    [Senate Hearing 116-444]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 116-444

                        OVERSIGHT OF HOUSING REGULATORS

    =======================================================================

                                    HEARING

                                   BEFORE THE

                                  COMMITTEE ON
                       BANKING,HOUSING,AND URBAN AFFAIRS
                              UNITED STATES SENATE

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 SECOND SESSION

                                       ON

     EXAMINING THE ACTIONS THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
     AND FEDERAL HOUSING FINANCE AGENCY HAVE TAKEN TO IMPLEMENT THE CARES
     ACT, ADDRESS AND/OR MINIMIZE THE ECONOMIC IMPACT OF THE ONGOING COVID-
             19 PANDEMIC, AND OTHER RECENT REGULATORY DEVELOPMENTS
                                   __________

                                  JUNE 9, 2020
                                   __________

      Printed for the use of the Committee on Banking, Housing, and Urban
                                    Affairs

                      [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                    Available at: https: //www.govinfo.gov /

                                   __________

                        U.S. GOVERNMENT PUBLISHING OFFICE

    44-628 PDF                 WASHINGTON : 2023

                COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                          MIKE CRAPO, Idaho, Chairman

    RICHARD C. SHELBY, Alabama           SHERROD BROWN, Ohio
    PATRICK J. TOOMEY, Pennsylvania      JACK REED, Rhode Island
    TIM SCOTT, South Carolina            ROBERT MENENDEZ, New Jersey
    BEN SASSE, Nebraska                  JON TESTER, Montana
    TOM COTTON, Arkansas                 MARK R. WARNER, Virginia
    MIKE ROUNDS, South Dakota            ELIZABETH WARREN, Massachusetts
    DAVID PERDUE, Georgia                BRIAN SCHATZ, Hawaii
    THOM TILLIS, North Carolina          CHRIS VAN HOLLEN, Maryland
    JOHN KENNEDY, Louisiana              CATHERINE CORTEZ MASTO, Nevada
    MARTHA McSALLY, Arizona              DOUG JONES, Alabama
    JERRY MORAN, Kansas                  TINA SMITH, Minnesota
    KEVIN CRAMER, North Dakota           KYRSTEN SINEMA, Arizona

                         Gregg Richard, Staff Director

                    Laura Swanson, Democratic Staff Director

                              Matt Jones, Counsel

               Beth Cooper, Democratic Professional Staff Member

               Megan Cheney, Democratic Professional Staff Member

              Stanley Hardy, Democratic Professional Staff Member

                          Cameron Ricker, Chief Clerk

                          Shelvin Simmons, IT Director

                        Charles J. Moffat, Hearing Clerk

                              Jim Crowell, Editor

                                      (ii)

                                C O N T E N T S

                                  ----------

                             TUESDAY, JUNE 9, 2020

                                                                       Page

    Opening statement of Chairman Crapo..............................     1
        Prepared statement...........................................    39

    Opening statements, comments, or prepared statements of:
        Senator Brown................................................     3
            Prepared statement.......................................    40

                                   WITNESSES

    Benjamin S. Carson, Secretary, Department of Housing and Urban
      Development....................................................     6
        Prepared statement...........................................    41
        Responses to written questions of:
            Senator Brown............................................    53
            Senator Tillis...........................................    58
            Senator Moran............................................    59
            Senator Menendez.........................................    59
            Senator Tester...........................................    65
            Senator Warren...........................................    69
            Senator Van Hollen.......................................    71
            Senator Cortez Masto.....................................    75
            Senator Smith............................................    82
    Mark A. Calabria, Director, Federal Housing Finance Agency.......     7
        Prepared statement...........................................    43
        Responses to written questions of:
            Senator Brown............................................    83
            Senator Tillis...........................................    86
            Senator Moran............................................    87
            Senator Menendez.........................................    88
            Senator Tester...........................................    90
            Senator Warren...........................................    92
            Senator Van Hollen.......................................    95
            Senator Cortez Masto.....................................    96

                  Additional Material Supplied for the Record

    Letter submitted by CUNA.........................................   103
    Letter submitted by NAFCU........................................   105

                                     (iii)

                        OVERSIGHT OF HOUSING REGULATORS

                                  ----------

                             TUESDAY, JUNE 9, 2020

                                           U.S. Senate,
              Committee on Banking, Housing, and Urban Affairs,
                                                        Washington, DC.
        The Committee met at 10 a.m., in room SD-G50, Dirksen
    Senate Office Building, Hon. Mike Crapo, Chairman of the
    Committee, presiding.

                OPENING STATEMENT OF CHAIRMAN MIKE CRAPO

        Chairman Crapo. This hearing will come to order. The
    hearing room has been configured to maintain the recommended
    six-foot social distancing between Senators, witnesses, and
    other individuals in the room necessary to operate the hearing,
    which we have kept to a minimum.
        This will be a hybrid hearing. Some Members will be here in
    present, the witnesses are here in person, and others will be
    coming in by video conference.
        I remind everyone, once you start speaking there will be a
    slight delay before you are displayed on the screen, if you are
    coming in remotely. To minimize background noise, please click
    the Mute button until it is your turn to speak or ask
    questions. If there is any technology issue, as usual, we will
    move to the next Senator until it is resolved.
        I remind all Senators and the witnesses that the five-
    minute clock still applies. You should all have a box on your
    screens, those of you who are operating remotely, that is
    labeled Clock, that will show the time that is remaining. At 30
    seconds I am going to try to remember to gently tap the gavel
    to remind Senators that their time is expiring.
        To simplify the speaking order process, Senator Brown and I
    have again agreed to go by seniority for this hearing.
        With that we welcome our Federal housing regulators, The
    Honorable Benjamin S. Carson, Secretary of the Housing and
    Urban Development, and The Honorable Mark A. Calabria, Director
    of the Federal Housing Finance Agency. Welcome back to both of
    you.
        Today we will receive testimony on your agencies' recent
    activities, operations, and ongoing efforts to promote access
    to quality affordable housing while also ensuring the safety
    and soundness of the housing finance market. Your agencies'
    missions have never been more critical. The disruption of
    COVID-19 on the U.S. economy has hit homeowners and the housing
    market especially hard. We have already seen a huge number of
    mortgage borrowers enter forbearance, while many landlords are
    struggling to make ends meet, and countless renters are unsure
    whether they will be able to make their next payment.
        In March, HUD and FHFA acted swiftly to prohibit
    foreclosures and evictions for millions of residential
    borrowers facing financial hardship due to the pandemic. Soon
    after, Congress passed the Coronavirus Aid Relief and Economic
    Security Act, or CARES Act, codifying and extending these
    protections and providing financial relief to renters.
        Title IV of the CARES Act contains three housing
    provisions. Section 4022 imposes a 60-day eviction and
    foreclosure moratorium for single-family borrowers with a
    federally backed mortgage loan. It also allows struggling
    homeowners up to 1 year of loan forbearance.
        Section 4023 extends similar relief to federally backed
    multifamily borrowers who are current on their mortgage
    payments. They can request up to 90 days forbearance so long as
    they do not evict a tenant or charge late fees solely for
    nonpayment of rent during the pandemic.
        Section 4024 imposes a 120-day moratorium on evictions,
    fees, and penalties for tenants who live in multifamily units
    that participate in a Federal assistance program or have a
    Government-backed mortgage.
        Title XII of the CARES Act provides $12.4 billion of
    emergency supplemental appropriations for HUD programs and
    activities to further soften the economic blow of the pandemic
    across the many communities that HUD serves.
        In addition to implementing the CARES Act, HUD and FHFA
    have taken important actions to further protect borrowers and
    mortgage servicers during the pandemic. Both agencies have
    extended the eviction and foreclosure moratorium for qualifying
    homeowners through at least the end of June.
        The agencies have also taken steps to ensure borrowers are
    not facing large, looming debt payments. Director Calabria
    recently reiterated that borrowers in forbearance with a Fannie
    Mae- or Freddie Mac-backed mortgage will not owe a lump sum at
    the end of the forbearance. FHFA has further announced a new
    payment-deferred option which allows borrowers who are able to
    return to making their normal monthly mortgage payment the
    ability to repay their missed payments at the time the home is
    sold, refinanced, or at maturity.
        HUD has similarly implemented the National Emergency
    Partial Claim, which allows eligible FHA borrowers in
    forbearance to reinstate their loans by authorizing servicers
    to advance funds on their behalf. Like FHFA, repayment of any
    missed monthly payments is deferred until the back end of the
    loan.
        In recognizing the undue burden that the pandemic has
    placed on the mortgage servicing industry, HUD and FHFA have
    acted quickly to address the liquidity gap. HUD has expanded
    issuer assistance to include the Pass Through Assistance
    Program, or PTAP, which allows servicers to apply for
    assistance in meeting principal and interest payments, and FHFA
    has announced that no mortgage servicer will be responsible for
    advancing more than 4 months of missed principal and interest
    payments on a loan.
        While America is taking steps to return to work and relax
    stay-at-home orders, the recovery is only just beginning. I
    thank our witnesses for their swift and prudent actions to date
    and for their continued commitment and collaboration at this
    time.
        This Committee is also focused on working with HUD and FHFA
    to identify and tailor overly burdensome regulations in an
    effort to create conditions that will lead to a forceful
    economic recovery.
        Secretary Carson, I applaud you for spearheading the
    ongoing efforts to identify and eliminate regulatory barriers
    to affordable housing production in this country. This will
    play a big part in bringing about a stronger, quicker economic
    rebound.
        Finally, the pandemic has underscored the need for a
    stable, well-capitalized housing market in times of stress.
    FHFA has recently taken up a crucial step toward safety and
    soundness in proposing a thorough, thoughtful regulatory
    capital framework for Fannie Mae and Freddie Mac. As Americans
    face financial uncertainty, it is long past time to make the
    hard decisions and address this last unfinished business of the
    2008 financial crisis. Director Calabria, thank you for your
    considerable efforts here, and I look forward to our continued
    work together on this topic.
        Thank you both again for joining us here today. Senator
    Brown.

