The 116^th Congress has been considering a variety of housing-related issues. TheseHousing Issues in the 116th Congress October 16, 2020 Since the outbreak of the Coronavirus Disease 2019 (COVID-19) pandemic in early 2020 and the resulting economic recession, pandemic relief and response has dominated the housing policy Katie Jones, Coordinator considerations of the second session of the 116th Congress. The CARES Act (P.L. 116-136), Analyst in Housing Policy enacted in March 2020, contained several housing-related provisions. These included nearly $15 billion in supplemental funding for housing-related COVID-19 relief and response as well as policies such as a temporary eviction moratorium for some properties and forbearance for some Darryl E. Getter mortgages. Since then, the Administration issued an order implementing a nationwide eviction Specialist in Financial Economics moratorium, and additional relief legislation has been introduced and considered in Congress. Pandemic relief and response are not the only housing issues that have been considered by the Mark P. Keightley 116th Congress. Others include topics related to housing finance, federal housing assistance Specialist in Economics include topics related to housing finance, federal housing assistance programs, and housing-related tax provisions, among other things. Particular issues that have been of interest during theto Congress include the following:

• Maggie McCarty Specialist in Housing Policy  The status of Fannie Mae and Freddie Mac, two government-sponsored enterprises (GSEs) that have been in conservatorship since 2008, including administrative actions Libby Perl taken by their regulator, the Federal Housing Finance Agency (FHFA). Specialist in Housing Policy  (GSEs) that have been in conservatorship since 2008. Congress could consider comprehensive housing finance reform legislation to resolve the status of Fannie Mae and Freddie Mac. A new director for the Federal Housing Finance Agency (FHFA), Fannie Mae's and Freddie Mac's regulator and conservator, was sworn in on April 15, 2019. Congress may take an interest in any administrative changes that FHFA makes to Fannie Mae and Freddie Mac under new leadership.
• Appropriations for federal housing programs, including programs at the Department of Housing and Urban Development (HUD) and rural housing programs administered by Elizabeth M. Webster the U.S. Department of Agriculture (USDA).
• Analyst in Emergency  Oversight of the implementation of certain changes to federal assisted housing programs Management and Disaster that were enacted in prior Congresses, such as expansions of HUD'’s Moving to Work Recovery (MTW) program and Rental Assistance Demonstration (RAD) program, and proposed Administration actions, including a proposed rule to modify noncitizen eligibility for assisted housing programs.
• Considerations related to housing and the federal response to major disasters, including oversight of the implementation of certain changes related to Federal Emergency Management Agency (FEMA) Lida R. Weinstock assisted housing programs. Analyst in Macroeconomic  Considerations related to housing and the federal response to major disasters, including Policy emergency sheltering options that may be implemented during the COVID-19 pandemic, ongoing issues related to oversight of the Federal Emergency Managemen t Agency’s (FEMA’s) implementation of certain changes to assistance that were enacted assistance that were enacted in the previous Congress, and a bill to formally authorize the Community Development Block Grant-Disaster Recovery program.
•  Consideration of legislation related to certain federal housing programs, including bills related to programs that provide assistance to Native Americans living in tribal areas , to serve youth aging out of foster care, and to betterfurther regulate the quality of federally assisted housing.
•  Consideration of legislation to extend certain temporary tax provisions that are currentlyhad expired, including housing- related provisions that provide a tax exclusion for canceled mortgage debt and allow for the deductibility of mortgage insurance premiums, respectively.

Housing and mortgage market conditions provide context for these and other issues that Congress may consider, although housing markets are local in nature and national housing market indicators do not necessarily accurately reflect conditions in specific communities. On a national basis, some key characteristics of owner-occupied housing markets and the mortgage market in recent years include increasing housing prices, low mortgage interest rates, and home sales that have been increasing but constrained by a limited inventory of homes on the market. Key characteristics of rental housing markets include an increasing number of renters, low rental vacancy rates, and increasing rents. Rising home prices and rents that have outpaced income growth in recent years have led to policymakers and others increasingly raising concerns about the affordability of both owner-occupied and rental housing. Affordability challenges are most prominent among the lowest-income renter households, reflecting a shortage of rental housing units that are both affordable and available to this population. The housing-related implications of the COVID-19 pandemic and its resulting recession on U.S. markets and households are still unfolding. Congressional Research Service link to page 5 link to page 5 link to page 6 link to page 6 link to page 7 link to page 8 link to page 9 link to page 10 link to page 12 link to page 13 link to page 13 link to page 14 link to page 15 link to page 16 link to page 16 link to page 18 link to page 18 link to page 20 link to page 23 link to page 24 link to page 25 link to page 25 link to page 25 link to page 30 link to page 32 link to page 32 link to page 32 link to page 34 link to page 35 link to page 37 link to page 38 link to page 39 link to page 41 link to page 41 link to page 42 link to page 43 link to page 43 link to page 44 link to page 45 link to page 46 link to page 46 link to page 48 link to page 50 link to page 51 link to page 51 link to page 52 Housing Issues in the 116th Congress Contents Introduction ................................................................................................................... 1 Housing and Mortgage Market Conditions .......................................................................... 1 Owner-Occupied Housing Markets and the Mortgage Market ........................................... 2 House Prices........................................................................................................ 2 Interest Rates ....................................................................................................... 3 Homeownership Affordability ................................................................................ 4 Home Sales ......................................................................................................... 5 Housing Inventory and Housing Starts..................................................................... 6 Mortgage Market Composition ............................................................................... 8 Rental Housing Markets ............................................................................................. 9 Share of Renters................................................................................................... 9 Rental Vacancy Rates.......................................................................................... 10 Rental Housing Affordability ............................................................................... 11 The COVID-19 Pandemic and Housing ............................................................................ 12 COVID-19 and Effects on Housing ............................................................................ 12 Federal Housing Responses to COVID-19 ................................................................... 14 Federal Interventions Related to Rental Housing ..................................................... 14 Federal Interventions Related to Mortgages ............................................................ 16 Increased Funding for Housing Programs............................................................... 19 Proposals for Additional Action ................................................................................. 20 Other Housing Issues in the 116th Congress ....................................................................... 21 Housing Finance ..................................................................................................... 21 Status of Fannie Mae and Freddie Mac .................................................................. 21 CFPB’s Proposed Changes to the Qualified Mortgage Rule and the GSE Patch............ 26 Department of Veterans Affairs Loan Guaranty and Maximum Loan Amounts ............. 28 Housing Assistance .................................................................................................. 28 Appropriations for Housing Programs ................................................................... 28 Housing Vouchers for Foster Youth ....................................................................... 30 Implementation of Housing Assistance Legislation .................................................. 31 Quality of Federal y Assisted Housing ................................................................... 33 Native American Housing Programs...................................................................... 34 Proposed New Investments in Affordable Housing .................................................. 35 Selected Administrative Actions Related to Affordable Housing ..................................... 37 HUD Noncitizen Eligibility and Documentation Proposed Rule................................. 37 Equal Access to Housing ..................................................................................... 38 Regulatory Barriers Council................................................................................. 39 Affirmatively Furthering Fair Housing................................................................... 39 Housing and Disaster Response and Recovery ............................................................. 40 Emergency Sheltering Options During the COVID-19 Pandemic ............................... 41 Implementation of Housing-Related Provisions of the Disaster Recovery Reform Act (DRRA) ................................................................................................... 42 FEMA Short-term, Emergency Housing Program Change......................................... 44 Community Development Block Grants-Disaster Recovery (CDBG-DR).................... 46 Housing-Related Tax Extenders ................................................................................. 47 Exclusion for Canceled Mortgage Debt.................................................................. 47 Deductibility of Mortgage Insurance Premiums....................................................... 48 Congressional Research Service link to page 6 link to page 7 link to page 9 link to page 11 link to page 12 link to page 13 link to page 14 link to page 17 link to page 53 Housing Issues in the 116th Congress Figures Figure 1. Year-over-Year House Price Changes (Nominal) ..................................................... 2 Figure 2. Mortgage Interest Rates ...................................................................................... 3 Figure 3. New and Existing Home Sales ............................................................................. 5 Figure 4. Housing Starts ................................................................................................... 7 Figure 5. Share of Mortgage Originations by Type ............................................................... 8 Figure 6. Rental and Homeownership Rates ........................................................................ 9 Figure 7. Rental Vacancy Rates ....................................................................................... 10 Figure 8. Renters and Owners Having Difficulty Making Housing Payments.......................... 13 Contacts Author Information ....................................................................................................... 49 Congressional Research Service Housing Issues in the 116th Congress Introduction In March 2020, the Coronavirus Disease 2019 (COVID-19) pandemic began having wide-ranging public health and economic effects in the United States. The impacts of the pandemic have implications for housing, including the ability of households experiencing income disruptions to make housing payments. In response, Congress and the Administration have taken a variety of actions related to COVID-19 and housing. However, the pandemic is continuing and the economy is in a recession. Some initial assistance measures have ended, and there have been cal s for additional action. The longer-term consequences of the pandemic and associated economic turmoil on housing markets remain unclear. Outside of pandemic-related housing issues, several other housing-related issues have been active during the 116th Congress. These include issues related topopulation.

The 116^th Congress has been considering a variety of housing-related issues. These involve assisted housing programs, such as those administered by the Department of Housing and Urban Development (HUD), and issues related to housing finance, among other things. Specific topics of interest include ongoing issues such as interest in reforming the nation's housing finance system,issues such as the status of two government-sponsored enterprises, Fannie Mae and Freddie Mac; how to prioritize appropriations for federal housing programs in a limited funding environment, ; oversight of the implementation of changes to certain housing programs that were enacted in prior Congresses, and the possibility of extending Congresses; administrative changes to certain affordable housing policies and programs; and the extension of certain temporary housing-related tax provisions. Additional issues may emerge as the Congress progresses.

This report provides a high-level overview of the most prominent housing-related issues that have been of interest during the 116^th Congress. It116th Congress. It begins with an overview of housing and mortgage market conditions during the Congress to date. While this overview includes some national-level statistics from the months after the pandemic began, it is stil too early to know how the pandemic wil ultimately affect housing markets in the medium or longer term. The following section discusses housing-related concerns related to the COVID-19 pandemic and federal housing responses. Final y, the report discusses other housing issues that have been active during the 116th Congress. The discussion in this report provides a broad overview of major issues and is not intended to provides a broad overview of major issues and is not intended to provide detailed information or analysis. It includes references to more in-depth CRS reports on these issues where possible.

Housing and Mortgage Market Conditions

This section provides background on housing and mortgage market conditions at the beginning of the 116^th during the 116th Congress to provide context for the housing policy issues discussed in the remainder of the report. This discussion of market conditions is at the national level. Yet, localLocal housing market conditions can vary dramatically vary dramatical y, and national housing market trends may not reflect the conditions in a specific area. Nevertheless, national housing market indicators can provide an overall overal sense of general trends in housing.

In general, rising home prices, relatively low interest rates, and rising rental costs have been prominent features of housing and mortgage markets in recent years. Although interest rates have remained low, rising house prices and rental costs that in many cases have outpaced income growth have led to increased concerns about housing affordability for both prospective homebuyers and renters.

As the COVID-19 pandemic took hold in the United States beginning in March 2020, some housing indicators showed notable changes. For example, interest rates fel , and home sales and Congressional Research Service 1 link to page 6 Housing Issues in the 116th Congress construction activity experienced significant declines, although sales and construction indicators rebounded to varying degrees in subsequent months. Other housing market indicators, such as house prices, have shown only relatively slight changes to date. Since these indicators reflect national-level conditions, conditions in specific local housing markets may differ. Going forward, the pandemic’s impacts on housing market conditions are highly uncertain and wil depend on a variety of factors. Owner-Occupied Housing Markets and the Mortgage Market Owner-Occupied Housing Markets and the Mortgage Market

Most homebuyers take out a mortgage to purchase a home. Therefore, owner-occupied housing markets and the mortgage market are closely linked, although they are not the same. The ability of prospective homebuyers to obtain mortgages, and the costs of those mortgages, impact housing demand and affordability. The following subsections show current trends in selected owner- occupied housing and mortgage market indicators.

House Prices

As shown inin Figure 1, nationally, nominal house prices have been increasingincreased national y on a year-over-year basis in each quarter since the beginning of 2012, with year-over-year increases exceeding 5% for much of that time period and exceeding 6% for most quarters since mid-2016at times. These increases followfollowed almost five years of house price declines in the years during and surrounding the economic recession of 2007-2009 and associated housing market turmoil. House Year-over-year house price increases have slowed somewhat but continued to exceed 5% through the second quarter of 2020, despite the onset of the COVID-19 pandemic.1 slowed somewhat during 2018, but year-over-year house prices still increased by nearly 6% during the fourth quarter of 2018.

Figure 1. Year-over-Year House Price Changes (Nominal) Q1 1995–Q2 2020 Q1 1995–Q4 2018

Source: Figure created by CRS using data from the Federal Housing Finance Agency House Price Index (Seasonally Index (Seasonal y Adjusted Purchase-Only Index). Notes: Figure shows the percentage change in nominal house prices compared to the same quarter in the previous year.

