NCSHA Washington Report | February 28, 2025

Concerns are growing among apartment owners and industry analysts that delays in HUD funding and the prospect of significant layoffs in its financing arm, the Federal Housing Administration, may imperil billions of dollars in federally supported financing.

The National Leased Housing Association, which represents hundreds of owners, including some of the largest in the country, wrote HUD Secretary Turner that the department’s reported reconsideration of whether to disburse already appropriated funds for renovations around the country, despite a “written funding commitment from the Department,” will “halt or significantly delay” 47 projects with more than 6,400 apartments in 19 states. Overall, more than $2 billion in transactions are potentially at risk, the association wrote.

Up for Growth, a research and advocacy group backed by major industry players, has raised concern about the impact of expected staff reductions at HUD on its ability, through FHA, to originate loan guarantees and manage multifamily assets; the agency had insurance on almost 11,000 properties with nearly 1.4 million apartments as of last September.

“Without the ability to process and issue mortgage insurance in a timely fashion,” the group warns “lenders will decline to participate in FHA lending, crippling the residential construction industry as multifamily developers struggle to find options for debt financing and prospective homeowners find their home mortgage options increasingly limited.”

Investment banker and analyst Chris Whalen, reacting to potential steep staff cuts at HUD, as well as speculation the White House may at some point seek to privatize Fannie Mae and Freddie Mac (the GSEs), comments that “a reduction or withdrawal of HUD and/or GSE credit cover for multifamily assets is going to create a big mess, both for investors and banks alike” and ultimately could result in “some serious credit problems in red and blue cities around the country.”

Acknowledging that “FHA’s process for multifamily loan approvals is labor and time intensive — and certainly warrants a conversation about increasing efficiency,” analysts at the Urban Institute suggest “staff reductions could, at a minimum, cut the volume of these loans and, at worst, halt the FHA’s multifamily business entirely.”

Another dimension of HUD’s importance to multifamily financing is its administration of rental assistance, which has become a “key tool … that can reduce the cost of private market financing, encourage developers to include units affordable to the lowest-income households in their properties, and provide stable affordable homes to the people most in need,” notes a 2024 report from the Center on Budget and Policy Priorities.

One in four apartments financed with the Housing Credit, the private sector’s primary incentive for investing in and building affordable properties, which accounts for 15 percent or more of all multifamily construction in 40 states, has relied on HUD-administered rental assistance to pencil out in recent years.

HUD Secretary Turner has pledged to be “detailed and deliberate about every dollar spent” by his department in his determination to run it leaner. Avoiding unnecessary harm to an important part of the housing market would be consistent with that promise and any definition of government efficiency.

Stockton Williams | Executive Director

In This Issue

• NCSHA Welcomes New Members
• House Passes FY25 Budget Resolution
• Federal Agencies Directed to Plan for Significant Staffing Cuts
• Banking Committee Considers FHFA, CFPB Nominees
• HUD Eliminates Biden-Era Affirmatively Furthering Fair Housing Regulations
• NCSHA in the News
• Looking Ahead

NCSHA Welcomes New Members
NCSHA welcomed the following organizations as Affiliate members in February: Alvarez & Marsal Public Sector Services; Applied Business Software/The Mortgage Office; Oppenheimer & Co.; Pennrose Properties, LLC; Rhode Island Department of Housing; and Tangi Community Development. If you work with a partner interested in becoming a member, please contact membership@ncsha.org.

House Passes FY25 Budget Resolution
On Tuesday, the House of Representatives passed by a 217 – 215 vote its version of the FY25 budget resolution, which would allow Congress to use reconciliation legislation protected from a Senate filibuster to pass a tax bill costing up to $4.5 trillion in net foregone revenue paired with spending cuts in some government programs and additional funding for defense, border security, and energy initiatives favored by President Trump. As NCSHA previously has reported, the budget resolution directs various House committees to find at least $1.5 trillion in savings, but if those committees save less than $2 billion, the net cost of the tax bill must be reduced commensurately. The Senate-passed FY25 budget resolution is far smaller in scope than the House version — focusing on defense, border security, and energy but not tax — with the expectation Congress would pass an FY26 budget resolution later in the year to pave the way for a tax reconciliation bill.

The next step is for the House and Senate to reconcile their differences so both chambers can pass an identical budget resolution. While Republican Senators seem willing to accept the House’s “one big beautiful bill” approach to reconciliation legislation, they are not inclined to pass the House-passed budget resolution as currently written. That means the two chambers will need to negotiate and pass a final version through a formal conference committee or informal process. House and Senate negotiators will need to iron out numerous policy differences to get there, including whether to assume that extending existing tax policy currently scheduled to sunset does not cost money for purposes of scoring the legislation — a strategy favored by the Senate and which House Speaker Mike Johnson (R-LA) appears willing to accept but is likely to face opposition from House deficit hawks and could be disallowed by the Senate’s nonpartisan parliamentarian — and whether to use the budget resolution to raise the debt ceiling, as envisioned in the House-passed budget resolution but not included in the Senate-passed version.

