,

00:04:35they evict tenants, they drive up local housing prices.

00:04:38We should pass my Stop Predatory Investing Act

00:04:41to end their tax breaks for buying up

00:04:45numbers of single-family homes.

00:04:47We need to ensure that all our housing agencies

00:04:49are on the same page and working to stop,

00:04:51not in any way, supporting this predatory business model.

00:04:55State and local governments have a lot of influence

00:04:57over the housing of their communities,

00:04:59and more and more cities and counties

00:05:00are making changes like updates to zoning,

00:05:03like shortening lengthy approval processes

00:05:06to open up opportunities for new housing

00:05:10and expand access to affordable home ownership.

00:05:13HUD is a critical partner in supporting that work.

00:05:16Earlier this year,

00:05:17Franklin County Commissioner Kevin Boyce

00:05:20testified in the Senate on behalf

00:05:22of the National Association of Counties

00:05:24about their critical role that HOME, CDBG,

00:05:26and the Housing Trust Fund play in helping counties

00:05:29of every size to address housing needs.

00:05:31Local communities depend on this partnership.

00:05:34And even with more housing,

00:05:36some families working low-wage jobs

00:05:38and some seniors on fixed income still won't make enough.

00:05:41They can't hear the room.

00:05:43Sorry.

00:05:45Was that, okay.

00:05:47Sorry, okay.

00:05:48HUD's housing assistance programs

00:05:50are critical to keep rent affordable.

00:05:52I didn't think that was you.

00:05:53You've never done that, so.

00:05:54Okay.

00:05:55Okay.

00:05:56Okay.

00:05:57Okay.

00:05:58Okay.

00:05:59Well done.

00:06:01I'm almost done, Senator Scott.

00:06:05Take your time, Mr. Chairman.

00:06:07HUD needs to make sure they work effectively and efficiently

00:06:10to serve our communities and protect our investments.

00:06:13Congress needs to do our part.

00:06:15Last month, this committee had a hearing

00:06:16on legislative proposals to help expand our housing supply

00:06:20and bring down the cost of housing.

00:06:21We must continue our bipartisan work

00:06:24to move forward common-sense proposals

00:06:26that will help expand housing options and reduce costs.

00:06:30I look forward to continue to work

00:06:32with Ranking Member Scott on this committee

00:06:33toward that goal.

00:06:35I look forward to hearing today

00:06:36from the two leaders before us about what they have done,

00:06:39what more they can do, what resources they need

00:06:43to get their input on what Congress can do

00:06:45to make housing more affordable for renters

00:06:48and for homeowners.

00:06:49Ranking Member Scott.

00:06:50Thank you, Mr. Chairman.

00:06:51Thank you both for being here.

00:06:52Acting Secretary, congratulations.

00:06:5430 days, a long time.

00:06:55So we expect you to be completely prepared

00:06:58for everything we're gonna talk about

00:06:59over the next couple of hours, likely.

00:07:02Thank you, Mr. Chairman, for holding this hearing.

00:07:05I've been asking for about a year

00:07:06to have both of you in front of us,

00:07:08so it's certainly something

00:07:10that I think is absolutely essential for us

00:07:11to be able to hear from our regulators

00:07:13as often as possible to achieve the goal

00:07:15of American homeownership,

00:07:17because American homeownership is not just home ownership.

00:07:20It is, in fact, in the eyes of so many Americans,

00:07:23the American dream.

00:07:24If we're gonna close the wealth gap

00:07:26that we talk so much about, that is so persistent,

00:07:29one of the ways that you do that is by creating equity,

00:07:32and creating equity really comes from homeownership

00:07:35as much as it does any other place in our economy.

00:07:37So thank you both for being here.

00:07:40If you think about the value of homeownership,

00:07:44consistently, Americans owe somewhere around

00:07:47a little bit more than $12 trillion on their mortgages.

00:07:51Mortgage debt accounts for about 70 plus percent

00:07:54of consumer debt in the United States of America.

00:07:57Not an insignificant amount of money.

00:08:00And yet, the last time we had this hearing

00:08:02was back during the Trump years

00:08:05when Chairman Crapo was chairman of this committee.

00:08:07So I certainly hope that we have more opportunities

00:08:10to hear from both of you at the same time going forward.

00:08:14The American dream of homeownership

00:08:16is further out of reach today

00:08:18than it was just a few years ago.

00:08:20Despite all the subsidies, all the trillions of dollars

00:08:22we've spent over the decades, little has changed.

00:08:25In 1970, homeownership rate in America was 64%.

00:08:30Today, it's 65%.

00:08:32Since the passage of the Fair Housing Act in 1968,

00:08:37that was, the goal was to eliminate housing discrimination.

00:08:41The homeownership rate for African Americans

00:08:44hasn't changed much, 41 some odd times, 44% today.

00:08:49It just continues to have a very slow growth trajectory.

00:08:53Our housing regulators must testify more often

00:08:56so that we can find ways to deal with the challenges

00:08:59that housing presents to so many Americans.

00:09:03Since President Biden has taken office,

00:09:07mortgage rates have ballooned by 150%.

00:09:11Rents have gone up about 20%.

00:09:13Homelessness is up 12% in a single year,

00:09:16the highest number on record in the history of our country.

00:09:21Despite empty promises from the White House

00:09:24about helping working families,

00:09:25the simple fact is that housing costs

00:09:27under this administration has skyrocketed.

00:09:30I see that at home in South Carolina,

00:09:32and frankly, I see that across the nation as I travel.

00:09:35I see that in families worried about how to make ends meet,

00:09:38and watching the dream of homeownership

00:09:40seems to slip further and further and further away.

00:09:45What has become apparent is that this administration's

00:09:48platitudes about affordability and housing

00:09:52has failed to line up with their policies.

00:09:54Reckless spending on progressive wish lists

00:09:57fueled runaway inflation,

00:09:59and now Americans are painfully aware

00:10:02that Bidenomics has not helped them,

00:10:04instead burdening them so much.

00:10:08The mountains of red tape and regulations

00:10:11this administration has put on housing providers

00:10:15are only making the matter so much worse.

00:10:18Additionally, both HUD and FHFA

00:10:21have taken several politicized actions

00:10:23that will unnecessarily increase the costs

00:10:26for families and burdened communities.

00:10:29HUD recently imposed rent controls

00:10:32on low-income housing tax credit properties,

00:10:34and FHFA is asking for public comments on policies,

00:10:37including rent control,

00:10:39following direction from the White House.

00:10:42But what do these policies mean in practice?

00:10:45They have the potential to limit the number of people

00:10:49served by these programs

00:10:51and restrict the supply of affordable housing.

00:10:55Decades of research have proven that rent control policies

00:10:58make housing supply and affordability issues worse,

00:11:03not better.

00:11:04But this is the type of backwards logic

00:11:06Americans have come to expect from Joe Biden and Bidenomics.

00:11:12Second, HUD unfortunately joined other federal agencies

00:11:17under this administration

00:11:18in attempting to add climate regulator

00:11:22to the list of the duties.

00:11:23For instance, HUD proposed requiring

00:11:26that all newly constructed subsidized housing

00:11:28be built to increased energy efficiency standards,

00:11:32even though HUD itself admits that lower-income households

00:11:36may not be able to afford the added burdens

00:11:40of additional costs.

00:11:42According to the National Association of Home Builders,

00:11:45these new environmental mandates

00:11:46could cost as much as $31,000 to each new home.

00:11:53So at the same time, a family is facing doubling

00:11:55and sometimes tripling food costs.

00:11:58In order to meet the green climate goals,

00:12:01this administration saddles them with an extra $31,000

00:12:06of additional expenses for a single home.

00:12:10Families and communities like the one I grew up in

00:12:13can't afford new climate costs

00:12:17that increases the cost of housing,

00:12:22which brings me to my last example.

00:12:24It appears this administration's weak-on-crime policies

00:12:27have also been embraced by our housing regulators.

00:12:29Last year, HUD proposed a rule encouraging cities

00:12:32supplying for federal funds to remove crime-free ordinances,

00:12:37local laws that keep rental communities safe

00:12:39by keeping out convicted criminals.

00:12:41Even worse, HUD proposed a rule last week

00:12:44that will make it easier for criminals

00:12:46to live in HUD-subsidized housing,

00:12:49which risks making communities less safe.

00:12:53We need to reverse course and take a different road

00:12:56when it comes to federal housing policy.

00:12:58That's why I announced housing

00:13:00as one of my top priorities for this year

00:13:02as a ranking member of this committee.

00:13:05And since our first hearing last April,

00:13:08I have focused my efforts on building consensus

00:13:11around the common-sense nonpartisan reforms

00:13:15to all segments of our housing market

00:13:17included in my Road to Housing Act.

00:13:20I continue to urge consideration

00:13:22of my Road to Housing Act,

00:13:24which takes a comprehensive view of federal housing policy

00:13:27and recenters support around families

00:13:30helping those who are homeless or renting

00:13:34or prepared to buy a house.

00:13:36It is past time to consider my legislation,

00:13:39along with other common-sense bipartisan proposals

00:13:43that would include real solutions

00:13:45to tackle housing challenges.

00:13:47I look forward to hearing from both of the witnesses today,

00:13:50and I look forward to having an eager conversation

00:13:53about some of the challenges that so many Americans face

00:13:56as it relates to building on their version

00:14:00of the American dream.

00:14:02Thanks, Senator Scott.

00:14:03Adrienne Todman, welcome, is the Acting Secretary of HUD.

00:14:06She was confirmed as Deputy Secretary in 2021.

00:14:10Prior to her service there,

00:14:12Acting Secretary Todman was CEO

00:14:13of the National Association of Housing

00:14:15and Redevelopment Officials,

00:14:16held multiple roles at the D.C. Housing Authority,

00:14:20and served in several career positions at HUD.

00:14:22Welcome back, Ms. Todman, nice to see you.

00:14:24Good to see you, thank you.

00:14:25Sandra Thompson was confirmed as Director of FHFA in 2022.

00:14:31Prior to leading that agency,

00:14:32she was the Deputy Director

00:14:34of the Division of Housing Mission and Goals

00:14:35from 2013 to 2021.

00:14:38Prior to joining FHFA, she spent 18 years at FDIC,

00:14:42where she held a number of senior-level positions,

00:14:45including Director of the Division of Risk Management

00:14:48and Supervision.

00:14:49Director Thompson, welcome back.

00:14:53Madam Acting Secretary, welcome.

00:14:56Thank you.

00:14:57Chairperson Brown, Ranking Member Scott,

00:14:59and distinguished members of the Senate Banking Committee,

00:15:02thank you for the opportunity to testify today

00:15:05on how the Department of Housing and Urban Development

00:15:07is executing on our mission.

00:15:10And I want to thank the over 8,000 HUD employees

00:15:13across the country who are helping us

00:15:15carry out that mission.

00:15:16First, let me say that the support of this committee

00:15:18is critical to ensuring that the American people

00:15:21have access to housing that they can afford

00:15:24in communities that are strong and resilient.

00:15:26So thank you for your continued efforts

00:15:28to lead and legislate on these issues.

00:15:31As you are aware, this is my fourth week

00:15:34serving as Acting Secretary.

00:15:36We are grateful for Secretary Fudge's

00:15:38extraordinary stewardship of the department

00:15:40during the last three years.

00:15:42Her North Star was ensuring that we centered our work

00:15:45on the people, and that star still shines brightly.

00:15:49Under the leadership of President Biden

00:15:51and Vice President Harris, HUD has made historic strides

00:15:54to improve outcomes for the people we serve.

00:15:57We have provided historic levels of rental assistance,

00:16:00expanded opportunities for home ownership,

00:16:02supported the creation of affordable homes

00:16:05to rent and to buy, supported resilient communities,

00:16:09worked to root out housing discrimination,

00:16:11and helped people who don't make a lot of money

00:16:14just get a fair shot.

00:16:16HUD's work and our resources are having a tremendous impact

00:16:19on people in every community,

00:16:21from big cities and small towns

00:16:23to rural areas and tribal nations.

00:16:26There were more apartments under construction in 2023

00:16:29than in any year on record,

00:16:31and we are working to build even more.

00:16:34HUD helps over 4 million households annually

00:16:37through our rental assistance programs.

00:16:39Under this administration, we have implemented

00:16:42a number of historic changes to ensure we serve more families

00:16:46and that we support more choice in today's market.

00:16:49In fact, in the past three years,

00:16:52HUD has provided families

00:16:53with 120,000 new incremental vouchers,

00:16:57and that's a 20-year record.

00:16:59Actions we have taken to promote home ownership

00:17:01and wealth building has resulted in a higher rate

00:17:04of first-time homebuyers

00:17:05than we have seen in the last two decades.

