Update 359 — House Financial Svcs. Cmte. Adopts Eight Bills;
Focus on Housing Reform
This week, the House Financial Services Committee marked up eight bills, including five housing proposals. Chair Waters has put housing front-and-center in her legislative agenda, with a particular focus on a ‘housing trilogy’ in the areas of affordability, discrimination, and homelessness.
The Committee markup this week not only clarifies the focus of the Chair but points forward on reforms to go into the Democrats’ growing rainy day fund of bills waiting for a like-minded Senate and president for enactment and so deserve attention. Below we examine the five bills in each of the housing trilogy areas.
Short-term, we consider whether the following bills adopted by the Committee could ultimately make it through the Congressional gauntlet this session or should go right onto the rainy list of ideas for another day and another Congress.
Trilogy Part I: Affordability
- H.R. 3141, FHA Loan Affordability Act
Introduced by Rep. Dean Phillips, H.R. 3141 reinstates 2001 Federal Housing Administration (FHA) policy that automatically cancels mortgage insurance payments after the loan-to-home value ratio reaches 78 percent. This threshold mimics conventional mortgages where the borrower makes mortgage insurance payments until they reach 22 percent home equity. In 2013, FHA changed its policy following concerns about the financial status of the Mutual Mortgage Insurance Fund (MMIF).
Current FHA borrowers have to pay mortgage insurance premiums for the full term of the loan. During the markup, Rep. Phillips argued that current FHA policy puts first-time home buyers, minorities, and lower-income households at a disadvantage, with FHA borrowers having to pay much more in premiums than conventional borrowers.
GOP Committee members mostly opposed the bill. Ranking Member McHenry argued that it could conversely increase the cost of FHA insurance premiums in order to match up with liabilities. Rep. Phillips countered that the MMIF is now much more financially stable, with delinquencies continuing to decline and the capital reserve ratio now 40 percent above the statutory requirement. Eliminating life-of-loan insurance also helps keep performing loans within the FHA, raising revenue and preserving the integrity of the Insurance Fund.
A recorded vote was ordered, with the measure passing by a vote of 34 to 25, with one R voting yes. It will pass the House, but is unlikely to get a hearing in the Senate this Congress.
- H.R. 2162, Housing Financial Literacy Act
Introduced by Rep. Beatty, H.R. 2162 provides a 25 basis point discount on the FHA upfront mortgage insurance premium for first-time home buyers who complete a financial literacy program. In 2017, roughly 46 percent of first-time home buyers used an FHA loan to finance their purchase, and roughly half of all home purchases by minority households are made with FHA loans.
Rep. Beatty has introduced this bill every Congress since 2014 and the Subcommittee on Housing, Insurance, and Community Development held a hearing on this bill on May 8. The bill has bipartisan support. Republican Rep. Stivers, co-chair of the Financial Literacy Caucus with Rep. Beatty, is the primary cosponsor of the bill. Ranking member McHenry supports the bill with the caveat that the program must provide a tangible educational benefit. According to FHA, the preliminary cost of bill would be $2 billion per year, but a future CBO score would provide more detail on the net benefit to the economy and the net benefit to HUD as a result of a lower default risk.
A recorded vote was ordered, with the measure passing with strong bipartisan support: 52 to 6. It will pass the House, and given robust bipartisan support, may be taken up in the Senate this Congress.
Trilogy Part II: Discrimination
- H.R. 2763, Keeping Families Together Act
Introduced by freshman Rep. Sylvia Garcia (TX), H.R. 2763 would block a proposed HUD rule that would evict tens of thousands of mixed-immigrant status families from federal housing, including 55,000 children. GOP Rep. Barr spoke in opposition to the legislation, and engaged in a debate with Rep. Garcia. Barr quoted HUD Secretary Carson in alleging that because the U.S. is suffering from a housing crisis, this bill would pit Americans against non-citizens in a competition for the limited supply of affordable housing units. Rep. Garcia countered that studies have shown this argument to be facile, as immigrants do not clog up waiting lists, and Secretary Carson’s comments on this issue were rated by nonpartisan fact checkers to be false.
The bill passed the Committee 32 to 26, along party lines. If brought up for a full House vote, it would likely pass, but would not be considered in the Senate.
- H.R. 3154, Homeownership for DREAMers Act
The Trump Administration is quietly forcing mortgage lenders to unjustly deny home loans to Dreamers. H.R. 3154 would clarify rules that ensure that certain mortgage loans cannot be conditioned on the immigrant status of the mortgagor as long as other eligibility criteria were met. The bill currently has 27 cosponsors (all Democratic), including many HSFC members. Ranking Member McHenry spoke out against the bill.
The bill passed by a bipartisan vote of 33 to 25, but as with H.R. 2763, it likely does not have a life in the Senate.
Trilogy Part III: Homelessness
- H.R. 3018, Ensuring Equal Access to Shelter Act
Introduced by freshman Rep. Jennifer Wexton (VA), H.R. 3018 is in direct response to Secretary Carson’s proposed rule change for the “Equal Access to Shelter Rule.” The rule, which was implemented during the Obama Administration, states that HUD designated shelters cannot discriminate against LGBT people. The HUD’s proposed rule change would allow homeless shelters to turn away transgender people or deny them housing consistent with their gender identity in an attempt to give these shelters more flexibility. The bill has 30 current cosponsors, all of whom are Democrats, and it is endorsed by progressive organizations such as the Center for American Progress and the National Low Income Housing Coalition.
Republicans on the Committee oppose the bill because they think it is premature. Ranking Member McHenry stated that “HUD has not released a rule yet”, and therefore Congress should not take any action until that happens. Chair Waters responded to this thinking by saying that it is not wise to wait until a rule is developed because this concerns the safety of the homeless LGBT community who are statistically more likely to face violence.
A recorded vote was ordered, with the bill passing by a vote of 33 to 26, along party lines. It is probably D.O.A. in the Senate.
- H.R. 2513, Corporate Transparency Act. Introduced by Reps. Maloney, King, and Malinowski, this bipartisan bill would require companies to disclose beneficial ownership information to try and better track and shut down anonymous incorporation and prevent money laundering. The bill passed by a bipartisan vote of 43 to 16.
- H.R. 3167, National Flood Insurance Program Reauthorization Act. Introduced by Rep. Waters, this bill would reauthorize the program for five years, putting $500 million per year into updating flood maps. In the June 11-12 markup hearing, Rep. Waters said that she and the Ranking Member had “come together to put forward legislation that would provide a long term reauthorization,” despite “deep compromise” from both sides. The bill passed with unanimous consent.
- H.R. 3111, National Flood Insurance Program Administration Reform Act. Introduced by Rep. Velazquez, this bill would “increase fairness and accuracy and protect the taxpayer from program fraud and abuse” by reforming the claims and the disclosure processes. The bill passed with unanimous consent.
The HFSC markup that spanned Tuesday and Wednesday examined several bills, some enjoying resounding bipartisan support and a future vote in the Senate, others that will be not move past a House floor vote. Most of the bills fit into Chairwoman Waters’ housing agenda trilogy — affordability, discrimination, and homelessness — indicating that she has not wavered much on policy priorities since taking over the Committee in January.
All of the bills reported favorably by the Committee are serious but modest policy advances. The ones with bipartisan support can move forward this Congress. But those that don’t will be top candidates for passage and enactment by the next Congress and president.