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committee on housing urban affairs is called to order. thanks to the two witnesses joining us. home is more than four walls and a roof for the play and do their homework home as we plan for the future and build wealth. home is millions of families during the middle class. homes are an anchor in our lives for too many families are in the country home they can afford and build their life around feels out of reach. i hear it and ohio, hear from everywhere from people mine by the city similar to where i grew up in mansfield. fifty-four apartments for working families just opened 54 partners at 50011 interested families but i hear it from rural washington county in southeast ohio marietta, church

town, they struggled for years 48 homes for seniors right here in franklin county in central ohio, columbus population is grown by 14% to more than 1.3 million people housing supply has not kept up and prices have been rising for years and years. with more people that counted with world-class schools and skilled workforce is great quality of life will only continue to grow. to hear the stories from across ohio. it is not just happening in ohio. whether you are in downtown columbus, or minneapolis or rural south dakota or wyoming or south carolina housing is too expensive. it has been for years. it has been for far too long. one big reason we do not have enough of it. for the past decade rent has gone up and up and out part one and four renters pay more than half their income for rent.

more than half of your income goes to rent every month, it is hard to juggle all the bills you have let alone save for a down payment. height rent stops people from becoming homeowners so many families think if i can only come up with they're down payment the money for a down payment is what stands between millions of americans and building generational wealth. that's why my bill supports a first generation homebuyers down payment toward equity act and the helper act specifically they're down payment toward equity act is a broadly for teachers, firefighters and police officers to allow them to buy homes in their communities and other sources of assistance. all that is so important. director thompson, you know these challenges because you'rer agencies are at the center of our efforts to lower the cost of housing. your agencies do not build

housing of art housing markets your job is to make sure there is affordable housing for the hauser's and builders and housing providers create the families can get a mortgage to buy their first home and as americans get older they can still live safely in their homes. both of your agencies have announced changes that should help increase housing supply and bring down costa. following calls from senator reid and me and others hud acted to improve access to financing for affordable housing through fha and the federal financing bag parade this will help housing providers and states build and preserve more affordable housing for renters across the country. hud's a long overdue update to load limits for manufactured housing's new guidance to support conversion of old office space into homes will open up new housing options. especially in cities like cleveland. you have a limit upfront fees of fannie and freddie have in the past charge lower income first-time homebuyers and borrowers who could not afford a

big down payment to begin with. you also refocus to fannie and freddie the federal home loan banks with their roles not just in financial markets but in helping to support housing families and communities need. the fact remains housing prices are still far too high. they have been for years and years it will take all of us working together housing providers, federal, state, local governments to lower cost hud and fha need to do more to be vigilant and ensuring taxpayer money is actually serving families not enriching shady landlords and wealthy investors. wall street firms and other outside investors swoop into communities but they buy up properties they evicted tenants and drive up local housing prices we should pass my stop predatory investing act to end their tax breaks for buying up numbers of single family homes. we need to ensure all of our housing agencies are on the same page and working to stop not in

any way supporting this predatory business model. state and local governments have a lot of influence over the housing and their communities more and more cities and counties are making changes like updates to zoning like shortening lengthy approval processes to open up opportunities for new housing, expand access to affordable homeownership. hud is a critical partner in supporting that work. franklin county commissioner kevin testified these sent on behalf of the national association of counties about critical role homes, cdbg and the housing trust fund play and helping counties of every size to address housing needs. local communities depend on this partnership. even with more housing some families working low-wage jobs some seniors on fixed income still will not make enough. sorry okay. hud's housing assistance program are critical to keep rent affordable. >> excuse me.

[laughter] well done. [laughter] i am almost done senator scott. >> take your time mr. chairman. [laughter] i need to make sure they work effectively and officially to serve our communities and protect our investments. congress needs to do our part. last month this committee had a hearing on legislative proposals help expand our housing supply and bring down the cost of housing let's continue our bipartisan work to move forward with common sense proposal help expand housing options and reduce cost i look forward to continue to work with ranking member scott on this committee towards that goal. i look forward to hearing today from the two leaders before us about what they have done. what more they can do. what resources they need to get their input of what congress can do to make housing more affordable for renters and for homeowners. ranking member scott peck works works thankyou both for being h.

congratulations well done. expect you to be completely prepared were going to talk about over the next several hours, likely. thank you, mr. chairman for holding this hearing. i've been asking for about a year to have both of you in front of us. so it is certainly something that is absolute essential for us to be able to hear from our regulators as often as possible to achieve the goal of american homeownership because american homeownership is not just homeownership it is in fact in the eyes of so many americans the american dream. if we are going to close the wealth gap with that we talk so much about we are persistent is by create equity in creating equity comes from homeownership in our economy so thank you both for being here. you think about the value of homeownership, consistently, americans owe somewhere around somewhere amount $12 trillion on their mortgages. mortgage debt accounts for 70

plus% of consumer debt in the united states of america. not an insignificant amount of money. and yet, the last time we had this hearing was back during the trump years when chairman crapo was chairman of this committee. i certainly hope we have more opportunities you from both of you at the same time going forward. the american dream of home ownership is further out of reach today than it was just a few years ago despite the subsidies the trillions of dollars we spent over the decades, little has changed in 1970 homeownership and america was 64% today it is 65% rate since the passage of the fair housing act in 1968 the goal was to eliminate housing discrimination. the homeownership rate for african americans has not changed much, 41%, 44%, it continues to have a very slow

