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[inaudible] [inaudible conversations] committee on housing urban affairs is called to order.

thanks to the two witnesses joining us. >> the on banking, housing and urban affairs is called to order. thanks for the two witnesses joining us. home is a lot more than four walls and a roof. home is where you go after a long day at work. home is where your kids play and do their homework. home is where you plan for the future and build wealth. home is how millions of families join the middle class. our homes are an anchor in our lives. for too many families around the country, a home they can afford and build their life around just feels out of reach. i hear it in everywhere, i hear it from people in lima city, similar to where i grew up in mansfield, where a new building with 54 apartments for working families just opened. there's 54 apartments, they had 511 interested families. i hear it from rural washington county in southeast ohio, marietta, belfry, church town, where they struggled for years

to build 48 homes for seniors. i hear it in for glynn county and central ohio, columbus, where the population has grown by 40% to more than 1.3 million people. housing to play hasn't kept up and prices have been rising for years and years. with more people, with not enough homes, 40% of renters in this country are paying more than they can afford for housing and that county, with its world-class schools and workforce, it's quality-of-life on the continue to grow. i hear these 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, the problem is the same. housing is too offensive and has been for years. has been for far too long. one big reason is we don't have enough of it. for the past decade, rent has gone up and up and up. one in four renters pay more than half their income for rent. more than half your income goes

to rent every month, it is hard to juggle all the bills you already have, let them save for a down payment. hydrant stops people from becoming homeowners. so many families think if only i could come up with a down payment. the money for a down payment is what stands between millions of americans and the dream of homeownership and building generational wealth. that is why my bill to support first-generation homebuyers, down payment toward equity act with senator raphael warnock and the helper and specifically, the down payment toward equity is broader, the help act for teachers, firefighters and police officers to allow them to buy homes in their communities and other sources of down payment assistance. all of that is so important. secretary adrianne todman, director thompson communities challenges because your agencies are at the center of our office, of our efforts to lower the cost of housing. your agencies don't build housing but you are on the front lines of our housing

markets. your job is to ensure there is affordable financing for the housing that builders and hosting providers create, that families can buy their first home. and, as americans get older, they can live safely in their homes. but if your agencies have announced changes and should help increase housing supply and bring down costs. following calls from senator reid and me and others, i've acted to prevent test to financing for affordable rental housing through fha and the federal financing bank. this will help housing providers and states build and preserve more affordable housing for renters across the country. the long-overdue update to loan limits for effective housing it's new guidance to support conversion of old office space and bones will open up new housing options, especially in cities like cleveland. fha has eliminated up front fees, charge the lower income first-time homebuyers and borrowers who couldn't afford a big down payment to begin with.

you also refocused the federal home loan bank not just financial markets but helping to support housing that families need. housing prices are still too high, they happen for years and years. it will take all of us working together. housing providers, federal state, local governments to lower costs, hud and fha need to be vigilant to mature taxpayer money is different families, not enriching shady landlords and wealthy investors. in ohio and around the country, street firms and other on-site investors sweep into communities, they buy up properties, they evict tenants, they drive up local housing prices. we should pass my stop predatory investing act to end their tax breaks for biting up numbers of single family homes. we need to ensure that all our housing agencies are on the same page and working to stop, not in any way supporting this

predatory is a small. state and local governments have a lot of influence over the housing in their communities and more and more cities and counties are making changes like updates to zoning, shortening lengthy approval processes to open up housing, to open up opportunities for new housing, expand access to affordable homeownership. hud is a critical partner in supporting that work. earlier this year, the french commissioner , kevin boyce, testified in the senate on behalf of the national association of counties about the critical role that home, cdbg, and the county trust fund play in addressing housing needs. local communities depend on this partnership. even with more housing, some families working low-wage jobs and some seniors on fixed income still won't make enough to afford rent. >> the can't hear the room. >> sorry ? what was that ? sorry. okay. >> 25 housing assistance programs are critical to keep

went affordable. the well done. i am almost done, senator scott. >> take your time, mr. chairman. >> hud needs to make sure they work effectively and efficiently to serve our communities and protect our investments. congress needs to do our part. last month, this committee had a hearing legislative proposals to bring down the cost of housing. we must continue our bipartisan work to move forward commonsense proposals that will help expand options and reduce costs. i look forward to continuing to work with ranking member scott on this committee toward 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 there input on what congress should do to make housing more affordable for renters and for homeowners. ranking member scott. >> thank you mr. chairman, think about for your, acting

secretary, congratulations, 30 days is a long time. expected to be completely prepared for everything we are going to talk about over the next couple of hours, likely. thank you, mr. chairman for holding this hearing. i've been asking for about a year to both of you in front of us. certainly something that i think is 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 the eyes of so many americans, the american dream. if we are going to close the wealth gap that we talk so much about, that is a persistent, one of the ways that you do that is by creating equity and creating equity really comes from homeownership as much as it does any other place in our economy. thank you both for being here. if you think about the value of homeownership consistently, americans owe somewhere around $12 trillion on their mortgages. mortgage debt accounts for 70+ percent of consumer debt in the

united states of america is not an insignificant amount of money. the last time we had this hearing was back during the trump years when i certainly hope that we have more opportunities to hear from both of you at the same time going forward. the american dream of homeownership is further out of reach today than it was a few years ago, despite all the subsidies, all the trillions of dollars we spent over the decades, little has changed. in 1970, homeownership rate in america was 64%. today, it is 65%. since the passage of the fair housing act in 1868, the goal was to eliminate housing discretion, the homeownership rate for african americans hasn't changed much. 41 sometimes, 44% today. it continues to have a very

slow growth trajectory. our housing regulars once testified, must testify more often to begin find ways to deal with the challenges that housing peasants to so many americans. since president right in has taken office, mortgage rates have ballooned by 150%. rents have 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 work in families, the simple fact is that housing costs under this administration has skyrocketed. i see that at home in south carolina and exited across the nation as i travel. i see that in families worried about how to make ends meet and watching the dream of homeownership seems to slip further and further and further away. what has become apparent is that this administration platitudes about affordability in housing has failed to sign up with their policies.