               OPENING STATEMENT OF SENATOR SHERROD BROWN

        Senator Brown. Thank you, Mr. Chairman. Thank you to our
    two witnesses, Dr. Calabria and Dr. Carson. Over the past 2
    weeks, protesters have taken to the streets demanding justice,
    justice for Mr. Floyd, Ms. Taylor, and Mr. Arbery, and so many
    other Black Americans who have been killed in acts of
    extraordinary violence, too often at the hands of police.
        Justice for millions of Americans who, for hundreds of
    years have lived under a system that perpetuates inequality and
    systemic racism. Protesters, young and old, Black and white, in
    urban and rural communities are all marching like generations
    before them, risking their lives, praying for and demanding
    justice and real change. They demand economic justice. Our
    society calls their work essential but pays too many essential
    workers so little that they cannot afford an apartment, much
    less dream to own a home.
        Millions of American workers don't have a bank account.
    Saving for retirement is out of reach. They do not benefit when
    the Dow Jones hits 27,000. Americans are demanding reforms to
    our criminal justice system and equitable healthcare system
    that protects Black and brown mothers and their babies, and
    support for Black and brown communities so another economic
    crisis does not leave them further behind Wall Street and the
    wealthy and the privileged.
        Both of you before us today are central to that fight for
    economic and racial justice. HUD's mission was shaped by our
    Nation's struggle for civil rights.
        Chairman Crapo. Senator Brown is speaking and is being
    broadcast but we cannot get the signal in this room, so we are
    going to have him continue his remarks. I apologize to our
    witnesses that you may not hear his introductory remarks before
    I go to your testimony.
        Senator Brown. OK. All right. Just 6 months--Dr. Carson
    knows the history--just 6 months after John Lewis and the foot
    soldiers of Selma were beaten crossing the Edmund Pettus
    Bridge, President Johnson signed a bill that created HUD to
    address the need for investment in communities that had been
    left behind.
        Shortly after HUD's creation, the Kerner Commission warned
    that our Nation was moving toward two societies, one Black, one
    white, separate and unequal. It took the assassination of Dr.
    King for Congress to act on one of the central recommendations
    of that report, creating a fair housing law. Fifty years ago,
    Congress entrusted HUD with implementing the Fair Housing Act.
    Our country charged your agency, Mr. Secretary, with rooting
    out discrimination and actively working to make it easier for
    everyone to find and afford a home.
        Fundamentally, we all pretty much want the same thing--a
    place that is safe in a community we care about, where we can
    get to work and our kids have good school with room for our
    family, whether that is three children or an aging parent, or a
    beloved pet. All of us should get to define what home looks
    like for all of us, for each of us. We should be able to find
    it and afford it without crippling stress every single month.
        Everyone should have the opportunity to build wealth for
    their family by owning a home. To make that reality the reality
    for everyone, we cannot rely on the housing market to sort
    itself out, not when centuries of discrimination are baked into
    it, when we have decades of laws that distort the market in
    favor of banks and against families. That is what your job is,
    to the two witnesses, to fix that.
        Secretary Carson, under your leadership, instead of
    addressing the deep inequities in our housing system, you are
    trying to systematically dismantle basic civil rights
    protections that previous generations marched for and endured
    beatings for and laid down their lives for. Your department
    refuses to do its job of promoting economic inclusion and
    working to undue the historic Government-driven patterns of
    housing discrimination like redlining and restrictive
    covenants. You want to abandon the legal standard affirmed by
    the Supreme Court, the legal standard used to bring housing
    discrimination lawsuits.
        That is not just my opinion. Mr. Chairman, look at letter
    after letter that civil rights leaders sent to your agency
    opposing your actions. And both heads of the agencies before us
    today are pushing plans that will make home ownership more
    expensive, harder to get, particularly for borrowers of color.
    This is what happens when the ideologues in this Administration
    push Wall Street's agenda instead of what regular people
    actually need.
        Before this pandemic hit, families of color were spending
    more of their income on housing than were white families, and
    they were disproportionally likely to experience homelessness.
    This was fueled, in part, by the Federal Government's failure
    to protect Black and brown and immigrant borrowers from
    predatory subprime lenders before the 2008 crisis, despite
    knowing that lenders were targeting them. Forty years of gains
    in Black ownership and wealth were eviscerated.
        Now Black families are experiencing this public health and
    economic crisis with just one-tenth the wealth of white
    families. They are more likely to work at jobs where their
    corporate employers did not pay them enough to begin with.
        We are dangerously close to repeating mistakes of a decade
    ago. Nearly half of Black and 40 percent of brown renters
    report that they are unlikely to be able to make their next
    payment. Think of that--almost half of them unlikely to be able
    to make their next payment.
        We are in the middle of a crisis, and you either do not
    know, Mr. Secretary and Mr. Calabria, you either do not know or
    you do not care. You are plowing ahead with undoing civil
    rights protections while in Ohio and across the country they
    are opening eviction courts. Twenty million Americans are
    unemployed.
        Some have been able to pay their rent or the mortgage but
    only because we passed emergency unemployment insurance earlier
    this year. It is set to expire this summer, at the end of July.
    President Trump and Leader McConnell are refusing to extend it.
    Of course we should not be surprised. It is part of Republican
    leaders' decades-long effort to undermine and weaken this
    social insurance, unemployment benefits, that all of us pay
    into. Leader McConnell and President Trump see no urgency.
    Those are McConnell's words, no urgency to help people.
        Democrats have plans to get more help directly to working
    families. Our emergency rental assistance bill provides $100
    billion to help with rent and utility bills so we can help
    renters avoid impossible choices between rent and groceries or
    prescriptions or draining their savings or going to a payday
    lender. It has already passed the House. It sits on the
    Majority Leader's desk, collecting dust. For millions of
    families the bills keep coming, the clock keeps ticking, the
    stress keeps mounting.
        Before this pandemic, President Trump and his wealthy
    cabinet members either did not realize or did not care that
    behind the rosy stock market data this economy was already
    broken for millions of workers, and for Black and brown workers
    it never worked for many of them to begin with. And now the
    Trump administration either does not realize or does not care
    that the bottom is falling out for these families.
        People in this country, in every one of our States, in
    Hawaii and in Montana and in Minnesota and Rhode Island and
    Idaho and Ohio, people are tired of the lack of action and the
    lack of accountability. Before the pandemic, the Trump
    administration's idea of housing reform was to, quote, ``level
    the playing field for Wall Street.'' That is kind of a
    definition of out of touch.
        Enough is enough. Today we want to hear that you
    understand, Mr. Secretary and Mr. Calabria, we want to hear
    that you understand both the magnitude of the current crisis
    and the inequities built into our housing system for
    generations. It is about time you are actually going to do
    something to fix it instead of making it worse.
        Thank you, Mr. Chairman.
        Chairman Crapo. Thank you, Senator Brown. I am going to
    wait until he adjusts his phone a little bit. I think we are
    getting there.
        We will now move to our witnesses, and Secretary Carson,
    why don't you begin first.

       STATEMENT OF BENJAMIN S. CARSON, SECRETARY, DEPARTMENT OF
                     HOUSING AND URBAN DEVELOPMENT

        Mr. Carson. All right. Thank you, Chairman Crapo and
    Ranking Member Brown--I guess I am glad I did not hear most of
    what you had to say--and Members of the Committee. Thank you
    for this opportunity to discuss the steps the U.S. Department
    of Housing and Urban Development is taking to maximize our
    Nation's response to the COVID-19 national emergency. These
    actions reflect both my work with the White House Coronavirus
    Task Force and the measures developed at HUD to protect the
    health and safety of the American public.
        I want to begin by recognizing the unprecedented health
    care and economic challenges facing Americans today. This
    disease is impacting families and communities across the
    Nation. As HUD Secretary, my highest priority has been to
    ensure Americans don't lose their homes and to safeguard those
    at greatest risk of the virus, including homeless and low-
    income communities.
        I also want to thank our Nation's medical professionals and
    first-line responders who have sacrificed so much to keep
    Americans safe and healthy. As a medical doctor, I am inspired
    daily by their unwavering commitment to their fellow citizens.
        On March 27, President Trump signed into law the CARES Act.
    In total, the CARES Act provided more than $12 billion in
    funding to HUD programs. Recognizing the unprecedented nature
    of the global pandemic, I directed my staff to immediately
    begin the process of getting these funds to communities most
    impacted by COVID-19.
        As of today, HUD has announced allocations for over $9
    billion in funding. This includes $3 billion in CDBG funds, $4
    billion in ESG funds, $685 million for the Public Housing
    Operating fund, $380 million for Tenant Based Rental
    Assistance, $800 million in Project Based Rental Assistance,
    $200 million in IHBG funds--that's Indian Housing Block Grants,
    $75 million for the Section 811 Mainstream Housing Choice
    Voucher program, and $65 million for HOPWA funds.
        In the coming weeks, HUD will continue to expedite getting
    the funding provided by the CARES Act into the hands of
    communities.
        Prior to the passage of the CARES Act, FHA acted quickly to
    help protect single-family homeowners who lost their jobs or
    were experiencing economic hardship as a result of COVID-19, by
    implementing a 60-day moratorium on foreclosures and evictions,
    which was subsequently extended through June 30. The CARES Act
    also provided a 120-day eviction moratorium for tenants in
    certain federally supported rental properties, including
    properties with FHA-insured single-family or multifamily
    mortgages.
        FHA further announced a tailored set of mortgage payment
    relief options for single-family homeowners with FHA-insured
    mortgages who are experiencing financial hardship because of
    the pandemic. This includes CARES Act forbearance, which allows
    borrowers to request up to 6 months of forbearance and extend
    for up to 6 months. Also included was an extension period for
    calling a loan due for those with a Home Equity Conversion
    Mortgage.
        FHA also implemented the COVID-19 National Emergency
    Standalone Partial Claim for borrowers on forbearance. This
    option will help eligible homeowners resume their mortgage
    payments and avoid a lump sum repayment of arrears by deferring
    repayment to the end of the mortgage.
        Ginnie Mae expanded its pass-through assistance program,
    PTAP, to help address potential issuer liquidity challenges
    caused by the borrower forbearance requirements implemented by
    FHA and other Federal mortgage insurance programs. PTAP
    provides last-resort financing to cover the difference between
    issuers' available funds and scheduled payment of principal and
    interest to mortgage-backed security holders. The timely
    payment of P&I to mortgage-backed holders, consistent with
    Ginnie Mae's statutory guaranty, is essential to the liquidity
    of the MBS market and the confidence of investors who finance
    housing through the Ginnie Mae program.
        In December 2018, President Trump signed Executive Order
    13853, establishing the White House Opportunity and
    Revitalization Council. I have had the honor of chairing this
    Council since its establishment.
        In response to the ongoing and unprecedented global
    pandemic, President Trump has directed me and the Council to
    utilize its talented structure and build on its original intent
    with a renewed focus to expand efforts to protect and promote
    our most vulnerable communities. The Council will work to
    ensure that minority and underserved communities are kept safe
    from this invisible enemy, now and into the future. In the
    coming weeks, the Council will identify different policy
    approaches needed to help advance opportunity for these
    communities.
        Thanks to the leadership of President Trump, I am proud of
    the work this entire Administration, and especially the 7,500
    employees of HUD, are doing each and every day to fight this
    invisible enemy and meet the needs of the American people. I am
    grateful to this Committee for its bipartisan commitment to
    meeting this challenge. Thank you.
        Chairman Crapo. Thank you, Secretary Carson. Director
    Calabria.