growth trajectory. our housing regulators must testify up more often so that we can find ways to deal with the challenges that housing presents to so many americans. but sincepresident biden's takee mortgage rates have ballooned by 150%. rent have gone up about 20%. homelessness is up 12% in a single year. the highest number on record in the history of our country despite empty promises from the white house about helping working families the simple fact is the housing under this administration has skyrocketed. i see that at home in south carolina and i see that across the nation as i travel. i see that in families worried about how to make ends meet watching the dream of homeownership seemed further and further and further away. what has become apparent as this administration about affordability and housing has

failed to line up with their policies. reckless spending on progressive wish list fueled runaway inflation and now americans are painfully aware biden mixes not help them. instead burdened them so much. the mountains of red tape and regulations this administration has put on housing providers are only making that matter so much worse. officially, both hud and f hfa have taken several politicized actions that will unnecessary increase the cost for families and burden communities. i have recently imposed rent controls on low income housing tax credit properties. f hfa is public comments on policies enclosing correct rent controlviolent direction fe house. what do these policies mean in practice? they have the potential to limit the number of people served by these programs and restrict the

supply of affordable housing. decades of research have improvement rent control policies make housing supply and affordability issues worse, not better. this is the type of backward logic americans have come to expect from joe biden and biden makes. second, hud and joined other federal agencies under this administration in attempting to add climate regulator to the list of duties. for instance hud proposed requiring all newly constructed subsidized housing be built to increase energy efficiency standards, even though hud itself admits lower income households may not be able to afford the added burdens of additional cost. according to the national association of homebuilders these new environmental mandates could cost as much as $31000 to each new home.

so, the same time a families facing doubling of sometimes tripling food costs in order to meet the green claimant goals this administration saddles them with an extra $31000 of additional expenses for a single home. families and communities like the one i grew up in cannot afford new claimant costs that increases the cost of housing. which brings me too my last example it appears this administration have been embraced by her housing regulators. last year hud proposed a rule encouraging cities applying for federal funds to remove crime free ordinances local laws that keep a rental communities safe by keeping out convicted criminals. even worse hud proposed a rule last week that will make it easier for criminals to lip and hud subsidized housing which risks making communities less

safe. we need to reverse course and take a different road when it comes to federal housing policy that is why i announced housing is one of my top priorities for this year as a ranking member of this committee. since our first hearing last april i focused my efforts on building consensus around the commonsense non- partisan reforms to all segments of our housing market including my road to housing act. i continue to urge consideration might road into a housing act which takes a conference in view of federal housing policy re- centers support around families, helping those who are homeless or renting or prepared to buy a house. it has a past time to consider my legislation along with other commonsense and bipartisan proposals that would include real solutions to tackle housing challenges. i look forward to and from both of the witnesses today and i look forward to having an eager

conversation about some of the challenges so many americans face as it relates to building on their version of the american dream. >> thank you et cetera scott. adrian todman welcome as his acting secretary of hud. she was confirmed as deputy secretary 2021 and prior to her service their acting secretary with national association of housing and redevelopment. held multiple roles at the d.c. housing authority and served in several career positions at hud. welcome back ms. todman, good to see it. sandra thompson was confirmed fhfa in 2022. prior to leaving that agency she was the deputy director division of housing mission and goals from 2013 until 2021. prior to joining she spent 18 years at fd i see where she held a number of senior level positions including director of the division of risk management and supervision. welcome back.

madame acting secretary, welcome. >> thank you. chairperson brown, ranking member scott distinguished members of the senate banking committee, thank you for the opportunity to testify today on how the department of housing and urban development is executing our mission. i went to thank the over 8000 hud employees across the country who are helping us carry out that mission but first let me say the support of this committee is critical to ensuring the american people of access to housing. they can afford communities that are strong and resilient. thank you for your continued efforts to lead and a legislate on these issues. as you are aware this is my fourth week serving as acting secretary. we are grateful for secretary's extraordinary stewardship on the department in the last years. her northstar was ensuring we centered our artwork on the people and that star still shines brightly. under the leadership of president biden vice president

harris, hud has made a storks drag to include outcomes for the people we serve but we have provided historic levels of rental assistance, expanded opportunities for homeownership supported the creation of affordable homes to rent and to buy. supported resilient communities, or to root out housing discrimination and help to people who do not make a lot of money just get a fair shot. and resources are having a dramatic impact on people of every community from big cities and small towns or rural areas and tribal nations. but there's more under construction 2023 than any beyond record. we are working to build even more. hud helps over 4 million households annually through our rental assistance programs. under this administration have itimplemented a number of histoc changes we serve more families and support more choice in today's market.

hud has provided payments of 120,000 new incremental vouchers and that is a 20 year record. actions are taken to promote homeownership and wealth building has resulted in a higher rate of first-time homebuyers that we have seen in the last two decades. through fha we have supported nearly 1.8 million homeowners with the purchase mortgages including 1.5 million first-time homebuyers. last year we awarded the first ever package of resources to specifically reach people experiencing homelessness and unsheltered settings and rural communities. and it taken charge to protect all people facing housing discrimination. who provided committees with half a billion dollars so far in multifamily portfolio. and by doing so we are also making much and repairs to units across the country.