reckless spending on progressive which lists fueled runaway inflation. now americans are painfully aware that right in has not helped them. instead, burdening them so much the mountains of french tape and regulations this administration has put on housing providers are only making the matter so much worse. additionally, both hud and fhfa have taken the decisive actions that will unnecessarily increase the cost for families and burden communities. hud input and controls on low income housing tax credit properties and fhfa is asking for public comments on policies, including rent control following direction from the white 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 proven that went control policies make housing supply and affordability issues worse, not better. this is the type of backwards logic americans have come to expect from joe biden and bidenomics. second, hud unfortunately joined other federal agencies under this administration in attempting to add climate related to the list of duties. for instance, hud proposed requiring all newly constructed subsidized housing be built to increased energy efficiency standards, even though hud itself admits that lower income households may not be able to afford the added burdens of additional costs. according to the national association of homebuilders, these new environmental mandates could cost as much as $31,000.00 to each new home. so, the same time a family is

facing doubling and sometimes tripling food costs in order to meet green climate goals, this administration settles them with an extra $31,000.00 of additional expenses for a single home. families and communities like the one i grew up in can't afford new climate costs that increases the cost of housing. this brings me to my last example. it appears this administration is weak on crime policies have been raised by housing regulars beat last year, hud proposed a rule encouraging cities applying for federal funds to remove crime free ordinances , local laws that keep rental communities safe by keeping out convicted criminals. even worse, hud proposed a rule last week that will make it easier for terminals to live in 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 going i announced housing as one of my top priorities for this year as ranking member of this, the. since our first hearing last april, i focused my efforts on building consensus around the common sense, nonpartisan reforms to all segments of our housing market, included in my road to housing. i continue to urge consideration of my road to housing act, which takes account because of view of federal housing policy receptors support around families and helping those who are homeless, or renting, or prepared to buy a house. it is past time to consider my legislation along with other common sense, bipartisan proposals that would include real solutions to tackle housing challenges. i look forward to hearing 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, senator scott. adrianne todman, welcome as the acting secretary of hud beauty was confirmed as deputy secretary in 2021 . prior to her service there, acting secretary adrianne todman was ceo of the national association of housing it redeveloped officials , held multiple roles at the d.c. housing authority, and served in several career positions at hud. welcome back, nice to see you. sandra thompson was confirmed as director of fhfa in 2022. prior to reading that agency, she was the deputy director of the division of housing, mission and goals from 2013 to 2021. prior to joining fhfa, she spent 18 years at fdic, where she held a number of senior- level positions, including director of the division of risk management and supervision. director thompson, welcome

back. madame acting secretary, welcome. >> thank you. chairperson brown, ranking member scott, and anguished 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 on our mission. i want to thank the over 8000 hud employees across the country who are helping us carry out that mission. first, let me say that the support of this committee is critical to ensuring that the american people access to housing that they can afford in communities that are strong and resilient. thank you for your continued efforts to lead and legislate on these issues. as you are aware, this is my fourth week serving as acting secretary. we are grateful for secretary fudges partnership. her norstar was we sent it will work on the people and that star still shines brightly. under the leadership of president biden and vice president harris, hud has made

historic strides to improve outcomes for the people we serve. 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 worked to root out housing discrimination, and helped people who don't make a lot of money just to get a fair shot. hud's work, and our resources, or having a tremendous impact on people in every community, from big cities and small towns to rural areas and tribal nations. there were more apartments under construction in 2023 than in any year on record and we are working to build even more. hud helps over 4 million households annually through our rental assistance programs. under this administration, we have implemented a number of historic changes to ensure we serve more families and that we support more choice in today's market. in fact, in the past three years, hud has provided

families with 20,000 new incremental vouchers. that is a 20 year record. actions we have taken to promote homeownership and with 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 1.8 million homeowners with purchase mortgage is, including 1.5 million first time homebuyers. last year, we awarded the first ever package of resources to specifically reach people experiencing homelessness in uncharted settings and rural communities and we've taken seriously our charge to protect all people facing housing discrimination. with resources from the inflation reduction act, we have provided communities with half $1 billion so far to achieve energy efficiency and climate resiliency in our multifamily portfolio. by doing so, we are also making much-needed 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 have improved our hiring and we have focused on executing on i.t. and procurement goals. and, we've had four clean audits in a row. i am particularly proud of this. i am grateful for the work of this committee and the members of congress who have worked to make resources available to us so we can carry out our very important work. we have made strides but we acknowledge there is more work to be done. as we look ahead, we recognize that hud's mission is critical for the moms and dads still trying to make ends meet. it is critical for young families trying to buy their first home. it is critical for the people who may have lost a job and lost their home and are now on house and just need our help. is critical to ensuring repairs are made to public housing, to removing health hazards in any home and preventing and remedying the impact of

discrimination. senators, over the past two years, the executive branch has been executing on our housing supply action plan. it is an outcome-based collaborative effort across federal agencies and work that i am proud of. housing is a priority for the biden/harris administration and the president has put forward a vision that builds on our existing body of work. hud is prepared to do our part . chairperson brown, ranking member scott and was of the committee, i look forward to working with you. thank you. i look forward to your questions. >> thank you, but i'm secretary. dr. thompson, welcome. >> germantown, making member scott, and distinguished members of the committee, i am pleased to be with you today to discuss the work and parities of the federal housing finance agency and operations and activities of our related activities, fannie mae, freddie

mac and federal home loan banks. both renters and homebuyers face challenges in today's housing market. inadequate housing supply, four years of strong home price growth, and elevated traits have contributed to a challenging environment for housing for ability. homebuyers and renters alike face difficulties in finding a place they can afford to live. while housing affordability rep since a national problem, the impact is most acutely felt in local communities. i have heard about these issues from working families in cities such as philadelphia, louisville, and las vegas, as well as in more rural areas in states such as nebraska and tennessee. i have heard about the need for more workforce housing, which enables teachers, first responders, construction workers, and municipal employees to live in the communities they serve. i have also heard about doolin, renter households that cannot build the savings for down payment and closing costs on a

home purchase. i have heard about multigenerational families living in homes that are far too small just to make ends meet. while much of the ongoing discussion about housing affordability focuses on a consumer's monthly payments, closing costs also represent a substantial barrier to purchasing or refinancing a home. recently, fhfa and devices have been engaged in efforts to explore sustainable measures to reduce mortgage closing cost for both current and aspiring homeowners. earlier this year, fhfa approved a total acceptance pilot is one, and of that broader effort. this pilot seeks to evacuate whether technological advances and the electronic availability of real estate records can result in lower costs for borrowers who just want to refinance their mortgage. they are the only rooms and will continue to reside in them. appraisals are another

important area in which the enterprise are taking steps to reduce costs for borrowers out amazing safety and soundness. the enterprise is and the industry have developed several alternatives to traditional appraisals that address aphasia capacity, valuation changes, and shorten the process while promoting fair table, and accurate appraisals. the equitable housing finance plans produced by fannie mae and freddie mac are another critical component of their mission driven activities. initiatives developed under the plans, the enterprises supported almost 2 million families and their homeownership journey last year. some of these initiatives include down payment assistance programs and the use of positive rental payment data for renters to establish or improve their credit scores. fhfa is oversight of the federal home loan bank system featured an important milestone last november. when the agency released a report following a year-long comprehensive review of the

system, the report concluded 40 accommodations based on extensive engagement with stakeholders across the country designed to ensure that the banks effectively filled a core objective of the mission, providing stable and reliable liquidity to the members and supporting housing and community development. a series of reforms will be limited to ensure that banks remain well-positioned to meet the needs of their members and the communities they serve. the priorities i've outlined today represent just a portion of fhfa's ongoing work to ensure its regulated entities meet their missions in a safe and sound manner. these actions, along with others outlined in my prepared statement align with fhfa mandate from congress . in my 30 years as a financial regulator, i have long believed that safety and soundness and access to credit are not mutually exclusive, but instead, mentally.

