Senate Banking Hearing with FHFA Director
April 23, 2024
On April 18, the Senate Banking Committee held a hearing with leaders of the Federal Housing Finance Agency (FHFA) and Department of Housing and Urban Development (HUD).
Why it matters: Housing is a key priority for Chairman Sherrod Brown (D-OH), and the Biden Administration has been seeking to implement a number of housing policy priorities via FHFA and HUD. Witnesses included:
What they’re saying: Senators focused on a number of cost drivers and barriers to housing affordability both on the single family and multifamily side, and many senators questioned both witnesses on detailed policy issues. Key takeaways for CREFC members include:
Insurance Cost and Availability: Sen. Laphonza Butler (D-CA) specifically asked Thompson about FHFA not receiving notice when insurers withdraw from a market.
- Thompson responded that FHFA is working with the mortgage and insurance industry, and Butler urged both regulators to work on a framework to protect consumers when insurers withdraw.
Institutional Investors in Homes: Sen. Raphael Warnock (D-GA) focused his questions on “…large institutional investors and Wall Street private equity firms from outside Georgia [effectively] boxing first-time, first-generation home buyers out of the housing market….”
- Thompson responded that the GSEs do not engage with institutional investors for single-family rental and have limits on how many properties individuals can own.
- Thompson also emphasized that GSE real estate owned (REO) properties have a 30-day “first look” period that limits bidders to owner-occupied, Community Development Financial Institutions (CDFIs), or nonprofits. Institutional investors are not able to purchase during that period.
- Chairman Brown used his opening remarks to call single-family rental “predatory” and highlighted his Stop Predatory Investment Act (S.2224), which would eliminate tax breaks for institutional investors who buy single-family homes.
Federal Home Loan Banks (FHLB): Senator Elizabeth Warren (D-MA) highlighted her concerns with the FHLB program, including dividends to member institutions, FHLB liquidity to failed banks, and a lack of investment in affordable housing programs.
Conservatorship Exit: Sen. Bill Hagerty (R-TN) was the sole senator to bring up the GSE conservatorship. Hagerty urged Thompson to work with Treasury Secretary Janet Yellen and “continue the work that was begun by former FHFA Director Calabria to raise private capital and return Fannie Mae and Freddie Mac to the private markets.”
Contact David McCarthy (dmccarthy@crefc.org) with questions.