we have pulled together practitioners, experts and thought leaders who are innovating and executing and researching new solutions we've improved hiring a focus on executing it procurement goals. we have had for clean audits in a row. i'm grateful for the work of this committee and the members of congress you have worked to make resources available to us we can carry out our very important work. we relook ahead hud's mission is critical is critical for young families to buy the first trumpets critical for people of maine lost their job and lost their home and are now on house to need her help. you make sure to removing health hazards and any home preventing

and remedying the impacts of discrimination. senators, over the past years executive branch has been executing her housing supply action plan as an outcome based collaborative effort across federal agencies and at work woi am proud of. housing is appropriate for the biden/harris administration the presidents put forward a vision that builds on our existing body of work. hud is prepared to do our part. chairperson grown, ranking member scott, and distinguished members of the committee i look forward to working with you. thank you and i look forward to your questions. >> think it madam secretary. director thompson welcome provokes chairman brown, ranking member scott and distinguished members of the committee i am pleased to be with you today to discuss the work and priorities of the federal housing finance agency and operations and activities of art regulated entities. fannie mae, freddie. >> and federal homeland banks.

both renters and homebuyers face of challenges in today's housing markets. an adequate housing supply for years of strong home price growth elevated interest rates have contributed to a challenging environment for housing affordability. homebuyers and renters alike face difficulties in finding a place they can afford to live. wh >> homebuyersg and renters alik face difficulties in finding a place to live. -- i've heard about these issues in cities such as -- louisville, las vegas and rural areas such as nebraska and tennessee. i've heard about the need for more workforce housing, which enable teachers, first responders and construction workers and musical employees

who live in communities they serve. i have also heard about dual income rental household that cannot -- [ inaudible ] while much of the discussion about housing affordability discusses on consumers monthly payments, closing costs represent a substantial barrier to purchasing or refinancing a home. -- have been engaged for efforts for stable measures to reduce mordred -- mortgage closing cost for current and aspiring homeowners. earlier this year, fhfa introduced a pilot as a part of the broader effort. the pilot seeks to evaluate whether technological advances and the electronic availability of real estate records can result in lower cost to borrowers who just want to

refinance their mortgage. they already own their homes and will continue to reside in them. appraisals are another important area in which -- are taking steps to reduce cost of borrowers, without compromising safety and soundness. there are several alternatives to traditional appraisers including capacity, valuation changes and shorten the process , while promoting fair, equitable and at we would -- accurate appraisal. through initiatives developed under the plan, the enterprise has supported almost 2 million families in their home ownership journey last year. some of these initiatives include down payment assistance program, and the use of positive rental payment data for renters to establish or

improve the credit scores. fhfa's oversight of the federal home loan system features an important milestone last november. when the agency released for and followed a year-long comprehend review of the system, the report included 40 mathematicians -- recommendations based on stakeholders from across the country. designed to ensure the banks effectively fulfill the core objective of the mission, providing stable and reliable liquidity to the members and supporting housing and community development. a series of reforms would be implemented to ensure the banks remain well-positioned to meet the needs and the communities they serve. the priorities i have outlined today represent just a portion of fhfa's ongoing work to ensure its duties meet their missions in a safe and sound manner. these actions, along with others outlined in my prepared treatment, align with fha jays -- f batch -- fhfa's mandate.

in my 30 years of the financial regulator, i have long believed safety and soundness and access to credit are not mutually exclusive, but instead, complementary. brought in fair access, to the stability of financial institutions work together for pillars of the nation finance the. thank you again for the opportunity to appear before you today. i look forward to work with members of this committee to find effective solutions to the challenges of house and supply -- housing supply and affordability. >> thank you, director. i will begin the questions with senator tester. >> thank you, for holding the steering. and thanks to ranking member in your courtesy. acting secretary todman, i want to talk about an issue that i talk to your folks about before. i have talked about in this hearing. is a long-standing problem getting worse and not better. it has to do with hud fair market rates.

rents, i'm sorry. they are not kept up with the rapid rise of housing prices in montana. they do not reflect the reality of housing costs. and communities across our state are not being revised in a timely manner. we take away vouchers from housing authorities with long waiting list because there simply are not any units available. how your agency is handling [ inaudible ] great

falls is the closest major city to where i live. it's not the fastest growing city in montana by any stretch of the imagination reset the economic pressures they cannot use vouchers. just simply don't >> it is not the fastest growing city market by any stretch of the imagination. is not under the economic -- they cannot use vouchers. i would love to have you address this before fall of this year, that is six months from now. if there are ways you can speed that up, or however you can do it. i would appreciate if you could let us know. we are here to help. >> if i could answer, i am also happy to have our teammate sit

down with the housing agency to talk about flexibilities that they may have in terms of using their vouchers. >> this is a problem where we have a program that was set up that does not work. >> i understand. >> we have another challenge, i am concerned that that until montana communities are left with for a few housing vouchers. and few resources. you correct me if i am wrong. we were told that last year hud took .5 billion in housing choice voucher finds from reserve authorities -- reserve fund from housing authorities across the montana. and now, you're telling me [ inaudible ] they can have a lot of fun with this question, trust me. if that is true, if reserve

