Waters likely to raise affordable housing’s profile in GSE debate

Mortgage

WASHINGTON — One particular difference between a House Financial Services Committee likely led by Rep. Maxine Waters, D-Calif., and her GOP predecessor could be a newfound focus on affordable housing issues.

Expanding housing opportunities through government trust funds and other assistance programs has received little attention under current Chair Jeb Hensarling, R-Texas.

But with the change in House control and Waters’ focus on the issue throughout her career, observers expect the committee to have a new emphasis on affordable housing as part of discussions on reforming Fannie Mae and Freddie, as well as scrutiny of Department of Housing and Urban Development programs and broader efforts to reduce homelessness.

Rep. Maxine Waters, D-Calif.

“Unfortunately, this country is experiencing a rental housing crisis and homelessness is on the rise,” Rep. Maxine Waters, D-Calif., the likely incoming chair of the House Financial Services Committee, said in a letter to colleagues following the midterm elections.

Bloomberg News

Under “She’s championed the National Housing Trust Fund program, and she’s a big champion of the public housing program and of protecting residents in public housing, so I would expect her to use her chairing of the committee, if she becomes the chair, to really advance those issues,” said Diane Yentel, the president and CEO of the National Low Income Housing Coalition.

Affordable housing has often been a sticking point in plans to reform the government-sponsored enterprises. Hensarling’s bipartisan GSE reform proposal was met with criticism from some Democrats who felt that the plan did not do enough to address housing affordability.

But under Waters, many expect the National Housing Trust Fund to be back in the spotlight. The fund, along with the Capital Magnet Fund, is supposed to receive financing from Fannie and Freddie. The NHTF was a prominent piece of Waters’ 2014 GSE reform proposal. Her bill would have directed 10 basis points per covered mortgage-backed security to three trust funds, with 75% going to the National Housing Trust Fund.

“The future of Fannie and Freddie are really important to all the work that we do on homeownership for all groups,” said said Doug Ryan, the senior director of affordable homeownership at Prosperity Now, an organization focused on financial opportunities for lower-income consumers.

Waters’ signaled her interest in shining a spotlight on affordable housing issues last month. Following the midterm elections, she listed “expanding and supporting affordable housing opportunities and tackling the homelessness crisis” among her priorities if selected to chair the committee.

In a letter to colleagues after the election, Waters highlighted a bill she introduced in June 2017 to provide one-for-one replacement of public housing units and fund public housing capital and operating funds. “Unfortunately, this country is experiencing a rental housing crisis and homelessness is on the rise,” she wrote.

In general, some are bracing for tougher rhetoric from Waters as chair of the committee, and are worried that she may use the new position as a bully pulpit to direct attacks at the Trump administration. But many observers say a focus on affordable housing solutions and the broader issue of GSE reform could present opportunities for bipartisanship.

“The thing that most people who have not worked directly with her don’t appreciate is the extent to which she is willing and able to work with both members of her own caucus and across the aisle,” said David Dworkin, the president and CEO of the National Housing Conference.

Rep. Sean Duffy, R-Wis., the current chair of the housing and insurance subcommittee, told American Banker he’s willing to work with Waters to expand affordable housing opportunities.

“We’ve worked together on a lot of issues,” he said. “Sometimes her rhetoric can be a little bit hot on TV or in the committee room, but if you close the door, I’ve been able to sit down and negotiate with Maxine, and she can be fair and reasonable.”

“At first blush you might see housing finance as a very partisan issue,” Duffy added. “But when you sit down and both sides of the aisle talk to each other, we’re not that far apart,” he said.

Duffy has been a strong proponent of solving homelessness, and could partner with Waters in that area, said Diane Yentel, the president and CEO of the National Low Income Housing Coalition.

“He’s been somebody that we’ve been able to work with on looking at voucher mobility programs, improvements to the Section 8 voucher program and to the public housing program, so I do think there’s opportunities there for bipartisanship,” she said.

Republicans and Democrats might also be able to strike deals related to reducing veterans’ homelessness and improving public housing infrastructure, said Ryan.

“It’s really not that complicated. It’s a matter of resources and it’s a matter of priorities, but I do think there’s probably some bipartisanship to that,” he said. “There’s probably an interest in both parties to move forward.”

However, Waters has in the past set bold affordable housing goals and could try to forge her own path without settling for compromise, some observers said.

She has been “a passionate advocate for affordable housing since she arrived in Congress” and has seen home prices and rents skyrocket up close in her own district of Los Angeles, said Dworkin.

Yentel expects Waters to call oversight hearings on the HUD’s Rental Assistance Demonstration program, which allows for more private investment to fund affordable housing projects.

“She has really put a spotlight on ensuring that whenever those kinds of transactions happen, that residents are really protected, that there’s one-for-one replacement of any public housing … and that residents have a right to return to properties after they’ve been redeveloped,” she said.

In a letter to colleagues after the midterm election, Waters highlighted a bill she introduced in June 2017 to provide one-for-one replacement of public housing units and fund public housing capital and operating funds.

Waters is also likely address a shortage in housing production felt across the country and particularly in her home state of California, said Dworkin.

“I hope that we’ll see hearings around that and some specific solutions that will promote more production because it’s driving both the inventory problem in single family and the high prices in rising rents in multifamily,” he said.

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