       STATEMENT OF MARK A. CALABRIA, DIRECTOR, FEDERAL HOUSING
                             FINANCE AGENCY

        Mr. Calabria. Chairman Crapo, Ranking Member Brown, and
    distinguished Members of this Committee----
        Chairman Crapo. Could you turn your mic on?
        Mr. Calabria. Chairman Crapo, Ranking Member Brown, and
    distinguished Members of the Committee, thank you for the
    invitation to appear at today's hearing. Let me also thank you,
    Chairman Crapo, for those very kind words at the beginning.
        Let me also make it very clear, there is not a single civil
    rights protection that FHFA has rolled back during my time, not
    one. Any assertions to the contrary are simply false.
        We have acted swiftly at FHFA, we have acted prudently, and
    we have prioritized borrowers and renters in the housing market
    from day one. We have worked in close partnership with FHA and
    Ginnie Mae. I want to recognize and thank Secretary Carson, HUD
    Deputy Secretary Montgomery, and acting Ginnie Mae President
    Seth Appleton for their partnership and leadership.
        Let me also thank the employees of FHFA. They are our
    greatest asset. Their well being has been my top priority. Our
    teleworking flexibilities have enabled our employees to be safe
    and manage at-home obligations while continuing to fulfill the
    agency's vital mission.
        We have also continued to foster an environment where
    everyone at FHFA feels safe, respected, and valued for their
    differences. The unrest across our Nation in recent weeks
    reaffirms why fairness, diversity, and inclusion are core
    values to me personally and our agency. FHFA has one of the
    most diverse workforces among Federal regulatory agencies. Our
    diversity is, and will remain, a key source of FHFA's success.
        During this crisis, Americans should not have worry about
    losing their homes. FHFA has worked closely with our regulated
    entities to support borrowers and renters while ensuring the
    proper functioning of the mortgage market, both during and
    after this crisis. Our actions have been and continue to be
    data driven.
        The actions I will discuss today apply to mortgages backed
    by Fannie Mae and Freddie Mac. With that said, FHFA's policies
    have helped set standards for the entire market. For homeowners
    facing foreclosure before COVID-19, we suspended all
    foreclosures and evictions through at least June 30th. We will
    extend that date if necessary. For borrowers financially
    impacted by COVID-19, we allowed homeowners to take a time-out
    from mortgage payments through forbearance.
        We then announced that borrowers in forbearance who return
    to making monthly payments can repay what they missed when they
    sell their home or refinance their loan. We have emphasized
    that those who can make their mortgage payments should continue
    doing so.
        Of borrowers with enterprise-backed mortgages in
    forbearance, about one-third continue to make payments. Last
    month, FHFA directed the enterprises to treat such borrowers as
    current if they want to buy a new home or refinance.
        To support renters, FHFA and the enterprises developed a
    multi-forbearance program for the first time in history.
    Importantly, we mandated that tenants cannot be evicted for the
    nonpayment of rent during forbearance. At FHFA's direction, the
    enterprises created online look-up tools that allow renters and
    borrowers to determine if they are eligible for eviction
    protection or forbearance.
        We have also helped clarify consumers' options. We updated
    the scripts that servicers use when talking to borrowers about
    forbearance. We have emphasized to servicers in the public that
    no lump sum is required at the end of forbearance. We partnered
    with the CFPB to launch the Borrower Protection Program, and
    FHFA helped develop a website that consolidates Federal
    information about mortgage relief options, renter protections,
    and how to avoid scams.
        We have also taken action to support the proper function of
    the mortgage market. To ensure the safety of market
    participants, FHFA authorized several loan-closing, employment
    verification, and appraisal flexibilities at least through June
    30th. We instituted a 4-month limit on servicers' obligations
    to advance principal and interest payments on loans in
    forbearance. This provides stability and clarity to the
    mortgage market.
        To support lenders' liquidity, FHFA enabled the enterprises
    to purchase certain eligible single-family mortgages in
    forbearance. Prior to this, the enterprises had never purchased
    mortgages in forbearance. Our policy provides a new option to
    lenders and to the enterprises.
        I am proud of what FHFA has done to help homeowners in the
    housing market deal with this crisis. At this point, as
    referenced in my written testimony, I am encouraged by what the
    data tell us about the state of the market, the capacity of
    servicers, and forbearance rates.
        But this does not mean all is well. The crisis has provided
    ample evidence of the critical vulnerabilities in our mortgage
    system that put taxpayers, borrowers, and our housing market at
    risk. Most notably, Fannie and Freddie have lacked the capital
    to withstand a serious downturn of the housing market. This
    undermines their countercyclical role and jeopardizes their
    core important mission.
        To provide the enterprises a stronger foundation on which
    to weather periods of financial distress such as COVID-19, on
    May 20th, FHFA released a re-proposed capital rule. This rule
    would help each enterprise remain safe and sound to fulfill its
    statutory mission across the economic cycle. It is essential to
    build a strong, resilient housing finance system that supports
    sustainable and affordable home ownership.
        However, I should emphasize only Congress can enact the
    reforms necessary to fix the structural flaws in our housing
    finance system. To that end, next week I will submit FHFA's
    annual report to Congress that includes several legislative
    recommendations. Reform is long overdue. Strengthening FHFA's
    regulatory and supervisory authorities simply to be on par with
    what other safety and soundness regulators have will ensure the
    enterprises will be well regulated and capitalized outside of
    conservatorship.
        I look forward to the opportunity to hear your questions.
    Thank you for the opportunity to be here this morning.
        Chairman Crapo. Thank you, Director Calabria, and I look
    forward to your recommendations for resolution of our housing
    system.
        My first question will be to both of you. As you both know,
    Congress acted boldly and aggressively in the CARES Act to help
    renters and homeowners make it through this economic crisis,
    including through extending forbearance, prohibiting evictions,
    and prohibiting foreclosures across a broad portion of the
    market.
        Now, 10 weeks later, from your perspective, could you
    briefly tell me, how would you characterize the current state
    of the housing market and what are some of the policy tradeoffs
    that we need to consider now as we move forward toward the next
    COVID-19 response?
        Secretary Carson, do you want to go first?
        Mr. Carson. Yes. Well, clearly this is a very serious time
    period that we are in, which was the reason that we acted so
    quickly in conjunction with this Committee and other portions
    of the Government, because if a person is worried about their
    health, the health of their family, the last thing they need to
    be worried about is whether they are going to lose their home,
    and, therefore, quickly enacting the forbearance for
    homeowners, you mentioned the partial claim, which is interest-
    free, by the way. Payments are tacked onto the end of the
    mortgage.
        There are a host of other forbearance measures that we are
    taking. All of these have had a very important positive impact,
    so that things have not deteriorated to the level that most
    people thought that they would. We are still not resting on any
    laurels. We are still going to be extremely vigilant in looking
    at the market. You know, everybody, I think, was taken aback by
    last month's report. We expected a 22 percent decline in the
    market and instead had a 0.6 percent increase.
        You know, there are a lot of interesting things going on.
    It speaks to the impact of the interventions that have been
    done but also to the resilience of American people and their
    willingness to do what it takes. You know, most renters, over
    90 percent have continued to be able to pay their rent.
        So it is really quite impressive what the American people
    are able to do, and we have to recognize that the underlying
    economic infrastructure of this Nation is actually very strong.
    You know, we were just on a rocket ship, and then this
    coronavirus came along, and we intentionally had to stop the
    economy. But remember, that underlying factors that created
    that strong economy are still there. And what we have attempted
    to do is bridge the gap so that we don't have to start all over
    again, and that we can just resume the upward trend for
    everyone.
        Chairman Crapo. Director Calabria.
        Mr. Calabria. Let me start with the forbearance numbers.
    The most recent numbers for Fannie and Freddie loans are about
    6.6 percent. We have seen, over the last few weeks, those
    numbers start to stabilize, and, in fact, within the GSE
    portfolio you see almost as many borrowers canceling their
    forbearance programs as you see rolling on.
        I was certainly concerned that both going into May and
    going into June we would see spikes in the forbearance rates in
    Fannie and Freddie's books, and we did not. So I think we have
    seen a stabilization.
        As was mentioned in my remarks, about a third of those
    borrowers continue to make their payments, which I think is a
    real positive. Clearly, the biggest problems facing the economy
    going forward, which ultimately impact the housing market, is
    employment. So writ large, I think the single most important
    thing we can do is figure out how to put people back to work. I
    think that is the primary focus.
        Let me, last, say that I certainly, over the last few
    months, have been concerned about what the direction of the
    housing market would be coming out of COVID-19. I have to say I
    have been very pleasantly surprised. Purchase mortgage
    applications, for instance, in recent weeks, have been even
    higher than they were a year ago. We have seen home sales
    really pop back up. And I would both
    emphasize that the home sales activity and the mortgage
    purchase activity I think have been far stronger than anyone
    projected.
        Seemingly, it is the case that apparently a lot of people
    in quarantine spent their time looking at homes online, because
    again, a number of them decided to buy homes when we came out
    of this.
        So I would emphasize, I think the housing market itself is
    in a relatively strong point, and where we really need to be
    focused on primarily is the labor market.
        Chairman Crapo. All right. Thank you to both of you. My
    time has expired. Senator Brown.
        Senator Brown. Thank you, Mr. Chairman. Dr. Carson, do you
    know that people working in jobs right through the pandemic--
    retail workers, millions of retail workers, custodians, food
    service people, security people, home health aides--do you know
    that people working in these jobs right through the pandemic
    don't get paid enough to afford to rent a modest one-room
    apartment?
        Mr. Carson. I do, and that is one of the reasons that we
    are concentrating on the people who were most severely affected
    by this pandemic, and what are the reasons that they were most
    severely affected. One of those reasons----
        Senator Brown. Mr. Chairman--I am going to cut you off
    there, Dr. Carson. You act like you talk about the economy was
    on a rocket, going up like a rocket when the pandemic hit. The
    fact is these are workers in the economy that have been working
    through the pandemic, the workers I'm talking about, they
    don't--because corporations are not paying them enough.
        We had an affordable housing crisis in this country long
    before the current public health crisis, upon which you blame
    the entire economic problems in this country. Your agencies are
    making things worse, whether it is through budget cuts to
    affordable housing or trying to make mortgages more expensive
    or harder to get or dismantling fair housing protections.
        So I want to turn to that. Secretary Carson, I have been
    writing to you, and many Members of this Committee have joined
    me in this, from Minnesota and Hawaii and Nevada and Montana
    and Rhode Island. All of us have been writing to you about
    HUD's decision to not enforce our Nation's fair housing law.
        Let me give you some examples. NAACP's legal defense fund
    said housing and HUD's FHA proposal is a, quote, ``blatant and
    egregious attempt to undermine the premise of the Fair Housing
    Act, is an absolute regression in fair housing practices.''
    Urban League President, Marc Moriel, said that HUD's proposed
    disparate impact rule is directly at odds with the Fair Housing
    Act in its basic purpose, and if enacted would destroy
    disparate impact liability as we know it.
        A coalition of 45 civil rights groups, including Unidos and
    the Leadership Conference of Civil and Human Rights, told HUD
    the same rule was, quote, ``in direct contradiction to HUD's
    mission, decades of legal precedent, and the Supreme Court's
    recent decision in inclusive communities,'' unquote. Now these
    45 groups--these 45 groups, Mr. Secretary, represent tens and
    tens and tens of millions of Americans. This is our country.
    You are ignoring them and if these comments come even partially
    true, it will be devastating for equality in this country.
        Why are you still moving forward with these proposed rules,
    against the wishes of tens and tens of millions of Americans?
        Mr. Carson. You know, I abhor anything that even smacks of
    unfairness for people, but we also want things that actually
    work, not things that have been there for decades and have not
    resulted in any improvement. Therefore, we are doing things a
    little bit differently. You know, when we are looking at AFFH,
    we are looking at the real reason that there is segregation.
    The real reason that there is segregation is not because there
    is a bunch of George Wallaces standing in the doorways. It is
    because people can only afford to live in certain places. And,
    therefore, we are moving toward a model where we encourage the
    development of affordable and decent housing, not just in one