00:17:09Through FHA, we have supported nearly 1.8 million homeowners

00:17:13with purchase mortgages,

00:17:14including 1.5 million first-time homebuyers.

00:17:20Last year, we awarded the first-ever package of resources

00:17:23to specifically reach people experiencing homelessness

00:17:26in unsheltered settings and in rural communities,

00:17:30and we have taken seriously our charge

00:17:32to protect all people facing housing discrimination.

00:17:36With resources from the Inflation Reduction Act,

00:17:38we have provided communities with half a billion dollars so far

00:17:42to achieve energy efficiency and climate resiliency

00:17:45in our multifamily portfolio,

00:17:47and by doing so, we are also making much-needed repairs

00:17:50to units across the country.

00:17:52We have pulled together practitioners, experts,

00:17:55and thought leaders who are innovating and executing

00:17:58and researching new solutions.

00:18:00We've improved our hiring,

00:18:02and we've focused on executing on our IT and procurement goals,

00:18:05and we have had four clean audits in a row,

00:18:09and I'm particularly proud of this.

00:18:11I'm grateful for the work of this committee

00:18:14and the members of Congress

00:18:15who have worked to make resources available to us

00:18:18so we can carry out our very important work.

00:18:22We have made strides,

00:18:23but we acknowledge that there is more work to be done.

00:18:26As we look ahead, we recognize that HUD's mission is critical

00:18:30for the moms and dads who are still trying to make ends meet.

00:18:34It is critical for young families

00:18:35trying to buy their first home.

00:18:38It is critical for the people who may have lost a job

00:18:40and lost their home and are now unhoused

00:18:43and just need our help.

00:18:45It is critical to ensuring repairs

00:18:47are made in public housing,

00:18:49to removing health hazards in any home,

00:18:51and for preventing and remedying the impacts of discrimination.

00:18:56Senators, over the past two years,

00:18:58the executive branch has been executing

00:19:00on our housing supply action plan.

00:19:03It's an outcome-based collaborative effort

00:19:05across federal agencies and work that I am proud of.

00:19:09Housing is a priority for the Biden-Harris administration,

00:19:13and the president has put forward a vision

00:19:15that builds on our existing body of work,

00:19:19and HUD is prepared to do our part.

00:19:22Chairperson Brown, Ranking Member Scott,

00:19:24and distinguished members of the committee,

00:19:26I look forward to working with you.

00:19:28Thank you. I look forward to your questions.

00:19:31Thank you, Madam Secretary. Director Thompson, welcome.

00:19:34Chairman Brown, Ranking Member Scott,

00:19:36and distinguished members of the committee,

00:19:39I'm pleased to be with you today to discuss the work

00:19:42and priorities of the Federal Housing Finance Agency

00:19:46and the operations and activities

00:19:48of our regulated entities, Fannie Mae, Freddie Mac,

00:19:51and the Federal Home Loan Banks.

00:19:53Both renters and homebuyers face challenges

00:19:56in today's housing market.

00:19:58Inadequate housing supply,

00:20:00four years of strong home price growth,

00:20:03and elevated interest rates have contributed

00:20:05to a challenging environment for housing affordability.

00:20:09Homebuyers and renters alike face difficulties

00:20:12in finding a place they can afford to live.

00:20:15While housing affordability represents a national problem,

00:20:19the impact is most acutely felt in local communities.

00:20:23I've heard about these issues from working families

00:20:26in cities such as Philadelphia, Louisville, and Las Vegas,

00:20:30as well as in more rural areas in states

00:20:32such as Nebraska and Tennessee.

00:20:35I've heard about the need for more workforce housing,

00:20:38which enables teachers, first responders,

00:20:40construction workers, and municipal employees

00:20:43to live in the communities they serve.

00:20:46I've also heard about dual-income renter households

00:20:49that cannot build the savings for the down payment

00:20:52and closing costs on a home purchase.

00:20:55And I've heard about multi-generational families

00:20:57living in homes that are far too small just to make ends meet.

00:21:02While much of the ongoing discussion

00:21:04about housing affordability

00:21:05focuses on a consumer's monthly payments,

00:21:08closing costs also represent a substantial barrier

00:21:12to purchasing or refinancing a home.

00:21:14Recently, FHFA and the enterprises have been engaged

00:21:19in efforts to explore sustainable measures

00:21:22to reduce mortgage closing costs

00:21:24for both current and aspiring homeowners.

00:21:27Earlier this year, FHFA approved a title acceptance pilot

00:21:31as one component of that broader effort.

00:21:34This pilot seeks to evaluate whether technological advances

00:21:38and the electronic availability of real estate records

00:21:42can result in lower costs for borrowers

00:21:44who just want to refinance their mortgage.

00:21:47They already own their homes

00:21:48and will continue to reside in them.

00:21:51Appraisals are another important area

00:21:53in which the enterprises are taking steps

00:21:56to reduce costs for borrowers

00:21:57without compromising safety and soundness.

00:22:00The enterprises and the industry

00:22:02have developed several alternatives

00:22:04to traditional appraisals that address appraiser capacity,

00:22:08valuation changes, and shorten the process

00:22:12while promoting fair, equitable, and accurate appraisals.

00:22:16The equitable housing finance plans

00:22:18produced by Fannie Mae and Freddie Mac

00:22:20are another critical component

00:22:21of their mission-driven activities.

00:22:24Through initiatives developed under their plans,

00:22:27the enterprises supported almost 2 million families

00:22:29in their homeownership journey last year.

00:22:32Some of these initiatives

00:22:34include down payment assistance programs

00:22:36and the use of positive rental payment data

00:22:39for renters to establish or improve their credit scores.

00:22:43FHFA's oversight of the federal home loan bank system

00:22:47featured an important milestone last November.

00:22:50When the agency released a report

00:22:52following a year-long comprehensive review of the system,

00:22:56the report included 40 recommendations

00:22:58based on extensive engagement with stakeholders

00:23:01across the country designed to ensure

00:23:04that the banks effectively fulfill

00:23:06the core objective of their mission,

00:23:08providing stable and reliable liquidity to their members

00:23:11and supporting housing and community development.

00:23:15A series of reforms will be implemented

00:23:18to ensure the banks remain well-positioned

00:23:21to meet the needs of their members

00:23:22and the communities they serve.

00:23:24The priorities I've outlined today

00:23:26represent just a portion of FHFA's ongoing work

00:23:30to ensure its regulated entities

00:23:32meet their missions in a safe and sound manner.

00:23:36These actions, along with others outlined

00:23:38in my prepared statement,

00:23:40align with FHFA's mandate from Congress.

00:23:43In my 30 years as a financial regulator,

00:23:46I've long believed that safety and soundness

00:23:48and access to credit are not mutually exclusive,

00:23:51but instead complementary.

00:23:54Broad, fair access and the stability

00:23:56of financial institutions work together

00:23:59as pillars of the nation's housing finance system.

00:24:02Thank you again for the opportunity

00:24:04to appear before you today.

00:24:06I look forward to working with members of this committee

00:24:09to find effective solutions

00:24:10to the challenges of housing supply and affordability.

00:24:19Thank you, Director.

00:24:20I will begin the questions with Senator Tester.

00:24:22Thank you, Mr. Chairman,

00:24:23for holding this hearing and the ranking member also,

00:24:25and thank you for your courtesy.

00:24:26I want to express my appreciation to the two panelists.

00:24:30Acting Secretary Todman,

00:24:31I want to talk about an issue

00:24:32that I've talked to your folks before.

00:24:35I've talked about it in this hearing.

00:24:38It is a longstanding problem

00:24:39that is getting worse, not better.

00:24:41It has to do with HUD's fair market rates,

00:24:44rents, I'm sorry,

00:24:45HUD's fair market rents that have not kept up

00:24:48with the rapid rise of housing prices in Montana.

00:24:52They do not reflect the reality of housing costs

00:24:55in communities across our state,

00:24:57and they're not being revised in a timely manner.

00:25:00You're taking away vouchers from housing authorities

00:25:02with long waiting lists

00:25:03because there simply aren't any units available

00:25:07to be able to use those vouchers with.

00:25:10How your agency is handling this now is not working, okay?

00:25:16I know this is a problem HUD knows about,

00:25:19but the changes that you're making

00:25:21to incorporate rents from corporate landlords

00:25:24are not gonna help us in Montana at all.

00:25:27Right now, these programs are not able

00:25:29to serve the folks in Montana that they are meant for,

00:25:33and I think it's incredibly important

00:25:35that the folks at HUD step up and fix these FMRs.

00:25:39This program is gonna end up leaving rural America behind.

00:25:44So what more needs to happen

00:25:46so that these rates reflect the actual rents

00:25:49that we have in Montana communities

00:25:51that folks can access these housing resources?

00:25:55Thank you, Senator, for raising this issue.

00:25:59As you and your team is probably aware,

00:26:01fair market rents are established by HUD

00:26:04and updated yearly so we can keep up

00:26:08with what's happening in the market,

00:26:09and a couple years ago,

00:26:11we did introduce private data into our calculations there

00:26:16because we had received lots of concerns

00:26:19that the data we were relying on,

00:26:21the agency was relying on was not really keeping up

00:26:24with what the market was showing.

00:26:28And so I'm happy to sit down with you, your team,

00:26:31and the housing agencies in Montana

00:26:35to learn more about how our current methodology

00:26:38for FMRs may not be working,

00:26:39particularly for the voucher program,

00:26:42and look forward to talking with you more about that.

00:26:43When is the next time the rents will be assessed

00:26:46and potentially moved up?

00:26:48It's reestablished every year,

00:26:50so it should be about fall of this year.

00:26:52Fall of this year?

00:26:53That's correct.

00:26:55Okay, and I appreciate the offer to work with me

00:27:00on what's going on in Montana.

00:27:03I can just tell you that Great Falls

00:27:08is the closest major city to where I live.

00:27:11It's not the fastest-growing city in Montana

00:27:13by any stretch of the imagination.

00:27:15It's not under the economic pressures that there are.

00:27:18They can't use vouchers.

00:27:19Just simply don't work.

00:27:21And so I would love to have you address this

00:27:24before fall of this year,

00:27:25because that's six months from now.

00:27:27But so if there's ways you can speed that up

00:27:31or amend or however you can do it,

00:27:34I would appreciate it if you'd let us know,

00:27:35because we're here to help, okay?

00:27:37If I can add, Senator,

00:27:38I'm also happy to have our teammates

00:27:42in the Office of Public and Indian Housing

00:27:44sit down with the housing agencies

00:27:45to talk about flexibilities that they may have

00:27:49in terms of using their vouchers.

00:27:51That's good.

00:27:52Just, I mean, this is a problem

00:27:55where we've got a program that was set up,

00:27:58and it just doesn't work.

00:27:59I understand.

00:27:59Okay, another question here.

00:28:02Our housing authorities in Montana

00:28:04have another challenge related to the FMR issue.

00:28:07I'm concerned the two problems together

00:28:09will worsen until Montana communities

00:28:11are left with far few housing vouchers

00:28:14and few resources to get folks into home.

00:28:17You correct me if I'm wrong,

00:28:19but we are told on the ground in Montana

00:28:21that last year HUD took 4.5 million

00:28:23in housing choice voucher funds

00:28:25from reserve authorities,

00:28:28from reserve funds from housing authorities

00:28:31across Montana.

00:28:33And now you're telling them that they're at risk

00:28:36of a shortfall.

00:28:38I could have a lot of fun with this question, trust me.

00:28:42But if that's true,

00:28:45if reserve funds were took,

00:28:47and then a short time later we're saying,

00:28:49guess what, folks, you got a shortfall,

00:28:51it doesn't take a nuclear physicist

00:28:52to figure out why that happened, okay?

00:28:55So could you tell me what happened, number one?

00:28:59And number two, if there is a problem

00:29:02you commit with working with our folks

00:29:03in Montana to solve that problem?

00:29:05Well, I'll commit at the top

00:29:07and say always happy to work with the housing agencies

00:29:10on Montana who I call former colleagues.

00:29:12And I'll also share that I'll have to take a look

00:29:15at the reserve poll and then to request a new shortfall.

00:29:18You're correct, that doesn't seem to make a lot of sense.

00:29:22But I will promise to work with you

00:29:23and the agencies there so we can correct.

00:29:26Thank you very much.

00:29:27And I'll have a question for the record for you.

00:29:29Thanks, Senator Scott, recognized.

00:29:31Thank you, Mr. Chairman.

00:29:32One of the successes of the 2017 Tax Cuts and Jobs Act

00:29:36was the legislation that I put in there,

00:29:38the Opportunity Zones.

