NCSHA Washington Report | March 28, 2025

Republicans on both sides of Capitol Hill are pressing the Trump Administration to affirm support for the Treasury Department’s Community Development Financial Institutions Fund, after an ominously vague executive order two weeks ago suggested it was “unnecessary” and ordered it shrunk to the “minimum presence and function required by law.”

Shortly after the directive, 23 Senators — 10 Republicans and 13 Democrats — wrote Treasury Secretary Scott Bessant urging him to avoid the “unfortunate outcome” for local communities that crippling the fund would have. This week, House Republicans were reportedly “continuing to seek clarity” from the White House about its intentions.

These Republicans are doing every elected official’s job one: representing the interests of their voters. CDFIs — which include banks, credit unions, and loan funds — are sprouting fastest in states President Trump won last year. CDFI aggregate assets and financing activities favor Republican congressional districts and red states.

There are signs the White House is listening. Secretary Bessant issued a statement March 18 saying, “This Administration recognizes the important role that the CDFI Fund and CDFIs play,” and “CDFIs are a key component of President Trump’s commitment to supporting Main Street America.” Last Friday, the White House said, “The CDFI Fund is operating as normal and does not anticipate any disruptions to the programs.” If so, this would be an improvement from January, when according to Bloomberg, fund staff were “working outside the main Treasury building since January, in an office without Internet connection.”

The CDFI Fund’s annual budget — equal to less than half of one percent of the federal government’s debt service payment for a single month — delivers a remarkably high return on federal investment. The $8 billion in financial assistance it has awarded since 1994 has led to $38 billion in private financing from hundreds of institutions around the country. The fund also administers the New Markets Tax Credit, which generates $8 of private capital for every federal dollar of investment in local economic development.

While a handful of state housing finance agencies have received support from the fund over the years, HFAs’ connections to the institutions it primarily supports are much broader and deeper. A Federal Reserve Board report finds “growing examples of state-level support to CDFIs, including statewide CDFI coalitions and funding pools.”

HFAs value the essential complementary roles CDFIs play in strengthening areas where HFAs also invest and in supporting families who are also HFA-financed home buyers and renters. HFAs have helped establish CDFIs, provided direct financial support to them, and jointly financed countless projects with institutions around the country.

“Our capital markets should work for everyone,” House Financial Services Committee Chairman French Hill (R-AK) said this week, which means in part “reducing barriers for startups to access funding [and] incentivizing investment in regional businesses.” The CDFI Fund supports that objective.

Stockton Williams | Executive Director

In This Issue

• NCSHA Welcomes New Members
• ACTION Campaign Hosts Hill Briefing in Support of Housing Credit
• Natarajan Among AHF’s Women Shaping the Future of Affordable Housing
• Republicans Make Headway on Budget Resolution Setting Up Tax Bill
• Banking Regulators to Rescind New CRA Rule, Return to Old CRA Framework
• Pulte Rescinds FHFA Directives on Multifamily Lease Policies Providing Tenant Protections, Radon Policies
• FHFA to Eliminate GSE Equitable Housing Finance Plan Requirements, Special Purpose Credit Programs
• Turner, Noem Announce Initiative to Remove Undocumented Residents from Public and Assisted Housing
• FHA Restricts Single-Family Insurance Eligibility for Undocumented Residents
• USDA Retracts Waiver Allowing Non-U.S. Citizens Access to Home Loans
• NCSHA in the News
• Looking Ahead

NCSHA Welcomes New Members
NCSHA welcomed as Affiliate members in March the Community Economic Development Assistance Corporation and RSM US LLP. If you work with a partner interested in becoming a member, please contact Phaedra Stoger.

ACTION Campaign Hosts Hill Briefing in Support of Housing Credit
On Tuesday, the ACTION Campaign — the nationwide coalition of organizations and businesses that support the Housing Credit, co-chaired by NCSHA and Enterprise Community Partners — hosted a briefing and reception on Capitol Hill to raise awareness of the Housing Credit and the importance of including expanded resources for the program in this year’s major tax legislation. Representative Darin LaHood (R-IL), the lead House sponsor of the Affordable Housing Credit Improvement Act (AHCIA) kicked off the briefing by explaining why he supports the Housing Credit and urged the Hill staff in attendance to encourage their bosses to co-sponsor the AHCIA upon its reintroduction, expected in the coming days. Other AHCIA lead champions, Senator Maria Cantwell (D-WA) and Representative Jimmy Panetta (D-CA), made remarks during the reception.