Federal Agencies Directed to Plan for Significant Staffing Cuts
In response to a February 11 executive order entitled “Implementing the President’s ‘Department of Government Efficiency’ Workforce Optimization Initiative,” the Office of Management and Budget (OMB) and Office of Personnel Management (OPM) issued a memorandum to the heads of all federal agencies on February 26 describing in greater detail the process and timeline for expected staffing cuts across the federal government. The OMB/OPM memorandum directs federal agencies to develop plans no later than March 13 to initiate large-scale reductions in force (RIFs) designed to achieve “maximum elimination of functions” not statutorily mandated as well as to “close and/or consolidate regional field offices.” Final implementation of agencies’ reduction and reorganization plans is to take place by September 30.

This action follows earlier reports of potentially significant staffing cuts being planned at the Department of Housing and Urban Development, including up to 84 percent of staff in the Office of Community Planning and Development, which oversees the HOME Investment Partnerships program, and up to 40 percent of staff at the Federal Housing Administration.

Banking Committee Considers FHFA, CFPB Nominees
The Senate Banking Committee yesterday held a confirmation hearing to consider the nominations of Bill Pulte to lead the Federal Housing Finance Agency (FHFA) and Jonathan McKernan to serve as director of the Consumer Financial Protection Bureau (CFPB). In his opening statement, Committee Chair Tim Scott (R-SC) praised both Pulte and McKernan, saying they had the expertise and experience needed to administer their agencies.

In his written and spoken testimony, Pulte said his top priority at FHFA would be to strengthen and safeguard the housing finance system. Regarding the future of Fannie Mae and Freddie Mac, Pulte said any exit from conservatorship must be planned carefully so it does not disrupt the markets. He pledged to work with lawmakers from both parties to address the nation’s affordable housing crisis. In response to a question from Senator Jack Reed (D-RI), Pulte pledged to continue Fannie Mae and Freddie Mac funding of the Housing Trust Fund as long as it is required via statute.

Ranking Member Elizabeth Warren (D-MA) expressed concern that the Trump Administration’s goal for CFPB is effectively to shut it down and wanted to know if McKernan was committed to fulfilling the bureau’s mission. McKernan told the committee CFPB must go back to its core mission of enforcing consumer financial protection laws and suggested some of the previous director’s actions had exceeded the bureau’s statutory mandate. In response to questions from Warren and other committee Democrats, McKernan reiterated his commitment to carrying out CFPB rules and policies that have been authorized by Congress.

The committee also considered the nominations of Dr. Stephen Miran to chair the Council of Economic Advisors and Jeffrey Kessler to serve as Under Secretary of Commerce for Industry and Security. In response to a question from Scott, Dr. Miran said Opportunity Zones are a valuable tool for supporting affordable housing development.

HUD Eliminates Biden-Era Affirmatively Furthering Fair Housing Regulations
This week, HUD published an interim final rule revising its fair housing regulations by repealing a 2021 interim final rule, developed under the previous administration, for implementing the statutory requirement to affirmatively further fair housing (AFFH) under the Fair Housing Act. The Biden Administration’s 2021 interim final rule had restored aspects of a 2015 final rule developed under the Obama Administration, which had been revoked by HUD during the first Trump Administration. The 2025 interim final rule published this week does not reinstate the obligation for grantees to conduct an Analysis of Impediments — the mechanism in place since 1994 for determining compliance with AFFH requirements — or mandate any specific fair housing planning mechanism. Rather, it states that grantee AFFH certifications will be deemed sufficient so long as the grantee took any action during the relevant period of time to promote fair housing, including helping to end housing discrimination. This was the mechanism for showing compliance with AFFH requirements prior to 1994. The interim final rule provides a 60-day comment period, which will begin upon its publication in the Federal Register.

NCSHA in the News
Mortgage Professional America, 2.26.25, CFPB nominee Jonathan McKernan gains strong support from housing groups

Looking Ahead

Legislative and Regulatory Activities

• February 28 | Comments Due | HUD Request for Information on Resilience Measures and Insurance Coverage
• March 3 | Comments Due | Establishment of the Optional Reimbursement Claim Alternative
• March 4 | House Financial Services Subcommittee on Housing and Insurance | Hearing: “Building Our Future: Increasing Housing Supply in America”
• March 10 | Comments Due | Partial Claim Document Recording and Payoff Statements
• March 10 | Comments Due to NCSHA | Equity Saver Sale Home Disposition Option
• March 17 | Comments Due | Equity Saver Sale Home Disposition Option

NCSHA, State HFA, and Industry Events

• March 3 | American Wood Council Annual Meeting | Washington, DC
  Jennifer Schwartz will speak at this event.
• March 10 – 12 | NCSHA’s 2025 Legislative Conference | Washington, DC
• March 14 | Women’s Affordable Housing Network: Quarterly Policy Update | Virtual
  Jennifer Schwartz will speak at this event.
• March 17 – 18 | Council of State Community Development Agencies: 2025 Program Managers Training Conference | Washington, DC
  Jennifer Schwartz will speak at this event.
• March 18 – 21 | National Affordable Housing Management Association: Top Issues in Affordable Housing Conference | Washington, DC
  Jennifer Schwartz will speak at this event.
• March 19 | National Housing Supply Summit | Washington, DC
  Stockton Williams will participate in this event.
• March 26, 1:00 – 3:00 pm ET | NCSHA Webinar: Empowering Women in Housing Finance Careers | Virtual