00:29:39And one of the reasons why it's been so successful

00:29:41is whether you're a Democrat mayor or a Republican governor,

00:29:44they both agree that attracting more housing opportunities

00:29:47into the inner cities of their communities is critical.

00:29:51I think of the event that I attended

00:29:53with Democrat Mayor Geddes in South Carolina

00:29:56where he said that the first time in almost 30 years

00:29:59that he had the chance to build homes within his city,

00:30:02the downtown area of his city

00:30:04is because of the Opportunity Zones.

00:30:05So we still see real opportunities.

00:30:07We note that last year OZs represented the largest spike

00:30:12in apartment complexes being built in our country,

00:30:16leading to more accessible housing.

00:30:20You don't own it, but certainly you can live in it

00:30:22in our country.

00:30:24I think most of us would agree

00:30:25that the largest issue impacting the housing market

00:30:27is a lack of supply, especially for affordable homes.

00:30:31My Road to Housing Act includes a number of solutions

00:30:33that aim to increase supply

00:30:36as well as preserve affordable units that already exists.

00:30:40Specifically, my legislation makes crucial changes

00:30:43to the Rental Assistance Demonstration Program

00:30:46by eliminating the cap

00:30:47on the number of public housing units

00:30:49that can be converted under the program.

00:30:51This would create more opportunities for private capital

00:30:54to help rebuild our nation's aging affordable housing.

00:30:58Question for you, Acting Secretary Todman,

00:31:02you previously testified that the RAD program

00:31:05has been a critical tool to help recapitalize

00:31:08the public housing infrastructure backlog.

00:31:11You also said that housing authorities

00:31:12must explore private-driven solutions

00:31:15to preserve these units.

00:31:17Do you still agree with your statement

00:31:18and do you support lifting the cap

00:31:20on how many units may participate in

00:31:23and be preserved through RAD?

00:31:27Yes, ma'am.

00:31:28Thank you, Senator.

00:31:29One of the things that we've seen

00:31:30with the advent of the Rental Assistance

00:31:32Demonstration Program is a number of repairs being made

00:31:36to public housing units across the country

00:31:38and I think we all welcome that.

00:31:41I've also heard from some of our local

00:31:44and national advocates about their concerns

00:31:46around tenant protections tied to this conversion to RAD.

00:31:52So I think that we are really excited and pleased

00:31:56at the repair work that's been done

00:31:58and how the program has really turned the tide

00:32:01in terms of underinvestment in a really critical portfolio

00:32:05that houses some of our lowest income families.

00:32:07But I would also want to make sure

00:32:10that we are making sure that those lowest income families

00:32:12are being protected as the program grows.

00:32:15So I'm happy to talk to you more about

00:32:17what an expansion looks like,

00:32:19but certainly want to make sure we're marrying

00:32:21what we're seeing with what we're hearing on the ground.

00:32:24You also previously testified that you were

00:32:25deeply supportive of Congress's efforts

00:32:28to expand the Moving to Work Demonstration Program.

00:32:31Do you still agree with your statement

00:32:33and do you support my legislation authorizing the program?

00:32:36So Moving to Work is another place

00:32:37where we've seen a number of innovations

00:32:40that without the flexibilities afforded these agencies,

00:32:44we probably would not have been able to adopt

00:32:46across the portfolio.

00:32:48Just a couple weeks ago I was in Boulder County

00:32:51so we could celebrate the establishment

00:32:54of the last of the 100 agencies

00:32:57that Congress allowed as an expansion to Moving to Work.

00:33:00You might recall there are 39

00:33:02and Congress authorized us to expand it to another 100.

00:33:06So we've added our last 14 agencies

00:33:10to the Moving to Work Club

00:33:11and we look forward to their work.

00:33:14I will say that Moving to Work has been critical

00:33:17with really looking at ways that we can

00:33:20continue to house residents safely.

00:33:22We have seen housing production,

00:33:24we have seen new forms of services,

00:33:27we have seen even ways that agencies

00:33:30are reducing their administrative costs

00:33:31which I think is something that we all would want.

00:33:35And so I completely support Moving to Work

00:33:39as it continues to be a source of innovation

00:33:42across the housing industry.

00:33:43Only have about 50 seconds left

00:33:45and I'll have to see Ms. Thompson next time.

00:33:48So another question for you on homelessness.

00:33:51I know that we appreciate

00:33:53Secretary Fudge's service to the country.

00:33:56Are there any proposals that were not implemented

00:33:59that you would like to implement

00:34:01or do you have any new ideas to help expand

00:34:04the opportunities for our homeless population?

00:34:06We saw the greatest spike in homelessness

00:34:08over the last 12 months basically.

00:34:10Any thoughts on how we can combat homelessness?

00:34:13I think that there's lots of thoughts

00:34:16on how to combat homelessness.

00:34:17I think one of them is continuing to work

00:34:20with the folks on the front line

00:34:21to make sure that they're using

00:34:22our existing funds effectively.

00:34:24But quite frankly, making sure that we have

00:34:27the type of rental assistance and preservation tools

00:34:29we need to try to prevent homelessness to begin with.

00:34:33We were pleased just a couple months ago

00:34:36to give localities about $3.1 billion in resources,

00:34:41the highest amount ever to our continuance of care

00:34:44across the country so they could continue

00:34:46to do the good work that they do.

00:34:48And we're really pleased at the additional vouchers

00:34:50that Congress provided us because we know

00:34:52we've been able to stabilize over 120,000 families

00:34:55across the country and so we look for that

00:34:57as a tool of intervention as well.

00:35:0010 seconds here.

00:35:02Director Thompson, I know that you'll spend some time

00:35:04in South Carolina coming up soon.

00:35:05And I think Secretary, I'd love for you all

00:35:08to spend some time in Columbia, South Carolina.

00:35:10I know Columbia is spending some time

00:35:11working on new ways to combat homelessness.

00:35:15I met with their mayor yesterday

00:35:18and they're spending a lot of time

00:35:19in investing some resources on ways to do so.

00:35:21We'd love to have your expertise weigh in on that.

00:35:24So it's an open invitation to both of you

00:35:26to spend some time in Columbia, South Carolina.

00:35:28Thank you both.

00:35:29Looking forward to it.

00:35:29Thanks, Senator Scott.

00:35:30Senator Butler, who's been called to preside,

00:35:32and Senator Smith, thank you for ceding your time

00:35:36for a moment.

00:35:37Senator Butler.

00:35:39Thank you, Mr. Chair, and thank you to Senator Smith.

00:35:43I appreciate the chair and ranking member

00:35:45for holding today's hearing and wanna join my colleagues

00:35:48in honoring the service of Secretary Fudge

00:35:50and her time in the role.

00:35:53And you all are taking on and continuing leadership

00:35:56in an important moment for the American people

00:36:00relative to housing, housing affordability,

00:36:03and achieving that thing that we call the American dream,

00:36:07the ability to pass on generational wealth across families.

00:36:12Director Thompson, thank you so much

00:36:14for the previous conversation.

00:36:15And I wanna sort of pick up where we left off.

00:36:20The analysis conducted by Moody's estimates

00:36:24that the U.S. economic losses

00:36:26from the recent California flooding

00:36:27add about five to $7 billion.

00:36:31Last week, the insurer with the largest market share

00:36:35in California announced it would not renew

00:36:37the homeowners, rental dwelling,

00:36:39and other property insurance policies

00:36:41of 30,000 Californians,

00:36:44leaving them financially on the hook

00:36:46for millions or even billions of dollars

00:36:49in the event of future climate disasters.

00:36:52And I know that it's not just California,

00:36:55but Louisiana, Texas, Florida are also facing challenges

00:36:59in their property insurance markets.

00:37:02In our conversation, you mentioned that FHFA

00:37:05does not receive notice about insurers

00:37:09withdrawing from insurance markets

00:37:11and the downstream effects that this can have.

00:37:14Could you elaborate on these withdrawals,

00:37:16impacts of homeowners, future homeowners,

00:37:19in not just in California, but across the country?

00:37:22Sure, thank you for the question.

00:37:24Property insurance is a requirement,

00:37:26property and casualty insurance is a requirement

00:37:29for any loan that's purchased by Fannie Mae or Freddie Mac,

00:37:33and they have to have that in order for Fannie and Freddie

00:37:36to purchase them.

00:37:38And when property carriers withdraw from large populations,

00:37:42it's very difficult, especially for first-time homebuyers,

00:37:46to purchase a home and then have to search for a policy

00:37:51to adhere to the requirement that we have

00:37:56that they purchase the loan.

00:37:57You know, it's interesting because we're starting to see

00:38:00a lot of natural disasters and the collateral

00:38:04that FHFA is responsible for.

00:38:07We've got about $8.4 trillion outstanding

00:38:12in mortgage collateral,

00:38:13so these natural disasters impact us greatly.

00:38:17So we've got multifamily properties

00:38:19and residential properties,

00:38:21and so when there is something that happens,

00:38:23we really, it impacts the valuation of our property.

00:38:27From an insurance perspective,

00:38:28we're starting to see a number of climate issues

00:38:32or natural disasters take place.

00:38:34There used to be about three issues per year

00:38:38that were costing over a billion dollars,

00:38:41and now, just last year,

00:38:42there were about 28 different issues

00:38:46that cost over a billion dollars each.

00:38:48And so the impact on our portfolio,

00:38:51where our only asset is mortgage collateral,

00:38:55either a house or an apartment, is just phenomenal.

00:38:58We would really like to work with the mortgage industry

00:39:02to address this issue.

00:39:05What we're finding is that premiums are going up

00:39:08and borrowers are not being able to afford

00:39:11some of their monthly payments with little or no notice.

00:39:15And so we're also seeing a reliance on state plans

00:39:19for insurance, whether it's flood or otherwise,

00:39:23that we really want to address

00:39:25as we try to deal with the cost of just owning a mortgage.

00:39:30We've been actually working with the insurance commissioners

00:39:34in some of the states

00:39:35that have lots of natural disasters,

00:39:37California, Florida, Louisiana, Rhode Island.

00:39:41We've been working with the NAIC

00:39:42to try to address this very important issue.

00:39:45And to that point, just really quickly,

00:39:47with my last 50 seconds,

00:39:49I do want to just offer,

00:39:52either or both of you, Ms. Timon,

00:39:54Secretary Timon, I'd offer you the opportunity first,

00:39:57but just to talk about what steps can we collectively,

00:40:01HUD and FHFA, take to, in the near term,

00:40:06at least to develop a framework for protecting consumers

00:40:10in the event of these natural disasters

00:40:13and insurance provider withdrawals.

00:40:16Well, I'm happy to pick up where the director left off.

00:40:19As you know, HUD has limited authorities

00:40:22as it relates to the insurance industry,

00:40:24but what we have done

00:40:25is we've convened an internal working group

00:40:28to look at, with the authorities we have,

00:40:30how can we help consumers?

00:40:31How can we help some of those housing owners

00:40:33who are saying that they're having increased operating costs

00:40:36because of outrageous insurance increases?

00:40:39And so, as soon as this week,

00:40:42you'll be hearing HUD announce some of the things

00:40:44that we can do,

00:40:46and there's a whole body of work

00:40:47that we'll be rolling out,

00:40:48including engaging with the insurance industry

00:40:51so they can understand the impact on housing affordability.

00:40:55Thank you.

00:41:00Senator Rounds of South Dakota is recognized.

00:41:03Thank you, Mr. Chairman,

00:41:04and just in a follow-up to Senator Butler's questioning,

00:41:09I think a lot of the challenge,

00:41:10and it's not just in homeowners,

00:41:11it's in a lot of the other areas

00:41:13where insurance is finding

00:41:15that if you're making property and casualty repairs,

00:41:19because of supply chain issues,

00:41:21the costs of making those repairs have exploded

00:41:23and the time delays have really added to the cost,

00:41:26and that's being borne by an insurance industry

00:41:29that is seeing significant costs for those specific items,

00:41:33and it's driving premiums up because of it.

00:41:42Secretary Todman, I'm thinking out loud

00:41:45about the way to phrase this question to you.

00:41:51We're trying to cut costs wherever we can

00:41:54with regard to the bureaucratic costs

00:41:56of providing homeownership and so forth.

00:42:00There was a discussion most recently

00:42:02that we did at a roundtable

00:42:03in which we were talking about

00:42:05some of the unneeded paper trails

00:42:09that are required right now,

00:42:11and I'd like to just read a format for you,

00:42:15and you may very well want to take this for the record,

00:42:17but I really think it's one that we could very efficiently

00:42:21and simply maybe cut some costs

00:42:23and some red tape for some folks.