funds were took and a short time later we are seeing, guess what, you have a shortfall, it doesn't not take a physicist to figure out why that happened. could you tell me what happened? two, if there is a problem do you commit with working with the folks of montana to work? >> i will come in at the top and say i'm always happy to work with the housing agencies in montana who i call former colleagues. i will also share i will have to take a look at the reserve goal and -- it does not seem to make a lot of sense. i will promise to work with you and the agencies they are so we can correct it. >> thank you, -- >> thank you, mr. chairman. one of the successes of the 2017 -- was a legislation i put in there, the reason it's been so successful whether your

democratic mayor, or republican governor, they agreed to attract more housing opportunities in the inner cities of the community is critical. i think about the event i attended with democrat mayor geddes, it was the first time in almost 30 years he had a chance to build homes within his city. the downtown area of his city, because of the opportunities. we still see real opportunities. we noted last year ocs represented largest strike apartments and the country, leading to more affordable housing. i think both of us would agree the largest issue of impacting the housing market is the lack of supply. especially for affordable homes. the housing act includes a number of -- to increase supply, as well as preserve affordable units that already exist. specifically, my legislation makes crucial changes to the

rental assistance demonstration program by eliminating the cap of the number of housing units that could be converted under the program. this would create more opportunities for private capital to help rebuild our nation aging affordable housing. a question for you, i think -- acting secretary todman. priestley said the right program has been a critical tool to help recapitalize the housing instructor backlog. he also said the housing authority must explore private driven solutions to preserving these units. do you still agree with the statements? or do you support lifting the cap on how many units may participate in or be preserved through? >> thank you, one of the things we have seen with the advent of the rental assistance demonstration program is a number of repairs being made to public housing units across the country. i think we all welcome that. i have also heard from some of

our local and national advocate about their concerns with tenant protections tied to this conversion to rad. i think we are really excited and pleased at the repair work that has been done and how the program has really turned the tide in terms of underinvestment in a really critical portfolio the house and some of our lowest income families. i would also want to make sure that we are making sure those lowest income families are being protected, as the program grows. i'm happy to talk to you more about what an expansion looks like. -- >> you also previously testified that you were deeply supportive congress's efforts to expand the moving to work a demonstration program. do you still agree with your statement and you support -- supporting the program? >> moving it is where we see four or of innovation without

the flexibility afforded these agencies, we probably would not have been able to adopt across the portfolio. just a couple of weeks ago i was in boulder county so we could celebrate the establishment of the last of the 100 agencies that congress allowed as an expansion to move into work, we call it our 39 and congress authorized us to expand into another 100. we've added our last 14 agencies moving toward the club and we look forward to their work. i will say that moving to work has been critical in looking at ways we can continue to housing residents safely. we have seen housing production, we have seen new forms of services. we have seen ways that agencies are reducing their administrative costs. which i think is something we all would once. i completely support moving to work. it continues to be a source of innovation across the housing

industry. >> we have about 50 seconds left. i will have to cmis toxin -- todman next time. we appreciate secretary fudge's service to the country. are there any's proposal that were not implemented that you would like to implement? or do you have any new ideas to help expand opportunities for our home was population? we saw the greatest bike over the last 12 month. any thoughts on how we could combat homelessness? >> i have a lot of thoughts on how to combat homelessness. one is continuing to work with the folks at the frontline to make sure they're using our existing funds effectively. white frankly, making sure we have the types of rental assistance and preservation tools we need to try to prevent homelessness to begin with. we were pleased just a couple of months ago to give localities $3.1 billion in resources. the highest amount ever to our

teams of care across the country so we can continue to do the good work that they do. we are really pleased with the additional vouchers congress provided us. because we know we have been able to stabilize over 120,000 families across the country. we look for that as a tool of intervention as well. >> thank you. director thompson, i know you will spend some time in south carolina soon. i would love for you all to spend some time in columbia spending some time working on new ways to combat homelessness. i met with her mayor yesterday and they're spending a lot of time investing resources on ways to do so, but we would love to have your expertise to weigh in on that. that is an open invitation to both of you. >> i am looking forward to it. >> senator butler, who is been called to preside. -- if you receipting your time for a moment. >> thank you, mr. chair. and thank you to senator smith.

i appreciate the chair and ranking member for holding today's hearing. i want to join my colleagues in honor the service of secretary fudge and her time in -- in the role you are taking on. an important moment for the american people, relative to housing, housing affordability and achieving that thing we call the american dream. the ability to pass on generational wealth. across the family's. director thompson, thank you so much for the previous conversation. i want to pick up where we left off. the analysis conducted by moody's estimates the u.s. economic losses from the recent california flooding at about five to $7 billion. last week, the insurer with the largest market share in california announced it would not renew the homeowner rental telling -- dwelling and other property insurance policies of

