The House Committee on Financial Services held a hearing on Tuesday, October 22 featuring U.S. Treasury Secretary Steve Mnuchin, Housing and Urban Development (HUD) Secretary Ben Carson and Federal Housing Finance Agency (FHFA) Director Mark Calabria.
The three had appeared previously before the Senate Banking Committee on September 10 to discuss the Administration’s housing finance reform memos recently released by Treasury and HUD as well as steps FHFA expects to take as a result of the memos.
During the recent House hearing, the panel was questioned over a broad range of topics with a particular focus on the impact on housing affordability from the plans and actions taken by FHFA.
While homeownership and single-family issues were front and center, several members did focus on the multifamily industry. Both Representative Huizenga (R- MI) and Representative Loudermilk (R- GA) asked questions about the GSE capital standard rule and its impact on the multifamily industry.
FHFA proposed a capital standard rule for Fannie Mae and Freddie Mac in June 2018. The proposed includes a risk-based capital requirement and minimum leverage capital requirement.
In response, NMHC and NAA submitted a comment letter raising concerns about the treatment of the multifamily businesses. Specifically, we raised that the analysis was not transparent in its analytical process, did not fully recognize the differences between single and multifamily businesses, did not fully recognize the strong performance of each of the GSEs businesses and of their unique business models and did not adequately evaluate the different capital frameworks applied to other financial institutions.
Director Calabria has said that there are generally three possible paths forward for the rule: (1) the Finalize the GSE capital rule later this year with only modest changes, which would not require a re-proposal; (2) finalizes part of the capital rule and re-proposes the remainder; or (3) re-proposes the entire rule, which would push finalization into the spring of 2020.
Rent control was also a topic of discussion during the hearing due to the inclusion of language referencing rent control the Treasury Department’s recently released housing finance reform proposal, which states that burdensome rent control laws can “interfere with the functioning of local housing markets, tending to decrease the supply and quality of the available housing.” Specifically, the lawmakers discussed the potential affect rent control could have on underwriting. The Treasury’s report cites that “FHFA should revisit the GSEs’ underwriting criteria for acquisitions of multifamily loans secured by properties in jurisdictions that adopt rent-control laws or other undue impediments to housing development.”
To learn more about GSEs and housing finance reform, visit our advocacy page.
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