NCSHA Washington Report | March 7, 2025

Last week we noted the growing concern among multifamily housing finance players about the uncertainty federal funding delays and looming layoffs at HUD are causing. Similar worries are percolating in the home mortgage lending space.

The Federal Housing Administration’s mortgage insurance backed 15 percent of all home purchase loans last year and serves a greater share of first-time and low- to moderate-income borrowers than the government sponsored housing enterprises (Fannie, Freddie, and the Federal Home Loan Banks) or non-agency providers. Half or more of all HFA-financed home buyers use FHA insurance in a given year.

The White House’s week-one attempt to freeze virtually all federal funding and financial assistance, currently blocked by two federal court restraining orders, exempted FHA single-family insurance and the functions of Ginnie Mae, which facilitates capital market liquidity for FHA loans. Early reports of forthcoming mass layoffs at HUD suggested they would be largely spared as well. Nothing to worry about.

But leaked HUD planning documents indicated the opposite, and while HUD has not confirmed any specific staff cuts, the representative for the largest HUD employee union said this week “there will be some cuts” at FHA. Ginnie Mae already has laid off 25 percent of its staff, according to various reports.

HUD has also apparently put in motion plans to close most of its 65 local offices around the country, potentially leaving 34 states without one. Many of the offices underwrite FHA-insured mortgages, and some of them are central to the agency’s loan servicing, asset management, and real estate disposition activities.

Lenders and other mortgage providers worry that layoffs and office closures will inevitably make it harder, slower, and more expensive for borrowers to buy a home with an FHA-insured mortgage. Insured homeowners who have fallen behind on their mortgages may not get help from one of FHA’s special programs in time to avoid more serious financial harm or foreclosure.

Systemic stresses in the mortgage market could develop quickly. Analysts at the Urban Institute suggest: “Increases in the waiting time to recover losses will reduce servicer liquidity in the short term and increase their likelihood of bankruptcy. In response, originators may increase mortgage rates, putting homeownership further out of reach.”

It’s true enough that some of this might not happen, but none of it needs to or should. One wonders what problem large-scale, indiscriminate layoffs at an agency that made $6 billion for the federal government while helping three-quarters of a million families achieve the American Dream last year aims to solve.

If HUD decides to pursue reforms to FHA and Ginnie Mae in a rational manner, it will have allies among those who know them the best. Scott Olson, executive director of the Community Lenders of America, speaks for many when he says, “All we ask is for this to be done in a balanced manner, which both streamlines operation of these programs and maintains their critical role in making homeownership a reality for millions of American families.”

The scalpel rather than the hatchet.

Stockton Williams | Executive Director

In This Issue

• Ways and Means Committee Poised to Begin Drafting Tax Bill
• Congress Explores CR Options as Funding Deadline Nears
• Banking Committee Advances Nominees to Lead FHFA, CFPB
• House Subcommittee Discusses How to Increase Housing Supply
• Waters Leads Rally to Oppose HUD Funding, Personnel Cuts
• Looking Ahead

Ways and Means Committee Poised to Begin Drafting Tax Bill
While both chambers of Congress have yet to pass a final budget resolution, the House Ways and Means Committee is getting ready to put pen to paper: Next week, committee Republicans will begin meeting to discuss the framing of the tax reconciliation bill that Chair Jason Smith (R-MO) anticipates the budget resolution will call for. Smith reiterated publicly this week he wants to have the tax bill on President Trump’s desk by Memorial Day. That ambitious schedule will hinge on whether both chambers are able to soon pass identical budget resolutions, as each has thus far advanced a separate plan. Also this week, Senate Majority Leader John Thune (R-SD) said the Senate will not take further action on the budget until after the Senate’s March 17 – 21 recess, meaning the earliest the Senate will act is the week of March 24.

While the Senate could adopt the House resolution as written, it is unlikely to do so due to concerns that the amount allocated for tax cuts in the House budget resolution — a maximum of $4.5 trillion — is insufficient to make permanent expiring provisions of the 2017 Tax Cuts and Jobs Act, let alone have room for other Trump tax priorities, such as removing taxes on tips, overtime, and Social Security — all of which the president mentioned in his joint address to Congress this week. Moreover, some Senators are concerned it will be difficult to find at least $1.5 trillion in spending cuts, as called for in the House budget resolution, without slashing Medicaid and potentially other safety net programs.

Senate Republican leaders, including Finance Committee Chair Mike Crapo (R-ID), favor changing the way the baseline is calculated so extensions of existing policy would not count against the cost of the bill. However, if Congress were to do that, it would have to be written into the budget resolution itself, which is not the way the House-passed budget resolution is drafted. This baseline change is likely to face opposition from fiscal conservatives concerned about the impact on the debt and may not pass muster with the nonpartisan Senate parliamentarian.