00:42:26We're all discussing housing affordability,

00:42:29but there has been little action

00:42:30on streamlining programs, requirements,

00:42:33and federal regulations.

00:42:35Removing unnecessary program requirements

00:42:38would be a great place to start.

00:42:40I'd like to discuss the environmental review process.

00:42:43The National Environmental Policy Act, or NEPA,

00:42:46requires agencies to consider

00:42:49the environmental effects of any proposed action

00:42:53and inform the public regarding their decisions.

00:42:56As you know, the agency carrying out the federal action

00:43:00may create their own NEPA procedures.

00:43:03Under HUD regulations,

00:43:05grantees must complete the environmental review process

00:43:11and maintain a written record of the environmental review

00:43:14for every project before decisions are made

00:43:18and actions are taken.

00:43:20This requirement includes the use

00:43:23of Community Development Block Grant, CDBG, funding

00:43:26for grantee administrative expenses.

00:43:32Secretary Todman, can you tell me why,

00:43:36when a federal program specifically allows

00:43:38a portion of the funds to be utilized

00:43:41for administrative expenses, HUD requires the grantee

00:43:46to go through the bureaucratic process

00:43:48of actually conducting the review

00:43:50and creating a written record of that determination.

00:43:55It really does look like some low-hanging fruit

00:43:57that could be fairly easily eliminated.

00:44:00Would you, and maybe you know about it right now,

00:44:02but, and if not, would you take it for the record

00:44:05and get back to me?

00:44:06Senator, I accept your invitation to take it for the record.

00:44:09I would just add that environmental reviews, of course,

00:44:13are something that is important

00:44:16as we're carrying out our work.

00:44:18Probably not with regard

00:44:19to just doing administrative expenses.

00:44:21Well, I accept your invitation to respond on the record

00:44:24and certainly we'll ask our staff

00:44:26to take a look at this with you.

00:44:28Thank you.

00:44:29Director Thompson, in 2022, during your confirmation,

00:44:33we had a very good discussion about credit transfers, GSEs,

00:44:39and I asked you about ways

00:44:41that we could incentivize the GSEs

00:44:43to create credit risk transfers.

00:44:46I strongly support credit risk transfer at the enterprise,

00:44:48Fannie and Freddie, as a way to protect taxpayers.

00:44:52And you agreed, made it very clear

00:44:53that you felt the same way.

00:44:55But in 2023, the enterprises posted

00:44:59the second lowest credit risk transfer

00:45:01in the history of the program,

00:45:03and Freddie posted the single lowest amount

00:45:05of credit risk transfer ever.

00:45:08Now, Director Thompson, I know that you,

00:45:10because we've talked about this,

00:45:12you understand what a valuable tool that is,

00:45:16but I just can't figure out what's contributing

00:45:18to the trend that's going on there.

00:45:20Can you help us with that?

00:45:21Sure, thank you for the question, Senator Rounds,

00:45:23and I appreciate the opportunity

00:45:25to talk about credit risk transfer,

00:45:27because we think that's a huge component

00:45:30of shifting credit risk to private investors

00:45:33and off the balance sheets of Fannie and Freddie.

00:45:36The reason that the credit risk transfers

00:45:40were so low in 2023 is that they're based

00:45:43on the loans that are purchased by Fannie and Freddie,

00:45:47and you'll remember in 2020 and 2021,

00:45:51we were faced with historic interest rates,

00:45:56record lows, I should say,

00:45:58and the acquisitions for Fannie and Freddie

00:46:00were at record highs.

00:46:01Those were the two largest years of loan purchases ever

00:46:06for both Fannie and Freddie.

00:46:08The interest rate environment really stifled

00:46:11the acquisitions of loans from Fannie and Freddie in 2023.

00:46:16They went from record highs to very low,

00:46:19so again, their credit risk transfer

00:46:21is really based on the amount of loans that they purchase,

00:46:24but we encourage them to utilize credit risk transfers.

00:46:28They've been very innovative in this space,

00:46:31and it is really a measure for safety and soundness,

00:46:34which is of paramount importance to us.

00:46:37Well, thank you, and I just,

00:46:39it appears that probably even for these folks,

00:46:42a lot of these folks that don't have another place to go

00:46:44to get a loan, we're seeing right now

00:46:47that these high interest rates are impacting

00:46:49this segment of the population rather dramatically,

00:46:53aren't we?

00:46:54Absolutely, yes.

00:46:55Thank you, thank you, Mr. Chairman.

00:46:57Thanks, Senator Rouse.

00:46:58Senator Menendez from New Jersey is recognized.

00:47:01Acting Secretary Todman,

00:47:03I hope that you have been made aware

00:47:05of the deplorable conditions residents of properties

00:47:08under the management of the Atlantic City Housing Authority

00:47:11have been subjected to.

00:47:13Residents have been complaining about issues

00:47:15including water and gas leaks, pest infestation,

00:47:18mold, broken appliances, and much more.

00:47:21Some residents even lack heat and hot water

00:47:24all throughout the past winter,

00:47:26and these issues have been ongoing for years.

00:47:29In addition, the authority itself

00:47:31is rife with management problems,

00:47:32including issues with its procurement

00:47:34and contracting procedures

00:47:36that have delayed critical fixes to units.

00:47:38In February, residents of Stanley Homes

00:47:40were instructed to relocate to a hotel

00:47:44with no cooking devices,

00:47:45no accommodations for their pets,

00:47:48and at least one instance,

00:47:49no accommodation for a resident's disability.

00:47:52Many of these residents have still not been able

00:47:54to return to their homes.

00:47:56I know that HUD is aware of these issues

00:47:58because last year, HUD's principal deputy assistant

00:48:00secretary for public and Indian housing

00:48:03described an audit of the Atlantic City Housing Authority

00:48:05as quote, one of the worst audits

00:48:08that I have ever read in my life.

00:48:11Your staff has briefed mine

00:48:12on the recovery and action plan HUD has developed

00:48:15for the housing authority to fix these issues.

00:48:17However, a plan is not enough for these residents

00:48:20who have been living in inhumane conditions for so long,

00:48:24especially when the plan is being executed

00:48:26by the same authority that has allowed these issues

00:48:29to fester for years,

00:48:31all the while ignoring or retaliating against residents

00:48:34who spoke out about the problems they were facing.

00:48:37The Atlantic City Housing Authority

00:48:38has lost the trust of the residents

00:48:40it was created to serve.

00:48:41And that is why I sent a letter

00:48:43to your predecessor in December,

00:48:45calling on HUD to exercise its authority

00:48:48to immediately place the Atlantic City Housing Authority

00:48:50into receivership and rapidly working

00:48:53to bring relief to the residents.

00:48:55Today, I'm reiterating that call.

00:48:58So Madam Secretary, will you commit

00:49:01to personally reviewing this situation

00:49:05and getting back to me with what you plan to do

00:49:07to accelerate relief for the residents of Atlantic City?

00:49:12Certainly, Senator.

00:49:13I'm aware of this issue.

00:49:14In fact, I also directed the senior leadership

00:49:17of our Office of Public and Indian Housing

00:49:19to take more urgent action.

00:49:22We are working with the leadership

00:49:24at the Atlantic City Housing Authority.

00:49:26What you've described is horrific

00:49:28and no person, particularly the residents

00:49:30of public housing, should be experiencing that.

00:49:33Well, I look forward to, to be honest with you,

00:49:35there's something more to that.

00:49:37I view that HUD must immediately take over

00:49:40the Atlantic City Housing Authority

00:49:42to ensure the safety and dignity of its residents.

00:49:45And every day that we allow the authority

00:49:46that allowed all this to happen

00:49:49to affect the lives of its residents the way it has

00:49:52is a day that it becomes HUD's problem,

00:49:54more so than the Atlantic City Housing Authority.

00:49:57So I look forward to you get back to me exactly.

00:49:59What is your plan of action?

00:50:00I commit to doing so.

00:50:01Thank you.

00:50:04Madam Secretary, I was puzzled to see

00:50:06that the President's budget request for FY25

00:50:09called for $143 million less

00:50:12than the FY24 enacted level for Section 202 housing.

00:50:17Do you believe that HUD's budget request

00:50:19accurately reflects trends in the market

00:50:21for senior rental housing?

00:50:23Senator, as you may know,

00:50:25the HUD and the administration are working

00:50:28under the constraints of the Fiscal Responsibility Act.

00:50:31And so there's, it was difficult decisions to be made.

00:50:34We think we've put forward a budget

00:50:36that considers that agreement,

00:50:40but also prioritizes where we know there's need.

00:50:42Well, all I know is that the nation is graying

00:50:45pretty dramatically.

00:50:47Those who are boomers are grayers.

00:50:49And at the end of the day,

00:50:52if we invest less in the supply of senior housing

00:50:56while demand is skyrocketing,

00:50:58I'm not sure what that will do in the marketplace.

00:51:01So I urge you to re-look at that.

00:51:04Finally,

00:51:08Secretary Thompson,

00:51:12I,

00:51:15oh, actually it's Secretary Thompson.

00:51:17I understand that HUD is working on updates

00:51:20to energy efficiency and other construction standards

00:51:23for manufactured homes.

00:51:25And I understand that while HUD

00:51:27has primary statutory responsibility

00:51:30for regulating manufactured housing,

00:51:32the Department of Energy has been working in parallel

00:51:35on their own energy efficiency updates.

00:51:37Can you share with us an update on your work on this issue?

00:51:42Right, so the Department of Energy was compelled,

00:51:44I believe, by legislation to carry out its work.

00:51:48HUD does have a draft rule.

00:51:50I'm therefore limited in what I can say about the draft rule,

00:51:54but I do know that we are trying to marry

00:51:56the pressing need of energy efficiency

00:51:59along with housing affordability.

00:52:01And we've been working with our colleagues

00:52:02at Department of Energy to do that.

00:52:04Well, we have huge housing affordability

00:52:06across the country, New Jersey for sure,

00:52:09where people spend more of their disposable income

00:52:12on housing than they should.

00:52:13And I would hope that this is something

00:52:15that can be accelerated

00:52:17because I think this is part of our answer.

00:52:18Thank you. Thank you, Senator.

00:52:21Senator Hagerty, I assume I see Senator Tillis

00:52:24has yielded to you. Senator Hagerty of Tennessee.

00:52:27Thank you, Senator Tillis. Thank you.

00:52:29And I love the fact that your mom

00:52:31and your brother still live there.

00:52:33Director Thompson, I'd like to direct this to you.

00:52:37You've testified that in order to end conservatorship

00:52:40of Fannie Mae and Freddie Mac, two things need to happen.

00:52:43First, we've got to build capital

00:52:45through retrained earnings

00:52:47before ending the government's 15-year-long conservatorship.

00:52:51And second, you've said that Congress

00:52:54needs to decide the future

00:52:55of these two government-sponsored entities

00:52:57and the U.S. mortgage finance system more broadly.

00:53:01On the first point,

00:53:03the quickest way to end the GSE conservatorships

00:53:05is to raise private capital,

00:53:07just as bailed-out banks were allowed to do

00:53:08in the wake of the 2008 financial crisis.

00:53:12Now that the GSEs control so much of the housing market,

00:53:14there seems to be a reluctance

00:53:16to relinquish government control.

00:53:18I ask myself why.

00:53:20Well, judging by the redistributive housing policies

00:53:23that have been pursued at the helm,

00:53:25while you've been at the helm of FHA,

00:53:28it seems that the GSEs are viewed

00:53:29by the Biden administration as simply backdoors

00:53:33to push its DEI social policy agenda,

00:53:36which is well beyond your mandate.

00:53:38On the second point, Congress has already decided

00:53:41what type of mortgage finance system

00:53:43it wanted with the 2008 HERA law.

00:53:46That law significantly enhanced the regulatory

00:53:48and supervisory powers of your agency

00:53:50over Fannie Mae, Freddie Mac,

00:53:51and the federal home loan banks.

00:53:54The problem here is that the Obama

00:53:55and Biden administrations have never taken their feet

00:53:57off the throats of Fannie Mae and Freddie Mac

00:53:59so that they can succeed as private companies.

00:54:02The responsible thing to do for yourself,

00:54:05for Secretary Yellen, and for Attorney General Garland

00:54:08is to continue the work that was begun

00:54:11by former FHA Director Calibria to raise private capital

00:54:16and return Fannie Mae and Freddie Mac

00:54:17to the private markets.

00:54:20This would result in a 100 billion plus windfall

00:54:24for taxpayers, and it could be used

00:54:28to immediately help expand the country's housing supply

00:54:31and support affordable housing for Americans

00:54:33who are most in need.