1 See Federal Housing Finance Agency, House Price Index (HPI) Quarterly Report, 2020Q2 and June 2020, August 25, 2020, https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/2020Q2_HPI.pdf. Congressional Research Service 2 link to page 7 Housing Issues in the 116th Congress House prices, and changes in house prices, vary greatly across local housing markets. Some areas of the country are experiencingcan experience rapid increases in house prices, while other areas are experiencingexperience slower or stagnating house price growth. Similarly, prices have fully regained or even exceeded their pre-recession levels in nominal terms in many parts of the country, but in other areas prices remain below those levels.¹

HouseFurthermore, house price increases affect participants in the housing market differently. Rising prices reduce affordability for prospective homebuyers, but they are generallygeneral y beneficial for current homeowners due to the increased home equity that accompanies them (although rising house prices also have the potential to negatively impact affordability for current homeowners through increased property taxes).

Interest Rates

For several years, mortgage interest rates have been low by historical standards. Lower interest rates increase mortgage affordability and make it easier for some households to purchase homes or refinance their existing mortgages.

As shown inin Figure 2, average mortgage interest rates have been consistently below 5% since May 2010 and have been below 4% for several stretches during that time. After starting to increase somewhat in late 2017 and much of 2018, mortgage interest rates showed declines at the end of 2018 into early 2019. The average mortgage interest rate for February 2019 was 4.37%, compared to 4.46% in the previous month and 4.33% a year earlier.

have been general y declining since late 2018. Since the COVID-19 pandemic began, interest rates have fal en even further, in part due to federal monetary policy responses to the pandemic. At times, interest rates have been below 3%, their lowest levels since at least 1971.2 The average mortgage interest rate for August 2020 was 2.94%, compared to 3.02% in the previous month and 3.62% a year earlier. Figure 2. Mortgage Interest Rates January 1995–August 2020 Figure 2. Mortgage Interest Rates January 1995–February 2019

Source: Figure created by CRS based on data from Freddie Mac' Mac’s Primary Mortgage Market Survey, 30-Year Year Fixed Rate Historic Tables, available athttpathttp://www.freddiemac.com/pmms/. pmms/. Notes: Freddie Mac surveys lenders on the interest rates they are charging for certain types of mortgage products. The actual interest rate paid by any given borrower will wil depend on a number of factors.

2 For example, see Freddie Mac, “Mortgage Rates Drop, Hitting a Record Low for th e Eighth T ime this Year,” press release, August 6, 2020, https://freddiemac.gcs-web.com/node/20476/pdf. Congressional Research Service 3 Housing Issues in the 116th Congress Homeownership Affordability Homeownership Affordability

House prices have been rising for several years on a national basis, and mortgage interest rates, while low currentlywhile still low by historical standards, have also risen for certain stretches. While incomes have also been rising in recent years, helping to mitigate some affordability pressures, on the whole house price increases have outpaced income increases.²3 Home price-to-income ratios have been generally trending upwards since around 2012, with the national median sales price for an existing home more than 4.1 times the median household income in 2018.4 These trends have led to increased concerns about the affordability of owner-occupied housing.

Despite rising house prices, many metrics of housing affordability suggest that owner-occupied housing is currently relatively affordable.³5 These metrics generallygeneral y measure the share of income that a median-income family would need to qualify for a mortgage to purchase a median-priced home, subject to certain assumptions.  Therefore, rising incomes and, especiallyespecial y, interest rates that are stil are still low by historical standards contribute to monthly mortgage payments being considered affordable under these measures despite recent house price increases.

Some factors that affect housing affordability may not be captured by these metrics. For example, several of the metrics are based on certain assumptions (such as a borrower making a 20% down payment) that may not apply to many households. Furthermore, because they typicallytypical y measure the affordability of monthly mortgage payments, they often do not take into account other affordability challengeschal enges that homebuyers may face, such as affording a down payment and other upfront costs of purchasing a home (costs that generallygeneral y increase as home prices rise). Other factors—such as the ability to qualify for a mortgage, the availability of homes on the market, and regional differences in house prices and income—may also make homeownership less attainable for some households.⁴ 6 Some of these factors may have a bigger impact on affordability for specific demographic groups, as income trends and housing preferences are not uniform across all al segments of the population.7 It is unclear how the COVID-19 pandemic may ultimately impact the affordability of homeownership. The pandemic could have implications for a variety of interrelated factors that affect affordability, including factors related to both the supply of homes on the market and the demand for homes. 3 See Joint Center for Housing Studies of Harvard University, State of the Nation’s Housing 2018, p. 22, http://www.jchs.harvard.edu/sites/default/files/Harvard_JCHS_State_of_the_Nations_Housing_2018.pdf , showing changes in median house prices and median household incomes (in real terms). 4 Joint Center for Housing Studies of Harvard University, State of the Nation’s Housing 2019, p.12, https://www.jchs.harvard.edu/state-nations-housing-2019. 5 For example, see U.S. Department of Housing and Urban Development (HUD), Housing Market Indicators Monthly Update, August 2020, p.3, https://www.huduser.gov/portal/sites/default/files/pdf/Housing-Market -Indicators-Report -August-2020.pdf, showing the National Association of Realtors Housing Affordability Index (HAI) compared to its historical norm. (For more information on the HAI, see the National Association of Realtors website at https://www.nar.realtor/research-and-statistics/housing-statistics/housing-affordability-index/methodology.) See also the Urban Institute’s Housing Finance Policy Center’s Housing Finance at a Glance: A Monthly Chartbook, August 2020, p. 21, https://www.urban.org/sites/default/files/publication/102776/august-chartbook-2020.pdf. 6 Freddie Mac Insight, If Housing Is So Affordable, Why Doesn't It Feel That Way?, July 19, 2017, http://www.freddiemac.com/research/insight/20170719_affordability.html. 7 For example, see the discussion of affordability challenges for younger households in Freddie Mac Insight , Locked Out? Are Rising Housing Costs Barring Young Adults from Buying Their First Hom es?, June 2018, http://www.freddiemac.com/research/pdf/201806-Insight -05.pdf. Congressional Research Service 4 link to page 9 link to page 9 Housing Issues in the 116th Congress Home Sales Annual home sales increased between 2014 and 2017, improvingsegments of the population.⁵

Home Sales

In general, annual home sales have been increasing since 2014 and have improved from their levels during the housing market turmoil of the late 2000s, although in 2018 the overall . The overal number of home sales declined from the previous year in 2018 and remained steady in 2019. While home sales have been improving somewhat in recent years (prior to fallingfal ing in 2018), the supply of homes on the market has generally general y not been keeping pace with the demand for homes, thereby limiting home sales activity and contributing to house price increases.

Home sales include sales of both existing and newly built homes. Existing home sales generally general y number in the millionsmil ions each year, while new home sales are usuallyusual y in the hundreds of thousands. thousands. Figure 3 shows the annual number of existing and new home sales for each year from 1995 through 20182019. Existing home sales numbered about 5.3 million in 2018, mil ion in 2019, steady from the previous year and a decline from 5.5 millionmil ion in 2017 (existing home sales in 2017 were the highest level since 2006). New home sales numbered about 622683,000 in 20182019, an increase from 614 617,000 in 20172018 and the highest level since 2007. However, the number of new home sales remains appreciably lower than in the late 1990s and early 2000s, when they tended to be between 800,000 and 1 millionmil ion per year. per year.

Figure 3. New and Existing Home Sales Annual, 1995–2019 Annual, 1995–2018

Source: Figure created by CRS using data from HUD'’s U.S. Housing Market Conditions reports, available at at https://www.huduser.gov/portal/ushmc/home.html, , which use data from the National Association of Realtors for existing home sales and the U.S. Census Bureau for new home sales.

While Figure 3 shows annual home sales through 2019, monthly home sales have been impacted since the pandemic began. Both new and existing home sales fel sharply in March and April 2020, though both rebounded during the summer months.8 8 HUD, Housing Market Indicators Monthly Update, August 2020 , pages 1-2, https://www.huduser.gov/portal/sites/default/files/pdf/Housing-Market -Indicators-Report -August-2020.pdf. Congressional Research Service 5 link to page 11 Housing Issues in the 116th Congress Housing Inventory and Housing Starts Housing Inventory and Housing Starts

The number and types of homes on the market affect home sales and home prices. On a national basis, the supply of homes on the market has been relatively low in recent years,⁶9 and in general new construction has not been creating enough new homes to meet demand.⁷10 However, as noted previously, national housing market indicators are not necessarily indicative of local conditions. While many areas of the country are experiencing low levels of housing inventory that contribute to higher home prices, other areas, particularly those experiencing population declines, face a different set of housing challengeschal enges, including surplus housing inventory and higher levels of vacant homes.⁸

11 On a national basis, the inventory of homes on the market has been below historical averages in recent years, though the inventory, of new homes, in particular, has begun to increase somewhat of late.⁹12 Homes come onto the market through the construction of new homes and when current homeowners decide to sell sel their existing homes. Existing homeowners'’ decisions to sell their sel their homes can be influenced by expectations about housing inventory and affordability. For example, current homeowners may choose not to sell sel if they are uncertain about finding new homes that meet their needs, or if their interest rates on new mortgages would be substantiallysubstantial y higher than the interest rates on their current mortgages. New construction activity is influenced by a variety of factors including labor, materials, and other costs as well wel as the expected demand for new homes.

One measure of the amount of new construction is housing starts. Housing starts are the number of new housing units on which construction is started in a given period and are typicallytypical y reported monthly as a "seasonally“seasonal y adjusted annual rate."” This means that the number of housing starts reported for a given month (1) has been adjusted to account for seasonal factors and (2) has been multiplied multiplied by 12 to reflect what the annual number of housing starts would be if the current month' month’s pace continued for an entire year.¹⁰

13 Figure 4 shows the seasonallyseasonal y adjusted annual rate of starts on one-unit homes for each month from January 1995 through December 2018.¹¹ Housing starts for single-family homes fell during the housing market turmoil, reflecting decreased home purchase demand. In recent July 2020.14 Housing starts for single-family homes fel during the 9 For example, see HUD’s U.S. Housing Market Conditions National Housing Market Summary, 1st Quarter 2020, June 2020, p. 3, https://www.huduser.gov/portal/sites/default/files/pdf/NationalSummary_1Q20.pdf. 10 For example, see Freddie Mac, The Major Challenge of Inadequate U.S. Housing Supply, Economic & Housing Research Insight, December 2018, http://www.freddiemac.com/fmac-resources/research/pdf/201811-Insight-06.pdf and The Housing Supply Shortage: State of the States, Economic & Housing Research Insight, February 2020, http://www.freddiemac.com/fmac-resources/research/pdf/202002-Insight -12.pdf. 11 For example, see Freddie Mac, The Housing Supply Shortage: State of the States, Economic & Housing Research Insight, February 2020, p. 3, http://www.freddiemac.com/fmac-resources/research/pdf/202002-Insight -12.pdf; Jenny Schuetz, The Goldilocks problem of housing supply: Too little, too m uch, or just right? , Brookings Institution, December 14, 2018, https://www.brookings.edu/research/the-goldilocks-problem-of-housing-supply-too-little-too-much-or-just-right/; and Alan Mallach, The Em pty House Next Door: Understanding and Reducing Vacancy and Hypervacancy in the United States, Lincoln Institute of Land Policy, 2018, pp. 22 -26, https://www.lincolninst.edu/sites/default/files/pubfiles/empty-house-next -door-full.pdf. 12 HUD, U.S. Housing Market Conditions National Housing Market Summary, 1st Quarter 2020, June 2020, pp. 1-3, https://www.huduser.gov/portal/sites/default/files/pdf/NationalSummary_1Q20.pdf. 13 T he Census Bureau defines the seasonally adjusted annual rate as “the seasonally adjusted monthly value multiplied by 12” and notes that it “is neither a forecast nor a projection; rather it is a description of the rate of building permits, housing starts, housing completions, or new home sales in the particular month for which they are calculated.” See U.S. Census Bureau, “New Residential Construction,” at https://www.census.gov/construction/nrc/definitions/index.html#s. 14 T he number of housing starts is consistently higher than the number of new home sales. T his is prima rily because housing starts include homes that are not intended to be put on the for -sale market, such as homes built by the owner of the land or homes built for rental. See the U.S. Census Bureau, “Comparing New Home Sales and New Residential Congressional Research Service 6 Housing Issues in the 116th Congress housing market turmoil of the late 2000s, reflecting decreased home purchase demand. In recent years, levels of new construction have remained relatively low by historical standards, reflecting a variety of considerations including labor shortages and the cost of building.¹²15 Housing starts have general yhave generally been increasing since about 2012, but remain well wel below their levels from the late 1990s through the mid-2000s. For 2018, the seasonally2019, the seasonal y adjusted annual rate of housing starts averaged about 868893,000. In comparison, the seasonallyseasonal y adjusted annual rate of housing starts exceeded 1 million mil ion from the late 1990s through the mid-2000s.

