NHC releases housing finance reform paper

NHC released a new report outlining conditions for administrative action to release Fannie Mae and Freddie Mac (the Enterprises) from their long-standing conservatorship, outlining a clear vision for the future of the housing finance system. The paper, titled "Moving Forward: Administrative recapitalization and release from conservatorship for Fannie Mae and Freddie Mac," presents a comprehensive and nonpartisan path forward to resolve the status of the Enterprises while establishing a stable, equitable, and market-driven future for the housing finance system.

NHC affirms that any movement out of conservatorship must guarantee five major aspects of the status quo:

1. Maintain and enhance mortgage funding liquidity for single-family and multifamily mortgages, including a robust and efficient To-Be-Announced (TBA) market;
2. Ensure broad, reliable, safe and sound access to affordable mortgage credit for the most consumers possible as statutorily required in the Housing and Economic Recovery Act of 2008 (HERA);
3. Improve on the pre-conservatorship implicit guarantee structure;
4. Maintain strong, independent regulation to ensure the Enterprises are safe and sound while preserving a level playing field for lenders of all sizes; and
5. Mitigate any adverse market and consumer impacts with a smooth, transparent transition.

“The transition out of conservatorship should be deliberate, transparent, and supportive of the affordable housing market, leveraging existing regulatory authorities where possible and engaging stakeholders across the housing ecosystem,” the report says. One key element of a successful exit from conservatorship is the return to independent board governance with a fiduciary responsibility to shareholders. “Without an independent Board of Directors with fiduciary responsibility to the shareholders, the value of shares in a secondary offering would be significantly diluted and potentially eliminated entirely,” the report says.

Senate Finance Committee releases reconciliation text with key housing provisions

The Senate has begun its consideration of a tax and budget reconciliation bill, with the Senate Finance Committee releasing text that includes key housing and community development priorities. The Senate bill permanently expands the Low-Income Housing Tax Credit (LIHTC) and, in contrast to the House version of the bill, the New Markets Tax Credit. The Neighborhood Homes Investment Act was not included in either version. While the House bill calls for a 12.5% increase in the state LIHTC allocation cap from 2026 to 2029, the Senate bill proposes a permanent 12% increase beginning in 2026. Both chambers agree on lowering the private activity bond financing threshold for receiving the full 4% credit from 50% to 25%. According to Novogradac, a permanent 25 percent test alone will finance 1.14 million affordable homes over the next decade than otherwise possible. Unlike the House bill, it does not include the basis boost for buildings in rural and Native communities.

The Senate text also phases out or eliminates clean energy related credits and enhances and permanently extends Opportunity Zones (OZs) with new designations of OZs every 10 years. While some enhancements were made to OZs in the Senate version, specific proposals to better support affordable housing development within OZs remain unclear.

Although the House passed its version of the reconciliation bill last month, it has not yet formally transmitted the legislation to the Senate due to ongoing deliberations over potential revisions. Over the next two weeks, the Senate will continue to go through the Byrd Rule compliance process—commonly known as the “Byrd bath”—to determine which provisions meet reconciliation requirements. Revisions may be made in preparation for expected committee markups. The Senate plans to vote on the final passage of the bill ahead of the July Fourth break, an increasingly ambitious goal given ongoing deliberation.

Subcommittee hearing discusses housing opportunities in rural America

The House Financial Services Subcommittee on Housing and Insurance held an oversight hearing regarding the state of housing in rural America. Lawmakers and witnesses discussed the affordability crisis, outdated housing infrastructure, and the regulatory burdens that hinder growth in non-metropolitan communities. Chairman Mike Flood (R-Neb.) framed the conversation around what he referred to as the “four horsemen of the housing apocalypse” – environmental reviews; Build America, Buy America requirements; Davis-Bacon requirements; and Section 3 requirements – each of which has been blamed for delayed construction timelines and increased costs, particularly in smaller markets with limited contractor availability.