00:54:35We talked about this at the time of your confirmation

00:54:37to be the agency head.

00:54:39And our housing markets and American taxpayers

00:54:43deserve to see these conservatorships brought to an end,

00:54:46and I appreciate your full attention to this

00:54:48in the time you have remaining as director.

00:54:50Thank you, thank you, Mr. Chairman.

00:54:53Thanks, Senator Hagerty.

00:54:54Senator Smith of Minnesota has re-arrived

00:55:01and been kind and yielding.

00:55:04Thank you so much, thank you so much, Mr. Brown,

00:55:07and thank you to both of you for being with us today.

00:55:09I really appreciate it.

00:55:12Oh, thank you.

00:55:12So everybody we know, I think we're all here today

00:55:15because we believe that everybody deserves

00:55:17a safe, affordable place to call home.

00:55:19And we also acknowledge all of us

00:55:21that for far too many families, this is out of reach.

00:55:24And I'm very grateful to the Biden administration

00:55:26and to Chair Brown for his leadership,

00:55:29really bringing attention to finding solutions

00:55:31to these challenges.

00:55:32And of course, housing is incredibly complex and nuanced.

00:55:36It's much driven by the private sector

00:55:39and also much driven by local decision-making

00:55:41when it comes to zoning, for example.

00:55:43But I think that we could all agree

00:55:45that we need to focus on boosting housing supply

00:55:47and also on preserving the housing stock that we have.

00:55:51Chair Brown, we had a very interesting hearing

00:55:53in my subcommittee just earlier this week

00:55:57that really highlighted the need to preserve

00:56:00the housing stock that we have.

00:56:01So Secretary Todman, my question is for you.

00:56:05Could you just highlight for us

00:56:07how the department has been working

00:56:09on this issue of housing supply,

00:56:11especially in the housing for middle-income people

00:56:15who are working in low-wage jobs also?

00:56:17Absolutely.

00:56:18Thank you, Senator, for the question

00:56:20and for your leadership on these issues as well.

00:56:22So HUD has been very busy over the past three years,

00:56:26not just carrying out its own work,

00:56:28making sure that we are executing

00:56:30on the new vouchers that we've received,

00:56:32making sure that we are modernizing our rules,

00:56:36like the Home Rule, which I know so many people

00:56:37locally lean on to make sure we're building

00:56:40to low- and moderate-income family needs.

00:56:42But we've also been working collaboratively

00:56:44with our sister agencies, with Treasury,

00:56:47on our new Federal Financing Bank risk sharing

00:56:50and removing sort of the deadline

00:56:52that was tied to that initiative

00:56:55so that more HFAs can help support

00:56:59affordability development.

00:57:00And also just working with our colleagues at Treasury

00:57:04on the State and Local Fiscal Recovery Act

00:57:07and repurposing those funds for gap financing,

00:57:09for really critically capital needs on the ground.

00:57:13So we have been busy, and we think that

00:57:15with the umbrella of the President's

00:57:19Housing Supply Action Plan,

00:57:21we've been acting as one government

00:57:23to just drive this issue.

00:57:24The administration has made some proposals,

00:57:27some new proposals to help expand housing supply,

00:57:30particularly the Innovation Fund for Housing Expansion.

00:57:32Could you talk a bit about how that proposal

00:57:34could help empower local solutions

00:57:37to increase housing supply?

00:57:39No, thank you.

00:57:40And I think you're referring to,

00:57:41in the President's budget for 2025,

00:57:43the $20 billion Innovation Fund.

00:57:45Well, it's just that.

00:57:46We wanna make sure that we are including gap financing,

00:57:49that we're helping folks with thinking through

00:57:52some of their pro-housing work.

00:57:56We're very excited to have our new pro-housing program,

00:57:59and we'll be rolling out some of the recipients of that

00:58:01sometime this spring.

00:58:03It is meant to be a program that is really

00:58:06meeting localities where they are,

00:58:08and inspiring them to be able to create

00:58:11their local solutions to build housing,

00:58:13and certainly to preserve the housing that they have.

00:58:16Thank you.

00:58:18I also wanna talk with you a bit.

00:58:19You and I have had quite a few conversations

00:58:21about issues around tribal and native housing.

00:58:23I know this is something that Senator Cortez Masto

00:58:25and Senator Warren also pay very important attention to.

00:58:31We know that there are significantly high rates

00:58:33of homelessness and overcrowding,

00:58:37which is really almost a bigger problem,

00:58:40because as people, more than one family,

00:58:44crowd into shelter that is just not

00:58:47nearly large enough for them.

00:58:49And also just the issue of substandard housing.

00:58:52Senator Lummis and I held a subcommittee hearing

00:58:54on this last year, and we've been working

00:58:56with the administration on how we can

00:59:00respect tribal sovereignty and partner with tribes

00:59:02as we work on these housing issues.

00:59:04Could you just talk a bit about how the department

00:59:06is addressing this issue?

00:59:07Yeah.

00:59:08You'll be happy to hear that since I took on the job

00:59:10as Deputy Secretary, I've been in robust conversation

00:59:13with tribal nation leaders about what their needs are.

00:59:17And I've heard it earful, as you can imagine.

00:59:19One of the things that we have been doing,

00:59:21in addition to deploying the historic levels of funds

00:59:24that Congress has given us to help on housing

00:59:26and community development, is really working

00:59:29with tribes on how they are able to use that money swiftly.

00:59:33In addition to that, we've created a new advisory committee

00:59:38in the department for tribal leaders.

00:59:40And we've had two meetings.

00:59:41We're gonna have another one shortly.

00:59:42And there, we have consistently looked to the leaders

00:59:46of the tribal nations to tell us,

00:59:48what can we be doing better in true respect

00:59:50of our government-to-government relationship?

00:59:52Those conversations continue, and I've been working

00:59:56personally with some of the leaders on ways

00:59:59that HUD can cut some of the red tape

01:00:01to make sure that we're helping them deliver.

01:00:03Thank you.

01:00:03Thank you so much for both of your work

01:00:05on these really important issues.

01:00:06Thank you, Chair Brown.

01:00:07Thank you, Senator.

01:00:08Thank you, Senator Smith.

01:00:09Senator Tillis from North Carolina.

01:00:11Thank you, Mr. Chair, and thank you both for being here.

01:00:14Director Thompson, last year, FHFA directed Fannie

01:00:19and Freddie to make changes

01:00:21to the loan level pricing adjustment matrix.

01:00:24You've said these updates were intended

01:00:26to allow the GSEs to further build capital

01:00:29and reduce taxpayer risk.

01:00:31I'm just trying to get my head around this.

01:00:33These changes functionally reduce aspects

01:00:37of LLPA's risk-based pricing relationship.

01:00:42And common with loan-to-value strata,

01:00:46they seem to be providing a decrease in rates

01:00:50applied to higher-risk persons

01:00:54and increasing it to lower-risk persons.

01:00:57Did I get that right, or what am I missing?

01:00:59So thank you for the opportunity, Senator,

01:01:01to clarify the misunderstanding

01:01:03that permeated all of last year

01:01:06about some of the pricing changes

01:01:07that Fannie and Freddie undertook.

01:01:10We have been working diligently to ensure

01:01:14that Fannie and Freddie are doing what they can

01:01:16to fulfill their mission.

01:01:18One, safety and soundness.

01:01:20Two, making sure that they're fulfilling their mission

01:01:24in terms of facilitating loans to underserved communities.

01:01:29We eliminated the loan level price adjustment

01:01:34or fee, the upfront fee,

01:01:36for all borrowers across the country,

01:01:40for borrowers that had area median incomes

01:01:44of 100% or less.

01:01:46I can assure you that all of the changes that we made

01:01:50do not result in borrowers with high credit scores,

01:01:57subsidizing borrowers with low credit scores.

01:02:00We continue to have risk-based pricing.

01:02:02What happened in the discussion was

01:02:05when you have a loan-to-value that is 80% or higher,

01:02:11you have to purchase a credit enhancement,

01:02:14usually in the form of mortgage insurance.

01:02:17And we don't add that into the calculation,

01:02:21but it's still risk-based pricing at the end of the day.

01:02:24And I can assure you that risk-based pricing exists

01:02:27at Fannie and Freddie,

01:02:29and there are provisions to make sure

01:02:33that lower-income borrowers and borrowers

01:02:37in rural communities across this country

01:02:40don't have to pay upfront fees.

01:02:42This can be a very complicated discussion.

01:02:45It's hard to simplify it into five minutes,

01:02:48but I'm gonna submit this matrix for the record

01:02:51and then have you,

01:02:54can I get your commitment to respond back

01:02:56to a very specific set of questions that we'll ask on this?

01:03:01Because the thing that I'm still trying

01:03:02to get my head around,

01:03:04if a part of this decision was used

01:03:07as a basis for raising capital,

01:03:09then where is that capital coming from?

01:03:11Where is it coming from?

01:03:12So the chart that you have reflects a number of changes

01:03:16that the enterprises undertook.

01:03:18One, we increased prices on super-conforming,

01:03:23super-jumbo loans,

01:03:25so loans that were over the conforming loan limit.

01:03:27That was one of the first changes we made.

01:03:30We also increased prices for-

01:03:32What drove that decision?

01:03:35What drove that decision was the conforming loan limit

01:03:38in some of the counties was well over seven digits.

01:03:43That's what's driving,

01:03:43and there's a private market that exists

01:03:46to purchase those jumbo mortgages.

01:03:48And so to the extent that the enterprises

01:03:50are purchasing those loans,

01:03:53that people need to be able to pay the additional fees

01:03:58for those loans.

01:03:59The other thing that we did was-

01:04:01So are you saying that the policies

01:04:03that have been implemented over the last year,

01:04:05in your opinion,

01:04:08and the fees associated with them

01:04:10were driven by actuarial decisions

01:04:12where you're rating for risk in every case?

01:04:14Absolutely, we're rating for risk,

01:04:16and we're also looking at the capital requirements

01:04:18for every single loan that we purchase.

01:04:20We've also raised fees for second homes and vacation homes.

01:04:25So the reduction in fees for people

01:04:28with higher risk ratings

01:04:29were because they were being overcharged at the time?

01:04:32They were overcharged because we were not capturing

01:04:35the mortgage insurance that they have to pay,

01:04:38it's mandatory.

01:04:39So when you have that chart,

01:04:41I'm gonna draw a line for the loans

01:04:44that are 80% LTV and above,

01:04:46and I'm gonna add fees for those loans-

01:04:49Okay, we'll get it.

01:04:50I've got a long series of questions.

01:04:52I appreciate your commitment to answering them,

01:04:54because I really want to get to the fact.

01:04:57I will say that we did reach out,

01:04:59try to get a consultation,

01:05:00and see if your imposition of this

01:05:04was a violation of the APA,

01:05:06it should have been subject to rulemaking.

01:05:07We found out that because,

01:05:09because we were gonna try and force that issue,

01:05:12but apparently you're given latitude

01:05:14in the conservatorship model,

01:05:16and the conservatorship that you're operating within now.

01:05:19But it is beginning to make me wonder

01:05:22whether or not we should more tailor

01:05:24what authorities you have within your role as conservator

01:05:27versus some of these policy decisions.

01:05:30Thank you for being here.

01:05:31Thank you both for being here.

01:05:32I'm gonna submit some questions

01:05:33for the record around manufactured housing,

01:05:36and clearing the backlog as well.

01:05:37Thank you, Ms. Todman.

01:05:38Thank you all.

01:05:39Thank you, Mr. Chairman.

01:05:39Senator Warren of Massachusetts is recognized.

01:05:41Thank you, Mr. Chairman.

01:05:42So in 1932, Congress created

01:05:45the Federal Home Loan Bank System

01:05:47to tackle the biggest housing crisis of the last century,

01:05:51the Great Depression.

01:05:52And the basic idea was simple.

01:05:54The federal government offered help

01:05:56in the form of an implied government guarantee,

01:05:59favorable regulatory treatment, and special tax status.

01:06:03And then in return, the FHLBs would provide liquidity

01:06:08to their members to support housing

01:06:10and community development.

01:06:12Today, we are in the middle of another housing crisis.

01:06:14By some estimates,

01:06:16we are short seven million housing units nationwide.

01:06:19But in this critical moment,

01:06:21the FHLBs are missing in action

01:06:25on their affordable housing mission.

01:06:28Last month, the Congressional Budget Office

01:06:30released a report that, for the first time,

01:06:32put a number on how much the FHLBs

01:06:36receive in public subsidies.

01:06:39In fiscal year 2024 alone,

01:06:42that number was a whopping $7.3 billion.