Single-family housing starts showed a significant drop as the pandemic began, though they have begun to recover somewhat in the months since then.16 Single-family housing starts in July were higher than in the previous July, though not as high as the months in late 2019 and early 2020.17 Figure 4. Housing Starts By month; seasonal yFigure 4. Housing Starts By month; seasonally adjusted annual rate

adjusted annual rate Source: Figure created by CRS using data from the U.S. Census Bureau, New Residential Construction Historical Historical Data, http://www.census.gov/construction/nrc/historical_data/. . Data are through December 2018. July 2020. Notes: Figure reflects starts in one-unit structures only, some of which may be built for rent rather than sale. The seasonal yThe seasonally adjusted annual rate is the number of housing starts that would be expected if the number of homes started in that month (on a seasonally seasonal y adjusted basis) were extrapolated over an entire year. year.

High housing construction costs have led to a greater share of new housing being built at the more expensive end of the market over the last several years. To the extent that new homes are Construction,” https://www.census.gov/construction/nrc/salesvsstarts.html. 15 For example, see Freddie Mac, “What is Causing the Lean Inventory of Houses?,” Outlook Report, July 27, 2017, http://www.freddiemac.com/research/forecast/20170726_lean_inventory_of_houses.page. 16 T he Census Bureau notes that its data collection methods for this survey were impacted by the pandemic, though it says that “ ... processing and data quality were monitored throughout the month [of July] and quality metrics, including response rates, fell within normal ranges for these surveys.” For more information on how data collection was impacted, see U.S. Census Bureau, “Frequently Asked Questions (FAQs) COVID-19’s Effect on the July 2020 New Residential Construction Indicator,” https://www.census.gov/construction/nrc/pdf/newresconst_202007_notes.pdf. 17 For data on housing starts and other measures of residential construction (both single-family and multifamily), see U.S. Census Bureau, New Residential Construction, https://www.census.gov/construction/nrc/index.html. Congressional Research Service 7 link to page 12 Housing Issues in the 116th Congress concentrated at higher price points, supply and price pressures may be exacerbated for lower- priced homes.18 Mortgage Market Composition After a mortgage is originated, it might be held in a financial institution’s asset Figure 5. Share of Mortgage Originations portfolio, or it might be securitized through by Type one of several channels.19 Two government- 2019 sponsored enterprises (GSEs),. To the extent that new homes are concentrated at higher price points, supply and price pressures may be exacerbated for lower-priced homes.¹³

Mortgage Market Composition

Figure 5. Share of Mortgage Originations by Type 2018

Source: Figure created by CRS based on Inside Mortgage Finance data as reported in Urban Institute, Housing Finance Policy Center, Housing Finance at a Glance: A Monthly Chartbook, April 2019, p. 8. Notes: Figure shows share of first-lien mortgage originations by dollar volume.

When a lender originates a mortgage, it can choose to hold that mortgage in its own portfolio, sell it to a private company, or sell it to Fannie Mae or Freddie Mac, two congressionally chartered government-sponsored enterprises (GSEs). Fannie Mae and Freddie Mac bundle mortgages into , issue mortgage-backed securities and guarantee investors' ’ payments on those securities. Furthermore, a mortgage might be insured by a federal government Mortgages that are insured or guaranteed by a federal agency, such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA), are eligible to be included in mortgage-backed securities guaranteed by Ginnie Mae, part of the Department of Housing and Urban Development (HUD). Private companies can also issue mortgage-backed securities without a government or GSE guarantee, known as private label securities. The Source: Figure created by CRS based on Inside Mortgage Finance data as reported in Urban Institute, shares of mortgages that are provided Housing Finance Policy Center, Housing Finance at a through each of these channels may be Glance: A Monthly Chartbook, February 2020, p. 8. relevant to policymakers because of their Notes: Figure shows share of first-lien mortgage implications for mortgage access and originations by dol ar volume. affordability as wel as the federal government’s exposure to risk. As shown in Figure 5, a little underVeterans Affairs (VA). Most FHA-insured or VA-guaranteed mortgages are included in mortgage-backed securities that are guaranteed by Ginnie Mae, another government agency.¹⁴ The shares of mortgages that are provided through each of these channels may be relevant to policymakers because of their implications for mortgage access and affordability as well as the federal government's exposure to risk.

As shown in Figure 5, over two-thirds of the total dollar volume of mortgages originated was either backed by Fannie Mae or Freddie Mac (4643%) or guaranteed by a federal agency such as FHA or VA (2319%) in 2018. Nearly2019. Over one-third of the dollar volume of mortgages originated was held in bank portfolios, while close to 2% was included in a private-label security without government backing.

The shares of mortgage originations backed by Fannie Mae and Freddie Mac and held in bank portfolios are roughly similar to their respective shares in the early 2000s. The share of private-label securitization has been, and continues to be, small smal since the housing market turmoil of the late 2000s, while the FHA/VA share is higher than it was in the early and mid-2000s.¹⁵20 The share of mortgages insured by FHA or guaranteed by VA was low by historical standards during that 18 For example, see Joint Center for Housing Studies of Harvard University, State of the Nation’s Housing, 2019, p. 8, https://www.jchs.harvard.edu/sites/default/files/Harvard_JCHS_ State_of_the_Nations_Housing_2019.pdf ; and Jung Hyun Choi, Laurie Goodman, and Bing Bai, “Four ways today’s high home prices affect the larger economy,” Urban Institute, Urban Wire blog, October 11, 2018, https://www.urban.org/urban-wire/four-ways-todays-high-home-prices-affect -larger-economy. 19 For more information on different types of mortgages and mortgage securitization channels, see CRS Report R42995, An Overview of the Housing Finance System in the United States. 20 See Urban Institute, Housing Finance Policy Center, Housing Finance at a Glance: A Monthly Chartbook, July 2020, p. 8, for a graph showing mortgage market composition since 2001 . Congressional Research Service 8 link to page 13 Housing Issues in the 116th Congress of mortgages insured by FHA or guaranteed by VA was low by historical standards during that time period as many households opted for other types of mortgages, including subprime mortgages.

mortgages. Rental Housing Markets

As has been the case in owner-occupied housing markets, affordability has been a prominent concern in rental markets in recent years. In the years since the housing market turmoil of the late 2000s, the number and share of renter households has increased, leading to lower rental vacancy rates and higher rents in many markets.

The extent to which these trends in rents and vacancies wil continue in light of the pandemic and related policy responses—including the imposition of various eviction moratoria discussed later in this report—is unclear. Share of Renters Share of Renters

The housing and mortgage market turmoil of the late 2000s led to a substantial decrease in the homeownership rate and a corresponding increase in the share of households who rent their homesrenter households. As shown in Figure 6, the share of renters increased from about 31% in 2005 and 2006 to a high of about 36.6% in 2016, before decreasing slightly to 36.1% in 2017 and continuing to decline to 35.6% in 2018beginning to decrease and reaching 35.4% in 2019. The homeownership rate correspondingly fell fel from a high of 69% in the mid-2000s to 63.4% in 2016, before rising to 63.9% in 2017 and continuing to rise to 64.4% in 2018.¹⁶

Figure 6. Rental and Homeownership Rates 1965–2018

64.6% in 2019.21 Figure 6. Rental and Homeownership Rates 1965–2019 Source: Figure prepared by CRS based on data from the U.S. Census Bureau, Annual Housing Vacancy and Homeownership and Homeownership Survey, Annual Statistics, Table 14, "Homeownership “Homeownership Rates by Area.” The overal Rates by Area."

The overall number of occupied housing units also increased over this time period, from nearly 110 mil ion 110 million in 2006 to 121 million in 2018123 mil ion in 2019; most of this increase has been in renter-occupied units.¹⁷22 The number of renter-occupied units increased from about 34 millionmil ion in 2006 to about 43 million in 2018. The number of owner-occupied housing units fell from about 75 million units in 2006 to about 74 million in 2014, but has since increased to about 78 million units in 2018.

44 21 U.S. Census Bureau, Housing Vacancies and Homeownership, Annual Statistics, http://www.census.gov/housing/hvs/data/prevann.html. 22 U.S. Census Bureau, Housing Vacancies and Homeownership, Historical T ables, T able 7, “Annual Estimates of the Housing Inventory: 1965 to Present,” http://www.census.gov/housing/hvs/data/histtabs.html. Congressional Research Service 9 link to page 14 link to page 14 Housing Issues in the 116th Congress mil ion in 2019. The number of owner-occupied housing units fel from about 75 mil ion units in 2006 to about 74 mil ion in 2014, but has since increased to about 79 mil ion units in 2019. In general, it is too early to know how the COVID-19 pandemic may influence the share of households who rent or own their homes, as it wil take time for the effects of the pandemic on owners and renters to fully play out and be reflected in the data.23 Rental Vacancy Rates Rental Vacancy Rates

The higher number and share of renter households has had implications for rental vacancy rates and rental housing costs. More renter households increases competition for rental housing, which may in turn drive up rents if there is not enough new rental housing created (whether through new construction or conversion of owner-occupied units to rental units) to meet the increased demand.

As shown inin Figure 7, the rental vacancy rate has generallygeneral y declined in recent years and was under 7 6.4% at the end of 2018.

2019. The potential impact of the COVID-19 pandemic on rental vacancy rates is unclear, in part because the pandemic has affected more recent data collection for this survey.24 Figure 7. Rental Vacancy Rates Q1 1995–Q4 2019 Figure 7. Rental Vacancy Rates Q1 1995–Q4 2018

Source: Figure created by CRS based on data from U.S. Census Bureau, Housing Vacancies and Homeownership Historical Homeownership Historical Tables, Table 1, "“Quarterly Rental Vacancy Rates: 1956 to Present," ” http://www.census.gov/housing/hvs/data/histtabs.html.

histtabs.html. 23 T he pandemic has impacted data collection for this survey, affecting the comparabilit y of the 2020 quarterly dat a to previous periods. See, for example, Census Bureau, Frequently asked questions: The im pact of the coronavirus (COVID-19) pandem ic on the Current Population Survey/Housing Vacancy Survey (CPS/HVS) , https://www.census.gov/housing/hvs/files/qtr220/impact_coronavirus_20q2.pdf; and McCue, Daniel, “ Buyer Beware: A Cautionary Note on the Most Recent Homeownership Data from HVS,” Joint Cen ter for Housing Studies of Harvard University, blog post, August 10, 2020, https://www.jchs.harvard.edu/blog/buyer-beware-a-cautionary-note-on-the-most -recent -homeownership-data-from-hvs/. 24 See footnote 23 for more on how the pandemic has affected data collection for this survey. Congressional Research Service 10 Housing Issues in the 116th Congress Rental Housing Affordability Rental Housing Affordability

Rental housing affordability is impacted by a variety of factors, including the supply of rental housing units available, the characteristics of those units (e.g., age and amenities), and the demand for available unitsavailable units, and renter incomes. New housing units have been added to the rental stock in recent years through both construction of new rental units and conversions of existing owner- occupied units to rental housing. However, the supply of rental housing has not necessarily kept pace with the demand, particularly among lower-cost rental units, and low vacancy rates have been especially been especial y pronounced in less-expensive units.¹⁸

25 The increased demand for rental housing, as well wel as the concentration of new rental construction in higher-cost units, has led to increases in rents in recent years. Median renter incomes have also been increasing for the last several years, at times outpacing increases in rents. However, over the longer term, median rentsRents have increased faster than renter incomes, reducing rental affordability.¹⁹

26 Rising rental costs and renter incomes that are not keeping up with rent increases over the long term can contribute to housing affordability problems chal enges, particularly for households with lower incomes. Under one common Under the most commonly used definition, housing is considered to be affordable if a household is paying no more than 30% of its income in housing costs. Under this definition, householdsHouseholds that pay more than 30% are considered to be cost-burdened, and those that pay more than 50% are considered to be severely cost-burdened.