30,000 californians. leaving them financially on the hook for millions or billions of dollars in the event of future climate disasters. i know that is not just california, but louisiana, texas, florida, are also facing challenges in their property insurance markets. in our conversation, you mentioned that fhfa does not receive notice about insurer is withdrawn from insurance markets and the downstream effects that this can have. could you elaborate on these withdrawal impacts of homeowners, future homeowners, not just in california, but across the country? >> thank you for the question, property insurance property and casualty insurance is a requirement for any home purchased by fannie mae or freddie mac. and they have to have that in order for fannie and freddie to purchase them.

when property carriers withdraw from large populations, it's very difficult, especially for first-time homebuyers to purchase a home and then have to search for policy to adhere to the requirement that we have that the purchase of the loan. it is interesting because we are starting to see a lot of natural disaster is an the collateral that fhfa is responsible for, we have $8.4 trillion outstanding in the mortgage collateral. these natural disasters impact us greatly. we have multifamily properties and residential properties. and so when there is something that happens, it impacts the valuation of our property. from an insurance perspective, we are starting to see a number of climate issues, or natural disasters take place. they used to be about three issues per year that were costing over $1 billion. and now, just last year, there

were about 28 different issues that caused over $1 billion each. so the impact on our portfolio, were our only asset is mortgage collateral, even house or apartment is just phenomenal. we would really like to work with the mortgage industry to address this issue. what we are finding is -- and borrowers are not being able to afford some of their monthly payment with little or no notice. so we are also seeing a reliance on state plan for insurance. whether it is flight or otherwise. we really want to address as we try to deal with the cost of just owning a mortgage. we have been working with the insurance commissioners and some of the states that have natural disasters. california, porto, louisiana, rhode island, we are working with the naic to try to address

this very important issue. >> to that point, with my last 50 seconds, i want to offer either or both of you, secretary todman, to talk about what steps can we collectively hide and fhfa, take in the near term at least to develop a framework to incorporate detecting consumers in the event of these natural disasters and provide insurer withdrawals? >> i am happy to pick up where the director left off. as you know, hud has limited authorities as it relates to the insurance industry. what we have done is convene and a working group to look at with the authorities we have, how can we help consumers cap -- how can we help those housing owners who are saying they have increased operating costs because of outrageous insurance increases?

as soon as this week, you'll be hearing hud announced some other things we can do. there the whole body of work that will be rolling out, including engaging the insurance industry so they can understand the impact on housing affordability. >> senator rounds of south dakota is recognized. >> thank you mr. chairman. just to follow-up to senator butler's questioning. i think a lot of the challenge, it's not just in homeowners, it's a lot of the other areas where insurance is fine if you're making casualty and property repairs because of supply chain issue, the cost of making those repairs have exploded and the time delays have added to the cost. -- [ inaudible ] it is driving premiums up because of it. secretary todman, i am thinking

out loud about the way to phrase this question to you. we are trying to cut costs wherever we can with regard to bureaucratic cost of home ownership and so forth. there was a discussion most recently where we did a roundtable talking about some of the unneeded paper trails that are required right now. i would like to read a format for you. you may very well want to -- it is what we could very efficiently and simply cut some costs and red tape for some folks. we were all discussing housing affordability. there have been streamlining requirements and federal regulations. removing unnecessary requirements would be a great place to start. i would like to discuss the environmental review process.

the national environmental policy act requires agencies to consider the environmental effects of any proposed action and inform the public regarding their decisions. as you know, the agency carrying out the federal action may create your own procedures, under hud regulations. grantees must complete the environmental review process and maintain a written record of the environmental review for every project before decisions are made and actions are taken. this requirement includes the use of community development block grant funding for grantee administrative expenses. secretary todman, can you tell me why when a federal program specifically allows a portion of the funds to be utilized for administrative expense is, hud

requires the grantee to go through the bureaucratic process of actually conducting the review and creating a written record of that determination? it doesn't look like some low hanging fruit that could be fairly, easily eliminated. maybe you know about it right now, if not, would you take it for the record and get back to me? >> senator, except her invitation to take it for the record. i would add the environmental reviews of course are something that we -- is important as we carry out our work. >> probably not with regard to administrative expenses. >> i appreciate your invitation to respond on the record. i would certainly ask our staff to take a look at this with you. >> director, in 2022 during your confirmation, we had a good discussion about credit transfers, gse's. i asked you about ways we could incentivize gse's to create

credit risk transfers. i strongly support credit risk transfers at the enterprise, fannie and freddie as a way to protect taxpayers. you made it clear you felt the same way. in 2023, the enterprises posted the second lowest credit risk transfers in the history of the program and freddie posted the single lowest amount of credit risk transfers ever. director johnson, we have talked about this. you understand what a valuable tool that is. i just cannot figure out what is contributing to the trend. can you help us with that? >> i appreciate the opportunity to talk about credit risk transfer. we think as a huge component of shifting the credit risk to private written answers -- private investors and off the balance sheets of fannie and freddie, the reason the risk transfers were so low in 2023

is they are based on the loans that are purchased by fannie and freddie. you will remember in 2020 and 2021, we were faced with historic interest rates, record lows, i should say. the acquisitions for danny and freddie were at record highs. those were the two longest years of loan purchases ever for both fannie and freddie. the interest rate environment really stifled the acquisition of loan from fannie and freddie in 2023. they went from record highs, to very low. again, the credit risk transfers are based on the amount of -- they purchase. we encourage them to utilize credit risk transfers. they have been very innovative in the space. and it's a measure for safety and soundness, which is of paramount importance to us. >> thank you. it appears, probably even a lot of these folks do not have

