Enterprise: Community Developments: Treasury and HUD Release Plans to Reform the Housing Finance System
- Yesterday, the Departments of Treasury and Housing and Urban Development (HUD) submitted to the Administration proposals to reform the housing finance system. Earlier this year, President Trump issued a memorandum directing the two agencies to craft housing finance reform plans. While the Treasury's plan includes both legislative and administrative reforms, the proposal notes that the agency's preference and recommendation is that Congress enact comprehensive housing finance reform legislation. This report lays out administrative changes to proceed down the already anticipated path of “recap and release” of Freddie Mac and Fannie Mae (also known as the GSEs). It also calls for eliminating the GSEs' affordable housing goals and replacing them with a “more efficient, transparent, and accountable mechanism” in the form of a fee that would be appropriated for HUD's affordable housing programs. House Financial Services Chairwoman Maxine Waters (D-CA-43) has released a statement, which explains that this action would “cause significant damage for low-income persons and communities of color” and argues that a fee would “fail to adequately support affordable housing.” HUD's reform proposal offers recommendations for providing the Federal Housing Administration (FHA) and Ginnie Mae with tools necessary to “appropriately manage risk.” It also introduces the probability of risk-based pricing at the FHA, suggests converting the FHA to an autonomous corporation within HUD and proposes creating Office of Rental Subsidy and Asset Oversight outside the FHA. Learn more about these plans in our new blog post and read our principles for housing finance reform on the Enterprise website.
- The New York Times has published an article titled “As Disasters Multiply, Billions in Recovery Funds Go Unspent.” The article highlights that as of June 30, the federal government had released less than one-third of the $107 billion disaster recovery funds that were authorized by Congress following the natural disasters of 2017 and 2018. HUD has released less than 1 percent (less than $75 million out of $37 billion in recovery funds) of its disaster funding from the past two years. In the Times article, Enterprise's SVP of Public Policy and Senior Advisor for Resilience explains that HUD's disaster-recovery function was never set up to be permanent, and therefore, Congress requires HUD to design a new program from scratch each time it receives disaster recovery funds and to draft new rules for how jurisdictions can spend those funds. McFadden also notes that “there opportunities to make the recovery process faster at every level.” (NYT, September 5) Enterprise strongly supports Reforming Disaster Recovery Act of 2019 (S.2301 and H.R. 3702.), legislation that would improve and permanently authorize HUD's Community Development Block Grant - Disaster Recovery (CDBG-DR) program.
Courtesy of Enterprise