The overall The overal number of cost-burdened renter households has increased from 14.8 mil ion 14.8 million in 2001 to 20.5 million in 2017, although the 20.5 million in 2017 represented a decrease from 20.8 million in 2016 and over 21 million in 2014 and 2015.²⁰8 mil ion in 2018, or about 47% of al renters.27 (Over this time period, the overal the overall number of renter households has increased as wellwel .) While housing cost burdens can affect households of all al income levels, and have been growing among middle-income households,28 income levels, they are most prevalent among the lowest-income households. In 20172018, 83% of renter households with incomes below $15,000 experienced housing cost burdens, and 72% experienced severe cost burdens.²¹29 A shortage of lower-cost rental units that are both available and affordable to extremely low-income renter households (households that earn no more than 30% of area median income), in particular, contributes to these cost burdens.30 25 For example, see Joint Center for Housing Studies of Harvard University, America’s Rental Housing 2020, pp. 3, https://www.jchs.harvard.edu/sites/default/files/Harvard_JCHS_Americas_Rental_Housing_2020.pdf. 26 See HUD, Office of Policy Development and Research, U.S. Housing Market Conditions National Housing Market Sum m ary 1st Quarter 2020, June 2020, pp. 5-6, and underlying data available at https://www.huduser.gov/portal/ushmc/quarterly_commentary.html. Data on median rents reflect median rents for recent movers less the cost of utilities. For more information on data sources used, see HUD Office of Policy Development and Research, HUD’s New Rental Affordability Index, https://www.huduser.gov/portal/pdredge/pdr-edge-trending-110716.html. 27 Joint Center for Housing Studies, America’s Rental Housing 2020, Appendix T ables, https://www.jchs.harvard.edu/americas-rental-housing-2020, showing Joint Center for Housing Studies tabulations of American Community Survey data. 28 See, for example, Whitney Airgood-Obrycki, “America’s Rental Affordability Crisis is Climbing the Income Ladder,” Joint Center for Housing Studies of Harvard University, blog post, January 31, 2020, https://www.jchs.harvard.edu/blog/americas-rental-affordability-crisis-is-climbing-the-income-ladder/. 29 Joint Center for Housing Studies, America’s Rental Housing 2020, Appendix T ables, https://www.jchs.harvard.edu/americas-rental-housing-2020, showing Joint Center for Housing Studies tabulations of American Community Survey data. 30 See Joint Center for Housing Studies of Harvard University, America’s Rental Housing 2020, p. 31, https://www.jchs.harvard.edu/sites/default/files/Harvard_JCHS_Americas_Rental_Housing_2020.pdf; and National Low Income Housing Coalition, The Gap: A Shortage of Affordable Hom es, March 2020, available at https://reports.nlihc.org/gap. Congressional Research Service 11 link to page 17 Housing Issues in the 116th Congress The COVID-19 Pandemic and Housing The COVID-19 pandemic that began in early 2020 is having wide-ranging effects on public health and the economy. The pandemic has led to a number of housing-related concerns, including, among other things, concerns about housing insecurity among both renters and homeowners. Congress and federal agencies have responded to these concerns by taking a variety of actions. In general, these actions have included providing additional federal funding for several housing programs, establishing temporary protections for certain renters and homeowners, and taking actions intended to support the housing finance system more broadly. As the economy has entered recession and some temporary assistance measures have begun to expire, many policymakers and others have cal ed for additional federal action. Numerous bil s that would further address COVID-19-related housing issues have been introduced and some have been considered. This section of the report discusses the effects of COVID-19 on housing and federal responses to date. COVID-19 and Effects on Housing The pandemic has led to increased housing insecurity as many households experience income disruptions. Such disruptions can lead to difficulties making rent or mortgage payments. According to data from the Census Bureau’s Pulse Survey, and as shown in Figure 8, 21% of renters and 13% of owners reported having not made the current month’s housing payment as of the week that ended on July 21. (These figures include those with deferred payments.) Larger shares (35% and 17%, respectively) expected that they would not be able to pay the following month.31 31 T hese figures reflect CRS calculations based on data in the Week 12 Household Pulse Survey, available at https://www.census.gov/programs-surveys/household-pulse-survey/data.html. T hey include those who missed last month’s payment or whose last month payment was deferred, and those who have slight or no confidence that they will make next month’s payment or anticipate that next month’s payment will be deferred. Congressional Research Service 12 link to page 5 Housing Issues in the 116th Congress Figure 8. Renters and Owners Having Difficulty Making Housing Payments For the week ending July 21, 2020 Source: Figure created by CRS based on data from the Census Bureau’s Household Pulse Survey for Week 12 (July 16-July 21). Thus far, many households have been protected by federal and state or local eviction or foreclosure moratoriums. It is not yet clear to what extent renters and homeowners wil be able to make their rent or mortgage payments or make up missed payments when protections expire. (The end dates for eviction and foreclosure protections depend on a variety of factors, including the specific protection in question and whether any extensions are issued.) As described in the “Housing and Mortgage Market Conditions” section, data are beginning to emerge about the trajectory of national housing market indicators during the first few months of the pandemic. However, the full effects of COVID-19 on housing markets wil not be known for some time. Such effects wil depend on a variety of factors, including the duration of the public health threat and the timing and pattern of economic recovery, and involve a high degree of uncertainty. Impacts may vary across the country based on differences in local housing markets as wel as geographic variation in the prevalence of COVID-19 and local responses. The impacts are likely to vary across demographic groups, due in part to existing differences in housing conditions as wel as the uneven distribution of the health and economic consequences of the pandemic.32 32 For example, see Sharon Cornelissen and Alexander Hermann, A Triple Pandemic? The Economic Impacts of COVID-19 Disproportionately Affect Black and Hispanic Households, Joint Center for Housing Studies of Harvard University, July 7, 2020, https://www.jchs.harvard.edu/blog/a-triple-pandemic-the-economic-impacts-of-covid-19-disproportionately-affect-black-and-hispanic-households/; and Michael Neal and Alanna McCargo, How Econom ic Crises and Sudden Disasters Increase Racial Disparities in Hom eownership, T he Urban Institute’s Housing Finance Policy Center, June 1, 2020, https://www.urban.org/research/publication/how-economic-crises-and-sudden-disasters-increase-racial-disparities-homeownership. Congressional Research Service 13 Housing Issues in the 116th Congress Federal Housing Responses to COVID-19 On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136), a COVID-19 response package that included, among many other things, several provisions related to housing. These included certain temporary protections for renters in properties with federal assistance or federal bac king and homeowners with federally backed mortgages, as wel as increased funding for several housing programs. Both prior to and since the passage of the CARES Act, federal agencies have taken various administrative actions to address housing concerns related to COVID-19. In addition, on August 8, 2020, President Trump signed an Executive Order related to COVID-19 and housing.33 The Executive Order directed several federal agencies to examine authorities or resources that they may be able to use to further assist tenants or homeowners affected by COVID-19 to help them avoid eviction or foreclosure. It did not itself provide any new resources or implement any additional actions related to evictions and foreclosures. (For more information on this Executive Order, see CRS Legal Sidebar LSB10532, President Trump’s Executive Actions on Student Loans, Wage Assistance, Payroll Taxes, and Evictions: Initial Takeaways.) The Executive Order, among other things, directed the Secretary of Health and Human Services (HHS) and the Centers for Disease Control and Prevention (CDC) to consider whether measures to temporarily pause evictions were necessary to prevent the spread of COVID-19 between states. On September 4, 2020, the CDC announced a national eviction moratorium to last until the end of the year. Lawmakers have also introduced a variety of additional bil s to further address housing issues related to COVID-19, though as of the date of this report none has been enacted. Federal Interventions Related to Rental Housing While al types of households may be at risk of housing instability due to COVID-19, renters may be particularly vulnerable. This is both because more financial y vulnerable populations are more likely to be renters, and because the process for evicting a household from a rental unit is general y faster than the process of foreclosing on a mortgage. As such, there have been several policy interventions aimed specifical y at aiding renters. CARES Act Rental Housing Provisions To protect renters experiencing COVID-19-related financial hardships, the CARES Act included a 120-day moratorium on eviction filings for tenants in rental properties with federal assistance or federal y related financing, as wel as a prohibition on charging late fees for nonpayment of rent for the same time period. These protections were designed to al eviate the economic and public health consequences of tenant displacement during the pandemic. They supplemented temporary eviction moratoria and rent freezes implemented in states and cities by governors and local officials using emergency powers. The CARES Act eviction moratorium expired on July 24, though the law also required that landlords provide tenants with at least 30 days’ notice before requiring tenants to vacate a covered property after the moratorium expired. Therefore, tenants should not have been required to leave covered rental units until at least August 23. 33 Executive Order on Fighting the Spread of COVID-19 by Providing Assistance to Renters and Homeowners, issued on August 8, 2020, https://www.whitehouse.gov/presidential-actions/executive-order-fighting-spread-covid-19-providing-assistance-renters-homeowners/. Congressional Research Service 14 Housing Issues in the 116th Congress Separate from the eviction moratorium, the CARES Act also included provisions related to forbearance for federally backed multifamily mortgages (discussed further below). The CARES Act provided that multifamily mortgage borrowers receiving forbearance must provide certain tenant protections during the forbearance period. Namely, owners cannot evict tenants for nonpayment of rent or charge late fees for the duration of the forbearance. Therefore, some tenants may benefit from federal protection from eviction because they live in a property with a federal y backed multifamily mortgage subject to a forbearance agreement. In addition, other assistance provided in the CARES Act, such as federal unemployment insurance supplemental payments (which have now expired), likely helped renters make housing payments and therefore avoid eviction. While this assistance was not specific to housing, households could use it to help maintain housing in light of income disruptions. For more information on CARES Act protections for renters, see the following:  CRS Insight IN11320, CARES Act Eviction Moratorium. CDC’s National Eviction Moratorium On September 4, the Centers for Disease Control and Prevention published an order in the Federal Register implementing a national eviction moratorium through December 31, 2020.34 The moratorium protects certain tenants from eviction for non-payment of rent. The CDC relied on broad authority that it has to take actions to prevent the spread of communicable diseases between states to implement this moratorium.35 In the Federal Register notice announcing it, the CDC described the public health risks posed by evictions and their effects during a pandemic. Unlike the CARES Act eviction moratorium, the CDC’s eviction moratorium potential y applies to renters in any rental property, not just those with federal financing or federal assistance. While the CARES Act moratorium applied automatical y to renters in covered properties, the CDC moratorium requires eligible renters to provide landlords a document that attests to their eligibility. Eligible renters must attest that they  meet income eligibility criteria; namely, that they either 1) expect to have incomes no higher than $99,000 ($198,000 if filing a joint tax return) in 2020, 2) were not required to report income to the Internal Revenue Service in 2019, or 3) received an Economic Impact Payment under Section 2201 of the CARES Act;  have made “best efforts to obtain al available government assistance” to pay rent;  are unable to pay full rent due to certain specified hardships;  are making “best efforts” to make partial payments as close as possible to the full payment as circumstances permit; and  would likely become homeless, move to a homeless shelter, or move into housing with others in close quarters if evicted due to a lack of available housing options. Renters must also attest that they understand that the order does not relieve them of the obligation to pay rent, and does not prohibit landlords from charging fees, penalties, or interest in 34 Centers for Disease Control and Prevention, Department of Health and Human Services, “T emporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19,” 85 Federal Register 55292-55297, September 4, 2020. 35 T he CDC’s order cites its authority under Section 361 of the Public Health Service Act (42 U.S.C. §264) and regulations at 42 CFR 70.2. See the Federal Register notice for the CDC’s discussion of the risk s that evictions pose to public health. Congressional Research Service 15 Housing Issues in the 116th Congress accordance with applicable contracts. (In contrast, the CARES Act prohibited landlords from charging fees, penalties, or interest during the eviction moratorium.) The CDC moratorium does not supersede state or local eviction moratoria that provide greater protections. While the CARES Act did not explicitly include any penalties for noncompliance, the CDC’s order specifies potential penalties (fines and/or jail time) for landlords who do not comply. Renters who are not truthful in their attestations could be found guilty of perjury and be subject to associated penalties. The CDC’s national eviction moratorium order raises a variety of questions and is the subject of legal chal enges.36 In addition to questions surrounding the CDC’s authority to issue such a moratorium, there are questions around issues such as how enforcement is being carried out and how many renters may seek protection. Industry groups representing property owners have raised concerns about the impact of the eviction moratorium on owners, who may have difficulty covering the costs of the property if tenants are unable to pay rent.37 Tenant advocates, while general y welcoming the moratorium, have also noted that it does not help tenants pay rent and have raised concerns about what happens to renters when the moratorium ends.38 Both owner and tenant advocates have cal ed for federal rental assistance to help tenants make rent payments.39 For more information on the CDC’s eviction moratorium, see CRS Insight IN11516, Federal Eviction Moratoriums in Response to the COVID-19 Pandemic. Federal Interventions Related to Mortgages The CARES Act requires mortgage servicers to grant forbearance requests for borrowers with federal y backed mortgages who are experiencing a financial hardship related to COVID-19.40 Mortgage forbearance al ows a household to reduce or suspend mortgage payments for an agreed-upon period of time, but it does not forgive the amounts owed; borrowers and mortgage servicers must negotiate an agreement for the repayment of the missed amounts. Under the CARES Act, forbearance for federal y backed single-family mortgages can be for up to 360 days (an initial period of up to 180 days, with an extension of up to an additional 180 days). For federally backed multifamily mortgages, the forbearance can be for up to 90 days (an initial period of up to 30 days, with two possible 30-day extensions).41 Federal y backed mortgages 36 See, for example, Brown v. Azar et al., 1:20-CV-03702, N.D. Ga. 37 See, for example, National Multifamily Housing Council, “Statement by NMHC President Doug Bibby on Administration’s Enactment of Federal Eviction Moratorium,” September 1, 2020, https://www.nmhc.org/news/press-release/2020/statement-by-nmhc-president -doug-bibby-on-administrations-enactment -of-federal-eviction-moratorium/. 