another place to go to get a loan. we are seeing these high interest rates are impacting this segment of the population, rather dramatically, aren't we? >> absolutely. >> thank you. >> senator menendez of new jersey is recognized. >> acting secretary todman, i hope you have been made aware of the to warble conditions residents a property under the management of the atlantic city housing authority have been subjected to. residents have been complaining about issues including gas leaks, pest infestation, mold, and appliances and much more. some residents even like heating and hot water all throughout the past winter and issues have been ongoing for years. in addition, the authority itself is right with management problems, including issues with this procurement and contracting procedures that delete critical fixes to units. in february, residents of stanley holmes were instructed

to relocate to a hotel with no cooking devices, no accommodations for their pets, and at least one instance no accommodation for a residence -- resident's disability. i know hud is aware because last year, the principal deputy assistant secretary described an audit as "one of the worst ordinance -- audits i have ever read in my life. " your staff has a brief mind of the plan hud has developed for the housing authority to fix the issues. however, a plan is not enough for these residents who have been living in inhumane conditions for so long. especially when the plan is being executed by the same authority that has allowed these issues to fester for years. all the while ignoring or retaliating against residents who spoke out against what they were facing. the atlantic housing authority has lost the trust of the residents it was created to serve.

that is what i sent a letter to your predecessor in december, calling on hud to exercise its authority to immediately place the atlantic housing authority into receivership and rapidly worked to bring relief to the residents. today, i am reiterating that call. madam secretary, will you commit to personally reviewing the situation and getting back to me with what you plan to do to accelerate relief for the residents of atlantic state? >> certainly, senator. i am aware of this issue. i also directed the senior leadership of the office -- to take more urgent action. we are working with the leadership of the atlantic city housing authority, what you have described is horrific and no person, particularly the residents of public housing to be experiencing that. >> i am looking for to something more than that. i believe hud must immediately take over the atlantic housing

authority to ensure the safety and dignity of it residents. everyday we allow -- to affect the lives of the residents in the way it has, is the day it becomes the hud's problem. more so than the atlantic housing authority. i look forward to getting back to me your exact plan of action. >> i commit to doing so. >> madam secretary, i was puzzled to see the president's budget request for fiscal year 2025 call for $143 million less in the fiscal year 2024 enacted a level for section 202 housing. do you believe the budget request accurately reflects the trends in the market? >> center, as you may know, hud and the administration are working under the constraints of the fiscal responsibility act. so there are difficult decisions to be made. we think we have put forward a budget that considers that agreement. but also prioritizes where we know there is need. >> all i know is the nation is

graying pretty dramatically. those who are boomers are grayer's. if we invest less in the supply of senior housing while demand is skyrocketing, i am not sure what that will do in the marketplace. i urge you to relook at that. finally, secretary thompson, does that secretary todman, i understand hud is working on updates to energy efficiency and other construction standards for manufactured homes. i understand while -- has statutory responsibility for regulating manufactured housing, the department of energy has been working in parallel with their own energy efficiency updates. can you share with us an update on your work on this issue? >> the department of energy was

compelled by legislation to carry out its work. hud does have a draft -- i am limited in what i can say. i know we are trying to marry the pressing need of energy efficiency along with housing affordability. we have been working with our colleagues at the department of energy to do that. >> we have huge housing affordability across the country. new jersey for sure, people spend more of their disposable income on housing and where they should. i would hope this is something that could be accelerated. >> thank you, senator. >> senator haggerty -- >> thank you. i love the fact that [ inaudible ] i would like to direct this to you, secretary thompson. you testified that in order to end conservatorship with fannie mae and freddie mac two things need to happen.

first, you have to build capital to retained earnings before ending the government 15 year- long conservatorship. secondly, you said congress needs to decide the future of these two government sponsored entities. [ inaudible ] on the first point, the quickest way to end the gse conservatorship is to raise private capital. just as -- were allowed to do in the 2008 financial crisis. now that gse's control so much of the housing market, there seems to be a reluctant seed to relinquish control. i asked myself why? judging by the redistribution of housing policies that have been pursued while you been at the helm of fhfa, it seems the gse's are viewed by the biden administration as simply backdoors to push it dei social policy agenda, which is well beyond the mandate. on the second point, congress has already decided what type of finance system they wanted