During the briefing, North Carolina Housing Finance Agency Executive Director Scott Farmer joined a panel of experts moderated by NCSHA’s Jennifer Schwartz to discuss the state HFAs’ role as Housing Credit program administrators. Panelists Tim Henkel, CEO of Pennrose; Jennifer Seamons, senior director of community finance with Capital One; John Wiechmann, president and CEO of the Midwest Housing Equity Group; and Cathe Dykstra, president and CEO of Family Scholar House, represented the developer, investor, syndicator, and service provider perspectives on the program. The briefing was attended by numerous congressional staff working for members of both parties in both chambers of Congress.

Natarajan Among AHF’s Women Shaping the Future of Affordable Housing
Nandini Natarajan, CEO and executive director of the Connecticut Housing Finance Authority, was among the industry leaders profiled this month in Affordable Housing Finance magazine’s feature “Five Women Shaping the Future of Affordable Housing” during Women’s History Month. Natarajan serves on the NCSHA Board of Directors and is a member of the Federal Home Loan Bank of Boston Advisory Council. Read the interview.

Republicans Make Headway on Budget Resolution Setting Up Tax Bill
After a Tuesday meeting with senior White House officials, congressional Republican leadership and tax committee chairs announced they are making progress on negotiations for a final budget resolution calling for reconciliation legislation that includes major tax changes. Congress can pass reconciliation bills with a simple majority in both chambers without needing to overcome a filibuster in the Senate. Following the White House meeting, Senate Majority Leader John Thune (R-SD) reportedly told Republican Senators in a closed-door luncheon he intends to bring the compromise budget resolution to the floor for a vote as early as next week. If they are successful, the House could clear the measure before Congress adjourns for the Easter/Passover break, which begins April 14.

Before Thune brings the budget resolution to the floor, congressional negotiators need a ruling from the Senate Parliamentarian on whether they will be able to use “current policy baseline” for purposes of determining the cost of the reconciliation bill the budget resolution facilitates. The current policy baseline approach assumes no cost for extending existing tax policy (i.e., the expiring provisions of the Tax Cuts and Jobs Act). Historically, Congress uses a “current law baseline,” which assigns cost to extensions of expiring policy.

Some fiscal hawks in both chambers, including several on the tax writing committees, have questioned the merits of current policy baseline, or even publicly objected to the approach. If Congress is unable to use current policy baseline, it will be impossible to extend permanently the Tax Cuts and Jobs Act provisions, address President Trump’s other tax priorities, and include congressional tax priorities, such as the increase in resources for the Housing Credit program, within the cost maximums set by the resolution.

Another aspect of the budget resolution likely to face some resistance is direction for the inclusion of a debt ceiling increase in the resulting reconciliation bill. House and Senate leaders want to use reconciliation to raise the debt ceiling, and President Trump has stated on social media his support for this approach, though some Senators have raised objections. Should the budget resolution include an increase in the debt ceiling, it essentially would make the “X date” — the date by which the United States would default on its debt absent an increase or suspension of the debt ceiling — the deadline for passing the reconciliation bill. The Congressional Budget Office Wednesday released its X-date forecast: sometime in August or September, though it could be as early as May or June depending on tax receipts.

Budget negotiators also will need to work out how much funding to direct various congressional committees to cut. The House-passed version of the budget resolution calls for spending reductions of at least $1.5 trillion, and unless those committees find $2 trillion, the amount available for tax cuts — $4.5 trillion — would go down proportionately. Some Republican Senators have raised concerns that such spending reductions would result in major cuts to Medicaid and other safety net programs, while others have said $1.5 trillion is not enough, particularly if Congress adopts current policy baseline for scoring tax policy.

Banking Regulators to Rescind New CRA Rule, Return to Old CRA Framework
Earlier today, the three major federal banking regulators — The Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation — announced they soon will rescind their October 2023 rule overhauling their Community Reinvestment Act (CRA) regulations. The regulators will reinstate the CRA regulations and enforcement framework that were in place before the October 2023 rule was published and have pledged to work together to ensure a consistent regulatory approach to CRA. Last April, a federal judge issued a preliminary injunction preventing the October 2023 rule from taking effect while the court considered a legal challenge of the rule filed by several organizations representing the financial services industry.

Pulte Rescinds FHFA Directives on Multifamily Lease Policies Providing Tenant Protections, Radon Policies
Federal Housing Finance Agency (FHFA) Director Bill Pulte announced Monday evening via social media he had issued a directive rescinding a series of tenant protections FHFA previously had announced for renters living in properties guaranteed by Fannie Mae and Freddie Mac. The tenant protections, which FHFA finalized in 2024, would have required owners of such properties to provide tenants with a 30-day notice of rent increase and lease term expirations and a five-day grace period for late rent payments. FHFA postponed implementation of the tenant protections in February. In the directive, FHFA argues states and local governments already have their own tenant protection laws and implementing the tenant protections would increase the regulatory burden on multifamily developers and lenders. The directive announcing the tenant protections has since been removed from FHFA’s website.