38 See, for example, National Low Income Housing Coalition, “Statement from National Low Income Housing Coalition President and CEO Diane Yentel on the White House Morato rium on Evictions for Nonpayment of Rent,” September 1, 2020, https://nlihc.org/news/statement-national-low-income-housing-coalition-president -and-ceo-diane-yentel-white-house. 39 Letter from California Housing Consortium et al., August 21, 2020, https://www.irem.org/File%20Library/GlobalNavigation/Advocacy/CoalitionLetters/2020/08212020RentalAssistanceCoalitionLetter.pdf. 40 Prior to passage of the CARES Act, the federal agencies that back mortgages and the government -sponsored enterprises Fannie Mae and Freddie Mac had each released guidance reminding mortgage servicers of existing options to help borrowers having difficulties making mortgage payments, including forbearance, and encouraging or requiring temporary suspensions on foreclosures. While much of this guidance was similar to the provisions included in the CARES Act, the specifics varied by agency. 41 FHFA has since announced the availability of forbearance for multifamily mortgages backed by Fannie Mae or Freddie Mac for up to an additional three months; tenant protections must apply for the duration of the forbearance. See FHFA, “FHFA Provides T enant Protections,” press release, June 29, 2020, https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Provides-T enant -Protections.aspx. HUD has also stated that FHA-insured multifamily mortgages in Congressional Research Service 16 Housing Issues in the 116th Congress include those insured, guaranteed, or originated by a federal agency, such as HUD, USDA, or VA, or purchased or securitized by two government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. They are estimated to constitute approximately 70% of outstanding single-family mortgages.42 The CARES Act also temporarily suspended foreclosures on federally backed single-family mortgages. The CARES Act foreclosure moratorium was in effect for 60 days from March 18, 2020; however, the federal agencies that back mortgages and Fannie Mae and Freddie Mac have al since announced extensions. As of the date of this report, these entities had extended the foreclosure moratorium for mortgages they back through December 31, 2020.43 Federal agencies that back mortgages, such as the Federal Housing Administration, and GSEs such as Fannie Mae and Freddie Mac (along with their regulator, the Federal Housing Finance Agency, or FHFA44) have also taken additional steps to assist borrowers and other mortgage market participants.45 These steps have included the following:  The CARES Act was silent on this question. Several of the federal entities involved in mortgages have stated that borrowers with mortgages they back who are not able to repay the missed amounts in a lump sum at the end of the forbearance wil be offered other repayment options,46 and have announced specific options for deferring the missed amounts to the end of the loan term.47 forbearance may be able to have forbearance periods extended, and that tenant protections will apply during any extended forbearance. See HUD Housing Notice H 20 -07, “ Coronavirus Aid, Relief, and Economic Security (CARES) Act Eviction Moratorium,” issued July 1, 2020, p. 3, https://www.hud.gov/sites/dfiles/OCHCO/documents/20-07hsgn.pdf.pdf. 42 See, for example, Karan Kaul and Laurie Goodman, “T he Price T ag for Keeping 29 Million Families in T heir Homes: $162 Billion,” T he Urban Institute’s Housing Finance Policy Center, March 27, 2020, https://www.urban.org/urban-wire/price-tag-keeping-29-million-families-their-homes-162-billion. 43 FHA Mortgagee Letter 2020-27, https://www.hud.gov/sites/dfiles/OCHCO/documents/2020-27hsgml.pdf; FHFA, “FHFA Extends Foreclosure and REO Eviction Moratoriums,” https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Extends-Foreclosure-and-REO-Eviction-Moratoriums.aspx; VA Circular 26-20-30, https://www.benefits.va.gov/HOMELOANS/documents/circulars/26-20-30.pdf; USDA, “ USDA Implements Immediate Measures to Help Rural Residents, Businesses and Communities Affected by COVID -19,” updated August 28, 2020, https://www.rd.usda.gov/sites/default/files/COVID19_CUMULAT IVE_StakeholderNotification_WEEKLY_Aug28.pdf ; and HUD Office of Public and Indian Housing Dear Lender Letter 2020-10, https://www.hud.gov/sites/dfiles/PIH/documents/DLL_2020-10_Eviction_Moratorium_and_Loan_Processing_Flexibilities_Extension.pdf . 44 T he Federal Housing Finance Agency is the regulator and conservator for Fannie Mae and Freddie Mac as well as the regulator of a third housing GSE, the Federal Home Loan Bank (FHLB) system. T he FHLBs have also taken steps to address COVID-19-related issues; see the FHLB website at https://fhlbanks.com/covid-19/. For more information on the FHLBs in general, see CRS Report R46499, The Federal Hom e Loan Bank (FHLB) System and Selected Policy Issues. 45 Administrative actions and guidance related to the pandemic continue to evolve. Many federal agencies involved in housing post pandemic-related guidance in a centralized location. For example, see HUD’s webpage on coronavirus resources at https://www.hud.gov/coronavirus, the Federal Housing Finance Agency’s webpage on coronavirus assistance information at https://www.fhfa.gov/Homeownersbuyer/MortgageAssistance/Pages/Coronavirus-Assistance-Information.aspx, and USDA’s Rural Development COVID-19 response page at https://www.rd.usda.gov/coronavirus. 46 See “CARES Act Forbearance Fact Sheet for Borrowers with FHA, VA, or USDA Loans,” https://www.hud.gov/sites/dfiles/SFH/documents/IACOVID19FBFactSheetConsumer.pdf; and FHFA, “ ‘No Lump Sum Required at the End of Forbearance’ says FHFA’s Calabria,” press release, April 27, 2020, https://www.fhfa.gov/Media/PublicAffairs/Pages/No-Lump-Sum-Required-at-the-End-of-Forbearance-says-FHFAs-Calabria.aspx. 47 See FHA Mortgagee Letter 2020-06, “FHA’s Loss Mitigation Options for Single Family Borrowers Affected by the Presidentially-Declared COVID-19 National Emergency in Accordance with the CARES Act,” April 1, 2020, Congressional Research Service 17 Housing Issues in the 116th Congress  Temporary Mortgage Origination Flexibilities: Certain aspects of the mortgage origination process present chal enges during the pandemic. In response, federal entities have made temporary changes to certain requirements for mortgages that they back in order to minimize the effects on mortgage origination and home buying. These changes include al owing for alternatives to interior home appraisals in some circumstances and providing flexibilities related to the process for re-verifying a borrower’s employment before closing.48 FHA and Fannie Mae and Freddie Mac have each also announced temporary policies that al ow them to insure or purchase, respectively, mortgages that otherwise meet their requirements but are in forbearance.49 (Usual y, mortgages that are already in forbearance are not eligible for FHA insurance or purchase by Fannie Mae or Freddie Mac.) To help balance the increased risk that these mortgages pose to these entities, their acceptance of these mortgages is subject to certain conditions.50 Some lawmakers have raised concerns about these conditions, however, and their potential impact on mortgage credit access.51  Support for Mortgage Servicers: Mortgage servicers are often required to advance payments to investors in mortgage-backed securities even if the borrower has not made their payments on time, including in the case of forbearance. Large volumes of delinquent payments or mortgage forbearances can therefore cause liquidity issues for some servicers.52 In response, Ginnie Mae and Fannie Mae and Freddie Mac have each taken certain steps to address potential servicer liquidity issues for mortgages that they back.53 https://www.hud.gov/sites/dfiles/OCHCO/ documents/20-06hsngml.pdf; FHA Mortgagee Letter 2020-22, “ FHA’s COVID-19 Loss Mitigation Options,” https://www.hud.gov/sites/dfiles/OCHCO/documents/20-22hsgml.pdf; and FHFA, “FHFA Announces Payment Deferral as New Repayment Option for Homeowners in COVID-19 Forbearance Plans,” press release, May 13, 2020, https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Payment-Deferral-as-New-Repayment -Option-for-Homeowners-in-COVID-19-Forbearance-Plans.aspx. 48 See, for example, FHFA, “FHFA Directs Enterprises to Grant Flexibilities for Appraisal and Employment Verifications,” press release, March 23, 2020, https://www.fhfa.gov/media/PublicAffairs/Pages/FHFA-Directs-Enterprises-to-Grant-Flexibilities-for-Appraisal-and-Employment-Verifications.aspx; and HUD, “ Re-verification of Employment and Exterior-Only and Desktop-Only Appraisal Scope of Work Options for FHA Single Family Programs Impacted By COVID-19,” FHA Mortgagee Letter 2020-05, March 27, 2020, https://www.hud.gov/sites/dfiles/OCHCO/documents/20-05hsgml.pdf. T he flexibilities provided in each of these documents were subsequently extended. 49 FHFA, “FHFA Announces that Enterprises will Purchase Qualified Loans in Forbearance to Keep Lending Flowing,” press release, April 22, 2020, https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-that-Enterprises-will-Purchase-Qualified-Loans.aspx; and FHA Mortgagee Letter 2020-16, “ Endorsement of Mortgages under Forbearance for Borrowers Affected by the Presidentially -Declared COVID-19 National Emergency consistent with the Coronavirus Aid, Relief, and Economic Security (CARES) Act,” https://www.hud.gov/sites/dfiles/OCHCO/documents/2020-16hsngml.pdf. As of the date of this report, FHA’s policy is in effect through November 30, 2020, and FHFA’s policy had been ext ended through October 31, 2020. 50 Ibid. Fannie Mae and Freddie Mac charge additional fees for purchasing mortgages in forbearance, while FHA requires a lender to continue to bear some of the risk of such mortgages by signing a partial indemnification agree ment. 51 Letter from House Financial Services Committee Chairwoman Maxine Waters et al. to HUD Secretary Benjamin S. Carson and FHFA Director Mark Calabria, June 25, 2020, https://financialservices.house.gov/uploadedfiles/ltr_to_hud_and_fhfa_re_ef_6-25-20.pdf. Bills introduced in the House (H.R. 6794) and Senate (S. 4260) would prohibit FHA and Fannie Mae and Freddie Mac from imposing additional costs or other terms on such mortgages solely based on their forbearance status. 52 For more information on mortgage servicing considerations, see CRS Insight IN11377, Mortgage Servicing Rights and Selected Market Developm ents. 53 Ginnie Mae expanded access to the Pass T hrough Assistance Program (PT AP), through which Ginnie Mae lends money to servicers to make required advances if they cannot obtain funding through other sources. FHFA announced that Fannie Mae servicers would only be required to advance four months of principal and interest payments (this was Congressional Research Service 18 Housing Issues in the 116th Congress In addition, the Federal Reserve has agreed to purchase mortgage-backed securities to help provide liquidity and stability in the mortgage market.54 These purchases can facilitate the funding of mortgages, even if investors’ demand for mortgage-backed securities declines during the pandemic. For more information, see the following:  CRS Insight IN11334, Mortgage Provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  CRS Insight IN11316, COVID-19: Support for Mortgage Lenders and Servicers.  CRS Insight IN11385, The Impact of COVID-19-Related Forbearances on the Federal Mortgage Finance System. Increased Funding for Housing Programs The CARES Act appropriated an additional $12.4 bil ion for HUD housing programs in FY2020. These funds were directed to several HUD programs to provide additional resources to address emerging housing needs caused by COVID-19, to help cover increased costs in rental assistance programs, and for administrative capacity and oversight. The CARES Act also provides the HUD Secretary broad waiver authority in most accounts to expedite or facilitate the use of these funds to respond to the coronavirus. The majority of the funds—about $9.4 bil ion—were for several HUD grant programs, many of which provide relatively flexible funding to state and local governments or other entities for eligible affordable housing, community development, or related activities. Because these programs general y fund a range of al owable activities, they can be used to address a variety of emerging needs related to the pandemic. The largest amounts were for the Community Development Fund, the account that funds Community Development Block Grants (CDBG) ($5 bil ion), and Emergency Solutions Grants (ESG) ($4 bil ion). States and local governments can use CDBG funds for a range of housing and community development activities, while ESG, one of the Homeless Assistance Grants, can be used for a range of services for those who are homeless or at risk of homelessness. The law also provided funds to grant programs that assist tribes, fair housing programs, and the Housing Opportunities for Persons with AIDS (HOPWA) program. The CARES Act also provided about $3 bil ion to maintain existing rental assistance in several HUD programs. HUD rental assistance programs subsidize the difference between tenant contributions toward rent and a unit’s rent (or operating expenses). When tenants’ incomes are reduced—such as by rising unemployment triggered by the pandemic—their rent contributions decrease, which increases federal subsidy costs. The CARES Act provided supplemental funding to help cover those anticipated increased costs in several HUD programs, inc luding the public housing, Housing Choice Voucher, and project-based Section 8 programs. already t he policy for Freddie Mac servicers). See Ginnie Mae, “ Ginnie Mae Announces Changes to its Pass-T hrough Assistance Program in Response to COVID-19 National Emergency,” press release, April 10, 2020, https://ginniemae.gov/newsroom/Pages/PressReleaseDispPage.aspx?ParamID=196; and FHFA, “ FHFA Addresses Servicer Liquidity Concerns, Announces Four Month Advance Obligation Limit for Loans in Forbearance,” press release, April 21, 2020, https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Addresses- Servicer-Liquidity-Concerns-Announces-Four-Month-Advance-Obligation-Limit-for-Loans-in-Forbearance.aspx. 54 Board of Governors of the Federal Reserve System, “Federal Reserve Issues FOMC Statement,” March 23, 2020, https://www.federalreserve.gov/newsevents/pressreleases/monetary20200323a.htm. Congressional Research Service 19 Housing Issues in the 116th Congress The CARES Act also provided $50 mil ion for HUD administrative offices and $5 mil ion for the HUD Office of the Inspector General for oversight of activities funded under the CARES Act. For more information, see the following:  CRS Insight IN11319, Funding for HUD in the CARES Act.  CRS Insight IN11315, Community Development Block Grants and the CARES Act.  