01:06:48Director Thompson, in 2023,

01:06:51how much of these public subsidies

01:06:54did the FHLBs spend on affordable housing programs?

01:06:58I think it was approximately 390 million.

01:07:02I think 350 was-

01:07:04Okay, $390 million.

01:07:06So that means the vast majority of the subsidies

01:07:10the federal government poured into the FHLBs

01:07:14went somewhere other than to affordable housing.

01:07:18Only a tiny fraction went to affordable housing.

01:07:20So where did the taxpayer money go?

01:07:23Director Thompson, in that same year,

01:07:25how much did the FHLBs spend on dividends for their members

01:07:30like banks and insurance companies?

01:07:32Approximately 3.4 trillion.

01:07:35Billion.

01:07:35Billion, billion. Gosh.

01:07:36I'm sorry, B, with a B. Bad enough.

01:07:38Okay.

01:07:40All right, so just so we're clear here,

01:07:42the FHLBs spent eight and a half times

01:07:47as much on dividends to their members

01:07:50than they did on affordable housing.

01:07:52I think that's right.

01:07:53Just the math here.

01:07:56But not all of those federal dollars,

01:07:58those taxpayer dollars, went to dividends.

01:08:00There's still some money left over.

01:08:02According to the GAO, the FHLBs

01:08:05lent tens of billions of dollars

01:08:09to prop up Silicon Valley Bank, Signature Bank,

01:08:13and First Republic Bank before they failed.

01:08:17Director Thompson, FHFA is the primary regulator

01:08:23for the FHLBs.

01:08:25Do you agree that it is important for the FHFA

01:08:28to clarify that the mission of the FHLBs

01:08:33is to provide liquidity for housing

01:08:37and community development,

01:08:38not simply to prop up failing banks and hand out dividends?

01:08:43Absolutely.

01:08:44Thank you for the question, Senator.

01:08:46We conducted a year-long review

01:08:49of the home loan bank system.

01:08:50We conducted 17 listening sessions around the country,

01:08:54and we heard exactly that,

01:08:55that the home loan banks, they have a dual mission.

01:08:59One is to provide stability and liquidity to their members,

01:09:03but the other is to support the communities

01:09:06that they live in through affordable housing development

01:09:09and community development.

01:09:11And there is a huge affordability issue.

01:09:14There are huge supply issues,

01:09:16and the home loan banks are well-positioned

01:09:18to do a lot more.

01:09:20And that's one of our recommendations from our report.

01:09:22And I appreciate that.

01:09:23It's not enough to be well-positioned

01:09:25if they are taking the money

01:09:26and then not spending it to accomplish that.

01:09:28So I think clarifying the mission of the FHLBs

01:09:32is an important start,

01:09:34but I think we also need to take a look

01:09:36at who lines up for these federal subsidies.

01:09:39Remember, these government subsidies are to promote housing,

01:09:43but in the last five years, five full years,

01:09:4742% of FHLB members did not originate a single mortgage,

01:09:54not one, 42%.

01:09:57So how did this happen?

01:09:59Well, it turns out under the current rules,

01:10:01members only need to hold at least 10% of their assets

01:10:05in residential mortgage loans at the time they apply

01:10:08to join a FHLB.

01:10:11Once you're in, you're in,

01:10:13and you can get out of the housing finance business

01:10:17while you take advantage of these government subsidies.

01:10:20Director Thompson, should the FHFA change the rules

01:10:23so that members must hold at least 10% of their assets

01:10:27in residential mortgages on an ongoing basis

01:10:31in order to remain eligible for FHLB financing?

01:10:35That was one of the recommendations in our report.

01:10:38We are going to promulgate rulemaking sometime this year

01:10:41to talk about membership,

01:10:43one, to define what the role is of membership,

01:10:47and to also ask questions about what that threshold should be

01:10:52because you will have a situation

01:10:54like one of the three bank failures

01:10:57where you start out with the 10% to meet the requirement,

01:11:01and then the bank's business model changes,

01:11:04and there's no ongoing checks for them

01:11:06to access the home loan bank system.

01:11:08So that is rulemaking.

01:11:10It'll be very transparent,

01:11:11and we're looking forward to engaging in that discussion.

01:11:13Well, I strongly urge the FHFA

01:11:16to issue its proposed rulemakings

01:11:19to address the FHLB's mission and membership

01:11:22as soon as possible.

01:11:24The FHLB should be tackling our nation's housing crisis,

01:11:27not doling out corporate welfare to these giant banks

01:11:31and to members that aren't even in the housing business.

01:11:34Thank you. Thank you, Mr. Chairman.

01:11:36Senator Vance of Ohio is recognized.

01:11:39Thank you, Mr. Chairman,

01:11:40and thank you to the two witnesses

01:11:42for being here with us today.

01:11:44I want to just direct my questions to Director Thompson.

01:11:48And Director Thompson, one of the biases that I have,

01:11:52and I think it's hopefully a bias

01:11:53shared by everybody who serves in this body,

01:11:55is that we shouldn't be discriminating

01:11:57in our country based on race.

01:11:59We should treat people

01:12:01based on their individual characteristics

01:12:03and not dole out government benefits, favors,

01:12:07or consequences because people have the wrong skin color.

01:12:11And I assume that you share that conviction as well.

01:12:15And so I want to point directly

01:12:18to a particular policy of your directorship.

01:12:22So a September 21 announcement,

01:12:24followed by an August 2023 proposed rule

01:12:28requiring Fannie and Freddie to, among other things,

01:12:31advance equity in housing finance.

01:12:34And in particular, the way that Fannie has applied

01:12:37this particular directive worries me.

01:12:41So there's a Fannie Mae plan, as I understand it,

01:12:44that is strictly targeted at black and brown Americans,

01:12:48that explicitly is targeted at black and brown Americans.

01:12:50Again, I don't think we should be doling out housing favors

01:12:53based on skin color, but I'm curious,

01:12:56one, am I right about that?

01:12:58Does the Fannie Mae plan

01:12:59specifically target black and brown Americans?

01:13:01And second, does that program have any income requirements?

01:13:06So thank you for the question.

01:13:08And one, I want to assure you that everything that FHFA

01:13:12and our regulated entities do complies with the law.

01:13:16We have under the Fair Housing Act

01:13:19the responsibility to ensure

01:13:22that there's fair housing access for everyone.

01:13:25When you talk about the affordability issue,

01:13:27which is the biggest issue that our country has today,

01:13:30it didn't miss any communities.

01:13:32And there are particular communities that are underserved

01:13:36and there are huge housing gaps.

01:13:38And we have asked Fannie Mae and Freddie Mac

01:13:40to come up with plans, not just for underserved communities,

01:13:44and you're specifically talking

01:13:46about the equitable housing finance plans,

01:13:48but rural communities, tribal communities,

01:13:52Native American communities,

01:13:53because we want to make sure that no one's left behind.

01:13:57We can't let the housing market fail

01:13:59and there's no one-size-fits-all.

01:14:01I would say that many of the barriers

01:14:04that have been identified in some of the plans,

01:14:07especially in the Fannie and Freddie plans

01:14:09for black and brown borrowers,

01:14:12apply to other cultures as well.

01:14:15And it applies across our nation.

01:14:16I'll give you an example.

01:14:18One of the things that came out of the...

01:14:19So Director, just because I'm a little on time,

01:14:21I'm sorry to interrupt, but I just want to sort of,

01:14:23just to specify this a little bit.

01:14:25So as I understand, there's a down payment assistance

01:14:27slush fund that Fannie Mae has applied

01:14:30as part of this particular equitable housing finance plan.

01:14:36My understanding is that black and brown Americans

01:14:38are eligible for this down payment assistance,

01:14:40but it's not income-based.

01:14:41Well, our programs are not race-based.

01:14:44The programs that are in the special purpose

01:14:49credit programs is what I think you're referring to.

01:14:51They're location-based.

01:14:52And those are the programs that Fannie and Freddie offer.

01:14:56They do purchase loans from other institutions.

01:14:59So there is not, this actually makes me feel good

01:15:03if I'm misunderstanding this.

01:15:04There is not a Fannie Mae down payment assistance program

01:15:07that you can only apply for if you are black or brown.

01:15:10There are down payment assistance programs

01:15:12that apply to many Fannie Mae programs,

01:15:16a home ready program.

01:15:18But is there one that discriminates based on race?

01:15:20You can only apply if you have a specific racial category.

01:15:23For the enterprise-based special purpose credit programs,

01:15:28you can apply for those programs

01:15:30if you live in a certain area.

01:15:32I think it's location-based, it's not race-based.

01:15:35But is there any income requirement on that?

01:15:38I'm not sure, I'd have to get back to you on that.

01:15:40I appreciate that, because being mindful of my time here,

01:15:43the thing that I guess I find somewhat troubling

01:15:47about this stuff is I certainly agree

01:15:50that there are a lot of black and brown Americans

01:15:52who've been left behind by the housing market.

01:15:53We wanna sort of guarantee access

01:15:55to the housing market for everybody.

01:15:57But you can accomplish these things very often

01:15:59by targeting at a particular income category.

01:16:03And of course, you're gonna catch up

01:16:04a lot of black and brown Americans.

01:16:06You're also gonna catch up a lot of Americans

01:16:08from other racial categories

01:16:09who maybe don't have high income.

01:16:12And it strikes me as a much better way,

01:16:14and also a much less illegal way,

01:16:17to do housing assistance in our country,

01:16:19and targeting at particular racial groups

01:16:22is just not something I think we should be doing.

01:16:24Well, first I wanna say

01:16:26that we're not doing anything illegal,

01:16:28and we do have-

01:16:29That's good to hear.

01:16:30Yeah, and we would not do that.

01:16:33But we think that these housing programs

01:16:35should be available for everyone.

01:16:37We have them.

01:16:38We have programs based on income,

01:16:40and we've had them for years.

01:16:42And we do have these programs that are based on location,

01:16:45that the enterprises are promulgating.

01:16:47All right, thank you, Director.

01:16:50Thanks, Mr. Chair.

01:16:51Thanks, Senator Vance.

01:16:51Senator Van Hollen from Maryland's recognized.

01:16:54Thank you, Mr. Chairman.

01:16:55Thank both of you for your testimony and your service.

01:16:59A couple questions for both of you

01:17:02related to how we can use programs

01:17:05under each of your jurisdictions

01:17:06to help families reduce their energy costs,

01:17:12whether they're homeowners or whether they're renters.

01:17:16So let me begin with you, Acting Secretary Todman.

01:17:20I know that last year you undertook a review,

01:17:24I think, of the building codes,

01:17:27that review that's required under

01:17:30the Energy Independence and Security Act of 2007.

01:17:35And I understand that both from

01:17:36a Department of Energy analysis,

01:17:38but also from HUD's own preliminary determination.

01:17:42I think that determination was also made

01:17:44by the Department of Agriculture,

01:17:47that updating the building energy codes

01:17:50are a net positive for households,

01:17:53that they save households money

01:17:55because the monthly cost savings on energy bills

01:17:58are greater than the relatively small

01:18:00upfront costs of building to the latest code.

01:18:04And that cost, of course,

01:18:06is spread over the 30-year mortgage.

01:18:09As I understand it, your analysis showed

01:18:11that the cost savings are about $500 a year,

01:18:14which is real money,

01:18:16particularly for low-income households

01:18:18that we know are spending way too much

01:18:21of their paycheck on energy costs.

01:18:24In my state of Maryland,

01:18:26these updated standards would boost

01:18:29resilience and efficiency for new homes,

01:18:33thousands of new homes,

01:18:34and the average new home would deliver

01:18:36a net savings of over $5,000

01:18:39for a Maryland family over a 30-year mortgage.

01:18:43So could you tell me where HUD stands right now

01:18:48in finalizing this code determination?

01:18:53It's been a while since I think

01:18:55that preliminary determination was made,

01:18:57so what's your plan and timetable for finalizing this?

01:19:00Great, thank you, Senator,

01:19:01and thank you for your leadership on this issue.

01:19:04HUD certainly did take a look at this

01:19:07along with our colleagues at USDA and DOE,

01:19:10and we did put a proposed rule out,

01:19:13and I think you're referring

01:19:14to some of the elements of that.

01:19:16The rule itself is still in our,

01:19:21it wasn't in our interagency process,

01:19:23but it's back at HUD,

01:19:24and you will be hearing some more very, very soon

01:19:28about the release of a final rule,

01:19:30something you can look forward to,

01:19:31and I think that what we've tried to do very carefully

01:19:35is look at the pressing needs around energy efficiency,

01:19:38as you so well articulated,

01:19:39and the long-term savings to homeowners and renters,

01:19:43but also looking at its intersection with affordability.