Congress Explores CR Options as Funding Deadline Nears
Despite reported progress towards an agreement on total defense and non-defense discretionary spending levels for fiscal year (FY) 2025 as the March 14 expiration of the current continuing resolution (CR) rapidly approaches, Congress faces a choice between yet another CR of indeterminate length or a government shutdown. House Republican leaders, including Appropriations Committee Chair Tom Cole (R-OK) and Speaker Mike Johnson (R-LA), want a full-year CR, keeping funding levels from FY 2024 flat for the duration of FY 2025. Democrats, however, oppose such a plan without additional protections to constrain the Trump Administration from deviating from the spending plans enacted by Congress. Given the razor-thin margin in the House and 60-vote threshold in the Senate, it remains unclear whether Republicans can enact a funding plan without Democratic support, leaving the door open for a shutdown or perhaps another short-term CR to allow for negotiations to continue.

Banking Committee Advances Nominees to Lead FHFA, CFPB
The Senate Banking Committee voted Thursday to favorably report the nominations of Bill Pulte to direct the Federal Housing Finance Agency (FHFA) and Jonathan McKernan to head the Consumer Financial Protection Bureau (CFPB). McKernan’s nomination was advanced via party-line vote, with all Republicans voting in support and all Democrats opposed. Pulte also received unanimous support from committee Republicans while being opposed by all but two Democrats. Committee Chair Tim Scott (R-SC) lauded both nominees, arguing Pulte will protect the housing finance system and McKernan will implement necessary reforms at CFPB. Ranking Member Elizabeth Warren (D-MA) expressed concern Pulte would pursue policies at FHFA that would make homeownership less affordable for middle-class families. Regarding McKernan, Warren said she is unconvinced he will be able to carry out CFPB’s mission, given efforts by President Trump and Elon Musk to shut down the agency.

The committee also advanced 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. Each of these nominations will be referred to the full Senate for consideration.

House Subcommittee Discusses How to Increase Housing Supply
On Tuesday, the House Financial Services Subcommittee on Housing and Insurance held a hearing to consider steps the federal government could take to increase the nation’s housing supply. In his opening statement, new Subcommittee Chair Mike Flood (R-NE) said increasing housing supply is the most important way to address the current affordable housing crisis and he hopes to work with subcommittee members from both parties on this issue. He opined that there are several factors contributing to the supply shortage, including state and local zoning and building regulations, the costs of construction materials, and the programmatic requirements for federal housing programs, including the Housing Credit and HOME Investment Partnerships Program. Ranking Member Emanuel Cleaver (D-MO) pledged to work with Flood on the issue, which he said would require increased federal investment. Flood will address NCSHA’s Legislative Conference next Tuesday morning.

The witnesses testifying during the hearing were former HUD General Counsel Paul Compton of Compton Jones Dresher LLP; Dr. Emily Hamilton, director of the Urbanity Project at the Mercatus Center at George Mason University; Buddy Hughes, board chair of the National Association of Home Builders; Tara Vasicek, city administrator for Columbus, Nebraska; and Nikitra Bailey, executive vice president of the National Fair Housing Alliance. Compton, Hughes, and Bailey all expressed support for the Housing Credit during the hearing and as part of their written testimonies.

Waters Leads Rally to Oppose HUD Funding, Personnel Cuts
House Financial Services Committee Ranking Member Maxine Waters (D-CA) led a rally Monday outside HUD headquarters in Washington, DC, to protest recent Trump Administration efforts to cut funding for HUD programs and fire HUD staff. Waters was joined by other Democratic members of Congress, current and recently laid off HUD employees, and federal employee union officials. Waters argued the cuts would worsen the nation’s affordable housing crisis and exceeded the administration’s constitutional authority. Waters attempted to hand deliver a letter to HUD Secretary Scott Turner from her and 121 other House Democrats expressing these concerns. The letter was received by Turner’s chief of staff, who said the Secretary was too busy to receive it in person. Turner has since characterized Waters’ letter as a “political stunt.”

Looking Ahead

Legislative and Regulatory Activities

• March 10 | Comments Due | Partial Claim Document Recording and Payoff Statements
• March 10 | Comments Due to NCSHA | Equity Saver Sale Home Disposition Option
• March 12 | Senate Banking Committee | Hearing on Housing Roadblocks: Paving a New Way to Address Affordability
• March 17 | Comments Due | Equity Saver Sale Home Disposition Option

NCSHA, State HFA, and Industry Events

• 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