CRS Insight IN11277, Responding to the COVID-19 Pandemic with Community Development Block Grant (CDBG) Authorities Proposals for Additional Action As the pandemic continues, there have been cal s for additional federal policy interventions. Dozens of bil s have been introduced in Congress that would address various housing-related issues caused by the pandemic. Some cal s have been for additional assistance to renters and homeowners so they do not fal behind on their payments and risk eviction or foreclosure, and possibly homelessness, when moratoria or forbearance periods end. Such assistance could take various forms. Some have proposed expansions or extensions of existing eviction or foreclosure moratoria or additional protections related to CARES Act mortgage forbearance requirements. Others have proposed other types of assistance, such as direct payments to help households make their rental or mortgage payments for a period of time. For example, even before the national eviction moratorium was announced, a broad coalition of low-income housing advocates, real estate interests, and other stakeholders had come together to cal for emergency rental assistance.55 Some have also cal ed for additional assistance for other housing market participants that are affected when renters or mortgage borrowers miss payments; namely, landlords and mortgage servicers. (Proposals to assist households by providing direct financial assistance to help with rent or mortgage payments would also benefit landlords and servicers, respectively, by reducing the amount of missed payments.) In addition to experiencing a loss of income, which could be particularly significant for landlords whose rental properties represent their primary source of income, some landlords may have difficulty sustaining mortgage payments, operating costs, or other expenses related to maintaining rental housing if tenants are unable to pay rent. Tenants who work in industries at higher risk of job loss may be more likely to rent units in single-family homes or smal multifamily properties, and many of the smal er landlords of these properties, in particular, may struggle to withstand months without rental income.56 Some owners of rental properties were eligible for Smal Business Administration Economic Injury Disaster Loans as authorized under the CARES Act,57 but there have been cal s for additional or more targeted assistance. Similarly, while Ginnie Mae and FHFA have taken some administrative actions to 55 Letter from Aeon et al. to Congressional Leadership, May 4, 2020, https://nhc.org/wp-content/uploads/2020/05/FinalHousingCoalitionERALetter2020-05-04.pdf. 56 For example, see Whitney Airgood-Obrycki and Alexander Hermann, “COVID-19 Rent Shortfalls in Small Buildings,” Joint Center for Housing Studies of Harvard University, May 26, 2020, https://www.jchs.harvard.edu/blog/covid-19-rent-shortfalls-in-small-buildings/; and Jung Hyun Choi and Caitlin Young, “ Owners and Renters of 6.2 Million Units in Small Buildings Are Particularly Vulnerable during the Pandemic,” Urban Institute Housing Finance Policy Center, August 10, 2020, https://www.urban.org/urban-wire/owners-and-renters-62-million-units-small-buildings-are-particularly-vulnerable-during-pandemic. 57 For more information on these loans, see https://www.sba.gov/funding-programs/loans/coronavirus-relief-options. Congressional Research Service 20 Housing Issues in the 116th Congress address concerns about mortgage servicer liquidity, some have cal ed for additional actions to provide additional financial support for mortgage servicers.58 A variety of bil s introduced in Congress would address these or other pandemic-related housing issues, and some have been considered. The Heroes Act (H.R. 6800), which the House passed in May, includes several housing-related provisions in Division K. These include additional funding for some existing housing programs as wel as for certain new programs to respond to pandemic -related housing needs; extensions, expansions, and changes to the CARES Act eviction moratorium, foreclosure moratorium, and mortgage forbearance provisions; and access to financial support for landlords and mortgage servicers.59 These provisions were also included in a standalone bil , the Emergency Housing Protections and Relief Act of 2020 (H.R. 7301), which has also passed the House. The House passed a revised version of the Heroes Act (H.R. 925) on October 1; the broad contours of the housing-related provisions in H.R. 925 are largely similar to those in H.R. 6800, though there are some differences in the details and in the specific provisions that are included. For more information, see the following:  CRS Report R46434, HEROES Act, Division K—COVID-19 Housing, Economic Relief, and Oversight Act. Other Housing Issues in the 116th Congress Outside of the pandemic, a variety of other housing-related issues have been of interest during the 116th Congress, including issues related to housing finance, housing assistance programs, administrative actions related to affordable housing, housing and disaster relief, and housing- related tax provisions. Housing Finance Status of Fannie Mae and Freddie Mac Fannie Mae and Freddie Mac are two government-sponsored enterprises (GSEs) chartered by Congress to provide liquidity to the secondary markets for single-family and multifamily residential mortgages. The GSEs purchase mortgages from loan originators, retain the credit (default) risk from the mortgages they purchase, and subsequently issue mortgage-backed securities (MBS). Investors who purchase the MBS are guaranteed to get their initial principal investment returned, but they assume the risk that borrowers may choose to repay their mortgages ahead of schedule (e.g., by refinancing or sel ing the home), known as prepayment risk.60 In short, 58 For example, see Karen Kaul and T ed T ozer, The Need for a Federal Liquidity Facility for Government Loan Servicing, Urban Institute Housing Finance Policy Center, July 2020, https://www.urban.org/sites/default/files/publication/102580/the-need-for-a-federal-liquidity-facility-for-government-loan-servicing_0.pdf. 59 T he Heroes Act, as passed by the House, would also continue the UI expansion and provide a second $1,200 relief payment for most households. While not specific housing provisions, such assistance could potentially be used to address housing-related needs. 60 Prepayment risk is one type of the broader category of risks linked to changes in interest rates. Following interest rates changes, the market value of a loan (or bond) asset can change; for assets that give borrowers the option to prepay their loans ahead of schedule, the prepayment risk may offset market value changes. On the liability side, interest rate changes affect the lenders’ costs to borrow funds used to finance assets held in their portfolios. Hence, lenders can take advantage of the GSEs’ securitization process to reduce the various interest rate risks associated with holding highly Congressional Research Service 21 Housing Issues in the 116th Congress the GSEs’ securitization process detaches two mortgage risks into separate components.61 The GSEs retain the default risk component for a fee and transfer the prepayment risk component to MBS investors. The Federal Housing Finance Agency (FHFA), an independent federal government agency created by the Housing and Economic Recovery Act of 2008 (HERA; P.L. 110-289), regulates the GSEs for prudential safety and soundness and ensures they meet their affordable housing mission goals. In September 2008, the GSEs experienced losses that exceeded their statutory minimum capital requirement levels due to the high rate of mortgage defaults. The GSEs also experienced losses following spikes in short-term borrowing rates that occurred while they were funding long-term assets held in their portfolios. The GSEs subsequently agreed to be placed under conservatorship by FHFA, which now has the powers of management, boards, and shareholders.62 Since Fannie Mae and Freddie Mac entered conservatorship in 2008, policymakers have expressed interest in comprehensive housing finance reform legislation that would resolve the conservatorships of these GSEs and address the underlying issues that are perceived to have led to their financial trouble and conservatorships. Previous Congresses have considered housing finance reform legislation to varying degrees, but none has been enacted. Early in the 116th Congress, Senate Committee on Banking, Housing, and Urban Affairs Chairman Mike Crapo released an outline for potential housing finance reform legislation.63 The committee held hearings on it shortly thereafter.64 In March 2019, President Trump issued a Memorandum on Federal Housing Finance Reform directing the Treasury and HUD secretaries to develop plans to achieve certain housing finance reform goals, including both legislative and administrative reforms.65 Treasury and HUD released these plans on September 5, 2019.66 Both plans include a variety of legislative recommendations, as wel as recommendations for steps that the agencies could take administratively in the absence of legislation. The Senate Banking Committee and the House Financial Services Committee each held a hearing on the plans.67 interest -sensitive assets such as 30-year fixed rate mortgages. 61 For more on default and prepayment risk, see CRS In Focus IF10993, Consumer Credit Markets and Loan Pricing: The Basics. 62 For more background on the conservatorship of Fannie Mae and Freddie Mac, see CRS Report R44525, Fannie Mae and Freddie Mac in Conservatorship: Frequently Asked Questions; and FHFA, “ Conservatorship,” at https://www.fhfa.gov/Conservatorship. 63 U.S. Congress, Senate Committee on Banking, Housing, and Urban Affairs, “Chairman Crapo Releases Outline for Housing Finance Reform,” press release, February 1, 2019, https://www.banking.senate.gov/newsroom/majority/chairman-crapo-releases-outline-for-housing-finance-reform. 64 U.S. Congress, Senate Committee on Banking, Housing, and Urban Affairs, Chairman’s Housing Reform Outline: Part 1, 116th Cong., 1st sess., March 26, 2019; and U.S. Congress, Senate Committee on Banking, Housing, and Urban Affairs, Chairm an’s Housing Reform Outline: Part 2 , 116th Cong., 1st sess., March 27, 2019. 65 Presidential Memorandum, Memorandum on Federal Housing Finance Reform , March 27, 2019, https://www.whitehouse.gov/presidential-actions/memorandum-federal-housing-finance-reform/. 66 Department of the Treasury, Housing Reform Plan Pursuant to the Presidential Memorandum Issued March 27, 2019, September 2019, https://home.treasury.gov/system/files/136/Treasury-Housing-Finance-Reform-Plan.pdf; and Department of Housing and Urban Development, Housing Finance Reform Plan Pursuant to the Presidential Mem orandum Issued March 27, 2019, September 2019, https://home.treasury.gov/system/files/136/HUD-Housing-Finance-Reform-Plan-September-2019.pdf. 67 U.S. Congress, Senate Committee on Banking, Housing, and Urban Affairs, Housing Finance Reform: Next Steps, 116th Cong., 1st sess., September 10, 2019; and U.S. Congress, House Committee on Financial Services, The End of Affordable Housing? A Review of the Trump Administration’s Plans to Change Housing Finance in America , 116th Congressional Research Service 22 Housing Issues in the 116th Congress Outside of any legislative efforts related to housing finance reform, FHFA has taken a variety of administrative and regulatory actions related to Fannie Mae and Freddie Mac in its dual roles as their regulator and conservator. Status of FHFA Administrative Requirements for GSEs While Under Conservatorship Since conservatorship, the FHFA has focused on initiatives to standardize many aspects of the GSEs’ operations, which include their mortgage data collection processes, securitization processes, mortgage servicing policies (e.g., resolving delinquencies), and MBS issuances. Such standardization arguably increases transparency, reduces the length of the single-family mortgage origination and securitization processes, and ultimately increases the liquidity and uniform pricing of the GSEs’ issued securities.68 These efforts have resulted in the GSEs issuing two types of securities to facilitate lending in the single-family mortgage market. The GSEs continue to transfer prepayment risks but via a new financial instrument (the uniform mortgage-backed security); and they now transfer default risks (credit risk transfers, CRT) to private investors. Uniform Mortgage-Backed Security The FHFA, under the single security initiative, directed the GSEs to align their key contractual and business practices by acquiring mortgages with similar prepayment speeds along with other features.69 Each GSE continues to separately purchase conforming mortgages and guarantee the credit risks linked to the MBS trusts it creates. The prepayment speeds, however, are now required to align such that they do not diverge by more than 2% over a three-month interval.70 With similar prepayment characteristics, Fannie Mae’s and Freddie Mac’s MBS trusts would generate similar cash-flow predictability and prepayment speeds and, therefore, facilitate the creation of uniform securities. Rather than separate MBS issuances, the FHFA directed the GSEs to issue one common security—the uniform mortgage-backed security (UMBS). However, the GSEs would continue to separately issue and guarantee MBS that do not meet the standardization requirements for UMBS. The issuance of UMBS began on June 3, 2019.71 The combined market for the GSEs’ MBS issuances is expected to be more liquid because the UMBSs trade at a single price (rather than at two different prices).72 FHFA monitors the GSEs to ensure that their underwriting policies remain Cong., 1st sess., October 22, 2019. 68 For more information on the mortgage servicing and loss mitigation initiatives, see FHFA, “Mortgage Servicing,” at https://www.fhfa.gov/PolicyProgramsResearch/Policy/Pages/Mortgage-Servicing.aspx; and Karan Kaul et al., The Case for Uniform Mortgage Servicing Data Standards, Urban Institute, November 2018, at https://www.urban.org/sites/default/files/publication/99317/uniform_mortgage_servicing_data_standards_0.pdf. T he standardization of servicing may enhance the attractiveness of CRT investments by clarifying the procedures for handling nonp erforming mortgages, thus clarifying how losses will be distributed among the various tranche classes. For more information, see Basel Committee on Banking Supervision: T he Joint Forum, Report on Asset Securitisation Incentives, July 2011, at https://www.bis.org/publ/joint26.pdf; and Patricia A. McCoy, Barriers to Federal Hom e Mortgage Modification Efforts During the Financial Crisis, Joint Center for Housing Studies: Harvard University, August 2010, at https://www.jchs.harvard.edu/sites/default/files/mf10-6.pdf. 69 See FHFA, “Uniform Mortgage-Backed Security,” 84 Federal Register 7793-7801, March 5, 2019. 70 See FHFA, “Uniform Mortgage-Backed Security,” 84 Federal Register 7793-7801, March 5, 2019. 71 See FHFA, “Statement of FHFA Deputy Director Robert Fishman on the Launch of the New Uniform Mortgage -Backed Security (UMBS),” press release, June 3, 2019, at https://www.fhfa.gov/Media/PublicAffairs/Pages/Statement-of-FHFA-Deputy-Director-Robert-Fishman-on-the-launch-of-the-new-Uniform-Mortgage-Backed-Security.aspx. 72 FHFA, An Update on the Structure of the Single Security, May 15, 2015, p. 4, at https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/Single%20Security%20Update%20final.pdf. For a discussion of the pricing differential that Congressional Research Service 23 Housing Issues in the 116th Congress intact to avoid material misalignment that compromises interchangeability of the underlying mortgages used to create UMBS.73 Credit Risk Transfer In July 2013, the GSEs initiated new CRT programs to share with the private sector a portion of the default risk linked to their guaranteed single-family mortgages held in the MBS trusts.74 Investors preferring exposure only to mortgage prepayment risk may continue to purchase MBSs; however, the private sector may now purchase CRT issuances, which function similarly to MBSs, to earn revenue in exchange for assuming exposure to the credit risk.75 The GSEs typical y transfer to CRT investors some of the credit risk linked to mortgages with loan-to-values (LTVs) greater than 60% (or borrowers with 40% or less in accumulated home equity, meaning that they are more vulnerable to the possibility of owing more than the value of their homes if housing prices were to fal ).76 When defaults occur, the GSEs reduce the returns paid to CRT investors (similar to reducing the returns to MBSs investors after prepayments occur). Conversely, the GSEs retain the credit risk for mortgages with lower LTVs (or borrowers with 41% or more in accumulated home equity such that their outstanding balances are significantly below the value of their residential properties), which are less likely to default.77 From 2013 to 2019, the GSEs have transferred a total of $3.479 tril ion of credit risk to private investors.78 Proposed Capital Rule Although the exact definition of capital for financial firms is determined by law and regulation, it general y refers to common or preferred equity (as a percentage of assets), which can absorb financial losses. The FHFA suspended the GSEs’ capital requirements during conservatorship, and they must pay dividends only to Treasury (as opposed to private shareholders) while they are under conservatorship. As a prerequisite for exiting conservatorship, the GSEs must increase their holdings of capital reserves.79 Given that pre-conservatorship capital levels for the GSEs were not existed between Fannie Mae’s and Freddie Mac’s MBSs, see CRS Report R45828, Overview of Recent Administrative Reform s of Fannie Mae and Freddie Mac; and Laurie Goodman, The $400 Million Case for a Single GSE Security, Urban Institute, September 5, 2014, at http://www.urban.org/urban-wire/400-million-case-single-gse-security. For a discussion on the effects of standardization in the mortgage and MBS markets, see Adam J. Levit in and Susan M. Wachter, “Explaining the Housing Bubble,” The Georgetown Law Journal, vol. 100, no. 4 (April 12, 2012), pp. 1177-1258. 