brought, fair access and the stability of financial institutions work together as pillars of the nation's housing finance system. thank you again for the opportunity to appear before you today. i look forward to working with fibers of this many different effective solutions to the challenges of housing supply and affordability. >> thank you, director. i will begin the questions, senator tester. >> thank you for holding this hearing and the ranking member and thank you for your crazy. i want to start my appreciation to the two panels. acting secretary, ms. todman, i want to speak on an issue i've talked to your folks before, i've talked about it in the ceiling. it is a long-standing problem that is getting worse, not better. it has to do with the hud fair market rents. fair market rents that have not kept up with the rapid rise of housing prices. they do not reflect the reality of housing costs in communities

across our state and they are not being revised in a timely manner that you are taking away vouchers from housing authorities with long waiting list because there simply aren't any units available to be able to use those vouchers. how your agency is handling this now is not working, okay? i know this is a problem that hud knows about. the changes that you are making to incorporate rents from corporate landlords are not going to help us in montana at all. right now, these programs are not able to serve the folks in montana that they are meant for. and, i think it is incredibly important that the folks at hud step up and fix these bidenomics's. the program will end up leaving rural america behind. what needs to happen so these rates reflect the actual rents that we have montana communities so folks to, folks

can access these housing resources question >> thank you, senator, for raising this issue. as you and your team is probably aware, fair market rents are established by hud and updated yearly so we can keep up with what is happening in the market . a couple years ago, we did introduce private data into our conclusions there because we had received lots of concerns that the data we were relying on, the agency was relying on was not really keeping up with what the market was showing. so, i am happy to sit down with you, your team, and the housing agency is in montana to learn more about how our current methodology may not be working, particularly for the voucher program, and look forward to talking with you more about that we >> when is the next time the rent will be assessed and potentially moved out ? >> it is reestablished every year. it should be fall of this year. >> full of this year question

>> that's correct. >> okay. i appreciate the offer to work with me on what is going on in montana. i can just tell you that great falls is the closest major city to where i live. it is not the fastest growing city in montana by any stretch of the imagination. it is not under the economic pressures that others are, they can't use vouchers, they simply don't work. so, i would love to have you address this before fall of this year. that is six months from now. but, if there's ways you can speed that up or amend or however you can do it, i would appreciate if you let us know. we are here two. >> if i can add, also happy to have our teammates in the office of public and indian housing sedan with housing agencies to talk about flex abilities that they may have in terms of using their vouchers. >> is good. just, this is a problem we have

a program that was set up, it just doesn't work. >> i understand. >> on of the question here, our housing authorities in montana have another challenge related to the fmr issue. i'm concerned that two problems will worsen and montana communities are left with far fewer housing resources and far fewer resources left in the home. we are told faster, 24.5 million in housing choice voucher funds from reserves authorities, from reserve funds from housing authorities across montana. now, you are telling them they are at a risk for shortfall. i could have a lot of fun with this question, trust me. but, if that is true, if reserve funds were taken and a short time later we are saying guess what, folks, we've got a shortfall, it doesn't take a nuclear physicist to figure out

why that happened, okay? if so, could you, could you tell me what happened, number one, and number two, if there is a problem, did you commit with working with our folks in montana to that problem question >> i will come in at the top and say i am happy to work with housing agencies in montana, i called former colleagues and i will have to share that i will have to take a look at the reserve and request a shortfall, you are correct that that doesn't seem to make a lot of sense but i will promise to work with you and the agencies there so that we can correct. >> thank you very much. i will have a question for the record for you. >> thank you senator tester. senator scott is organized. >> one of the successes of the 2017 tax cuts and job act was the opportunity zones that i put in there. the reason why it is a been so successful, whether you are a democrat mayor or republican governor, they both agreed attracting more housing opportunities into the inner cities of their communities is critical. i think of the event i attended

with, your geddes in south carolina, where he's at the first time in almost 30 years the has had a chance to build homes within his city, the downtown urban cities because of opportunity zones. we still see a real opportunity. we note that in the last year, opportunity zones reprinted the largest spike in apartment complexes being built in our country, leading to more accessible housing, you. i think most of us would agree the largest issue impacting the housing market is a lack of supply, especially for affordable homes. my road to housing act includes inbred solutions that aim to increase supply as well as preserve affordable units that already exist, specifically my legislation mix crucial changes to the rental assistance demonstration program by the eliminating the cap on the number of public housing units that can be converted under the program. this would create more opportunities for private

capitol to help rebuild the nation's agent affordable housing. question for you, acting secretary todman. you previously testified the red program has been a critical tool to help recapitalize public housing and structure backlog duties at the housing authority must explore private driven solutions to preserve the senate. do you still agree with your statement and you support lifting the cap on how many units may participate in and be preserved through bidenomics question >> thank you senator. one of the things we've seen with the advent of the rental assistance demonstration program is a number of repairs 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 advocates about their concerns around tenant protections tied to this conversion to rad. i think that 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 that houses some of our lowest income families. that would also want to make sure that we are making sure that those lowest income families are being protected as the program grows. so, happy to talk to you more about that an expansion looks like but certainly want to make sure we are marrying what we are seeing with what we are hearing on the ground. >> you also previously testified you were deeply supportive of congress's efforts to expand the moving to work demonstration program. do you still agree with your statement and do support my legislation authorizing the program question >> moving to work is another place where we have seen a number of innovations that, without the flexibilities of those afforded these agencies, we probably would not be able to adopt across the portfolio. just a couple weeks ago, i was in boulder county so we could

celebrate the establishment of the rest of the 100 agencies that congress allowed as an expansion to and work. you might become there are 39 and congress authorized expand it to one 100 we have added our last 14 agencies to the moving to work club and we look forward to their work. i will say that moving to work has been critical with looking at ways that we can continue to house residence safely. we have seen housing production. we have seen new forms of services. we have seen even ways that agencies are reducing their administered cost, which i think is something that we all, we all would want. so, i am completely supportive of moving to work if it continues to be a source of innovation across the housing industry. >> we have about 15 seconds left. another question for you on homelessness. i know that we appreciate

secretary fudge's service to the country. are there any proposals that were not implemented that you would like to limit or do you have any new ideas to help expand the opportunities for our homeless population ? we saw the greatest spike in homelessness over the last 12 months, basically. any thoughts on how we can combat homelessness ? >> i think that there's lots of thoughts on how to combat homelessness. one of them is continuing to work with the folks on the frontline to make sure that they are using existing funds effectively. quite frankly, making sure that we have the type of rental assistance and preservation tools that we need to try to prevent homelessness to begin with. we were pleased just a couple months ago to give localities $3.1 billion in resources, the highest amount ever to our continuance of care across the country so they could do the good work that they do. we are really pleased that the additional factors that congress provided us.