On Wednesday, Pulte posted on social media he had issued a directive repealing a 2022 FHFA policy that strengthened Fannie Mae and Freddie Mac’s radon policies for multifamily properties.

FHFA to Eliminate GSE Equitable Housing Finance Plan Requirements, Special Purpose Credit Programs
In another series of posts on social media, Director Bill Pulte announced further efforts to rescind FHFA requirements on the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. Most notably, Pulte issued a regulatory waiver exempting the GSEs from most provisions of a rule formalized last year that requires them to publish and maintain equitable housing finance plans outlining the activities each firm will undertake to support equitable access to affordable and sustainable housing. The waiver is indefinite, and it is possible FHFA will pursue rulemaking to revise or withdraw the equitable housing rule entirely.

Pulte also directed the GSEs to end their participation in Special Purpose Credit Programs, ordered Fannie Mae to end its “Repair All” approach to its foreclosed homes portfolio, rescinded a 2024 FHFA advisory bulletin on how the GSEs should consider climate change when measuring risk, voided an advisory bulletin on how the GSEs should comply with the Unfair or Deceptive Practices Act, and directed the GSEs to cease developing borrower education tools that include energy efficiency metrics for homes. All these actions were announced on social media and have yet to be posted on FHFA’s website.

Turner, Noem Announce Initiative to Remove Undocumented Residents from Public and Assisted Housing
U.S. Department of Housing and Urban Development (HUD) Secretary Scott Turner and Department of Homeland Security Secretary Kristi Noem recently signed a memorandum of understanding between their agencies intended to coordinate efforts to identify undocumented residents who may be receiving HUD-funded assistance. It is unclear to which HUD programs this directive may apply but an accompanying press advisory specifically mentions related instructions to Moving to Work jurisdictions to comply with existing laws and regulations related to housing assistance for undocumented individuals.

FHA Restricts Single-Family Insurance Eligibility for Undocumented Residents
On Wednesday, the Federal Housing Administration (FHA) revised the residency requirements for its single-family insurance programs to limit eligibility to U.S. citizens and others with lawful residency status by eliminating eligibility for “non-permanent residents.” The revisions to HUD Handbook 4000.01 are included in new Mortgagee Letter 2025-09 and Title I Letter 409, both titled “Revisions to Residency Requirements.” Programs affected include single-family forward mortgages, home equity conversion mortgages, property improvement, and manufactured home loans under Titles I and II of the National Housing Act. The letters say their provisions may be implemented immediately but must be implemented for FHA case numbers assigned on or after May 25.

USDA Retracts Waiver Allowing Non-U.S. Citizens Access to Home Loans
The U.S. Department of Agriculture (USDA) announced last week that a temporary waiver allowing certain non-U.S. citizens to apply for loans through its Single-Family Housing Guaranteed Loan Program (SFHGLP) is no longer valid as of March 18. The temporary waiver, first communicated on April 29, 2022, made non-U.S. citizens with a valid Social Security number and an Employment Authorization Document eligible for USDA loans through the SFHGLP. To be eligible now, a loan applicant must be a U.S. citizen, a qualified alien, or a U.S. non-citizen national as specified in Chapter 8 of Handbook 1-3555. USDA will be updating the handbook to reflect the retracted waiver.

NCSHA in the News
Affordable Housing Finance, 3.25.25, Q&A with Nandini Natarajan
Notes from Novogradac, 3.19.25, The Importance of HUD and USDA Funding to LIHTC Developments

Looking Ahead

NCSHA, State HFA, and Industry Events

• April 22 – 24 | Affordable Housing Investors Council Spring Meeting | Pittsburgh, PA
  Jennifer Schwartz will speak at this event.
• April 23 – 24, 1:00 – 4:30 pm ET | NCSHA Virtual Event: Housing Credit 101: Development
• April 28 – 30 | Nebraska Investment Finance Authority 2025 Innovation Expo | Lincoln, NE
  Jennifer Schwartz will speak at this event.
• May 1 | Minnesota Affordable Housing Summit | Minneapolis, MN
  Stockton Williams will speak at this event.
• May 4 – 7 | 2025 Women’s Affordable Housing Network Summit | Denver, CO
  Jennifer Schwartz will speak at this event.
• May 8 – 9 | Novogradac 2025 Affordable Housing Conference | San Francisco, CA
  Jennifer Schwartz will speak at this event.
• May 12 – 15 | NALHFA Annual Conference | Minneapolis, MN
  Robert Henson will speak at this event.
• May 13 – 14 | Michigan State Housing Conference | Lansing, MI
  Jennifer Schwartz will speak at this event.