Housing finance ranks highly in 119th Congress goals set by Senate Banking Committee Chair Sen. Tim Scott, R.-S.C., who unveiled a comprehensive reform agenda on Wednesday. Scott also issued a letter criticizing the Federal Housing Finance Agency, signaling potential actions he may pursue to reverse policies at Fannie Mae and Freddie Mac.
In a letter to utgoing head of the Federal Housing Finance Agency Sandra Thompson, Scott criticized her lack of independence from the Biden administration on many initiatives and said she did not do enough to provide transparency and focus on financial soundness regarding equitable housing plans and the pilot programs on title insurance alternatives and second lien purchases.
Scott also took issue with efforts to draw up a new definition for first-generation homebuyers he called difficult to verify, and efforts to introduce price controls on renters in properties with multifamily financing that some in the industry have viewed as overreach. He advocated for prioritizing a GSE exit conservatorship, while Thompson has called for a slow-go approach to this.
In his letter, Scott also called Thompson out for allowing the Treasury to put pressure on the Federal Home Loan Banks that the FHFA also regulates “to increase their voluntary contributions of net income toward affordable housing beyond what is statutorily mandated.”
He was furthermore critical of a notice of proposed rulemaking seeking to add experience requirements in areas that include climate-related risk for independent directors on boards, calling it “at best tangential to the FHLBanks’ primary function of providing liquidity” to members.
Thompson has said she strives to take into account both the financial soundness of the entities the FHFA oversees and their need to fulfill their affordable housing missions in setting policy and working with other agencies. She also has aimed to improve transparency through initiatives like instituting a prior approval rule for new products. But Scott questioned whether some of her policy actions, such as the title insurance alternative pilot, were in line with this.
Scott’s agenda for reform includes the “Road to Housing Act,” a bill that would put federal agencies on a shorter leash. The bill has multiple supporters in the Republican party, which has secured a narrow majority in the Senate.
“We’ve led comprehensive solutions to serious challenges Americans face – from addressing our failed federal housing policies to increasing access to capital to bolstering our economic national security – and we can build on this success,” Scott said in a Senate Banking committee press release.
The committee chief’s list of goals provides an indication of the kind of “sweeping attempts at changes to regulatory and legislative policy” that the Mortgage Bankers Association anticipates will result from the shift to Republican control of both the presidency and Congress.
“The committee will review how overregulation contributes to excessive costs and delays in the supply of affordable housing and will prioritize struggling families over adding to bureaucracy,” it said in describing the leading financial-inclusion goal.
Where housing policy is concerned, the MBA and other groups active in this area had anticipated that Scott’s aforementioned bill would become an initial point for engagement on policy if the election put him in a more influential position as it has.
In addition to calling for increased review of various types of public intervention in housing, Scott’s bill also has reforms to items like Consumer Financial Protection Bureau rules on loan officer compensation.
Republicans in Washington are generally expected to be more or less aligned in a goal to weaken and restructure the CFPB and agencies more narrowly focused on housing in line with what’s broadly a deregulatory stance.
Plans to limit the CFPB’s “encroachment on state regulators” and “promote resilience in repeatedly flooded communities” are mentioned in the context of the committee’s insurance-related goal.
The Securities and Exchange Commission’s powers also would be narrowed under the “access to capital” goal on the committee’s list, which specifically references Scott’s “Empowering Main Street in America Act.”
That bill aims to refocus the SEC on “ensuring the engines of the U.S. capital markets system are primed to fuel the next chapter of American exceptionalism, instead of putting up new and burdensome hurdles,” Scott said in a press release introducing it in September.
Other agencies Congress and the second Trump administration are broadly anticipated to work to reform include influential government-sponsored enterprises Fannie Mae and Freddie Mac, their regulator, the Department of Housing and Urban Development and Treasury.