we have been able to stabilize over 120,000 families across the country. we look for that as a tool of intervention as well. >> 10 seconds, sir. >> i know that you will spend some time in south glenn coming up soon. i would love for you all to spend time in columbia, south carolina. club has been i'm working on new ways to combat homelessness. i met with their mayor yesterday. there's, they are spending a lot of time investing in resources. we would love to have your expertise waiting on that. it is an open invitation to both of you to spend some time in columbia, south carolina. >> looking forward to it. >> senator butler has been called to decide. senator smith thank you for ceding your time for a moment. senator butler. >> thank you, mr. chair. thank you to senator smith. i appreciate the chair and ranking member for holding today's hearing. i want to join my colleagues in honoring the service of secretary fudge and her time in the role you all are taking

on and continuing leadership, an important moment for the american people relative to housing, housing affordability and achieving the thing that we call the american dream, the ability to pass on generational wealth across families. director thompson, thank you for the previous conversation and i want to pick up where we left off. the analysis conducted by moody's estimates that the u.s. economic losses from the scent california flooding at about five to $7 billion. other propy insurance policies of 30,000ropy californians. leaving them financially on the hook for millions or billions of dollars in the event of future climate disasters. i know it is not just california but louisiana, texas, florida are also facing challenges in their property insurance market.

in our conversation you mentioned fhfa does not have notice of withdrawing from insurance markets and the downstream effects that this can have it. could you elaborate on these withdrawals impact of homeowners, future homeowners not just in california but across the country? >> yes thank you for the question. property insurance property and casualty insurance is a requirement for any home purchase by fannie mae or freddie. >> 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 have to search for policy to adhere to the requirements that we have that they purchase the loan. it is interesting because we are starting to see a lot of natural disasters and the collateral

fhfa is responsible for what wee a 8.4 trillion dollars outstanding in a mortgage collateral. natural disasters impact us greatly. we have a multi family 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. there used to be about three issues per year that were costing over a billion dollars. and now this last year end they year therewere about 28 differes that cost over a billion dollars each. the impact on our portfolio were our only asset is in mortgage collateral either house or an apartment is just phenomenal. we would really like to work with the mortgage industry to

address this issue. what we are finding is premiums are going up borrowers are not able to afford some of their monthly payments with little or no notice. we are also seeing a reliance on state plans for insurance. whether it is flood or otherwise that we really want to address as we try to deal with the cost of just owning eight mortgage. we have been working with the insurance commissioners and some of the space dust rick states have natural disasters like california, florida, louisiana, rhode island. where with naic to try to address this very important issue per. >> into that point just really quickly with my last 50 seconds i do want to offer either or both of you i offer you the opportunity first just to talk about what steps can we collectively hunt and fhfa take

in the near term to develop a framework for protecting consumers in the event of natural disasters and insurance provider withdrawals. quick sent happy to pick up where the director left off. i do know hud has limited authorities as it relates to the insurance industry. but we have done is convene an working group to look at with the authorities we have, how can we help consumers? how can we help those housing owners who are saying they have increased operating costs because of outrageous insurance increases. and so, as soon as this week you'll be hearing hud announce some of the things we can do. there is a whole body of work including engaging with the insurance industry said they can understand the impact on housing affordability. quick senator rounds of south dakota is recognized.

>> thank you, mr. chairman i'm just going to follow up to senator beutler's questioning. i think a lot of the challenge and it's not just homeowners it's in a lot of the other areas insurance is finding if you are making property and casualty repairs because of supply chain issue the cost of making those repairs have exploded in time delays have added a cost that is being a board by an insurance industry that is seeing significant cost for those specific items. it is in driving premiums up because of it. secretary todman i'm thinking out loud about the way to phrase this question to you. we are trying to cut costs wherever we can with regard to the bureaucratic cost of providing homeownership and so forth. there is a discussion most recently we did at a roundtable

where we were talking about some of the unneeded paper trails that are required right now. and i would like to read a format for you. you pay very may well want to take this for the record but it is one we can very efficiently and simply may be cut some costs costand a red tape for some fol. we are all discussing housing affordability but there's been a little action on streamlining program requirements and federal regulations. removing unnecessary program requirements will be a great place to start. i like to discuss the environmental review process. the national environmental policy act

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 guaranteeing administrative expenses. can you tell me why when a federal program specifically allows a portion of the funds to be utilized for administrative expenses, hud requires the guarantee to go through the bureaucratic process of actually conducting the review and creating a written record of that determination it does look like some hanging fruit that could be easily eliminated. maybe you know about it right now but if not would you take it

for the record and get back to me? >> i accept your invitation to add it for the record. environmental reviews of course are something that we have important. >> probably not as with regard to administrative expenses. >> to respond on the record i certainly would 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, and i asked about ways we could incentivize to create credit risk transfers. the enterprises posted the second lowest credit risk transfer in the history of the program and freddie posted the

single lowest amount ever. now, director thompson, i know because we talked about this, you understand what a valuable tool that is, but i can't figure out what's contributing to the trend going on. can you help us with that? >> sure, thank you. and i appreciate the opportunity to talk about the credit risk transfer. he is a huge component of shifting the credit risk of the balance sheets of fannie and freddie, the reason the credit risk transfers were so low in 2023 is that they are based on the loans purchased by fannie and freddie, and you will room better in 2020 and 2021, we were faced with historic record lows i should say and the acquisitions were at record highs. those were the two longest years

of lone purchasers ever for fannie and freddie. the interest rate environment really stifled the acquisition of loans for fannie and freddie in 2023. they went from record highs, so again credit risk transfers based on the amount they purchased, but we encourage them to utilize credit risk transfers. they've been very innovative in this space and it's a measure for safety and soundness which is of paramount importance to us. >> thank you. it appears for a lot of these folks that don't 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. >> senator menendez from the thw jersey is recognized.

>> i hope that you have been made aware of the management of the atlantic city housing authority and what they've been subjected to. residents have been complaining about issues on gas leaks and pest infestation, mold, broken appliances and much more. some all throughout the past winter and of these issues have been ongoing for years. at the authority of self is ripe with management problems including issues with its procurement and contracting procedure that delayed critical fixes to units. residents were instructed to relocate to a hotel with no cooking devices, no accommodations for their pets and at least one instance for residents disability. many still wouldn't be able to return to their homes. i know hud is aware of these issues because last year the principal deputy assistant secretary described in order to

the atlantic housing authority as, quote, one of the worst that i've ever read in my life. your staff briefed that the plan they've developed for the housing authority to fix these issues, however a plan is not enough for these residents that 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 pester for years all the while ignoring or retaliating against residents that spoke out about the problems they were facing. the housing authority lost the trust of the residents it was created to serve and that is why i sent a letter to your predecessor in december calling on hud to exercise its authority to immediately place the housing authority into receivership and rapidly worked to bring relief to the residence. today i am reiterating that call. so, madam secretary, will you commit to personally reviewing

the situation and getting back to me what you plan to do to accelerate relief for the residence of atlantic state? >> certainly, senator. i am aware of this issue and i also directed the senior leadership of the office to take more urgent action. we are working with of the leadership of the housing authority and what you've described is horrific and no person particularly the residents of public housing should be experiencing that. >> i look forward to something more than that. they must immediately take over the atlantic housing authority and every day that we allow the authority that allowed all this to happen to affect the lives of the residents in the way that it has is the day that it becomes the hud problem more so than the housing authority so i will look forward to you getting back to me. >> i commit to doing so.