The witnesses testifying showcased the scope of the rural housing shortage as well as promising state-level models. David Garcia, policy director for Up for Growth Action, discussed the affordability crisis and noted that renters in more rural regions are facing increasing financial strain. He testified that 44% of rural renters are cost-burdened, and half of those pay more than 50% of their income toward rent.

Richard Baier, President and CEO of the Nebraska Bankers Association, offered a strong endorsement of the state’s Rural Workforce Housing Investment Fund (RWHIF), citing the program’s success. RWHIF provides grants to non-profit organizations that invest in projects that address the need for workforce housing. Baier notes that “To date the state of Nebraska has awarded more than $59 million in grants which have been matched by $36 million in local funds,” resulting in 331 new owner-occupied units, 655 rental units, and 670 units currently under construction.

Housing Assistance Council (HAC) president and CEO David Lipsetz emphasized the need for local capacity building and technical assistance in rural areas.  

“Federal investment in capacity building launched almost every successful local and regional housing organization that we know today. However, very few of those local organizations are in rural regions. Fewer still work in areas of persistent rural poverty,” he explained. “The power of capacity building in rural communities cannot be overstated. Rural communities often have small and part-time local governments, inadequate philanthropic support and a shortage of the specialists needed to navigate the complexities of federal programs and modern housing finance. Targeted capacity building through training and technical assistance is how local organizations learn skills, tap information, and gain the wherewithal to do what they know needs to be done.”

The Rural Housing Services Reform Act was highlighted as a bipartisan effort to improve rural housing programs and endorsed by both HAC and Up for Growth Action during the hearing. 

HUD, Ginnie Mae partner with Korea Housing Finance Corporation

This week, HUD deepened its working relationship with the Korea Housing Finance Corporation (KHFC), by signing a Memorandum of Understanding (MOU). KHFC is government-sponsored entity (GSE) which serves a similar role as both FHA and Ginnie Mae, supporting the housing finance ecosystem with a particular focus on low-to-moderate income households. It supplies mortgage loans, guarantees for homebuilders, reverse mortgages, and issuance of mortgage-backed securities.

The MOU is a nonbinding agreement to facilitate the exchange of expertise and experiences related to policy, methodologies, technological innovation, and more. It also outlines the possibility of collaboration on events and projects, and proposes a structure for recurring meetings. Roughly a third of Ginnie Mae investors are international, with the majority in Japan, South Korea, and China. Current holdings by Korean institutional investors include approximately $37 billion in Agency Mortgage-Backed Securities and Debt, and $122 billion in U.S. Treasury securities, according to the latest data from the Treasury International Capital system. This agreement strengthens the existing economic ties and shared housing priorities between the U.S. and Korea.

“Working strategically with our South Korean allies, we are expanding the global understanding of American housing finance, while increasing capital flows in the United States, strengthening our domestic capital markets, and unlocking strategies to benefit American borrowers,” said HUD Secretary Scott Turner.

KHFC President and Chief Executive Officer Kyung Hwan Kim stated, “This partnership marks an important step toward closer collaboration between Korea and the United States in the field of housing finance. By sharing knowledge and best practices, we hope to strengthen the resilience and inclusiveness of our respective housing finance systems.”

NCSHA’s Housing Credit Conference Convenes in Chicago This Month 

As Congress works on major tax legislation that includes the most significant changes to the Low-Income Housing Tax Credit in more than a decade, the affordable housing industry is already considering the impact of these changes on the Housing Credit program. When the National Council of State Housing Agencies hosts its 2025 Housing Credit Connect conference later this month in Chicago, the agenda will include discussion on how state agencies are planning to utilize the additional 12.5 percent Credit authority, how a reduction in the tax-exempt bond financing threshold will dramatically alter financial structuring of 4 percent Credit developments, how the new rural and Native American basis boosts will enhance feasibility of deals in these markets, and how the additional Credits and program changes will impact the equity market and Credit pricing. To register for NCSHA’s June 24 – 27 event at the Marriott Marquis Chicago, visit www.ncsha.org/hcc. Walk-in registrations are welcome.