01:19:48One of the things that we're gonna be relying on

01:19:50is just recently the administration announced

01:19:54some of EPA's funding on greenhouse gas emissions,

01:19:58a reduction fund, and we'll be leaning in,

01:20:01and I know local localities will be leaning in

01:20:03on some of those funds to make sure

01:20:05that we're carrying out the energy efficiency work

01:20:07we all value.

01:20:08Great, and thank you for mentioning

01:20:09the EPA's recent announcement,

01:20:12something I've worked on for over a decade.

01:20:14I was glad to see it finally come to fruition,

01:20:16and I think you're right,

01:20:17that can be an important complement to these other efforts.

01:20:21So Director Thompson, obviously FHFA also has a role

01:20:27to play here in terms of your public component

01:20:32of your secondary mortgages,

01:20:35so could you talk about your plans

01:20:39to adopt similar building standards,

01:20:41which would also, in fact, have an even greater impact

01:20:45in terms of the number of homeowners and renters

01:20:49who would be able to save on their energy costs?

01:20:51Sure, thank you for the question.

01:20:53The enterprises have long been proponents

01:20:56of providing energy efficiency,

01:20:59whether it's reductions in water or energy,

01:21:03so they do give credit for builders' buildings

01:21:07that have those efficiencies already built in.

01:21:10We are undertaking an analysis right now

01:21:14to look at the building code issue.

01:21:17The enterprises are working with stakeholders

01:21:20to do their own analysis, provide research,

01:21:23and we're also looking at HUD's analysis as well.

01:21:26So this is a priority for us,

01:21:29and we should probably have some recommendations

01:21:32coming forward on what we are going to do

01:21:35in probably by the end of the second quarter.

01:21:38I appreciate that, and I think the work that HUD

01:21:41and USDA have done probably provide a good model

01:21:44so you don't have to reinvent the wheel

01:21:46when it comes to the standards.

01:21:49Mr. Chairman, I'm gonna submit a couple questions

01:21:52for the record, one for each of you,

01:21:55and I'd appreciate if you could get back to me

01:21:57as soon as possible.

01:21:58Thank you.

01:21:59Thanks, Senator Bethel.

01:22:00Senator Britt of Alabama is recognized.

01:22:01Thank you, Mr. Chairman,

01:22:02and thank you both for being here today.

01:22:04It is clear the country is facing

01:22:06an affordable housing crisis.

01:22:08High interest rates and inflation

01:22:10paired with soaring construction costs and low inventory

01:22:14have put home ownership further and further out of reach

01:22:17for hardworking Americans.

01:22:19This crisis, in my opinion,

01:22:21has only been intensified by Bidenomics.

01:22:24This administration's reckless tax and spend policies,

01:22:27overregulation, and misguided partisan efforts

01:22:30that prioritize things like the Green New Deal

01:22:32or, like my colleagues, Senators Hagerty and Vance

01:22:36pointed out, DEI programs over the safety and soundness

01:22:39of our housing market and our economy.

01:22:42Today, regulatory costs make up nearly 24%

01:22:46of a new home's price.

01:22:48Homelessness hit an all-time high in 2023

01:22:52despite HUD receiving record funding

01:22:55specifically to address this very issue.

01:22:59Not only is home ownership more out of reach,

01:23:01but not a single state in the country

01:23:03even has an adequate supply of affordable rental housing

01:23:07for low-income families.

01:23:09I could go on.

01:23:11There are real problems facing real people,

01:23:15and we have to focus on real solutions.

01:23:19Unfortunately, what we've seen from this administration

01:23:21is fast-tracking and politicizing regulatory actions

01:23:25that actually risk putting the economy at greater risk.

01:23:29And on that, Director Thompson, in a hearing last May,

01:23:33you said, quote,

01:23:35you are committed to making sure that pilots are public

01:23:39and that people know that there is more transparency

01:23:42going on in Fannie and Freddie, end quote.

01:23:46So my question for you is,

01:23:47is there a reason that your agency changed paths,

01:23:50so to speak, and did not go through the public notice

01:23:53or comment period

01:23:55before issuing the recent title insurance pilot program?

01:24:00Thank you for the question.

01:24:02And first, I'd like to say that safety and soundness

01:24:05grounds everything that we do.

01:24:07We do not compromise safety and soundness.

01:24:09I'm a longtime regulator.

01:24:11Thank you for reiterating that.

01:24:12Well, just want to make sure

01:24:13that that is the foundational understanding.

01:24:16With regard to the title pilot,

01:24:19we do have a pilot transparency page.

01:24:23We received the pilot from Fannie Mae,

01:24:27and the pilot, we don't-

01:24:30Just in time for the,

01:24:31is this just in time for the State of the Union

01:24:33right before that?

01:24:34Well, the pilot was,

01:24:35we went through our normal process,

01:24:37and the pilot went through analysis.

01:24:40We didn't do anything different or anything wrong.

01:24:43So is there, are you going to consider

01:24:45actually allowing the public some time to comment on that?

01:24:49Well, we are, we need to,

01:24:52the pilot hasn't been operationalized yet.

01:24:55We are still in the process of searching for a vendor

01:24:59to help digitize and try to figure out

01:25:02how they can access the title records.

01:25:05Fannie Mae is going to issue a solicitation

01:25:08to multiple vendors to provide this service.

01:25:10And make sure, we're talking about the same thing,

01:25:12this applied to certain low-risk refinances.

01:25:16So current homeowners,

01:25:17so this isn't going to help with people

01:25:19who are not currently homeowners

01:25:22and want to kind of achieve that American dream.

01:25:23It's just, okay.

01:25:25So, well, you finalized, your agency did,

01:25:29it's products and activities rule,

01:25:31which my understanding was meant to bring transparency

01:25:33to new initiatives.

01:25:35But it seems that that isn't going alongside

01:25:38this actual initiative.

01:25:39Yeah, this came in as a credit underwriting decision,

01:25:43because what the pilot actually will do

01:25:46is waive the requirement for representation,

01:25:49which is similar to what we've done

01:25:52and I'm so sorry, I only have one minute,

01:25:53but if you would commit to just making sure

01:25:55that there's public comment period

01:25:56and we have the opportunity to weigh in.

01:25:59Mrs. Todman, I want to shift my focus.

01:26:01Thank you so much for being here today.

01:26:03I understood you have been in the housing space

01:26:06and you were included in the moving to work program,

01:26:11but obviously when the pandemic hit,

01:26:14we decided or HUD decided to postpone that program.

01:26:17Would you recommit to actually reengaging

01:26:20now that the pandemic is over

01:26:22to help people really not only get on their feet,

01:26:24but have an opportunity to actually succeed?

01:26:28Senator, you'll be happy to hear

01:26:29that we have been working quickly and urgently

01:26:33to carry out Congress's mandate

01:26:35to expand the moving to work agencies.

01:26:37Excellent.

01:26:38And we completed that task just two weeks ago.

01:26:41Good, because I believe if you're an abled bodied,

01:26:43working aged American without dependents,

01:26:46working, training, volunteering,

01:26:48it is to receive government benefits

01:26:50that there's a dignity that goes along with that.

01:26:52And in my last few seconds,

01:26:54I just wanted to briefly underscore the magnitude

01:26:57of debt funded multifamily loans that will be needed,

01:27:00that will need to be refinanced

01:27:01over the next couple of years,

01:27:03but can't at the current interest rate.

01:27:05So I just would like to work with you

01:27:07and urge you both to revisit

01:27:08the enterprise regulatory capital framework

01:27:11and its lack of counter cyclical adjustments

01:27:13for multifamily.

01:27:15My staff will follow up with you,

01:27:16but I look forward to working with you both.

01:27:18Thank you.

01:27:19Senator Warnock from Georgia is recognized.

01:27:23Thank you so very much, Chair Brown.

01:27:25According to the Atlanta Journal Constitution,

01:27:28there are just a handful of private equity firms

01:27:32that individually own more than 10,000

01:27:36single family homes around Atlanta.

01:27:39And during this time of elevated rates

01:27:41and in the middle of a housing crisis,

01:27:44large institutional investors

01:27:47and Wall Street private equity firms from outside Georgia

01:27:51are effectively boxing first time,

01:27:53first generation home buyers out of the housing market

01:27:57by gobbling up the available housing stock in Atlanta.

01:28:03This is particularly egregious when you think about

01:28:05the role that Wall Street played

01:28:09in what we saw just a few years ago with the crash.

01:28:15This is also why I previously introduced

01:28:17the Housing Market Transparency Act,

01:28:19legislation that would provide greater transparency

01:28:22over who actually owns properties

01:28:24built under the low income housing tax credit,

01:28:27which includes significant private equity investors.

01:28:34I'd like to ask the Honorable Sandra Thompson,

01:28:37Acting Secretary, thank you for all the work

01:28:40that your agency has done to make homeownership

01:28:42more affordable for Americans.

01:28:44But I'm troubled by the increase

01:28:46in private equity ownership in the housing market.

01:28:49What steps is your agency taking

01:28:51to ensure that Fannie Mae and Freddie Mac

01:28:55are not passing economic benefits

01:28:57intended for ordinary Americans to private equity firms?

01:28:59Sure, so thank you for the question.

01:29:02And Fannie Mae and Freddie Mac

01:29:04do not engage in institutional investors

01:29:07for single family rentals at all.

01:29:10The agency had one transaction in 2018

01:29:14and decided to not engage in those activities anymore.

01:29:18So we do not permit institutional investors

01:29:22to purchase loans for acquisition.

01:29:26I would say though that there's a number of investors

01:29:30that six, these are more mom and pop,

01:29:34as opposed to institutional investors.

01:29:36Like Fannie Mae has a requirement

01:29:38that one person can have 10 properties,

01:29:41like one individual and Freddie Mac,

01:29:43one person can have six,

01:29:44but those again are more local mom and pop.

01:29:47They're not institutional investors.

01:29:50But so are there steps though that your agency

01:29:53can take to protect ordinary folks

01:29:57from this increase in private equity ownership

01:30:00in the marketplace at large?

01:30:02Well, for the loans that Fannie and Freddie

01:30:04won't purchase those loans

01:30:06because they're ineligible to make those loans.

01:30:11So one of the things that we do with our REO portfolio

01:30:15is we have a 30 day first look period

01:30:18where investors are not able,

01:30:21the house goes on the market

01:30:23and you have to be owner occupied

01:30:25or a community development investment fund

01:30:30or a nonprofit to purchase.

01:30:32First you get 30 days before the house goes on the market.

01:30:35So those are some of the things that we have done.

01:30:38So my larger concern obviously is to ensure

01:30:40that ordinary hardworking American families in Georgia,

01:30:44all across the country have access to the American dream.

01:30:48And this is what allows for generational wealth

01:30:51that gets passed, what allows for generational wealth.

01:30:55So as home prices have increased,

01:30:57the ability for many Americans to purchase

01:31:00an affordable home has moved out of reach.

01:31:03This is particularly true for first time,

01:31:05first generation home buyers.

01:31:07On top of this, we see a racial home ownership gap

01:31:11that actually widened in 2023.

01:31:16Only 44% of black Americans own a home,

01:31:19a total that's almost 29 percentage points

01:31:22lower than white Americans.

01:31:25Acting Secretary Todman,

01:31:27under President Biden, federal housing agencies

01:31:30have been committed to providing resources

01:31:32for new home buyers.

01:31:33I was glad to see the president call on Congress

01:31:36to pass a $10,000 tax credit for first time home buyers.

01:31:41Can you detail why this home credit is important

01:31:44and who is it targeting?

01:31:48Senator, thank you for that question.

01:31:50And I think you've provided the facts very clearly

01:31:53in terms of who will be most assisted

01:31:57by this type of investment in first time homeowners.

01:32:00And I'll take it to the next level,

01:32:02first generation home ownership,

01:32:04which was a part of the president's proposal

01:32:07in his 2025 budget proposal.

01:32:10You know, this is critical.

01:32:12We know that home ownership remains the number one way

01:32:15that the middle class is able to generate

01:32:18and sustain generational wealth.

01:32:20And as you so well said,

01:32:22there's only about 44% of black Americans

01:32:26that have access to that generational wealth.

01:32:29And so we know that by providing concepts

01:32:33like first generation down payment,

01:32:35we know what that means in the longterm.

01:32:37We know that having a tax credit

01:32:39that allows those families

01:32:40who are locked out of home ownership

01:32:42what it means to sort of have access

01:32:45to that type of subsidy

01:32:49to write down some of their upfront costs.

01:32:51But we also know that we have to do more as a country

01:32:55and we're doing more as administration

01:32:57to make sure that there are home ownership units to purchase

01:33:00by making sure we can encourage

01:33:02the increase of supply of starter homes.