>> madam secretary, i was puzzled to see the president's budget request for fy 25 called for $143 million less man the fy 24 enacted a level for section 202 housing. do you believe the budget request accurately reflects the trends in the market? >> senator, as you may know, hud and of the administration are working under the constraints of the responsibility act, and so there is with a difficult decision to be made we think we put forth a budget that's considers that agreement but also prioritizes the need. >> all i know is the nation's going pretty dramatically. at the end of the day, if we invest less in the supply of senior housing while the demand is skyrocketing, i'm not sure what that will do in the marketplace, so i urge you to really look at that.

finally, secretary thompson, i understand hud is working on updates to energy efficiency and other construction standards for manufactured homes, and i understand that while hud has primary statutory responsibility for regulating manufactured housing, the department of energy has been working in parallel on their own energy efficiency updates. can you share with us an update on your work on this issue? >> the department was compelled by distillation to carry out its work. they have a draft rule. i am limited on what i can say that i do know that we are trying to marry the pressing need of energy efficiency along with of the housing affordability. and we work with our colleagues at the department of energy to

do that. >> on the affordability across the country, new jersey for sure where people stand more of their disposable income on housing and i would hope that this is something that can be accelerated. >> thank you, senator. >> with fannie mae and freddie mac, two things need to happen. the system more broadly the

quickest way is to raise by the capital as they were allowed in the 2008 financial crisis. now that they control so much of the housing market there seems to be a reluctance to relinquish control. i ask myself why. judging by the policies that have been pursued it seems they are viewed by the biden administration as simply backdoors to push the social policy agenda that is well beyond your mandate. on the second point, congress has already decided what type of mortgage. that is significantly enhanced the supervisory powers of your agency over fannie mae and freddie mac. the problem is the obama and biden administration should never have taken so that they could succeed as private companies. the responsible thing to do for

yourself, her secretary yellen and the attorney general, is to continue the work that was begun by the former fhfa director to raise private capital and return fannie mae and freddie mac to the private markets. this would result in a 100 billion-dollar plus windfall for taxpayers, and it could be used to immediately help expand the housing supply and support affordable housing for americans most in need. we talked about this at the time of your confirmation to be the agency had, and our housing markets and american taxpayers deserve to see these brought to an end and i appreciate your full attention to this in the time you have remaining. thank you. >> thank you, mr. chair. >> thank you, senator. senator smith of minnesota has arrived and has been kind in

dealing. >> thank you so much both of you for being with us today. i appreciate it. so, everybody we know, i think we are here today because we believe that everybody deserves a safe and affordable place to call home and we also acknowledge all of us that for far too many families this is out of reach and i'm very grateful to the biden administration and chair brown's leadership really bringing attention to finding solutions to these challenges and of course housing is incredibly complex and nuanced. it's much driven by the private sector and also by local decision-making when it comes to zoning for example, but i think that we could all agree we need to focus on boosting housing supply and also on preserving the stock that we have. we had a very interesting hearing in my subcommittee just earlier this week where it highlighted the need to

preserve. my question is for you, can you highlight for us how the department has been working on this issue of housing by especially housing for middle income people working in low-wage jobs also. >> absolutely thank you for the question and your leadership. they've been very busy the past three years not just carrying out its own work making sure that we are executing on the vouchers that we have received and making sure we are modernizing the rules, which i know so many people lean on to make sure we are building. 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 so that more can help support and also working with

our colleagues on the physical recovery act and repurposing those funds for the gap financing and the critically capital needs on the ground. so we have been busy and we think that with the umbrella of the presidents housing supply and action plan we have been acting as one government to drive this issue. >> the administration has made proposals to help expand housing supply and particularly the innovation fund for housing expansion. can you talk about how that would help and power of the local solutions to increase housing supply? >> thank you and i think you are referring to the budget for 2025 the innovation fund. it suggested that we want to make sure we are including the gap financing thinking through the pro housing work we are very excited to have the housing program and we will be rolling out some of the recipients of that sometime this spring.

it is meant to be a program meeting localities where they are and inspiring them to be able to create the local solutions to build housing and preserve the housing that they have. >> thank you. i also want to talk with you a bit, we have had quite a few conversations about issues. i know this is something senator cortez musto and senator warren also pay very important attention to. we know that there are significantly higher rates of tribal homelessness and overcrowding which is almost a bigger problem because now is more than one family crowd into shelters that are not merely large enough for them and the issue of the substandard housing, the senator and i hold a subcommittee on this last year and we've been working with of the administration on how we can respect tribal sovereignty and partner as we work on these

issues. can you talk about how the department is addressing this issue? >> you will be happy to hear since i took on the job as deputy secretary i've been in robust conversations with of the nation leaders about what their needs are and i've heard and earful as you can imagine. one of the things we have been doing with the funds congress has given us to help on housing and community development is working with tribes on how they are able to use that money swiftly. in addition to that, we've created an advisory committee and the department for tribal leaders, and we had two meetings and we will have a mother shortly. are there, we have consistently looked to the leaders of the tribal nations to tell us what can we be doing better for the government to government relationship into those conversations continue. i've been working personally with some of the leaders to cut the red tape.

>> thank you for your work on these important issues. >> thank you, senator. >> the senator from north carolina. >> thank you mr. chair and both of you for being here. director thompson, last year fhfa directed freddie and fannie to make changes to the pricing adjustment matrix. you said these updates were intended to allow them to further build capital and reduce taxpayer risk. i'm trying to get my head around this. these changes reduce aspects of the risk-based pricing relationship and in common with loan to value they seem to be increasing it to lower risk persons. the did i get that right or what am i missing? >> thank you for the opportunity to clarify the misunderstanding

that permeated about some of the pricing changes that fannie and freddie undertook. we have been working diligently to ensure fannie and freddie are doing all they can to fulfill their mission on safety and soundness and making sure that they are fulfilling their mission in terms of facilitating those communities. we eliminated the price adjustment for the upfront fee for all borrowers across the country for borrowers that had incomes of 100% or less. i can assure you of all the changes that we made do not result in borrowers with high credit scores. we continue to have a risk-based