2008 -- that will significantly enhance the regulatory and supervisory powers of fannie mae -- the biden and harris administration have never taken their -- so they can succeed as private companies. the responsible thing to do for yourself, secretary yellen and attorney general marlin, is to kenny -- continue the work that was done by former fhfa director to raise private capital and return fannie mae and private mac -- freddie mac to the private market. this would result in a $100 billion windfall for taxpayers. and it could be used to immediately help expand the countries housing supply answer for affordable housing for americans most in need. we talked about this at the time of our confirmation -- our housing markets and american taxpayers deserve to see these

conservatorships brought to an end. i appreciate your full attention to this and this time you have remaining. thank you. >> thank you, secretary hagrid harry -- haggerty. senator smith has re-arrive. and has been kind in yielding. >> thank you so much. thank you to both of you for being with us here today, i appreciated. everybody, i think we are all here today because we believe everybody deserves a safe and affordable place to call home. we also acknowledge all of us that for far too many families, this is out of reach. i am grateful to the biden administration and chair brown for his leadership, really bring attention to finding solutions to these challenges. and of course, housing is incredibly complex and nuanced. it is much driven by the private sector and also driven by local decision-making when it comes to dozing -- zoning,

for example. i think we could agree we do focus on boosting housing supply and preserving the housing stock we have. chair brown, we had an interesting meeting earlier this week that highlighted the need to preserve the housing stock we have. secretary todman, the question is, can you talk about how the department has worked on the issue of housing supply, especially housing for middle income people who are working low-wage jobs also? >> thank you for the question and your leadership on these issues. hud has been very busy over the past three years. not just carrying out its own work, making sure we are executing on the vouchers we have received. making sure we are modernizing our rules, like the hud rule, which i know so many people will lean on to make sure they are building for family needs.

but we have also been working collaboratively with our sister agencies and treasury on the new federal financing bank with sharing and removing some of the deadline that was tied to that initiative some more fha's could [ inaudible ] and also working with our colleagues at treasury on the state and local fiscal recovery act and repurchasing those funds for gap finance thing for rudy -- really critical capital needs on the ground. we have been busy and we think with the umbrella of the president's housing supply action plan, we have been acting as one government to drive this issue. >> the administration has made a new proposal to help expand houses of my, and particularly the innovation fund or housing expansion, can you talk about how that would help empower the solution to housing supply? >> i think you are referring to in the president's budget the

innovation fund. we want to make sure we are including gap financing and helping folks with thinking through some of their pro housing work. we are excited to have our pro housing program. it will be rolling out sometime in the spring. it is meant to be a program that is meeting localities where they are. and inspiring them to be able to create local solutions to build housing and preserve housing the have. >> thank you. i also want to talk about, you and i have had conversations about tribal and native housing. i noticed something cortez masto and senator warren pay important attention to. we know there are significantly high rates of tribal homelessness and overcrowding, which is almost a bigger problem because more than one family

crowd into shelter, that is not largely enough for them. and also the issue of substandard housing. senator -- and i had a subcommittee on this. we have been working with the administration on how we can respect tribal sovereignty and partner with tribes as we work on these housing issues. can you talk about how the department is addressing this issue? >> you will be happy to hear that since i took on the job as a deputy secretary, i have been in robust conversations with nation leaders -- native leaders and i've heard that your full. one thing we have been doing in addition to deploying the historic level of funds -- is really working with tribes on how they are able to use that money swiftly. in addition to that, we have created a new advisory committee in the department for tribal leaders. we have had two meetings, and

we will have another one shortly. we have consistently looked to the leaders of the tribal nations to tell us what we can do better in respect of our government to government relationship. those conversations continue. i have been working personally with some of the leaders in ways that hud can cut some of the red tape to make sure we are helping them deliver. >> thank you for all of your work on these important issues. >> thank you, the senator from north carolina. >> director thompson, last year, fhfa directed fannie and freddie to make changes to the home level pricing adjustment matrix. you said these updates were intended to allow them to further build capital and reduce taxpayer risk. i am trying to get my head around this. these changes functionally reduce aspects of llp a's risk based pricing relationship. and common with loan to value

strata, they seem to be providing a decrease in rates applied to higher risk persons. and increasing it to lower risks persons. did i get that right? or what am i missing? >> thank you for the opportunity to clarify the misunderstanding that permeated all of last year. and some of the pricing changes that fannie and freddie undertook. we have been working diligently to ensure fannie and freddie are doing what they can to fulfill their mission on safety and soundness to ensure they are fulfilling their mission in terms of facilitating underserved communities. we eliminated the loan level price adjustment, the up-front the -- fee for all bald verse that stretched borrowers across

the country. borrower had median income of 100% or less. i can assure you that all of the changes that we made do not result in borrowers with high credit scores, subsidizing borrowers with low credit scores. we continue to have risk based pricing. what happened in the discussion was when you have a loan to value that is 80% or higher, you have to purchase a credit enhancement, usually in the form of mortgage insurance. and we do not have that into the calculation but it is still risk based pricing at the end of the day. i can assure you that risk- based pricing exists with fannie and freddie. and there are provisions to make sure that lower income borrowers and borrowers in the rural communities across this country do not have to pay up- front. >> this can be a very

complicated discussion. it is hard to simplify into five-minute. i will submit this matrix for the record. can i get your commitment to respond back to the very specific set of questions it will ask on this? the thing i'm trying to get my head around, if part of this decision is used as a basis for raising capital, where is it coming from? >> the chart you have reflected a number of changes that the enterprises undertook. one, we increased prices on super conforming -- jumbled loans. that was one of the first changes we made. we also increased the prices -- >> what drove that decision? >> what drove the decision with the conforming loan limit. some of the counties was well over seven digits.

there is a private market that exists to purchase those jumbo mortgages. so to the extent the enterprises are purchasing those loans, people need to be able to pay the additional fees. the other thing we did -- >> are you saying the policies implemented in the last year and the fees associated with them were driven by actuarial decisions? >> absolutely. we were reading for risk and looking at the capital requirements for everything alone we purchased. we have also raised fees or second homes. >> so the reduction in fees for people with higher risk ratings were because they were being overcharged at the time? >> they were overcharged because we were not capturing the mortgage insurance that they have to pay, it is mandatory. when you have the chart, i will drop a line for the loan that

are 80% ltv and above and i will add for those. >> i have asked a long series of questions. i am happy you are able to answer. i will say, we did reach out and try to get consultation and see if you are in possession of this is in violation of the apa should have been subject to rulemaking. we found out [ inaudible ] we were going to try to force the issue. apparently, you were giving latitude in the conservatorship model. it is beginning to make me wonder whether or not we should tailor what authorities you have within your role. thank you both for being here. i will submit some questions for the record around manufactured housing and clearing the backlog as well. thank you. >> senator warren of massachusetts. >> thank you.

in 1932, congress created the federal home loan bank system to tackle the biggest housing crisis of the last century, the great depression. the basic idea was simple, the federal government offered help in the form that -- favorable regulatory treatment and special tax status. and in return, that -- would provide liquidity to the members to support housing and community development. today, we are in the middle of another housing rices. by some estimates, we are short 7 million housing units nationwide. in this critical moment, the fhlb's are missing in action on their affordable housing mission. last month, the congressional budget office released a report that for the first time put a number on how much the fhlb has received in public subsidies. in fiscal year 2024 alone, that number was a whopping seven

point $3 billion. director thompson, in 2023, how much of these public subsidies did the fhlb spend on of audible housing programs? >> i think it was approximately $390 million, -- >> $390 million? that means the vast majority of the subsidies the federal government poured into the fhlb's went somewhere other than to affordable housing. where did the taxpayer money go? director thompson, in the same year, how much did the fhlb spend on dividends for their members like banks and insurance companies? >> approximately two point $1 billion. >> just so we are clear, the fhlb's spent 8.5 times as much

on dividends to their members than they did on affordable housing. i think that is right. not all of those federal dollars, taxpayer dollars went to dividends, they are still slightly left over. according to -- the fhlb's grant tens of billions of dollars to prop up silicon valley bank, signature bank, and first republic bank before they failed. director thompson, fhfa is the primary regulator for the fhlb's, do you agree it is important for the fhfa to clarify that the mission of the fhlb the's is to provide liquidity for housing and community development? not simply to prop up feeling thanks and handout dividends?

>> absolutely, thank you for the question, senator. we conducted a year-long review of the home loan bank system. we conducted 17 listening sessions around the country and we heard exactly that. the -- banks have a dual mission. one is to provide the ability and liquidity to their members, but the other is to support the communities that they live in for the housing development and community development. there is a huge affordability issue. there are huge supply issues and home loan banks are well- positioned to do more. that is one of our recommendations >> i appreciate that. is not enough to be well- positioned they are not -- if there take money and not spending it. i think clarifying the mission of the fhlb's is an important. i think we also need to take a look at line up to the federal sub. remember, these government subsidies are to promote housing.

but in the last five years, five full years, 42% of fhlb members did not originate a single mortgage. not one. 42%. how did this happen? it turns out, under the current rules, members only need to hold at least 10% of their assets residential mortgage at the time they apply. to join an fl shelby -- fhlb. once you're in, you're in. [ inaudible ] director thompson, should the fha -- fhfa change the rules so members must hold at least 10% of their assets on an ongoing basis? in order to remain eligible for fhlb finances? >> that was one of the recommendations in our. we are going to promulgate rulemaking sometime this year to talk about membership.

one, to define what the role is of membership, and to also ask questions about what that threshold should be. you will have a situation let one of the three tech failures when you start out with the 10% to meet the requirement and then the bank's business model changes, and there are no ongoing checks for them to access the home loan bank system. that is rulemaking, it will be very transparent and we look forward to engaging in that. >> i strongly urge the fhfa to issue its proposed rulemaking to address the fhlb's admission and membership as soon as possible. the fhlb should be -- tackling our nation housing crisis not doling out welfare to these giant banks and to members that already are in the housing business. thank you. >> center events ohio is recognized. >> thank you to the two witnesses for being here.

i want to direct my questions to director thompson. one of the biases i have and i think it's hopefully a bias shared by everyone who serves on the body as to who should be discriminating based on race. we should be treating people based on their individual characteristics and not dole out government benefits, favors or consequences. because people have the wrong skin color. i assume you share that as well. i want to point directly to a particular policy of your directorship. september, 21 announced it followed by -- august, will propose family and freddie to -- particularly in the way fannie has applied this particular directive worries me.

there is a fannie mae plan, as i understand that specifically targeted at black and brown americans. i do not think we should dole housing the first based on skin colors. i am curious, am i right about that? does the fannie plan specifically target black and brown families? secondly, do you have any income requirements? everyone. you talk about the affordability issue which is the biggest issue it has today it didn't miss under the law, we have the responsibility to ensure that there is fair housing access for everyone. when we talk about the affordability issue which is the biggest issue that the country has today. there are particular communities that are underserved and there are huge housing gaps, we have asked fannie mae to come up with