    area but throughout lots of different areas.
        Senator Brown. Mr. Secretary, there is no real evidence
    that that is what you are doing. There is certainly no evidence
    that this Administration wants to see higher wages so that
    workers actually can afford decent places to live--opposition
    to the minimum wage, taking away the overtime rules, 100,000
    people in my State lost thousands of dollars in overtime
    because this Administration, of which you are so happily a
    part, always comes down on the side of corporate interest,
    against workers.
        Let me go somewhere else on this, my last question, Mr.
    Chairman. Last week, the city of Columbus opened up its
    convention center to begin processing evictions. Courts are
    doing that all over the country. One advocate told me about a
    client who was trying to avoid eviction because her son, who is
    deployed in the Navy, is returning home and she does not want
    him to find her a shelter.
        We are in a national crisis. Reflect on that for a moment.
    Twenty million people have lost their jobs. We are using arenas
    as eviction courts in cities around the country. Dr. Carson,
    you are the top housing authority in this country, so tell us--
    you are the person--tell us how many people does HUD expect
    will lose their homes, how many does HUD expect will become
    homeless in the weeks and months ahead? How many?
        Mr. Carson. We will be working very hard to make sure that
    no one who we----
        Senator Brown. No, Mr. Secretary, how many do you expect--
    already some have become homeless. These eviction courts, many
    of them continue to operate. We know when the deadline comes
    off, when it expires, we know more people will be homeless. The
    point is, we have, and everybody on this Committee, every
    Democrat on this Committee, supports $100 billion in the
    emergency eviction fund and $75 billion, Jack Reed's bill, the
    unemployment emergency foreclosure fund, to keep people from
    losing their homes. Twenty million Americans unemployed. Half
    of Black renters surveyed told the U.S. Census they have little
    or no confidence they can pay their rent next month.
        Do you want to answer the simple question, how many people
    are going to be homeless? How many people are going to lose
    their homes? And what are you, as an Administration, going to
    do about it when President Trump and Senator McConnell simply
    say ``there is no sense of urgency. We do not have to do
    another package. We do not have to fix this. We will just let
    happen what is going to happen''?
        Thank you, Mr. Chairman.
        Chairman Crapo. Senator Scott.
        Senator Scott. Thank you, Mr. Chairman, and thank you to
    both of the panelists for being here this morning. I want to
    continue on the eviction conversation. I think it is really an
    important conversation for us to engage in. And perhaps Senator
    Brown's passion is well placed. There is a lot of fear around
    evictions. There is a lot of fear around people being able to
    pay their rent.
        The CARES Act contains extensive measures on eviction
    moratoriums for households renting in apartment buildings that
    are financed by federally backed mortgages. We did this to make
    sure that families would not end up on the streets during a
    pandemic and their ensuing job losses. But as we pivot to a
    recovery and better job numbers, my question is this. As you
    think through the eviction conversation, can the moratorium
    actually make it harder for renters? Are they not accruing a
    bigger and bigger balance that they have to pay 1 day, and will
    that not actually lead to more evictions and not less
    evictions?
        So I think there is a way, and I do appreciate his passion.
    I say that sincerely. But I think the other side of the coin is
    that we may be setting people up for long-term failure if, in
    fact, we don't start looking at the picture from the end of the
    crisis back as opposed to at the beginning of the crisis
    forward.
        Either panelist.
        Mr. Carson. Senator, that is a very astute observation,
    and, you know, the fact of the matter is when we extend the
    forbearance and people still owe money, that is not helpful.
    What is helpful is trying to create an environment such as we
    were enjoying a few months ago, where people have employment,
    people have opportunities to climb the ladder.
        We are very interested in creating affordable housing in
    lots of different places, and those are the kinds of things
    that really empower people. And we are very interested in
    programs where people can be able to save some money, so that
    they can actually make a down payment on a home, because that
    is the principle mechanism of wealth accumulation in this
    country. We are not interested in continuing a bunch of old
    programs that kept people impoverished for generations.
        Senator Scott. Thank you. Director, anything to add to
    that?
        Mr. Calabria. Thank you, Senator. I think you did touch
    upon a very important point, which is, you know, fundamentally,
    what we want to be able to do is grow the jobs and income so
    that people can pay their rent rather than simply try to avoid
    evictions. Although I certainly will note that we moved very
    quickly before the CARES Act to put a moratorium on evictions
    for Fannie and Freddie loans. We will certainly extend that if
    necessary. It currently goes to June 30th. But the fundamental
    point of how are we growing jobs income, how are we dealing
    with lack of housing supply, I think all of these things are
    critical to deal with.
        Senator Scott. Thank you very much. One final question.
    This is on forbearance measures. Director and Secretary, as far
    as I can tell you two have been very receptive and open, and
    frankly, we have had many conversations. We do not always agree
    on the outcome but at least you are both available for that
    conversation, so I thank you both for that.
        The GSEs and the FHA have been working with lenders and
    servicers to implement the extensive forbearance measures we
    put in through the CARES Act. For the Director, you and I have
    spoken on this before, but as of today can you give me an
    update or an assessment of the forbearance assistance being
    provided to borrowers in loans owned by the GSEs, as well for
    Secretary Carson, can you give me an update or assessment on
    forbearance through the FHA?
        Mr. Calabria. The current GSE numbers, as of this morning,
    are 6.6 percent of Fannie and Freddie loans in forbearance. I
    will note about a third of those are continuing to make their
    payment, and we have seen that flatline over the last couple of
    weeks. So it certainly seems to have stabilized.
        Senator Scott. Good.
        Mr. Carson. And, you know, last week was actually the first
    time started going back in the other direction. We are at 12.4
    percent right now, which is a much smaller number than had been
    anticipated and predicted by many. We will continue to work
    extremely hard to push that down further.
        Senator Scott. I only have about 30 seconds left. Would you
    agree that with the surprising job numbers in May that perhaps
    the worst of it is over, and that as we start climbing out,
    getting folks re-engaged in their monthly responsibilities, is
    a good thing long-term for their savings and retirement funds?
    Because ultimately, the one thing I keep thinking about are
    people who have limited incomes and limited savings, the
    deferral has been helpful, and that is good news. But I am
    afraid of creating an issue where that one, two, or 3 months
    divided over several months is still a bit too much for people
    to absorb. So the faster we get back to normal, the better off
    we will be, especially as the economy starts to percolate a
    little bit.
        Mr. Carson. You are so right, Senator, and that is why it
    is so very important that we utilize the information that we
    have learned about COVID-19 so that we can live with it and not
    be dominated by it.
        Senator Scott. Thank you, sir. Thank you both.
        Chairman Crapo. Senator Reed.
        Senator Reed. Thank you very much, Mr. Chairman. Director
    Calabria, let me direct some questions to you. I do understand
    that through your forbearance programs that people have been
    temporarily forgiven from their mortgage requirements, but at
    the end of that forbearance period, which will terminate,
    thousands and thousands of people could be foreclosed on their
    homes. Similarly, renters could be evicted. Is that the real
    situation we are looking at?
        Mr. Calabria. So Senator, we certainly want to minimize
    that, and I want to emphasize that within Fannie and Freddie
    loans nobody will be required to make a lump-sum payment. So
    our default option is to add that to the end of the loan or
    whenever the house is paid off. So we are really trying to make
    sure that there is no payment shock at all, there is no change
    in the monthly payment for the borrower or the renter, and we
    are trying to be able to make sure that people can get current
    again as much as we can.
        So certainly we are really focused on trying to minimize
    how many of these loans actually eventually go into real
    delinquency or into foreclosure, so we are certainly very much
    focused on that.
        Senator Reed. Well, but the reality is that legally that
    landlord or that mortgage holder can walk in the next day, if
    the next payment isn't made, even if you are tacking on the
    forbearance at the very end of the loan, and say, ``You have
    not paid, and you are out.'' And that is an incentive that
    many--unfortunately, I do not think can avoid.
        You have situations, also, where there are individual
    mortgages that are not federally related, so they already could
    have been foreclosed. But the situation, I think, is such that
    we are looking at--and you put your finger on it, in one
    sense--we are looking at a real employment problem and a funds
    problem, that even if your forbearance is tacked on at the end,
    people still might not be able to pay.
        And that would suggest to me that we need to do several
    things. First, we have to extend unemployment compensation,
    because many of the people who are sort of--as you have alluded
    to and so has the Secretary--are still paying, are doing so
    only because they are getting unemployment compensation,
    enhanced unemployment compensation.
        But two, we have to go right to the source of the problem,
    provide resources to individual mortgagors and renters so that
    they can basically pay their rent or their mortgage, and in
    addition, it takes the pressure off the landlords and the
    banks, so that they actually have funds.
        Can you conceive of a program--would not that make more
    sense than just simply stopping one day and crossing our
    fingers and hoping everything is OK?
        Mr. Calabria. Well, Senator, I certainly agree that top-
    line--the point about this being fundamentally a jobs income
    issue and do think that is where we should focus. I do want to
    say, in terms of Fannie and Freddie loans in forbearance,
    generally borrowers do not walk away from their home if there
    is positive equity, and we are seeing less than 1 percent of
    these borrowers across the board in a negative equity position.
        So as long as we have a strong housing market, which again,
    is an open question--I certainly do not have a crystal ball in
    that regard--but in the strength of the current housing market,
    I do not think there will be a lot of borrowers walking away.
    But that does not change the fundamental point you raise, which
    is absolutely correct that this is fundamentally an income jobs
    issue.
        Senator Reed. And we have to deal with getting the income
    to the people, through unemployment compensation together with
    some subsidy or some help for their rent or their mortgage.
    Otherwise--and again, I do not see anyone wanting to walk away
    from their house----
        Mr. Calabria. I agree.
        Senator Reed.----what I do see is people wanting to go in
    there and foreclose on a house and sell it to someone else at a
    profit. That is the way the system seems to operate, to me, and
    that would be quite--that would be an option that they will
    have once we stop forbearing and we stop providing unemployment
    compensation benefits.
        So again, I think this is something that we have to take
    very seriously. Rhode Island Housing has estimated that in
    Rhode Island 30,000 individual households will be at risk of
    additional foreclosure when the unemployment benefits
    terminate. They will be out on the street very quickly. And we
    know, also--and one of the things about this crisis is most of
    those households will be minority households. They do not have
    the resources, they do not have the financial support, they do
    not have the money stashed away to make it a couple more
    months. They will be the first ones out.
        And as far as affordable housing goes, we have tried, I
    know on the Appropriations Committee, to put money in for
    affordable housing as best we can, but it is a fraction of what
    we need. And this Administration has not been talking about
    affordable housing. They should talk about it more, and they
    should put more money in their budgets. We plus-up affordable
    housing approach.
        So we have a crisis ahead of us, and simply sitting back
    and saying we will not demand immediate repayment of the
    forbearance and we are so pleased at some of the other things
    we have seen, misses the point dramatically. Thank you.
        Chairman Crapo. Senator Cotton.
        Senator Cotton. Thank you, Mr. Chairman. Thank you for your
    testimonies today.
        Mr. Calabria, I will address this at you. I have long had
    some concern about mortgaging servicing assets, mainly from the
    vantage point of homeowners who could get confused, or worse,
    they could run into problems if they try to resolve payment
    issues on their mortgage, when those homeowners are working
    with a company that is often not in their community, or the
    original bank through which they got their loan. However,
    markets have had to evolve since 2008, because of regulations
    and other factors, and that has pushed a lot of that mortgage
    servicing activity on banks and into independent servicers.
        So that is the world that we live in now, but the concern
    for homeowners' financial protection is only more acute now as
    the CARES Act, well-intentioned though it was, could end up
    causing dislocation in this market because of the forbearance
    mandates and the costs mortgage servicers are having to
    shelter.
        I know that you have said that the mortgage servicing
    industry as a whole is well capitalized, enough to withstand a
