House Committee Holds Hearing on Housing Finance Reform

The House Financial Services Committee held a full committee hearing, “The End of Affordable Housing? A Review of the Trump Administration’s Plans to Change Housing Finance in America,” on October 22. Witnesses included Federal Housing Finance Agency Director Mark Calabria, HUD Secretary Ben Carson, and Treasury Secretary Steven Mnuchin. Committee members questioned witnesses about the Trump Administration’s housing finance reform plan, which includes the recapitalization and release from federal conservatorship of Fannie Mae and Freddie Mac and the elimination of the entities’ affordable housing goals (see Memo, 9/9).

In her opening remarks, Committee Chairwoman Maxine Waters (D-CA) criticized the administration’s plan, calling it “disastrous for our housing system” and questioning the administration’s motives, given the harmful housing policies for which it has advocated during its tenure. Ranking Member Patrick McHenry (R-NC) emphasized the importance of moving forward with housing reform in a bipartisan way and noted that “while by no means perfect, [the administration’s plan] sketches a path forward and away from the status quo that puts taxpayers at risk and prevents competition within the market.”

All three witnesses noted their disapproval of the hearing’s title, rebuking the notion that the housing finance reform plan would “end” affordable housing. Secretary Mnuchin stated the Treasury Department “does not propose, and indeed opposes, reducing or eliminating the government sponsored enterprises’ (GSEs) longstanding support for affordable housing.” Secretary Carson stated that affordable housing is HUD’s “highest priority.”

The administration’s proposal would eliminate Fannie Mae’s and Freddie Mac’s affordable housing goals and suggests the goals suffer from a lack of transparency and accountability to taxpayers. The proposal offers few details on what a new framework might entail, however, and the witnesses did not elaborate when pressed during the hearing. Secretary Mnuchin asserted there are many possible alternatives to the current system, and that the best way forward would be enacting reforms through bipartisan legislation.

The witnesses repeatedly emphasized the impact of local land-use and zoning regulations on the cost of housing construction, tying increased construction costs to increased rent burdens for households across the income spectrum. Secretary Carson also noted his support for the use of manufactured and modular housing to bring down construction costs and provide more affordable housing options for low-income households.

Representative Rashida Tlaib (D-MI) questioned Secretary Carson on HUD’s recent proposed changes to the fair housing Disparate Impact rule, a legal tool for determining whether a policy or practice has a discriminatory effect even without an apparent intent to discriminate (see Memo, 8/19). The secretary said the proposed changes are necessary to curb frivolous discrimination claims. Representative Tlaib emphatically disagreed, saying the current Disparate Impact rule provides people in protected classes legal recourse, and she urged HUD to abandon the proposed rule changes.

Watch a recording of the hearing at:

Read Chairwoman Waters’ opening statement at:

Read Ranking Member McHenry’s opening statement at:

Read the House Financial Services Committee’s memorandum on the hearing at: