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FHFA Director Watt Testifies before Senate Banking Committee, Addresses HTF

The Banking Committee held a hearing on Thursday, May 11 on “The Status of the Housing Finance System after Nine Years of Conservatorship” with Federal Housing Finance Agency (FHFA) Director Mel Watt as the sole witness. The Senate Banking Committee is moving forward with discussions about reforming our nation’s housing finance system, which remains a top priority for Chairman Mike Crapo (R-ID) and Ranking Member Sherrod Brown (D-OH).

During the hearing, Mr. Watt focused on the reforms that FHFA has made as conservator to the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, to make them more stable and reduce taxpayer risk. Mr. Watt cautioned, however, that the federal conservatorship of the GSEs was not sustainable, and that it is the responsibility of Congress, not FHFA, to develop housing finance reform principles. 

Senator Chris Van Hollen (D-MD) asked Mr. Watt about how the national Housing Trust Fund (HTF), which is currently funded through a modest fee on the GSEs’ book of new business each year, will be capitalized going forward. Mr. Watt said he decided to lift the suspension on the GSEs’ obligation to fund the HTF based on statutory mandate. He said that while FHFA does not have authority over the disposition of HTF funds, it does have the authority to fund the HTF. Senator Van Hollen thanked Mr. Watt for his decision to lift the suspension—pointing out that the decision was consistent with statute—and noted that Maryland was putting its HTF allocation to good use.

Senator Brian Schatz (D-HI) asked Mr. Watt about the role Fannie and Freddie play in the multifamily housing sector and FHFA’s effort to realign the GSEs to better serve underserved communities. Mr. Watt reminded the Committee that FHFA and the GSEs’ responsibility extended beyond homeownership to include rental housing as well. He said that there has been substantial progress in motivating the GSEs to finance multifamily housing that is affordable for low income families. Mr. Watt added that the Duty to Serve rule has helped push the GSEs to more aggressively serve specific underserved markets, including rural, affordable housing preservation, and manufactured housing.

NLIHC remains committed to working with advocates across the country to ensure that funding for the HTF is included in any housing finance reform legislation. NLIHC encourages all advocates to sign a letter urging Congress to protect and expand the HTF and to share the letter with their networks. The deadline for signing the letter is May 31.

Sign onto the letter supporting the HTF at: http://bit.ly/2rigPbH

Read about the hearing at: http://bit.ly/2q6PGuA