73 For more information, see CRS Report R45828, Overview of Recent Administrative Reforms of Fannie Mae and Freddie Mac. 74 T he GSEs had existing programs to redistribute more than 90% of the credit risk on their multi-family programs. Fannie Mae issues instruments linked to credit risk stemming from its multi-family mortgages through its Delegated Underwriting and Servicing Program (DUS); the corresponding Freddie Mac instruments are known as K -Deals. See U.S. Government Accountability Office (GAO), Financial Audit: Federal Housing Finance Agency’s Fiscal Years 2018 and 2017 Financial Statements, GAO-19-183R, November 15, 2018, at https://www.gao.gov/assets/700/695479.pdf; and FHFA, Overview of Fannie Mae and Freddie Mac Credit Risk Transfer Transactions, August 2015, at https://www.fhfa.gov/aboutus/reports/reportdocuments/crt-overview-8-21-2015.pdf. 75 Fannie Mae’s CRT instruments are known as Connecticut Avenue Securities (CAS); Freddie Mac’s CRT instruments are known as Structural Agency Credit Risk (ST ACR). 76 See FHFA, Performance and Accountability Report, FY2018, at https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/FHFA-2018-PAR.pdf. 77 T he GSEs may also transfer the credit risk of mortgages retained in their portfolios (typically because they lack the standardized features that would make them eligible for placement into an MBS trust for securitization). 78 For more information, see FHFA, “Credit Risk T ransfer Progress Report,” Fourth Quarter 2019, at https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/CRT -Progress-Report -4Q2019.pdf. 79 P.L. 102-550, the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, establishes the statutory Congressional Research Service 24 Housing Issues in the 116th Congress sufficient to avoid conservatorship, HERA gave FHFA the authority to increase capital standards above the statutory minimum as necessary.80 On May 20, 2020, FHFA released a proposed rule that would establish a new regulatory capital framework for Fannie Mae and Freddie Mac to be in place once they are returned to stockholder control.81 The proposed framework borrows concepts from the capital regulatory framework for large banks such as the definition of capital, various capital buffers, and a risk weight capital floor that would be applied for any CRT exposures retained in portfolio.82 Comments on the proposal were due by August 31, 2020. Multifamily Housing Financing Activities Multifamily properties are general y defined as properties that include five or more housing units. FHFA has placed various directives on the GSEs’ multifamily programs since conservatorship.83 Namely, in 2014, it placed annual caps on the overal dollar volume of multifamily mortgages that each GSE can purchase to shrink their multifamily operations and resulting risks to taxpayers.84 It excluded mission-driven purchases from counting toward the cap to encourage GSE support in the affordable housing and underserved market segments.85 Beginning in 2016, FHFA also excluded loans that would finance certain energy and water efficiency improvements (i.e., green loans) from the multifamily purchase caps to retain focus on mission goals. On September 13, 2019, FHFA revised its directive regarding the multifamily purchase caps, increasing them from the previous caps of $35 bil ion each to $100 bil ion each for Fannie Mae and Freddie Mac. Al multifamily mortgage purchases wil now count toward the cap—no exemptions or exclusions for mission-driven or green loans. 86 However, 37.5% of the GSEs’ loan purchases must be mission driven. The FHFA Director stated that this revision narrows the scope of the GSEs’ multifamily programs to maintain the focus on affordable rental units for low- and moderate-income households and other historical y underserved renters.87 minimum leverage (unweighted) capital requirement; P.L. 110-289, the Housing Economic and Recovery Act of 2008, gave FHFA the authority to increase capital standards above the statutory minimum as necessary. 80 T he statutory minimum leverage (unweighted) capital requirement, specified in P.L. 102-550, the Federal Housing Enterprises Safety and Soundness Act of 1992, is equal to 2.5% of on -balance sheet (portfolio) assets and 0.45% of off-balance sheet (MBS trust) obligations. 81 See FHFA, “FHFA Releases Re-Proposed Capital Rule for the Enterprises,” May 20, 2020, at https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Releases-Re-Proposed-Capital-Rule-for-the-Enterprises.aspx. 82 See FHFA, “Enterprise Regulatory Capital Framework,” 85 Federal Register 39274-39406, June 30, 2020. 83 For more information, see CRS Report R46480, Multifamily Housing Finance and Selected Policy Issues. 84 See FHFA, “FHFA Seeks Public Input on Reducing Fannie Mae and Freddie Mac Multifamily Businesses,” press release, August 9, 2013, at https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/MultifamilyInput080913Final.pdf; and FHFA, Conservatorship Strategic Plan: Perform ance Goals for 2013 , at https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/2013EnterpriseScorecard_508.pdf. 85 See FHFA, “Fact Sheet: New Multifamily Caps for Fannie Mae and Freddie Mac,” press release, at https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/newmultifamilycaps-9132019.pdf. 86 See FHFA, “FHFA Revises Multifamily Loan Purchase Caps for Fannie Mae and Freddie Mac,” press release, September 13, 2019, at https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Revises-Multifamily-Loan-Purchase-Caps-for-Fannie-Mae-and-Freddie-Mac.aspx. 87 See FHFA, “FHFA Revises Multifamily Loan Purchase Caps for Fannie Mae and Freddie Mac,” press release, September 13, 2019, at https://www.fhfa.gov/mobile/Pages/public-affairs-detail.aspx?PageName=FHFA-Revises-Multifamily-Loan-Purchase-Caps-for-Fannie-Mae-and-Freddie-Mac.aspx. Congressional Research Service 25 Housing Issues in the 116th Congress CFPB’s Proposed Changes to the Qualified Mortgage Rule and the GSE Patch The Dodd-Frank Wal Street Reform and Consumer Protection Act (Dodd-Frank Act; P.L. 111-203) requires lenders to make a good faith effort to ensure that certain mortgage borrowers have the ability to repay the loans they offer. Lenders that are found to violate the requirement can be required to pay monetary damages.88 On January 10, 2013, the Consumer Financial Protection Bureau (CFPB) released a final rule implementing these ability-to-repay (ATR) requirements; the rule took effect on January 10, 2014.89 The final rule provides multiple ways for a loan originator to comply with the ATR requirements,90 one of which is by originating a qualified mortgage (QM). QMs are mortgages that meet certain underwriting standards and lack various risky product-features. When a lender issues a QM, it creates a presumption that the lender has complied with its ATR responsibilities, reducing the lender’s legal exposure. The level of protection afforded a lender varies according to the loan’s pricing.91 QMs with annual percentage rates (APRs) not exceeding the Average Prime Offer Rate (APOR) by more than 1.5 percentage points qualify for safe harbor status. QMs with APRs exceeding the APOR by more than that amount are considered higher-priced QMs and benefit from a rebuttable presumption of compliance. The CFPB has explained these legal protections in this way: Under a safe harbor, if a court finds that a mortgage you originated was a QM, then that finding conclusively establishes that you complied with the ATR requirements when you originated the mortgage. ... Under a rebuttable presumption, if a court finds that a mortgage you originated was a higher-priced QM, a consumer can argue that you violated the ATR rule. However, to prevail on that argument, the consumer must show that based on the information available to you at the time the mortgage was made, the consumer did not have enough residual income left to meet living expenses after paying their mortgage and other debts.92 Lenders may be less likely to originate non-QM loans due to the increased legal exposure. Limiting the borrower’s debt-to-income (DTI) ratio to 43% is one of the current underwriting requirements for a loan to receive general QM status. Mortgages with DTIs exceeding 43% may stil qualify as QMs if (1) they are eligible to be insured or guaranteed by FHA, USDA, or VA and meet permanent QM standards established by each of those agencies,93 or (2) they are eligible for 88 15 U.S.C. §1640 89 See Bureau of Consumer Financial Protection (CFPB), “Ability -to-repay and Qualified Mortgage Standards Under the T ruth in Lending Act (Regulation Z),” 78 Federal Register 6408-6620, January 30, 2013. 90 For a comparison of the different ways the lenders can comply with the AT R requirements, see https://files.consumerfinance.gov/f/documents/201603_cfpb_atr-and-qm-comparison-chart.pdf. 91 All QM loans must meet certain underwriting and product feature requirements. 92 CFPB, Ability-to-Repay and Qualified Mortgage Rule Small Entity Compliance Guide, March 2016, pp. 33-34, https://files.consumerfinance.gov/f/documents/bcfp__atr-qm_small-entity_compliance-guide.pdf. 93 T he Dodd-Frank Act allowed federal agencies that guarantee mortgages to issue their own definitions of a QM. T he Federal Housing Administration, U.S. Department of Veterans Affairs, and United States Department of Agriculture did not adopt a 43% DT I requirement for the mortgages they guarantee. Instead, these agencies adopted their own QM definitions, which included the exclusion of product features they considered would impede repayment from borrowers they predominantly serve—but they did not limit DT Is to 43%. See Department of Housing and Urban Development, “Qualified Mortgage Definition for HUD Insured and Guaranteed Single Family Mortgages,” 78 Federal Register 75215-75238, December 13, 2013; Department of Veterans Affairs, “ Loan Guaranty: Ability -T o-Repay Standards and Qualified Mortgage Definition Under the T ruth in Lending Act,” 79 Federal Register 26620-26628, May 9, 2014; and Department of Agriculture, Rural Housing Service, “Single Family Housing Guaranteed Loan Program,” 81 Federal Register 26461-26465, May 3, 2016. Congressional Research Service 26 Housing Issues in the 116th Congress purchase by two government sponsored enterprises (GSEs), Fannie Mae or Freddie Mac.94 The GSE QM option, which is referred to as the QM patch, al ows the GSEs to operate under their own QM rules for seven years (until January 10, 2021) or until they exit conservatorship, whichever is sooner.95 On June 22, 2020, the CFPB proposed revisions to the current QM definition.96 Some of the proposed revisions include the following:97  For the QM definition, the proposal would remove the 43% DTI ratio requirement and replace it with requirements that are based on the mortgage pricing, which reflects the credit quality of borrowers. The rule would continue to grant safe harbor QM status to a first-lien (primary) mortgage in which the difference between its APR and the APOR is less than 1.5 percentage points.98 To qualify as a QM with rebuttable presumption, however, the proposal would limit the difference between the APR and APOR for first- lien mortgages to no more than 2 percentage points.99  The CFPB also seeks comments on removing Appendix Q, which creditors are currently required to use to verify borrower debt and income for QMs, and granting safe harbor to creditors that use specified income and debt verification standards such as one or more of the following: Fannie Mae’s Single Family Sel ing Guide, Freddie Mac’s Single-Family Sel er/Servicer Guide, FHA’s Single Family Housing Policy Handbook, the Veteran Administrations Lenders Handbook, and the Field Office Handbook for the Direct Single Family Housing Program and Handbook for the Single Family Guaranteed Loan Program of the U.S. Department of Agriculture (USDA).  The CFPB is also seeking comments on an alternative proposal to consider a DTI range between 45% and 48% rather than removing the DTI requirement entirely. Higher credit-quality applicants likely to qualify for lower mortgage rates could be approved with DTIs near or at the upper end of the range. In this case, a better credit score may act as a compensating factor, a positive risk attribute that may be given additional weight when underwriting applicants with higher DTIs. 94 See CFPB, Ability-to-Repay and Qualified Mortgage Rule Assessment Report, January 2019, at https://files.consumerfinance.gov/f/documents/cfpb_ability-to-repay-qualified-mortgage_assessment -report.pdf. 95 See CFPB, “Ability-to-Repay and Qualified Mortgage Standards Under the T ruth in Lending Act (Regulation Z),” 78 Federal Register 6049, January 30, 2013; Bing Bai, Laurie Goodman, and Ellen Seidman, Has the QM Rule Made It Harder to Get a Mortgage?, Urban Institute, March 2016, at https://www.urban.org/sites/default/files/publication/78266/2000640-Has-the-QM-Rule-Made-It-Harder-to-Get-a-Mortgage.pdf; and Karan Kaul and Laurie Goodman, What, If Anything, Should Replace the QM GSE Patch? , Urban Institute, August 2018, at https://www.urban.org/sites/default/files/publication/98949/2018_10_30_qualified_mortgage_rule_finalizedv2_0.pdf. 96 See CFPB, “Qualified Mortgage Definition Under the T ruth in Lending Act (Regulation Z): General QM Loan Definition,” 85 Federal Register 41716-41778, July 10, 2020. 97 For a summary of the proposal, see CFPB, Summary of Proposed Rule-Makings: June 2020 Proposals to Amend the ATR-QM Rule, June 22, 2020, at https://files.consumerfinance.gov/f/documents/cfpb_atr-qm_summary-of-proposals_2020-06.pdf. 98 Consistent with the current rule, the CFPB proposes higher thresholds for loans with smaller loan amounts and for subordinate-lien transactions, which typically have higher APRs. For more information on how the CFPB defines the benchmark APOR, see, CFPB, “ What is a ‘Higher-Priced Mortgage Loan?’”, September 17, 2013, at https://www.consumerfinance.gov/ask-cfpb/what -is-a-higher-priced-mortgage-loan-en-1797/. 99 Under the current rule, there is no limit on the amount by which the APR exceeds the APOR for the purposes of the QM definition, though only QMs where the difference is no more than 1.5 percentage points (for most first -lien mortgages) qualify for a safe harbor. Congressional Research Service 27 Housing Issues in the 116th Congress On June 22, 2020, in a separate proposed rule, the CFPB also proposed revisions to the current GSE/QM patch.100 Specifical y, the CFPB proposes to extend the sunset date for the GSE Patch such that it corresponds to the earlier of either (1) the effective date of the final amendments to the QM rule revisions or (2) the date that the GSEs exit conservatorship. (The CFPB notes that the QM rule revisions are not expected to become effective prior to April 1, 2021.) 30% of area median income), in particular, contributes to these cost burdens.²²