    large degree of forbearance and absorbing the impacts of the
    coronavirus lockdowns, but I just wondered if you could talk a
    little bit more about the upper limit to that capacity,
    forbearance take-up rate, for instance, that, in your opinion,
    might bring the mortgage service industry up to its limits.
        Mr. Calabria. Thank you, Senator. Let me start with
    emphasizing that for the 346 nonbank servicers that Fannie and
    Freddie do business with, we get quarterly financials for each
    and every one of them. We also, for the larger of the nonbank
    servicers, we get weekly or even daily contact for some of
    them.
        So first I want to assure you that our analysis on the
    servicer side is very data driven. We are looking at the
    financials for these entities. We are monitoring them. Every
    morning I get a heightened watch list of servicers, and I am
    happy to say that that list is shorter, it is smaller today
    than it was 2 months ago, and even 2 weeks ago.
        And I would go as far to say that servicers are in a better
    financial position today than they were in March. When we have
    seen servicers who we thought were a little close to the line,
    if you will, we have worked with Fannie and Freddie to
    encourage those servicers to go out and raise liquidity. Many
    of them have, and many of them have raised substantial
    liquidity.
        And so our estimates are that you probably could have,
    within the Fannie and Freddie book--and I really want to
    emphasize that that is our view on this, and that, of course,
    issues at Ginnie Mae or issues at private label may be
    different and are different--but for certainly in the Fannie
    and Freddie book you would really have to see forbearance rates
    get over 30 percent before there would really be stress among
    the industry, and that this would be systemic. And that is, of
    course, why we put the 4-month limitation in place, so that no
    servicer would be on the hook for 12 months.
        Senator Cotton. OK. Thank you for that answer. Mr.
    Chairman, I have got to get off to chair a hearing of my own,
    so I yield back my time.
        Chairman Crapo. Thank you. Senator Menendez.
        Senator Menendez. Secretary Carson, it has been over 2
    months now since the CARES Act became law. The Act provided $5
    billion in desperately needed and flexible CDBG funding
    communities to address both the health and economic aspects of
    COVID response.
        But today, HUD has only released about $3 of the funds
    Congress appropriated, and furthermore, there was a major lack
    of clarity from HUD on the rules around the first disbursement,
    which caused confusion and delays as the recipients desperately
    sought answers to questions like whether they could use the
    funds for PPE, COVID testing, or supporting small businesses.
        So my question to you, Mr. Secretary, when does HUD plan to
    release the remaining CDBG funds provided under the CARES Act?
        Mr. Carson. Well, thank you very much for your question,
    Senator. As you probably know, the time in which we have
    released the first set of funds for CDBG was a record amount of
    time. The reason that was done without a Federal Register
    notice is because a Federal Register notice is not required in
    those situations for the money to be disbursed and for it to
    actually be used. And I hope we have made that clear to
    everybody.
        Having said that, Federal Register notice for that will be
    coming out in the very, very near future.
        As far as the----
        Senator Menendez. Do you have some timeframe here that--I
    mean, the reason Congress provided these monies is obviously to
    deal with the challenges that these municipalities have. They
    have greater demands, they have less revenues that are taking
    place as a result of all the social distancing measures that
    took place, so all their different forms of revenues are
    lessened. So this CDBG money, for some essential programs, is
    critical.
        Mr. Carson. Well, of the $12.4 billion, $9.1 billion of it
    has already been allocated, and much of that has been utilized
    already, using the grant formulas that are already in
    existence.
        The last portion of that will be allocated by October 1st.
        Senator Menendez. Are you going to--by October 1st?
        Mr. Carson. Yes.
        Senator Menendez. That is way too late. That is not what
    Congress intended.
        Mr. Carson. Well, that----
        Senator Menendez. The demand is now, and there is no way
    that we should be waiting until October for that to happen.
        Mr. Carson. All the statutory requirements and timing will
    be met.
        Senator Menendez. Let me switch to another topic. On
    December 18, 2018, I and a series of other Senators sent you a
    letter raising concerns about HUD implementing an unofficial
    policy denying FHA-insured loans to DACA recipients, and we
    asked HUD to clarify that it was, in fact, a new policy. Your
    agency responded, saying, quote, ``It has not implemented any
    policy changes during the current Administration, either
    informal or formal, with respect to FHA eligibility
    requirements for DACA recipients,'' close quote.
        Then on February 12, 2019, FHA Administrator Montgomery
    testified before the House Appropriations Committee, saying the
    policy has been, quote, ``unchanged for many years.'' On
    February 22, 2019, HUD officials met with my senior staff and
    other Senate staff to brief them on the FHA policy related to
    DACA recipients. Those officials affirmed that there have been
    no policy changes.
        Mr. Secretary, you even testified before the House
    Committee on Appropriations in April of 2019, that you were
    unaware of any changes in policy related to DACA recipients
    receiving FHA loans, and said, quote, ``I am sure we have
    plenty of DACA recipients who have FHA mortgages.''
        However, FOIA documents released on Friday revealed that
    HUD officials were actively discussing, and had implemented, a
    policy prohibiting the issuance of FHA loans to DACA recipients
    as early as March of 2018, if not sooner.
        So, Mr. Secretary, why did you and other HUD officials
    conceal and misrepresent this policy change to Members of
    Congress?
        Mr. Carson. Senator, I have concealed nothing at all. Do
    people have conversations? Yes they do, and I am sure they will
    continue to have those conversations. Am I privy to all their
    conversations? No. Do their conversations change the policies?
    Absolutely not.
        Senator Menendez. Well, it evidently has changed the
    policy, because I have heard from so many lawfully present DACA
    recipients, social security numbers, everything that we would
    expect from any law-abiding citizen, who have been denied,
    mortgage companies who have said that FHA has changed the
    rules. And so all of your Department's testimony to date is
    totally out of the realm of what it, in fact, has been recorded
    as saying. That is what the FOIA documents show. So this
    Department has changed the rules on DACA recipients.
        Mr. Carson. I think the whole thing started as the result
    of a question that was asked about it, and it then came to
    light that maybe some rules were being violated and people
    decided that they better pay closer attention to the rules.
        Senator Menendez. Well, that is simply not what has
    happened. We will follow up, Mr. Chairman.
        Mr. Carson. OK.
        Chairman Crapo. Thank you. Senator McSally.
        Senator McSally. Thank you, Mr. Chairman, Secretary Carson,
    Director Calabria. Good to see you again.
        Director Calabria, FHFA currently guarantees $5.7 trillion
    in mortgages, which I know you are aware of but suffice it to
    say that plays a critical role in getting us through this
    pandemic. And in your testimony you said that 6.4 percent of
    Fannie and Freddie mortgages have entered forbearance. Those
    are many of my constituents in that 6.4 percent, and we have
    heard from several of them who are getting conflicting
    information and a lot of misunderstanding or confusion over the
    process of forbearance, and oftentimes just different,
    depending on who they are dealing with.
        And so while you have this public forum, and the
    opportunity to speak to constituents like mine who are looking
    for this forbearance, can you explain in layman's terms how the
    forbearance was designed to work, what the process should look
    like for the borrowers, what should the lenders and servicers
    be doing to ensure they are following the law, and what
    consequences are there for lenders or servicers that fail to
    process forbearance requests?
        Mr. Calabria. Thank you, Senator. Let me first emphasize
    that in response to the varying answers that servicers were
    giving, we drafted a script Fannie and Freddie have sent to all
    of their servicers. This was done some time ago. So all
    borrowers, regardless of who their lender is, if it is a Fannie
    and Freddie loan they should essentially get the same script.
    They should get the same answers. They should get the same
    options. And Fannie and Freddie do follow up with the servicers
    to make sure that is the case.
        For borrowers listening, let me first emphasize that there
    is no requirement at all for the missed payments to be made up.
    So if you have missed 2, 3 months, if it is a Fannie and
    Freddie loan, and I believe this is also the case with FHA, no
    one will be asking you to pay that back all at once. Of course,
    if you can that is great too.
        Let me also emphasize if you have been one of those
    borrowers in forbearance who have made your payments, you are
    immediately able to refinance if you choose.
        We will have a waterfall of different options, but if you,
    the borrower who have missed payments, do not contact the
    lender when you resume your payments, we will automatically
    take those payments and put them on the end of the loan,
    interest free. So let's say, for instance, you have missed
    $3,000 in payments and you have got a $250,000 mortgage. It
    will now become a $253,000 mortgage. Of course, it is not
    amortized. And that is simply paid back when you sell the home
    or when you refinance. And we think this is fair to borrowers.
    We think it is fair to lenders. It keeps the exact same
    payments, so when you resume and you can make the payment you
    used to be able to make, again, that will be pushed.
        If you cannot--so let's say you're back to work but you are
    not making what you are used to, and you cannot afford the
    previous payment, then we will underwrite you to a modification
    option where we can come up with a payment that is affordable.
    But that will have to be something where you have to reach out
    to your servicer and work with them for that option.
        So again, I want to emphasize if you were in forbearance,
    you started resuming your payments, we are simply going to tack
    it on the end automatically, and that will be reflected in your
    monthly statement, but your monthly payment will not change.
        Senator McSally. OK, great. And then on May 13th, FHFA
    announced the payment deferment plan. Again, that is different
    than a forbearance request. So as my constituents are looking
    at their options, can you explain, in plain English, the
    difference between the payment deferment plan and the
    forbearance?
        Mr. Calabria. So the forbearance is at the beginning of
    this where the payments are not forgiven. They are just pressed
    on pause. So, you know, instead of making your monthly payment
    you call up to your servicer, and you have to contact your
    servicer--I think this part is so crucial--you have to call or
    at least sign up, and a number of lenders do allow you to do
    this online. So you have to enroll in the forbearance plan.
    Again, it is not forgiven. It is just going to be tacked on to
    the end of the mortgage. And at the time when you start to
    resume, then whatever you have missed will be put back on the
    mortgage.
        So I do think it is critical to keep in mind it is not
    forgiven. It is a pause. You still have to pay it. And, in
    fact, you know, for many households if you can pay it you are
    probably better of continuing to pay it. But again, it is a
    time-out, basically, and that is the way to think about it.
        Senator McSally. OK. But that is different than the payment
    deferral plan that your agency came up with, just to clarify,
    right? Or----
        Mr. Calabria. It is in that the forbearance is what happens
    on the front end, while you are missing the payment or not
    making the payment, and the payment deferral was what happens
    when you are out of forbearance.
        Senator McSally. OK. Got it. Thank you. I also want to
    share, in my remaining time, my concern about renters. There is
    a single mom on my street who I talked to this weekend who is
    now coming up on 4 months of rent. And perhaps her homeowner
    actually has been given some relief--I do not know the
    circumstances--but as we are allowing grace to happen for the
    owners, I don't know if you could share--I don't know, there is
    not much time, but Secretary Carson, what else can be done for
    the renters to ensure that they are not put in a situation of
    potential eviction once the grace periods might end?
        Mr. Carson. Look, it is very important for the renters to
    make sure that they are in contact with the PHAs and with the
    owners, to work something out. They also can have a
    reassessment of their income made so that their rent obligation
    can be lowered. But it does require proactivity on behalf of
    the renter.
        Senator McSally. OK. Great. Thanks. I am out of time. I
    appreciate it.
        Mr. Carson. Thank you, Senator.
        Chairman Crapo. Senator Tester.
        Senator Tester. Yeah. Thank you, Mr. Chairman. Thank you,
    Ranking Member Brown, and I want to thank both Dr. Carson and
    Mr. Calabria for being here today.
        Kind of going off of what Senator Menendez said on the CDBG
    grants, Dr. Carson, and the fact that they are not out and we
    are two and a half months after the CARES Act has been passed,
    the same thing could be said, even to a greater extent, on the
    emergency solution grant. Two and a half months after Congress
    has passed the CARES Act, just 2.5 percent of the homeless
    assistance money has been available, you know, basically two
    and a half months after we approved the CARES Act.
        Can you tell me why this is the case?
        Mr. Carson. Well, first of all, the rest of that ESG money
    is being announced today, so all $4 billion of it will be
    allocated. An announcement was made as of today.
        Senator Tester. Why did it take so long?
        Mr. Carson. This is record time, Senator.
        Senator Tester. Yeah, but we are in a pandemic, in a