pricing and what happened in the discussion is when you have a loan to value that is 80% or higher, you have to purchase a credit enhancement. we don't add to that into the calculation but it's still risk-based pricing at the end of the day and i can assure you the risk-based pricing as soon as possible is ready and there are provisions to make sure that lower income borrowers are, and borrowers in rural communities across the country don't have to pay upfront fees. >> this could be a very complicated discussion. it's hard to simplify into five minutes but i'm going to submit this matrix for the record and have, can i get your commitment to respond back to a very specific set of questions? the thing i'm still trying to get my head around, if part of

this decision was used as a basis for raising capital, where is that coming from? >> the chart reflects a number of changes that the enterprises undertook. the increased prices on super conforming loans, that's one of the first changes we made. we also increased prices. >> what drove that decision? >> the conforming loan limit well over seven digits. the private market exists to purchase those jumbo mortgages and so to the extent the enterprises are purchasing those loans, people need to be able to pay the additional fees. >> are you saying the policies

implemented in the last year in your opinion and the fees associated with them were driven by actuarial decisions? >> we are also looking at the capital requirements for everything we purchase and we've also raised fees for second homes. hispanics of the reduction in fees for people with high risk ratings were because they were being overcharged? >> overcharged because we were not capturing the insurance they have to have. i have a long series of questions. i will say we reached out and tried to get a consultation to see if your imposition of this

was in violation of the rulemaking and we found out independently you're given latitude at the conservatorship model. to wonder whether or not we should be more tailored and what authorities you have within your role as conservator versus some of these policy decisions but thank you for being here. i'm going to submit some questions for the record according to backlog as well. >> thank you mr. chairman. in 1932, congress created the federal home low bank system to tackle the biggest housing crisis of the last century, the great depression and the idea was simple, the federal government offered help in the form of implied government guarantees, favorable regulatory treatment and special tax

status. then in return they would provide liquidity to the members. in this critical moment, they are missing in action on their affordable housing mission. last month of the congressional budget office released a report that first time put a number on how much the fhlb is received in public subsidies. fiscal year 2024 alone that number was a whopping $7.3 billion. director thompson how much did they spend?

>> approximately 390 million debate a. >> that means the vast majority of the subsidies and the government poured into the fhlb where somewhere other than to affordable housing, only a tiny fraction went to affordable housing. so where did the taxpayer money go? in the same year, how much did the fhlb spend on dividends for their members for banks and insurance companies? >> 3.4 billion with a b. >> just so we are clear, they spent eight and a half times as much on dividends to their members than they did on affordable housing. i think that's right. but not all of those federal dollars, those taxpayer dollars went to dividends. according to the gao, the fhlb's

went 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. do you agree that it is important to clarify that the mission is to provide liquidity for housing and community development to prop up failing banks and hand out dividends? >> absolutely. thank you for the question. we conducted a review of the home loan bank system and sessions around the country.

through affordable housing development and community development and there is a huge affordability issue, huge supply issues and they are well positioned to do a lot more and that is one of the recommendations from the report. >> if they are taking the money and not spending it to accomplish that, i think clarifying the mission of the fhlb is an important start. who lines up for these federal subsidies? these subsidies are to promote housing, but in the last five years, 42% of members did not originate a single mortgage, not one. 42%. so how did this happen? it turns out under the current rule members only need to hold

about 10% of their assets at the time they apply to join in fhlb. once you're in, you're in a and you can get out of the housing finance business while you take advantage of the government subsidies. director thompson, should the fhfa changed the rules so the members must hold at least 10% of their assets and residentiall mortgages on an ongoing basis in order to remain eligible for the financing? >> that was one of the recommendations in the report. we are going to promulgate rulemaking sometime this year to talk about membership, to define what the goal is of the membership and to also ask questions about what that threshold should be because you will have a situation like one of the three bank failures where you start out with the 10% to meet the requirement and then the business model changes and

there is no ongoing checks to access the system so that is rulemaking. we will be very transparent and we look forward to engaging in that. >> i strongly urge them to issue the proposed rulemaking to address the mission and membership as soon as possible. >> they should be tackling the crisis, not blowing out corporate welfare to these giant banks and members thank you mr. chairman and to the two witnesses for being here with us today. i would direct my questions to director thompson. one of the body as he is that i have we shouldn't be discriminating based on race. we should treat people based on their individual characteristics

and not dole out government favors were consequences because people have their wrong skin color and i assume you share that conviction as well. i want to point directly to a particular policy of your directorship. the announcement followed by august, 2023 requiring fannie and freddie among other things to advance equity in housing finance. and in particular the way they've applied this particular directive worries me. there's a grant as i understand it that is strictly targeted at a black and brown americans. again i don't think we should be doling out the favors based on skin color, but i'm curious am i right about that, does the plan target black and brown americans and second, does that program

have any income requirements? >> thank you for the question. everything that they do complies with the law. we have the responsibility to ensure the fair housing access for everyone. you talk about the affordability issue which is the biggest issue it has today it didn't miss any and there are particular communities underserved and huge and we've asked them to come up with plans not just for underserved communities and specifically the equal access plans but tribal communities, native american communities because we want to make sure that no one is left behind. we can't let the housing market fail and there is no

one-size-fits-all. i would say many of the barriers identified for black and brown borrowers applied to other cultures as well and i will give you an example one of the things -- >> sorry to interrupt but to specify this a little bit, there's a down payment system slush fund as a part of this particular equitable housing finance plan. my understanding is black and brown americans are eligible for this but it's not income based. >> our programs are not race-based. the programs that are in the special purpose credit program what i think you are referring to our location based end of and thoseare the programs they . they do purchase loans from other institutions. >> that makes me feel good.

there's not a down payment assistance program that you can only apply for if you are black or brown. there are programs that apply to many fannie mae programs, home ready programs. >> is there one that discriminates based on race that only applies when you have a specific? >> for the enterprise programs you apply for those programs if you live in a certain area. its location based it's not race-based. >> is there any income requirement? >> i would have to get back to you on that. >> the thing i guess i find somewhat troubling about this stuff is i agree there's a lot of black and brown americans left behind in the housing market and we want to guarantee access for everybody but you can accomplish these things very often by targeting at a particular income category and of course you're going to catch

up a lot of black and brown americans and a lot of other racial categories who don't have high income and it's a better way and also much less illegal to do housing assistance and targeting specific racial groups is not something we should be doing. >> i want to say we are not doing anything illegal. we think these housing programs should be available for everyone. we have programs based on income and we have these programs that are based on location. >> thank you. >> senator van holland from maryland is recognized. >> thank you both for your testimony and service. a couple of questions for both of you on how we can use

programs under your jurisdictions to help families reduce their energy costs, whether they are homeowners or renters, so let me begin with you, acting secretary. i know last year you undertook a review of the building codes under the security act of 2007 and i understand from the department of energy analysis but also from the preliminary determination that was also made by the department of agriculture. they save households money because the cost savings on energy bills or greater then the relatively small upfront cost of building to the latest code and

that cost of course is spread over a 30 year mortgage. particularly for the low income households that we know are spending way too much of their paycheck on energy costs. in my state of maryland the update standards boost resiliency and efficiency for new homes and what it delivered a net savings of over $5,000 for maryland families over a 30 year mortgage. so, could you tell me where he stands right now in finalizing this code determination, what is your plan and timetable?