Housing Issues in the 116^th Congress

Status of Fannie Mae and Freddie Mac

Potential for Legislative Housing Finance Reform

New FHFA Director and Possible Administrative Changes to Fannie Mae and Freddie Mac

Also in March 2019, President Trump issued a Memorandum on Federal Housing Finance Reform directing the Treasury and HUD secretaries to develop plans to achieve certain housing finance reform goals, including both legislative and administrative reforms.³⁷ Treasury and HUD released these plans on September 5, 2019.³⁸ Both plans include a variety of legislative recommendations, as well as recommendations for steps that the agencies could take administratively in the absence of legislation. The Senate Banking Committee and the House Financial Services Committee each held a hearing on the plans.³⁹

Other Issues Related to Fannie Mae and Freddie Mac

Housing Assistance

Appropriations for Housing Programs

FY2020 Budget

Housing Vouchers for Foster Youth

Implementation of Housing Assistance Legislation

Moving to Work (MTW) Expansion

Rental Assistance Demonstration Expansion

The Rental Assistance Demonstration (RAD) was an Obama Administration initiative initially designed to test the feasibility of addressing the estimated $25.6 billion backlog in unmet capital needs in the public housing program⁶⁰ by allowing local PHAs to convert their public housing properties to either Section 8 Housing Choice Vouchers or Section 8 project-based rental assistance.⁶¹ PHAs are limited in their ability to mortgage, and thus raise private capital for, their public housing properties because of a federal deed restriction placed on the properties as a condition of federal assistance. When public housing properties are converted under RAD, that deed restriction is removed.⁶² As currently authorized, RAD conversions must be cost-neutral, meaning that the Section 8 rents the converted properties may receive must not result in higher subsidies than would have been received under the public housing program. Given this restriction, and without additional subsidy, not all public housing properties can use a conversion to raise private capital, potentially limiting the usefulness of a conversion for some properties.⁶³ While RAD conversions have been popular with PHAs,⁶⁴ and HUD's initial evaluations of the program have been favorable,⁶⁵ a recent GAO study has raised questions about HUD's oversight of RAD, and about how much private funding is actually being raised for public housing through the conversions.⁶⁶

Quality of Federally Assisted Housing

Selected Administrative Actions Related to Affordable Housing

HUD Noncitizen Eligibility and Documentation Proposed Rule

Equal Access to Housing

Regulatory Barriers Council

Affirmatively Furthering Fair Housing

Housing and Disaster Response and Recovery

Implementation of Housing-Related Provisions of the Disaster Recovery Reform Act (DRRA)

FEMA Short-term, Emergency Housing Program Change

Community Development Block Grants-Disaster Recovery (CDBG-DR)

Native American Housing Programs

Tribal HUD-VASH

NAHASDA Reauthorization

In the 116^th Congress, a NAHASDA reauthorization bill (H.R. 5319) was introduced in the House in December 2019.

Department of Veterans Affairs Loan Guaranty and Maximum Loan Amounts

Department of Veterans Affairs Loan Guaranty and Maximum Loan Amounts The Department of Veterans Affairs (VA) insures home loans to veterans as part of the VA Loan Guaranty program. To date, the maximum amount a veteran can borrow has been limited by the Freddie Mac conforming loan limit.¹²¹101 While veterans can enter into loans that exceed the conforming loan limit, they cannot do so without making a down payment. The fact that VA loans do not ordinarily require a down payment is a popular feature of the program—in FY2018, nearly 80% of loans did not have a down payment.¹²²

102 Congress removed the conforming loan limit for VA loans entered into on or after January 1, 2020, as part of the Blue Water Navy Vietnam Veterans Act of 2019 (P.L. 116-23). After the change takes effect, most veterans will wil be able to enter into loans of any amount, subject to eligibility, without the need for a down payment. An exception exists for veterans who have outstanding VA loans; they will still stil be subject to Freddie Mac conforming loan limits. Housing Assistance Appropriations for Housing Programs For several years, concern in Congress about federal budget deficits led to increased interest in reducing the amount of discretionary funding provided each year through the annual appropriations process. This interest manifested most prominently in the enactment of the Budget Control Act of 2011 (P.L. 112-25), which set enforceable limits for both mandatory and discretionary spending.103 The limits on discretionary spending, which have been amended and adjusted since they were first enacted,104 have implications for HUD’s budget, the largest source of funding for direct housing assistance, because it is made up almost entirely of discretionary appropriations.105 In FY2020, the discretionary spending limits were slated to decrease, after having been increased in FY2018 and FY2019 by the Bipartisan Budget Act of FY2018 (BBA; 100 See CFPB, “Qualified Mortgage Definition Under the T ruth in Lending Act (Regulation Z): Extension of Sunset Date,” 85 Federal Register 41448-41463, July 10, 2020. 101 In 2019, the conforming loan limit for most areas of the country was $484,350. Ho wever, in certain high-cost areas the conforming loan limit may be as high as 115% of the area median home price, but not to exceed 150% of the conforming loan limit. As a result, in some high-cost areas the 2019 limit is as high as $726,525. (For more inf ormation on the conforming loan limit, see CRS Report R44826, The Loan Lim its for Governm ent-Backed Mortgages.) 102 U.S. Department of Veterans Affairs, FY2018 Annual Benefits Report, Home Loan Guaranty section, p. 8, https://www.benefits.va.gov/REPORT S/abr/docs/2018-loan-guaranty.pdf. 103 For more information, see CRS Report R44874, The Budget Control Act: Frequently Asked Questions. 104 Ibid. 105 Funding levels for HUD are determined by the T ransportation, HUD, and Related Agencies (T HUD) Appropriations Subcommittee, generally in a bill by the same name. While HUD’s budget is generally smaller than the Department of T ransportation’s, it makes up the largest share of the discretionary funding in the T HUD appropriations bill each year because the majority of DOT ’s budget is made up of mandatory funding. Congressional Research Service 28 Housing Issues in the 116th Congress P.L. 115-123), but they were raised again for FY2020 and FY2021 by the Bipartisan Budget Act of 2019 (P.L. 116-37).106 More than three-quarters of HUD’s appropriations are devoted to three rental assistance programs serving more than 4 mil ion families: the Section 8 Housing Choice Voucher (HCV) program, Section 8 project-based rental assistance, and the public housing program. Funding for the HCV program and project-based rental assistance has been increasing in recent years, largely because of the increased costs of maintaining assistance for households that are currently served by the programs.107 Public housing has, arguably, been underfunded (based on studies undertaken by HUD of what it should cost to operate and maintain it) for many years.108 Despite the large share of total HUD funding these rental assistance programs command, their combined funding levels only permit them to serve an estimated one in four eligible families, which creates long waiting lists for assistance in most communities.109 A similar dynamic plays out in the U.S. Department of Agriculture’s Rural Housing Service budget. Demand for housing assistance exceeds the supply of subsidies, yet the vast majority of the RHS budget is devoted to maintaining assistance for current residents.110 In a budget environment with limits on discretionary spending, pressure to provide increased funding to maintain current services for existing rental assistance programs competes with pressure from states, localities, and advocates to maintain or increase funding for other popular programs, such as HUD’s Community Development Block Grant (CDBG) program, grants for homelessness assistance, and funding for Native American housing. FY2021 Budget The Trump Administration’s budget request for FY2021 proposed a 15% decrease in new appropriations for HUD’s programs and activities as compared to the prior year.111 As in prior budget requests, it proposed to eliminate funding for several programs, including multiple HUD grant programs (CDBG, the HOME Investment Partnerships Program, the Self-Help and Assisted Homeownership Opportunity Program (SHOP), and the public housing Capital Fund), and to decrease funding for most other HUD programs. In proposing to eliminate the grant programs, the Administration cited budget constraints and proposed that state and local governments take on more of a role in the housing and community development activities funded by these programs. 106 For more information, see CRS Insight IN11148, The Bipartisan Budget Act of 2019: Changes to the BCA and Debt Lim it. 107 For the Section 8 HCV program, funding has been increasing in p art because Congress has created more vouchers each year over the past several years (largely to replace units lost to the affordable housing stock in other assisted housing programs or to provide targeted assistance for homeless veterans), and in part bec ause the cost of renewing individual vouchers has been rising as gaps between low-income tenants’ incomes and rents in the market have been growing. For the Section 8 project -based program, the increased funding is due to more long-term rental assistance contracts on older properties expiring and being renewed, requiring new appropriations, as well as rent inflation. 108 For example, see Meryl Finkel et al., “Capital Needs in the Public Housing Program: Revised Final Report,” prepared for the Department of Housing and Urban Development, November 24, 2010, http://portal.hud.gov/hudportal/documents/huddoc?id=PH_Capital_Needs.pdf. 109 See Figure 6 of Joint Center for Housing Studies be subject to Freddie Mac conforming loan limits.

Housing-Related Tax Extenders

Exclusion for Canceled Mortgage Debt

Deductibility of Mortgage Insurance Premiums