    pandemic with a lot of other things that are going on, and I do
    not think Congress passed--and I think it is what Senator
    Menendez was referring to too--I do not think Congress passed
    the CARES Act in a record amount of time, I might add, to have
    it going out in mid summer and fall.
        Mr. Carson. But do recognize, sir, that the initial amount
    of ESG went out the first week after the bill was signed, and
    that was $1 billion. We also made it clear that people could
    utilize the monies that they already had. They could be
    repurposed.
        Senator Tester. Yeah. Homeless assistance, though, that
    simply is not the case. I mean, it did not get out. And it is
    good you are getting it out now. I just hope it is not too
    late.
        Let me touch a little bit on Senator McSally's question,
    and others who have asked this question, on rental forgiveness.
    We have got a situation where people have lost their jobs and
    they cannot pay rent, so we are telling them it is OK, you do
    not have to pay your rent until you get your feet back under
    you. In the meantime, we have got people who own property who
    may have loans on that property. They might be through whoever,
    whatever mechanism they might have used.
        Can anybody tell me what the plan is for not only keeping
    the renters in their home when, hopefully, we get out of this
    sooner than later, and what is the plan for the property owner
    that rents that property to the renter, that does not get those
    rental payments?
        Mr. Carson. Well, first of all, you might be surprised,
    because you probably cannot see this. But this is the rent
    payment tracker, 4 months' rent result, for 2019 versus 2020.
    You can see that it has not changed very much--97.7 percent of
    people were paying last year, 94.6 percent now. So people have
    been paying, significantly, their rent.
        We are still concerned about it, obviously, and that is why
    I mentioned that if you do not see any prospect of being able
    to get a job, which I do not think is going to be the case for
    most people, but if that is the case, you can have your income
    readjusted so that your rent will be readjusted down.
        Senator Tester. I got it. I got it and I appreciate that,
    but what about the folks who own the homes that are being
    rented out, or the apartments that are being rented out, that
    have loans on those, that may not have gotten the income from
    the rent because the rent was not paid?
        Mr. Carson. Those individuals are businesses and they
    qualify for PPP.
        Senator Tester. Do you think that is adequate enough right
    now to take care of any sort of liability that they might have?
        Mr. Carson. It seems to be working, quite frankly.
        Senator Tester. OK. All right. Mr. Calabria, in April,
    ProPublica reported--they found that despite a ban on evictions
    during the crisis, landlords in four States were proceeding
    with eviction filings during this pandemic. Are you aware of
    that, number one, and number two, what are you doing about it,
    if you are aware of it?
        Mr. Calabria. So, Senator, we certainly have heard of
    landlords moving forward. We have not seen evidence on whether
    those properties are Fannie- or Freddie-backed or not. I will
    note that we do not have enforcement authority over landlords.
    When we hear complaints, we give those complaints to the CFPB.
    I believe the CFPB tries to get those to the State attorneys
    general. But we do not typically have statutory enforcement
    authority in this area.
        Senator Tester. So there is not much you can do about it,
    is what you are saying.
        Mr. Calabria. Correct, other than try to bring attention to
    it, try to encourage the--I mean, if we believe that a landlord
    who is getting forbearance is violating the terms of the
    forbearance, we can stop the forbearance. But we certainly have
    no ability to bring an enforcement action, if you will, against
    landlords.
        Senator Tester. OK. Thank you, Mr. Chairman.
        Chairman Crapo. Thank you. Senator Moran.
        Senator Moran. Mr. Chairman, thank you. Mr. Secretary and
    Dr. Calabria, thank you for joining us.
        Dr. Calabria, I want to draw my attention to you in my
    questions. First of all, I would like to talk about risk
    weighting for single family versus multifamily. Under the
    FHFA's Enterprise Capital Re-Proposal, in my view there is a
    confusing disparity between how the risk weighting is applied
    to single family versus how it is applied to multifamily.
        In determining, as I understand it, the single-family FHFA
    relied on the crisis of 2008 for a factual basis to make that
    determination. However, on the multi side, there was an
    indication by FHFA that that was not the appropriate way to
    look at it for multifamily.
        But in terms of losses, back in 2008 and 2009, multifamily
    2007 vintage cumulative losses were 1.3 percent, while single-
    family losses were 3.6 percent. Based upon that comparison, it
    surprises me that the indications by the re-proposal is the
    risks are higher in regard to multifamily, when it seems to me
    the evidence shows exactly the opposite.
        Why then, relative to single family, is FHFA penalizing
    multifamily against the data? You have indicated that FHFA may
    be overfinancing multifamily housing. Are these two things
    related? I want to make sure that we are making a risk
    calculation based upon the facts, not based upon a desire to
    reduce the financing of multifamily.
        Mr. Calabria. Thank you, Senator, for that question, and
    let me first say that I could not agree with you more on
    everything. All of this should be driven by the facts and the
    data.
        Let me start with your last question, in terms of there is
    a preexisting multifamily activity cap and then there is the
    capital rule treatment of multifamily, and those are indeed two
    different things. There is nothing in the capital rule that is
    meant to drive the activity more or less of multifamily. Again,
    those two are different. And, in fact, the current re-proposal
    is a re-proposal of a 2018 rule that was crafted by my
    predecessor. In the multifamily part of that rule, almost
    exactly the same as it was in the 2018 rule, very modest
    changes were made.
        But I also want to clarify a couple of issues that I think
    are critical here. While the re-proposal attempts to use more
    bank-like language so that analysts and commentators who
    understand the Basel process can read our proposed rule and
    have more of an apples-and-apples approach, I do want to
    emphasize that unlike in the banking world where the risk
    buckets are somewhat fixed--so, for instance, we are all aware
    with the 50 percent risk weight that banks have on single-
    family mortgages, well, that 50 percent is the same for
    everything that fits in that bucket, whereas the average risk
    weights on both single family and multifamily in the proposed
    rule are driven by the composition of the loans.
        And so what you have really seen is that the composition of
    both multifamily and single-family loans to date is different
    than it was in 2008, and I am certainly very appreciative that
    the multifamily performed functionally pretty well.
        Let me also emphasize that the cap on multifamily that we
    set still has Fannie and Freddie about where they have been in
    the marketplace, which is essentially their highest market
    share they have had in decades. So we have not pulled back
    Fannie and Freddie from the multifamily market. We tried to
    make sure, of course, that it performs differently.
        And also we are seeing, in this environment, so for
    instance Fannie and Freddie do have a significant amount of
    both seniors housing and student housing in the multifamily
    sector that are both under stress that we are keeping an eye
    on. Again, I am not overly concerned, but again, it is a
    possibility of that being a different crisis this time around
    than the last crisis.
        But I last want to emphasize that it is a proposed rule. We
    are taking comment. We certainly expect and welcome commentary
    from the multifamily industry and others. We will obviously go
    through those comments. We will be thoughtful about it, we will
    be thorough about it, and we will be data-driven about it, and
    I promise you we will be transparent about it.
        Senator Moran. Dr. Calabria, thank you. Would you commit
    that you would inform my staff and provide data----
        Mr. Calabria. Absolutely.
        Senator Moran. Thank you. And you will also follow up about
    other alternatives for that kind of lending for multifamily,
    what you see is available.
        My time has expired. I thank the Chairman. I thank you, Dr.
    Calabria.
        Mr. Carson. Thank you, Senator.
        Chairman Crapo. Thank you. Senator Schatz.
        Senator Schatz. Thank you, Mr. Chairman, Ranking Member.
    Dr. Calabria, half of all renters live in apartments owned by
    individual landlords, and FHFA provides for eviction
    protections for renters in multifamily properties that take
    advantage of CARES Act mortgage forbearance. But the same
    protections are not extended to renters in the one- to four-
    unit buildings with loans receiving CARES Act forbearance.
        Are you considering extending the protections prior to
    announcing the forbearance program?
        Mr. Calabria. Senator, I remind you that Section 4022 of
    CARES, which handles the single family, which is where the
    single-family rental is, we are mandated, essentially, on, if
    you will, the honor system, where we have to provide the
    forbearance. Where, by contrast, in 4023 of CARES, which covers
    the multifamily, you do have these requirements for there to be
    an exchange of, in exchange for forbearance there will be no
    eviction on nonpayment of rent.
        So our conclusion is that for us to place legal mandates on
    non-eviction, on tenants in single-family properties under
    4022, Congress would have to amend that section.
        Senator Schatz. Thank you. A couple of other things about
    where the discretion lies between the Congress and FHFA. You
    referred to a foreclosure moratorium which expires at the end
    of this month, and you said you are at least giving
    consideration to extending that moratorium. Is that correct?
        Mr. Calabria. Yes, Senator.
        Senator Schatz. And what is your timeframe for deciding
    that and what is the timeframe under consideration in terms of
    an extension?
        Mr. Calabria. We will be making that decision--we will be
    making that announcement certainly within a week. I think
    because we can always extend it as we move along, I certainly
    think, at a minimum, we would want to extend it a month. At a
    maximum, I do not think we would want it to be any more than 2
    months, just because we can always extend it again as we start
    to see how the economy evolves.
        So my preference here is to give people enough certainty
    without necessarily locking us in.
        Senator Schatz. And the July 24th expiration of the
    eviction moratorium, likewise, is that in the Congress' hand or
    do you have discretion other than the sort of complication
    related to LIHTC units?
        Mr. Calabria. We can extend for GSEs. Obviously, the CARES
    Act covers all Federal-related mortgages, not simply Fannie and
    Freddie. So, for instance, USDA, VA. If there was to be an
    extension for those, we could not do that at FHFA but we could
    extend the foreclosure moratorium.
        And I really want to emphasize the part of what we have
    done on the foreclosure moratorium are foreclosures that were
    in process pre-CARES Act. So there were a number, for Fannie
    and Freddie, probably about 200,000 ongoing foreclosures pre-
    COVID, and it is important to remember that we paused those as
    well, because we wanted to be able to facilitate social
    distancing. And we are looking at continuing that, and that is
    a separate, outside of the 4022 and 4023.
        Senator Schatz. I want you to, in your minds, good
    conversation has happened related to what will happen once the
    current CARES Act provisions related to housing expire. But if
    you would provide to the Committee sort of a set of predictions
    and recommendations for our consideration as we look at the
    next round of legislation, to understand what is going to
    happen next in the event that we do nothing at all. How many
    people would be out on the streets? How many people would be in
    foreclosure? How many people would be evicted? And what is
    within the Administration's authority to provide some
    flexibility to those individuals, but also probably more
    importantly, what we are going to need to do, as a Congress, to
    make sure that we don't face a cliff.
        And I know Ranking Member Brown has been very clear about
    this. You know, there are a lot of technical aspects of this,
    but basically what we are looking at is that people have their
    bills piling up and up and up, and that means that they are
    experiencing some relief right now. But as I heard Secretary
    Carson and you, Director Calabria, talk about the best solution
    to this being, you know, job growth, that may be true enough,
    but we know even in the most optimistic scenario that job
    growth is not going to come fast enough to help people with
    their rent and mortgage, not as a statistical matter.
        Individuals will be helped as they find employment. But we
    have got 40 million individuals who are unemployed, and those
    jobs are not coming back very quickly. And so as housing
    agencies it is a little bit of a rhetorical sleight of hand to
    say, well, we have just got to wait until the job market
    recovers. That is going to be years before we are fully
    recovered.
        One final question, Secretary Carson. Are you comfortable
    with an October deadline for pushing out the CDBG money?
        Mr. Carson. That is the deadline.
        Senator Schatz. No, I understand that.
        Mr. Carson. Bear in mind that the----
        Senator Schatz. I understand what you said, Secretary,
    before, to two previous Senators who asked you this question,
    and I understand that you are saying you are within the
    statutory framework. That is not what I am asking you. I am
    asking you, understanding how urgent the situation,
    understanding that we are experiencing Depression-levels of
    unemployment, understanding that we are in a global pandemic,
    that seems rather casual to think, well, we are within the
    statutory mandate, when you know that people across the country
    are suffering.
        So my question is, is there any way you could see fit to go
    back to your agency and accelerate the process of pushing out
    these CDBG funds? We are not saying that you are violating the
    law. We are saying that people need the money now, and would