we put a proposed rule out and i think you are referring to some of the elements of that. i think what we've tried to do very carefully is look at the pressing needs around energy efficiency as you articulated as the savings to homeowners and renters and looking at its intersection with affordability. one of the things we are going to be relying on as recently the administration announced some of the epa funding on greenhouse gas emissions and we will be leaning in and i know the local localities will be leaning in on some of those to make sure we

are carrying out the energy efficiency work we all value. >> thank you for mentioning the recent announcement, something i've worked on for over a decade and i was glad to see it come to fruition and that could be an important complement to these other efforts. so director thompson, obviously fhfa has a role to play in terms of your public component of the secondary mortgages, so could you talk about your plans to adopt similar building standards which would also have a greater impact in terms of the number of homeowners and renters who would be able to save on their energy costs? >> the enterprises have long been proponents of providing energy efficiency whether it's reductions were energy so they do give credit for buildings

that have those efficiencies already built in. we are undertaking and an analysis right now to look at the building code issue. the enterprises are working with stakeholders. this is a priority for us and we should probably have some recommendations coming forward on what we are going to do by the end of the second quarter. >> i appreciate that and i think the word that hud has done is provide a good model so we don't have to reinvent when it comes to the standards. i will submit a couple of questions thank you both for being here today.

it's clear the country is facing an affordable housing crisis. high interest rates and inflation with soaring construction costs and low inventory have put homeownership is further and further out of reach for hard-working americans. this crisis in my opinion has only been intensified by economics. the reckless tax policies overregulation and misguided efforts that prioritize things like the green new deal or like my colleague pointed out over the safety and soundness of the housing market and our economy, today regulatory costs make up nearly 24% of a new homes price. specifically to address this very issue not only is homeownership more out of reach, but not a single state in the

country even has an adequate supply of affordable rental housing for low income families. i could go on. there are real problems facing real people, and we have to focus on real solutions. unfortunately, what we've seen from this administration is fast tracking and actually risked rik putting the economy at greater risk. and on that, director thompson, hearing last may you are committed to making sure pilots or public and that people know that there is more transparency going on in fannie and freddie. so my question for you, is there a reason that your agency changed paths and did not go through the public notice or comment period before issuing the recent title insurance program? >> thank you for the question. first i would like to say safety

and soundness grounds everything we do with regards to the title pilot, we do have a title pilot transparency page and receive the pilot from fannie mae -- >> when the pilot went through an analysis we didn't do anything different. >> are you going to allow the public sometime to comment on that? >> we are still in the process surging for a vendor to help digitizing to figure out how they can access the title

records to issue a solicitation of multiple vendors. >> talking about the same thing, this applied to certain low risks so this isn't going to help with people that are not currently homeowners and want to achieve the american dream. your agency did its products and activities rule which my understanding is meant to bring transparency to new initiatives. so it seems it's going on inside this initiative. >> this came in as a credit underwriting decision because what it will do is waive the requirements, which is similar to what we've done -- >> i'm so sorry. i only have one minute. if you would commit to making sure there's a public comment period and we have the opportunity to weigh in. i want to shift my focus. thank you for being here today.

i understood you have been in the housing space and you were included in the moving to work program but obviously when the pandemic hit, we decided, or had decided to postpone that program. would you agree committed to engaging now that the pandemic is over to help people not only get on their feet about have an opportunity to actually succeed? >> senator, you will be happy to hear that we have been working quickly and urgently to carry out congress is mandated to expand the moving to work agencies. once we completed that task just two weeks ago. >> i believe if you are in able-bodied american without dependents, working, training, volunteering, if it is to receive government benefits that there is a dignity that goes along with that. in my last few seconds i want to underscore the magnitude of that multifamily loans that will be needed and will need to be refinanced over the next couple of years but can't at the

current interest rates. so i would like to work with you and urge you both to revisit the capital framework and its lack of countercyclical adjustments for the multifamily. my staff will follow-up with you but i look forward to working with you both. >> the senator from georgia is recognized. >> thank you so much, chair brown. according to the atlanta journal-constitution, there are just a handful of private equity firms that individually own more than 10,000 single-family homes around atlanta and during this time of elevated and in the housing crisis, large institutional investors and wall street private equity firms from outside are effectively boxing first time generational homebuyers out of the housing market by gobbling up the available housing stock in atlanta.

this is particularly egregious when you think about the role that wall street played in what ways will just a few years ago with the crash. this is also why i previously introduced to the housing market transparency act that would provide greater transparency over who actually owns the property is built under the low income housing tax credit which includes significant private equity investors. i would like to ask the honorable acting secretary thank you for all the work your agency has done to make homeownership more affordable for americans, but i'm troubled by the equity ownership in the housing market. what steps is your agency taking to ensure fannie mae and freddie mac are not passing economic benefits intended to private equity first? >> thank you for the question. fannie mae and freddie mac do

not engage in institutional investors for single-family rentals and there was one transaction in 2018 and they decided to not engage in those activities. we do not permit institutional investors. there's a number of investors that fix, these are more mom and pop as opposed to institutional investors like fannie mae has a requirement that one person can have ten properties like one individual and freddie mac one person can have six, but again those are more local mom and pop they are not institutional investors. >> so are there steps that your agency can take to protect ordinary folks from this increase in private equity in the marketplace at large? >> for those that fannie and

freddie won't purchase those loans because they are ineligible to make those loans, so one of the things that we do with our reo portfolio is we have a 30 day first look period where investors are not able, the house was on the market and if you have to be owner-occupied or a community development investment fund or nonprofit to purchase first to get 30 days before the house was on the market, so those are some of the things that we have done. >> so my larger concern obviously is where that ordinary hard-working american family at home across the country have access to the american dream and this is what allows for generational wealth to pass. as home prices have increased, the ability for many to purchase affordable homes has moved out of reach.

