Administration Officials Testify on GSE Reform, Housing Affordability; NMHC Releases Data on Ramifications of States’ Rent Control Legislation
The House Financial Services Committee held an Oct. 22 hearing – “The End of Affordable Housing? A Review of the Trump Administration’s Plans to Change Housing Finance in America” to review the Trump administration’s plans to change housing finance in the U.S. (Committee memorandum, Oct. 17)
- Witnesses included Treasury Secretary Steven Mnuchin; Dr. Ben Carson, Department of Housing and Urban Development (HUD) Secretary; and Dr. Mark Calabria, Federal Housing Finance Agency (FHFA) Director. Topics discussed included reforms to the Government Sponsored Entities (GSEs) Fannie Mae and Freddie Mac, Housing Affordability and Rent Control. (Video of the Oct. 22 hearing)
- Treasury and HUD unveiled plans last month to wind down the 11-year long federal conservatorships of Fannie and Freddie, which support the multi-trillion U.S. housing market by securitizing and guaranteeing residential mortgages. (Roundtable Weekly, Oct. 4 and (CQ, Oct. 22)
- The administration plans to reduce the size of Fannie and Freddie with an explicit government guarantee that would be open to private competitors who comply with underwriting standards from FHFA, the federal government’s GSE regulator.
- Committee Chairwoman Maxine Waters (D-CA) stated that the Trump Administration’s housing finance reform plan would be disastrous for the U.S. housing system. She said that the Administration’s plan would abolish affordable housing goals that help to support affordable home ownership and rental housing, replacing them with a mortgage fee that has not been explained in detail.
- Treasury Secretary Mnuchin testified, “I was surprised and disappointed by the title of this hearing. To be clear, Treasury does not propose – and indeed opposes – reducing or eliminating the government-sponsored enterprises' longstanding support for affordable housing.”
- During Q&A, HUD Secretary Carson stated that opportunity zone tax incentives revitalize business in specific geographic areas, which then incentivizes the building of affordable housing.
- In response to question about rent control from Rep. Alexandria Ocasio-Cortez (D-NY), FHFA Director Calabria agreed there is a lack of affordable rental housing, especially in certain cities like New York – but added he did not think it should be the federal government’s responsibility to tell someone what price they have to rent their property.
- In a separate development, new data released this week by the National Multifamily Housing Council (NMHC) highlights the ramifications of California joining Oregon and New York in passing sweeping rent control legislation. (Roundtable Weekly, Oct. 11)
- The October NMHC Quarterly Survey shows 34% of multifamily firms who operate in rent control jurisdictions have reduced investments in those areas – a significant jump from the July survey, where 20% of firms indicated they were cutting back investment in rent controlled areas. (NMHC, Oct. 22)
- Roundtable President and CEO Jeffrey DeBoer addresses rent control in Walker and Dunlop’s recently released “Quarterly Multifamily Outlook Quarterly Report for Fall 2019.” DeBoer states, “Although we focus on national issues, we do have concerns about the more local trend to enact rent control. These laws are destructive. They may help those people in the short term but those same people are hurt in the long run by giving them lower and lower quality housing. It ends up being very inequitable over time and hopefully the trend will not gain additional traction.”
Regarding housing finance and GSE reform, The Roundtable and 27 industry organizations on March 1 submitted principles for reforming the GSEs. The letter emphasized that compelling evidence must show the private market is capable of an expanded role before efforts are made to reduce the GSEs' current housing finance footprint. "Ultimately, we believe any reform, be it administrative or legislative, must seek to further two key objectives: 1) preserving what works in the current system, while 2) maintaining stability by avoiding unintended adverse consequences for borrowers, lenders, investors, or taxpayers." (Roundtable Weekly, March 1)
GSE reform, housing affordability and recent state measures on rent control will be discussed during The Roundtable’s Fall Meeting on Oct. 30 in Washington.
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