    you consider pushing it out a little more quickly?
        Chairman Crapo. And if you could be brief, please. We are
    way over time.
        Mr. Carson. OK. The statutory requirement for ESG is June
    25th. It is out today, the 9th. So it does not mean when the
    deadline is that we are going to wait that long. We are going
    to get it out as fast as we possibly can.
        Chairman Crapo. Thank you. Senator Van Hollen.
        Senator Van Hollen. Thank you, Mr. Chairman, and I thank
    the witnesses today. You have had a lot of questions about the
    impact of job loss and therefore the loss of income, and
    therefore the difficulty so many people have in paying rent. I
    think even the most optimistic scenarios show that millions of
    Americans will remain unemployed, through no fault of their
    own, beyond July 31st, and, of course, after July 31st, the
    enhanced unemployment compensation benefits would expire unless
    we extend them.
        So just a quick question to both of you. Do you agree that
    it makes sense, to the extent that we will continue to have
    millions employed, to extend enhanced unemployment insurance to
    help people pay their rent as this emergency continues?
        Mr. Carson. Well, I think it is obviously going to be very
    important for us to monitor the situation, see how much
    recovery is going on, and obviously we are not going to sit
    idly by and watch millions of Americans suffer for something
    that is not their fault.
        Senator Van Hollen. So, Mr. Secretary, just to clarify, at
    the end of July, if it is clear that we will continue to have
    millions of people unemployed, through no fault of their own,
    you would support continuing enhanced unemployment compensation
    in some form?
        Mr. Carson. As necessary.
        Senator Van Hollen. All right. Mr. Calabria, do you have an
    opinion on that?
        Mr. Calabria. Senator, I will just remind you we are an
    independent agency, not part of the Administration, not part of
    the negotiations, so I will leave what the next package looks
    like between Congress and the Administration.
        Senator Van Hollen. No, I understand that, but you are also
    somebody who is well versed on these housing issues and you
    have an understanding of the impact of people not paying their
    rent, or not able to pay their rent. So you do not have any
    opinion on it?
        Mr. Calabria. I certainly share the point about there being
    a broader income job dynamic. I certainly think the number of
    Senators, for instance, who have raised issues about the $600
    further being some percentage of the unemployed that are
    receiving more than they actually would in wages. I guess at
    the risk of the old clich? about a two-handed economist, there
    are tradeoffs here, and I think fundamentally the reason you
    and your colleague are elected are to weigh those tradeoffs.
        Senator Van Hollen. Well, Mr. Secretary, we will do that.
    There is a work-share program we will be talking to more of our
    colleagues about, which both provides, you know, the benefit of
    the employer, small business, being able to share reduced hours
    and wages with the unemployment system.
        Mr. Secretary, in response to an earlier question, I think
    it was to Senator McSally, you mentioned the process at HUD for
    income recertification. For people who lost income, they can
    recertify. Has HUD put out additional information recently to
    better inform
    tenants about the fact that they have to do that and that that
    option is available to them?
        Mr. Carson. Yes, we have, at HUD.gov/coronavirus.
        Senator Van Hollen. Great. And have you thought of
    expediting that process? In other words, we know a lot of
    people are losing their income because they are losing their
    jobs. Is there a way to expedite that recertification process
    so people can get the benefit of it earlier rather than later?
        Mr. Carson. We have our Assistant Secretary who is in
    constant communication with the various PHAs and others to
    inform them of what the process is and how to access that
    process quickly.
        Senator Van Hollen. Mr. Secretary, if you could--not right
    now, but if you could get us the information on how many people
    have requested recertifications, you know, since the emergency
    hit, and how many have received it, could you get us that
    information?
        Mr. Carson. I would be happy to.
        Senator Van Hollen. Thank you. Director Calabria, you
    recently released your re-proposed capital rules for GSEs.
    Moody's economist, Mark Zandi, has estimated that the change
    will raise interest rates on low-income borrowers and could
    raise mortgage payments on a $200,000 mortgage by $58 per
    month. Isn't it a fact that this proposal will increase
    interest rates and that they will be disproportionately borne
    by lower-income households?
        Mr. Calabria. I would disagree with that analysis and
    certainly note that Mr. Zandi is on the board of a mortgage
    insurer that has a strong economic interest in not seeing us do
    this rule. So I certainly would not put him forward as an
    unbiased expert in this.
        I would also note, Senator, we have had a decade since the
    financial crisis of arguments by Wall Street that somehow
    raising capital will destroy lending in this country. That has
    not been the case. I will note today that many commercial banks
    in the jumbo market are able to make mortgages and they hold
    twice the capital that the rule requires and do so at costs
    that are equal to or less than what Fannie and Freddie are
    charging.
        So, Senator, I think it is just critical that we have
    financial stability. We know in moments of stress, when large
    institutions like Fannie and Freddie are undercapitalized it is
    low- and moderate-income households that are most impacted.
        Senator Van Hollen. I know my time is up, Mr. Chairman. If
    you could just provide us your estimate of the impact this
    proposal will have on interest rates and mortgage payments for
    lower-income households. Can you get us detailed information on
    that?
        Mr. Calabria. Senator, we will look into that and see what
    we can provide.
        Senator Van Hollen. Well, it seems to me that in making
    this kind of decision it would be essential to have that
    information, so I hope you can put it together, and I look
    forward to getting it.
        Thank you, Mr. Chairman.
        Chairman Crapo. Thank you. Senator Cortez Masto.
        Senator Cortez Masto. Thank you, Mr. Chairman and Ranking
    Member Brown. I so appreciate Secretary Carson and Director
    Calabria for being here. Director Calabria, thank you for being
    on the phone with me last week as well. I really appreciate it.
        So, you know, I am looking online in the Urban Institute.
    There is an article that says, ``New data suggests that COVID-
    19 is widening housing disparities by race and income.'' In
    fact, the first paragraph into this article says that ``racial
    and economic disparities in access to safe and affordable
    housing existed long before the COVID-19 pandemic. And new data
    from the U.S. Census Bureau suggest that the pandemic and its
    economic fallout is only widening these divides.''
        Would you both agree with that?
        Mr. Carson. Absolutely.
        Mr. Calabria. Yes.
        Senator Cortez Masto. Thank you. So then let me start with
    you, Secretary Carson. I am listening to your testimony and I
    have been bouncing between here and Energy and Natural
    Resources, but from what I listened to your testimony and then
    also in your written statement you note the initial funds that
    Congress has provided to help people with housing assistance,
    but I do not hear or see any answers about how your department
    will respond to the increasing numbers of African Americans,
    Latinos, and low-income people who face rapidly increasing
    housing costs and eviction, what you are doing to address that.
        So I guess my first question to you is, as HUD calculated
    the assistance formulas, did your researchers prioritize
    communities with high proportions of African Americans and
    Latinos, and did you take that into consideration?
        Mr. Carson. Your voice keeps going in and out, so I am not
    getting the full question, but I think you are asking are we
    doing statistical analysis of the communities that we are
    trying to help, and looking at the demographic data, and is
    that somehow being utilized in the policies that we create.
    Would that be an accurate portrayal?
        Senator Cortez Masto. Absolutely. Thank you. Thank you.
    That is accurate.
        Mr. Carson. Yes. Of course we always look at the
    demographics, and we do recognize that there is a significant
    disparity, based on the environment in which you live. You
    know, the COVID-19 crisis has made it very clear that
    comorbidities such as hypertension and diabetes and obesity and
    asthma have a tremendous negative impact in terms of morbidity
    and mortality. And----
        Senator Cortez Masto. And I appreciate that, and believe
    me, I appreciate that, particularly coming from your
    background. But let me ask you this. You are Secretary of
    Housing and Urban Development right now, and so as you look at
    this data, which you do not disagree with, what are you doing
    right now, particularly during this pandemic, to address the
    issue that we see more of this economic disparity within these
    communities? And I have not heard, in this conversation we have
    had today, how you, as the Secretary of HUD, are specifically
    addressing this.
        So that is my first question to you.
        Mr. Carson. Well, what we are doing is utilizing the White
    House Council on Opportunity and Revitalization, which is a
    multiagency council, to address the underlying causes for those
    disparities. That means housing specifically, that means
    education, that means communication, that means transportation,
    it means looking at----
        Senator Cortez Masto. I appreciate that and I appreciate
    what the White House is trying to do, but my question to you is
    specifically, what policies and programs are you doing as the
    Secretary of Housing? What specifically are you doing to
    address this issue?
        Mr. Carson. Well see, we recognize that this is going to be
    an all-of-Government approach to solve these kinds of problems.
    These are not just a HUD problem. They are not just an HHS
    problem. It is a combination of utilizing all of these
    together, recognizing what the underlying causes of these
    problems are. It is because people have----
        Senator Cortez Masto. I appreciate that, and I appreciate
    the all-in approach and the wrap-around service approach and
    the holistic approach. But you are the Secretary of HUD, and so
    we are looking for specific programs and policies out of your
    Department to address the housing piece, and I have not heard
    that, and I think that is the frustration we are hearing today
    from many of the Senators.
        Let me--I do not have much time left so I will submit the
    rest of my questions for the record. Thank you.
        Chairman Crapo. Thank you. Senator Jones.
        Senator Jones. Thank you. I appreciate the opportunity to
    be here, and to both the witnesses, thank you so much for being
    here and giving us information, and for your service. I
    appreciate that.
        I would like to ask Secretary Carson a little bit about the
    issues involving radon and radon testing. As you know, and we
    have discussed, there have been numerous reports, a million or
    so instances where it is estimated that radon exists in public
    housing, and that is a serious hazard for potential lung
    cancer, and 21,000 Americans die of lung cancer every year.
        The President's budget includes $5 million for the Health
    Homes Program. I appreciate and comment your recognizing what a
    problem this is.
        But one of the problems we see is that public housing
    authorities also have to provide and make sure that housing is
    habitable, and when a unit is not being inhabited, though, they
    somehow get panelized.
        Huntsville Housing Authority, in Alabama, north Alabama, in
    particular has had this problem and said that they do not have
    the money at this time to fix the housing in those units.
        I want to make sure we invest in safe, healthy housing, but
    if the monies are not there, I don't want to see some of these
    public housing authorities being penalized. So is HUD adjusting
    its policy so we don't penalize these PHAs while they are
    waiting for sufficient funds to remove hazardous materials such
    as radon?
        Mr. Carson. We are. Thank you for mentioning the $5
    million, which is the first time that that kind of money has
    been dedicated to radon. But we also have a Healthy Homes grant
    of $20 million, which can be utilized for radon as well.
        We have also changed the inspection protocol so that it
    will be a part of the inspection, and obviously, as you
    probably know, there are State and local requirements regarding
    radon as well, and we will be assessing whether those are being
    followed during the inspection process.
        Senator Jones. All right. Well, thank you, but my real
    question is that as these public housing authorities are
    waiting to abate the radon and these units are standing empty,
    are you adjusting your policy so that these PHAs do not get
    somehow penalized for having vacant places--vacant buildings,
    vacant apartments?
        Mr. Carson. If the apartments are vacant but they are not
    following the protocols that are mandated by State and local
    law, yes, they will still be penalized. We cannot allow people
    to simply ignore those regulations.
        Senator Jones. No, no. That was not my question, sir. I
    mean, it takes time between getting the money. I mean, they do
    not have the money. It takes time to get the funds in to abate
    the radon, and for PHAs that are doing everything they can to
    comply with the law, are you trying to give some adjustments
    for their good faith compliance and they simply do not have the
    money, or are you going to just continue to penalize them, even
    though they just fully do not have the funds to comply?
        Mr. Carson. If they make it clear that they have recognized
    the problem and they are in the process of addressing it and
    they are just waiting for the funding to do so, of course we
    will provide them an appropriate waiver.
        Senator Jones. All right. Great. Thank you, sir. Thank you
    for that.
        Staying with you, Secretary Carson, I appreciate a lot of
    what is being implemented with the CARES Act, and recognizing
    the disparate impact that this crisis, this healthcare crisis
    has had on minority populations. But I think, and I would be