this is particularly true for first-generation homebuyers. on top of this, we see a racial homeownership gap that actually widens in 2003. only 44% of black americans own a home in total that is almost 29 percentage points lower than white americans. acting secretary, under president biden's federal housing agencies have been committed to providing resources for new homebuyers and i was glad to see the president call on congress to pass the $10,000 tax credit for first-time homebuyers. can you detail why this woman credit is important and who is it targeting? >> thank you for that question. and i think that you provided the facts very clearly in terms of who will be most assisted by this type of investment and first time homeowners and i will take it to the next level first

generation homeownership which was a part of the president's proposal and the 2025 budget proposal. this is critical. we know that homeownership remains the number one way that the middle class is able to generate and sustain. and as you said 44% have access to that so we know by providing concepts like first generation down payment we know what that means in the long term. we know that having a tax credit that allows those families that are locked out of homeownership, but it means to sort of have access to that type of subsidy but we also know we have to do more as a country and we are doing more as an administration to make sure there are units to purchase and then we can show that we can encourage the

increased supply of starter homes so we are looking at this and we look forward to sharing more with you and your team. >> that is exactly the work my act is focused on helping these first generation homebuyers and to support them with closing costs et cetera. thank you for your work on this and i look forward to working with the chair and the committee to get legislation signed into law. >> our conversation yesterday when we talked with of the acting secretary, we spoke about that bill and our work on it and how the secretary especially as we talked it was such a high priority for her if we are ever going to end the wealth gap in this country surely the best tool is homeownership and what this legislation can do. senator cortez musto is recognized. >> thank you, mr. chair to both of you. i want to say thank you both to you and your staff for all the

great work and partnership that you've done in nevada around affordable housing. thank you. i know you're there. i've talked with both of you. your staff is incredible. so thank you. let me start, director thompson, with you. i also have to thank you and your staff for the insightful and thorough review of the federal -- i think you and i talked about it from the very beginning and the challenges that i felt we needed to address particularly around the core mission of the federal homeland banks which is housing and community development. so, you did in an analysis many of the changes or recommendations in your report, recommendations or actions that the agency can take on its own but there's also recommendations of actions for congress, so i want to talk a little bit about those. can you tell us why the federal

agency recommends congress improve access to two of these systems for nondepository community development financial institutions? >> sure. thank you for the question. we spent a lot of time on the home loan bank review, and we got a wealth of information and as you mentioned some of the recommendations are statutory and some we can do on our own. what we found in our discussions is cdf eyes play an important role in local communities and communicate with all housing stakeholders in a way that is just so unique and helpful and produces results especially in underserved and low to moderate income areas and we wanted them to have the same benefits that other members had because of their members are able to commit especially if they have i think the limit is small community institutions they can pledge

collateral, but the cdf eyes are not able to pledge the same type of collateral and so we wanted to make sure there was. he because we are talking about small institutions and members and we want to make sure there's. he throughout the membership, so one of our regulatory acts is to make sure that cdf eyes have the same benefits as other small institutions like community banks so they can continue to build and provide affordable housing in their communities. >> thank you. and we know for decades the banks set aside was 3% of their net revenue, 10% for the affordable housing program and 20% to repay the savings and loan bailout. those payments never threatened the stability of the system. why do they recommend that the assessment for the affordable housing program be increased by at least 20%? >> thank you again for that question. for the very reasons you

mentioned right now the home loan banks are setting aside a 20% in remained earnings that counts towards capital but they are all well capitalized and can well afford to provide at least another 10% to help with this housing crisis that we are having throughout this country. they are in 11 districts around the country serving all the states and counties and they could do a better job in providing housing development and affordable housing and community development. i would say they are starting to increase their contributions but it would be really helpful to have the statutory contribution that the requirement increase from 10% to at least 20%. >> and we both know that they earned 6.6 billion, 6.6 billion last year and we said this already unlike fannie and freddie, they do not pay taxes, so i would ask my colleagues to join me on legislation that

addresses some of the recommendations you've talked about that are so essential to bringing more dollars into the communities for affordable housing. i only have about 40 seconds left. let me come acting secretary come ask you this. can you talk about the proposed rule to streamline the program? >> we are -- it's still in the agency process. i'm happy to say that we are doing it. one, i think it is a long time coming to modernize the program the largest grant program it has to make sure we have low to moderate income homes and opportunities. we are almost there across the finish line in getting the rule out for comments and look forward to working with you on how we did. >> your staff has been great. it was part of the subcommittee hearing that senator smith was just talking about and there was

a conversation how important the program is to building affordable housing in communities across the country so thank you for your work. >> thank you. >> thank you senator cortez musto. you're almost done. i have a series of questions and sometimes waiting until last i can get a better overview of the committee and the questions and what we want to talk about so starting with the secretary. we talked about toledo ohio and the city cited for deplorable conditions, ashland manner and covenant house. i commanded that hud a co-op to cooperate with officials to fix the situation. hud has been working with the city of toledo. will you commit in front of the committee publicly to contribute to work to see the job through to fix the conditions and to hold the landlords accountable?

>> absolutely. and i made that commitment to myself. >> i will be holding you to that. it never should have got into this situation. no one should have to live that way. i want to follow up on what they are doing to better identify the conditions and before they heard residents in communities as they did in toledo. count on that. director thompson, turning to manufactured housing, i've heard from ohio seniors who live in communities financed by freddie and fannie who are forced to go to extreme lengths to keep up with the rising rent and fees out-of-state investors are charging. we are seeing more and more out-of-state investors as you and i have talked in the past on manufactured housing. how do we change the system so when fannie and freddie are getting credit for providing affordable housing residents can actually afford their rent and are not forced to choose between their homes and buying food or medicine. >> thank you for the question.

we are working with them and we believe there ought to be a penalty saying you should not get credit for the situation and the circumstances where homeowners are not getting updated property maintenance or the living conditions that are just untenable. so we are thinking about ways to address those issues. as you know, for the manufactured housing communities, there is a set of protections that are required for anyone who gets a loan, who has a loan for fannie or freddie on the manufactured housing community, and we also have compliance agreements every year to ensure that they are complying with the protections that are in place. in addition, both fannie and freddie are getting ready to establish oversight so they can make sure that these properties are in good condition and that

people are living in safety from that affordable housing. there was a lag during the pandemic where inspections were not taking place and we really have a lot of catching up to do and want to make sure we are doing our part to make sure americans across the country especially in manufactured housing communities are able to live with dignity and respect and in the conditions that are safe and decent. .. had the highest number of foreclosures than any zip code in america and city and neighborhoods in cleveland throughout ohio. her clothes were poisoned by it led to know that their efforts like red safe cleveland coalition ohioans are working to make progress and protect kids. your testimony proposes improvements to hud healthy

homes program. want to follow up with you on how the supposedly full support efforts like these to prevent lead poisoning. we'll back to about that thank you. director thompson, after 2008 crisis fannie and freddie briefly provided financing to help investors buy up and rent single family homes. some of the financing is still benefiting the company called vine brook which owns thousands of homes in ohio is a track record of working properties into the ground and affecting families and driving up local housing prices its particular problem in cincinnati. i have visited some of those houses and neighborhoods. you commit today, director, fannie and freddie will not do any new financing for investors in single-family rentals who so often exploit tenants and write up a rent and housing prices? like senator, thank you for bringing that to my attention. after the experiment or pilot fannie and freddie did in 2018 we have prohibited them from

working with institutional investors. what you have described will we will absolutely follow up and make sure that this not happen but will follow on that particular property. >> i will continue to watch that. and you know we are watching that. i preach to the public service of both of you. that kind of predatory business model needs to be rejected always by anything the government any influence the government can have so thank you. thank you to the two witnesses today for your patience. think of your testimony. thank you most especially for your public service. they are due one week from today to the witnesses we have 45 days to respond thank you again for that but that the hearing is adjourned. [background noises]

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