01:33:05So we are looking at this in the full 360

01:33:07and look forward to sharing more with you and your team.

01:33:10Well, thank you.

01:33:11That's exactly the work that my down payment

01:33:13toward Equity Act is focused on,

01:33:16helping these first generation home buyers

01:33:18buy down the rate, support them with closing costs, et cetera.

01:33:24Thank you for your work on this.

01:33:24And I look forward to working with the chair

01:33:27and the committee to get legislation signed into law.

01:33:29Thank you.

01:33:30Senator Warnock, in my conversation yesterday,

01:33:34day before yesterday, whenever we talked

01:33:36with the acting secretary,

01:33:38we spoke about that bill and our work on it

01:33:41and how Secretary Fudge, especially as we talked,

01:33:45that was such a high priority for her.

01:33:46If we're ever gonna end the wealth gap in this country,

01:33:49surely the best tool is home ownership

01:33:52and what this legislation can do.

01:33:54Senator Cortez Masto of Nevada is recognized.

01:33:57Thank you, Mr. Chair.

01:33:58Welcome to both of you.

01:34:00I just wanna say thank you both to you and your staff

01:34:04for all the great work and partnership

01:34:06that you've done in Nevada around affordable housing.

01:34:08Thank you.

01:34:09I know you're there.

01:34:11I've talked with both of you.

01:34:12Your staff is incredible.

01:34:14They're on the ground.

01:34:15So thank you.

01:34:17Let me start, Director Thompson, with you.

01:34:19I also have to thank you and your staff

01:34:21for the very insightful and thorough review

01:34:24of the Federal Home Loan Bank System.

01:34:26This is something, I think you and I talked about it

01:34:28from the very beginning and the challenges

01:34:31that I felt we needed to address,

01:34:34particularly around the core mission

01:34:36of Federal Home Loan Banks,

01:34:39which is housing and community development.

01:34:42So you did an analysis.

01:34:45Many of the changes or recommendations in your report

01:34:49are recommendations or actions

01:34:52that the agency can take on its own,

01:34:55but there's also recommendations to actions for Congress.

01:34:57So I wanna talk to you a little bit about those.

01:34:59Can you tell us why the Federal Housing Finance Agency

01:35:03recommends Congress improve access

01:35:06to the Federal Home Loan Bank System

01:35:08for non-depository community development

01:35:11financial institutions, or CDFIs?

01:35:14Sure, thank you for the question.

01:35:16We spent a lot of time on the Home Loan Bank review,

01:35:21and we got a wealth of information.

01:35:24And as you mentioned, some of our recommendations

01:35:27are statutory and some we can do on our own.

01:35:29But what we found in our discussions

01:35:31was that CDFIs play an important role in local communities.

01:35:36They communicate with all housing stakeholders

01:35:39in a way that is just so unique and helpful,

01:35:42and it produces results,

01:35:44especially in underserved and low-to-moderate income areas.

01:35:48And we wanted them to have the same benefits

01:35:51that other members have,

01:35:53because other members are able to commit collateral,

01:35:56especially if they have, I think the limit is,

01:36:00if they're a small community institution,

01:36:03they can pledge collateral,

01:36:05but the CDFIs are not able to pledge

01:36:08the same type of collateral.

01:36:10And so we wanted to make sure there was parity,

01:36:13because we're talking about small institutions

01:36:16and small members,

01:36:17and we want to make sure there's parity

01:36:19throughout the membership.

01:36:20So one of our regulatory asks is to make sure

01:36:24that CDFIs have the same benefits

01:36:29as other small institutions like community banks,

01:36:32so they can continue to build

01:36:34and provide affordable housing in their communities.

01:36:36Thank you.

01:36:37And we know for decades,

01:36:38the FHL banks set aside was 30% of their net revenue,

01:36:4410% for the affordable housing program,

01:36:46and 20% to repay the savings and loan bailout.

01:36:49Those payments never threaten the stability of the system.

01:36:53Why does FHFA recommend that the assessment

01:36:55for the affordable housing program

01:36:57be increased by at least 20%?

01:37:00Well, thank you again for that question.

01:37:02For the very reasons you mentioned,

01:37:04right now the home loan banks are setting aside 20%

01:37:07in retained earnings, which counts towards capital,

01:37:10but they're all well capitalized,

01:37:12and they can well afford to provide at least another 10%

01:37:18to help with this housing crisis

01:37:20that we're having throughout this country.

01:37:22They're in 11 districts around the country,

01:37:24they're serving all of the states and counties

01:37:27in the United States,

01:37:28and they could do a better job

01:37:29in providing housing development

01:37:32and affordable housing and community development.

01:37:36And I would say, though,

01:37:37that they are starting to increase their contributions,

01:37:41but it would be really helpful

01:37:43to have a statutory requirement increase

01:37:47from 10% to at least 20%.

01:37:49And we both know this,

01:37:51the FHL banks earned 6.6 billion last year,

01:37:57and we've said this already,

01:37:58and like Fannie and Freddie,

01:37:59the federal home loan banks do not pay any taxes.

01:38:01So I would ask my colleagues to join me

01:38:04on legislation that addresses some of the recommendations

01:38:08that you've just talked about

01:38:09that are so essential to bringing more dollars

01:38:12into our communities for affordable housing.

01:38:15I only have about 40 seconds left.

01:38:17Let me, Acting Secretary, ask you this.

01:38:20Can you talk about the proposed rule

01:38:21to streamline the Home Investment Partnerships Program?

01:38:24We are, it's still in its interagency process.

01:38:28I am happy to say that we are doing it.

01:38:30One, I think it's a long time coming

01:38:32to modernize this program

01:38:34that is the largest grant program

01:38:36the federal government has

01:38:37to make sure we have low and moderate income homes

01:38:40and home ownership opportunities.

01:38:42We are almost there across the finish line

01:38:44in getting the rule out for comments,

01:38:47and look forward to working with you in your office

01:38:49on how we did.

01:38:50And we thank you.

01:38:51I know your staff's been great working with us

01:38:53on the bill, the Home Investment Partnerships

01:38:56Reauthorization Improvement Act that I've introduced.

01:38:59It was part of the subcommittee hearing

01:39:01that Senator Smith was just talking about

01:39:03with Senator Lamas.

01:39:04And there was a conversation,

01:39:06how important this program, the Home Program is

01:39:08to building affordable housing in communities

01:39:10across the country.

01:39:11So thank you for your good work.

01:39:13Thank you.

01:39:14Thanks, Senator Cortez Masto, and you're almost done.

01:39:17So I think no one else is coming.

01:39:19So I have a series of questions,

01:39:21and sometimes waiting to last,

01:39:23I can get a better overview of the committee

01:39:26and the questions and what we wanna talk about.

01:39:30So starting with Secretary Todman,

01:39:33you and I talked about the HUD-assisted properties

01:39:36in Toledo, Ohio and Northwest Ohio

01:39:38that the city cited for deplorable conditions,

01:39:41Ashland Manor and Covenant House.

01:39:44I demanded that HUD cooperate with Toledo officials

01:39:47to fix this situation.

01:39:49HUD's been working with the city of Toledo.

01:39:52Will you commit in front of this committee publicly

01:39:55to continuing to work with the city

01:39:57to see the job through, to fix the conditions

01:40:00at Ashland Manor and Covenant House,

01:40:02and to hold the landlords accountable?

01:40:04Absolutely, and I made that commitment

01:40:06to the mayor of Toledo as well myself.

01:40:08Good.

01:40:10I'll be holding you to that.

01:40:11It never should have gotten to this situation.

01:40:13No one else should have to live that way.

01:40:15I wanna follow up with you on what HUD is doing

01:40:18to better identify poor conditions

01:40:20and irresponsible owners before they hurt residents

01:40:23and communities as they did in Toledo.

01:40:26I'll count on that.

01:40:28Director Thompson, turning to manufactured housing,

01:40:31I've heard from Ohio seniors who live in communities

01:40:33financed by Freddie and Fannie who are forced

01:40:36to go to extreme lengths to keep up with the rising rents

01:40:39and fees that out-of-state investors are charging.

01:40:42We're seeing more and more out-of-state investors,

01:40:45as you and I have talked in the past,

01:40:47in manufactured housing.

01:40:48How do we change the system so that when Fannie and Freddie

01:40:51are getting credit for providing affordable housing,

01:40:54residents can actually afford their rent

01:40:56and aren't forced to choose between keeping their homes

01:40:59and buying food and medicine?

01:41:01Great, thank you for the question, Senator.

01:41:03We really are working with the Duty to Serve program

01:41:08because we believe that there ought to be a penalty.

01:41:11Fannie and Freddie should not get credit

01:41:13for the situations and circumstances

01:41:15where the homeowners are not getting updated

01:41:20property maintenance or they're living in conditions

01:41:23that are just untenable.

01:41:25So we're thinking about ways to address those issues.

01:41:28As you know, for manufactured housing communities,

01:41:31there's a set of tenant protections that are required

01:41:35for anyone who has a loan for Fannie or Freddie

01:41:40on a manufactured housing community.

01:41:43And we also have them sign compliance agreements every year

01:41:47to ensure that they're complying

01:41:49with the tenant protections that are in place.

01:41:53In addition, both Fannie and Freddie are getting ready

01:41:55to establish asset management oversight

01:41:58so that they can make sure that these properties

01:42:01are in good condition and that people are living

01:42:04in safe, decent, and affordable housing.

01:42:07There was a lag during the pandemic

01:42:10where inspections were not taking place,

01:42:12and we really have a lot of catch-up to do

01:42:15and wanna make sure that we're doing our part

01:42:18to make sure that Americans across this country,

01:42:20especially in manufactured housing communities,

01:42:23are able to live with dignity and respect

01:42:25and in conditions that are safe and decent.

01:42:29Thank you.

01:42:31Back to you, Secretary Todman.

01:42:32We have neighborhoods in Cleveland.

01:42:34In fact, in the zip code where I live in Cleveland,

01:42:37where my wife and I live, that zip code,

01:42:39at some points in the early part of the housing crisis

01:42:42a decade and a half ago had the highest number

01:42:44of foreclosures of any zip code in America.

01:42:47In city, in neighborhoods in Cleveland throughout Ohio,

01:42:51too many children are still poisoned by lead,

01:42:53and you know that.

01:42:54Through efforts like Lead Safe Cleveland Coalition,

01:42:56Ohioans are working to make progress and protect kids.

01:42:59Your testimony proposes improvements

01:43:02to HUD's Healthy Homes Program.

01:43:04I wanna follow up with you on how this proposal

01:43:06will support efforts like these to prevent lead poisoning.

01:43:10We'll be back to you about that.

01:43:12Very good.

01:43:12Thank you.

01:43:13Director Thompson, after the 2008 crisis,

01:43:17Fannie and Freddie briefly provided financing

01:43:19to help investors buy up and rent single family homes.

01:43:23Some of that financing is still benefiting

01:43:25a company called Vinebrook,

01:43:27which owns thousands of homes in Ohio

01:43:29as a track record of running properties

01:43:31into the ground, of evicting families,

01:43:33of driving up local housing prices,

01:43:35a particular problem in Cincinnati.

01:43:38I visited some of those houses and neighborhoods.

01:43:42Will you commit today, Director,

01:43:44that Fannie and Freddie won't do any new financing

01:43:47for investors in single family rentals

01:43:50who so often exploit tenants

01:43:51and drive up rent and housing prices?

01:43:54Senator, thank you for bringing that to my attention.

01:43:57After the experiment or pilot

01:43:59that Fannie and Freddie did in 2018,

01:44:02we have prohibited them

01:44:03from working with institutional investors,

01:44:05but what you've described,

01:44:07we'll absolutely follow up

01:44:08and make sure that that does not happen,

01:44:10but we'll follow up on that particular property.

01:44:12And I will continue to watch that.

01:44:16And you know we're watching that,

01:44:17and I appreciate the public service of both of you,

01:44:20but that kind of predatory business model

01:44:24needs to be rejected always by anything the government,

01:44:27any influence the government can have, so thank you.

01:44:30Thank you to the two witnesses today for your patience.

01:44:33Thank you for your testimony.

01:44:34Thank you most especially for your public service.

01:44:37Senators who wish to submit questions

01:44:39are due one week from today, April 25th.

01:44:41To the witnesses, you have 45 days to respond.

01:44:47Thank you again for that.

01:44:48With that, the hearing's adjourned.

Sherrod Brown Leads Senate Banking & Housing Committee Hearing On Oversight Of Housing Regulators

Category

Transcript

Recommended