    remiss if I have not pointed out that prior to this crisis your
    Department has also issued a number of rules and has done some
    things that I think completely turn on its head the role of HUD
    in trying to prevent discrimination.
        For instance, the new rule--and you and I have talked about
    this--that does away with the disparate impact proposed rule I
    think is going to make it almost impossible to provide and sue
    on race-based issues. You have got rules, the mixed status
    rule, which I think is also going to create problematic areas
    to try to prove discrimination.
        The Fair Housing Initiatives program for the 2021 budget, I
    think is less than what should be. And, you know, I am really
    concerned about the proposed rule where, in 2018, the Trump
    administration delayed and then rescinded the Obama
    administration's rule regarding recipients of HUD funds in
    localities to undertake a comprehensive analysis of fair
    housing barriers. Your proposed rule now completely eliminates
    tools involving race and segregation and instead focuses on
    removing regulatory barriers to develop.
        So as we move out of this crisis, Mr. Secretary, I am
    asking you, can you commit to making sure that the Housing
    Department goes back and starts looking at discrimination? We
    are in a crisis in this country involving race. Everyone is
    seeing it. It is not just police and law enforcement. Can you
    commit to making sure that in terms of the housing across this
    country, your Department is going to take another look at the
    rules that you have implemented and to try to make sure that it
    is both fair, equitable, and does everything in the
    Government's power to prevent discrimination of any sort?
        Mr. Carson. We will definitely commit to doing everything
    we can to prevent discrimination and create fair housing. No
    question about that.
        Senator Jones. All right. Thank you, sir. Thank you, Mr.
    Chairman.
        Chairman Crapo. Thank you. Senator Warner.
        Senator Warner. Thank you, Mr. Chairman. I would like to go
    to Director Calabria. Thank you for the opportunity we have had
    to speak on a number of times. We do not always agree but I
    really do appreciate your willingness to engage with me. And I
    want to come back to, actually, our favorite subject, the GSEs.
        I think the last couple of months we have seen the
    importance of the Government's role in supporting the mortgage
    market. As a matter of fact, it appears to me that outside the
    Government-supported mortgage market the rest of the market is
    not really doing that well, and you can point out that Congress
    has not been very effective at our reform efforts. I am
    concerned about some of the Administration's plans.
        So with that as a backdrop, as we get into your plans on
    how we get the entities out of conservatorship, can you address
    how you think the current economic challenges may impact the
    timing of the GSEs release? Obviously I would think investors
    would [inaudible] what were retained earnings, some of the
    interest of the investors might be diminished. Speak to that as
    well as how we actually make sure that we have got that real
    plan and make sure the GSEs wholly pay for that Government
    backstop.
        Mr. Calabria. Well, thank you, Senator. A number of
    questions in there, and let me say it is always a pleasure to
    talk to you, and I hope you at least always feel that when we
    disagree it is. It is always in a very transparent manner and a
    very fair and open manner.
        Let me also emphasize that as an independent regulator I
    really cannot speak to the Administration's plan. I do want to
    make a point about preparing for exiting conservatorship, that
    I believe this is not a choice on my part. It is a statutory
    mandate. The framework of the Housing and Economic Recovery Act
    requires me to get Fannie and Freddie into a safe and sound
    condition, which is consistent with exiting conservatorship.
        At this point, where we are in the COVID crisis, where we
    are in the housing market is I think this will likely delay an
    exit by 3 to 4 months, but I would certainly underline there
    are a tremendous amount of unknowns in here.
        It was touched upon by a couple of Members, if we start to
    have a number of forbearance loans eventually go into default
    and go into actual perhaps foreclosure or serious delinquency,
    we will have to take those loans out of pools, put them onto
    the balance sheets.
        So for Fannie and Freddie the really big price tag, if you
    will, with this, we probably will not see that until the fourth
    quarter. And so, again, we are still seeing how this evolves. I
    would simply say it is too soon to really tell, and by 3 to 4
    months should really be taken with an extremely wide margin of
    error.
        Senator Warner. I just hope you will keep us, those of us
    who are very involved in this subject, informed. Obviously the
    market is changing, and the interest of the private investors,
    I think, I want to follow that.
        It appears, as well, that the existing shareholders from
    any bank, you are going to simply walk away from the
    Government's preferred position without any compensation I
    think would be helpful in terms of giving everybody a little,
    you know, downstream guidance. To just clear up, I hope you
    would not support walking away from the Government's position
    without a sanction.
        Mr. Calabria. Well, I would emphasize that what happens to
    the Government's investment is fundamentally the responsibility
    of Treasury and the Administration to decide. I certainly think
    that we should make sure that the Government gets recouped
    fairly. But again, I do want to emphasize that this is
    fundamentally the Treasury Department's decision.
        Senator Warner. Yeah. You are a smart guy and you have got
    a pretty good amount of influence in all this, and I want to
    make sure--I do think it is important that we send that signal
    to the market that the Government is not going to walk away
    from its preferred position without compensation.
        I know that Senator Van Hollen has raised this issue, but I
    want to just re-emphasize my interest as well in making sure
    that LMI communities, that we have got really data-driven
    metrics on how, I think, the COVID crisis has disproportionally
    affected communities of color, and having that data will be
    really important as we think about how we protect these
    communities on a going-forward basis.
        I am down to my last 9 seconds and I would like to continue
    our discussion on risk sharing. I am concerned that if we end
    up with a solution where we go back to a too-big-to-fail
    duopoly. And I know not all of the risk-sharing experiments
    have fully worked, but I think it would be a challenge to come
    to a pre-2008 crisis without risk sharing to the too-big-to-
    fail entities. But I know we will continue those conversations.
        Thank you, Mr. Chairman.
        Chairman Crapo. Thank you, Senator Warner. Senator Smith.
        Senator Smith. Thank you, Chair Crapo and Ranking Member
    Brown, and thanks to both of you for being here testifying
    before our Committee today.
        I want to talk about the economic and health and racial
    equity crisis that is sweeping through our country. Mr. George
    Floyd was murdered by Minneapolis police officers in my
    hometown. This stuff is a tragedy and it never should have
    happened, and we cannot look away from this deep injustice. It
    reveals, I know, a systemic racism and inequity that exists in
    policing and in our society, and it is intolerable.
        You know, I have listened to Black people in my community
    who have said to me, with anguish and fear and frustration,
    that ``all we want is to know that the police won't attack us
    and kill us. All we want is to be treated equally.'' And we
    know that we need to seek justice for Mr. Floyd and his family,
    but people are marching in the streets because they are
    demanding more, and we need to listen and respond.
        Now they are demanding that we dramatically transform our
    policing systems in this country, but they are also demanding
    that we seek out and change and address the disparities and the
    discrimination that exists in all of our communities, including
    in our housing systems. And this, of course, as several of us
    have mentioned already today, the pandemic is even increasing
    this divide.
        In Minneapolis, we have the third-highest homeownership
    rate in the country, but the fifth-biggest gap in home
    ownership between white households and households of color. The
    typical Black family in Minneapolis earns less than half of the
    typical white family, 44 percent. Roughly 25 percent of Black
    families in Minneapolis own their own home, which is one of the
    lowest rates in the country. And we know that home ownership is
    the way that most Americans build wealth and economic
    stability.
        So why has this happened? We know that historic racism is
    at the root of this. In the 20th century, in Minneapolis,
    racist redlining strategies barred families of color from
    buying houses and renting in so many neighborhoods. In the
    1960s, we built big freeways that decimated historically Black
    communities in Minneapolis and St. Paul, like the Rondo
    neighborhood. One in eight African American families in St.
    Paul lost their homes when we built the I-94 freeway through
    the Twin Cities.
        These disparities that I am talking about in Minnesota are
    ours, but we see them everywhere in this country. So Secretary
    Carson, we need to work to fulfill the promise of the Fair
    Housing Act. This is from 1968, when a young Senator from
    Minnesota, Walter Mondale, helped to write that landmark
    legislation, and we know that its promise has not yet been
    fulfilled. And we had rules like the Affirmative Furthering
    Fair Housing Rule that were written to do just that. But HUD,
    under your leadership, has undermined this rule and your
    agency's effort to oversee fair housing.
        So Secretary Carson, I believe so strongly that in this
    moment we have a moral responsibility to change the systems in
    housing that perpetuate these deep inequities that I have just
    described, that we all know are there. We need to continue to
    move forward in the way that we have or we can actually finally
    do something about this.
        So I ask you, Secretary Carson, to please consider the
    voices of my constituents, the voices of civil rights leaders
    and advocates, and to seize this moment to make the kind of
    change that we need to make around fair housing. You have the
    power to do this. You can use the power of your agency to do
    this.
        Now I want to ask you something specific related to these
    inequities, related specifically to the issues of homelessness
    on Tribal land. The COVID-19 pandemic has exposed huge racial
    and economic disparities and the inequities that I have just
    been talking about. We see this on Tribal lands. We see the
    devastating impact on Tribal lands. According to the National
    Alliance to End Homelessness, people experiencing homelessness
    are uniquely vulnerable to COVID-19 because of food insecurity
    and crowded shelter conditions and all of the dangers that we
    see with encampments, with not enough hygiene stations, not
    enough help.
        So knowing that these risk factors are there, it makes no
    sense to me that Tribes are not eligible to apply for the HUD
    homelessness assistance grants. Senator Murkowski and I have a
    bill to fix this. And so my question to you, Secretary Carson,
    is do you think that Tribe should be able to access these
    homelessness assistance grants so that they can reduce some of
    this overcrowding and help families find safe and stable
    housing?
        Mr. Carson. There have been a number of programs, and I am
    sure you are familiar with the Indian Housing Block Grant
    Program and the Indian CDBG Program, which provides the same
    kinds of relief as the program that you are talking about. But
    do I believe that they should be entitled to significant help
    because of the disparities? The answer is yes.
        Senator Smith. Thank you, Secretary Carson. We are going to
    push forward this legislation. I think it is very important.
    And I will follow up separately with more questions, especially
    related to sprinkler systems in multifamily units, which has
    been such a big problem in public housing projects. Thank you.
        Chairman Crapo. Thank you. Senator Sinema. Is she on video
    and audio? Senator?
        Senator Sinema. Mr. Chairman, can you hear me?
        Chairman Crapo. I can. So you will be with us on audio. Go
    ahead.
        Senator Sinema. That is right, and thank you. Thanks to all
    of our witnesses for being here today.
        Economists reported this week that the recession officially
    began in February, and I hear from Arizonans about how our
    ongoing public health crisis and a bad economy create
    significant headaches and hardships for families across the
    State.
        Arizonans worry about their health and safety. An
    increasing number are concerned about how they will make ends
    meet. The Senate must act to provide meaningful relief to
    families and small businesses, stabilize the economy, fight the
    spread of coronavirus, and help our State and local governments
    provide essential services during these challenging times.
        Secretary Carson, thank you for being with us today. I want
    to talk about what we mean when we say eviction or foreclosure.
    These are families likely facing homelessness, so they will
    need to find shelter and food. There are unprecedented
    waitlists for shelter services across my State. Arizonans face
    very difficult circumstances that hurt our most vulnerable,
    including children, and this is largely through no fault of
    their own.
        What does it mean to you personally when an American family
    loses their home?
        Mr. Carson. Well, having a home is one of the things that
    gives people stability and confidence, and the ability to take
    advantage of other things in society. So obviously it is very
    important.
        Senator Sinema. So what would you tell a family that is
    facing foreclosure or eviction?
        Mr. Carson. Well, you would tell them that you are going to
    try to help them. That is what we are here for.
        Senator Sinema. You know, many Arizonans are struggling to
    keep their lives together right now, and it is hard for
    families to stay strong without safe and affordable housing. We
    have got to find ways to turn those words of ``we want to help
    you'' into action.
        But this is a growing problem in Arizona, particularly in
    our multifamily rental market. I have spoken to property owners
    who have told me that over 50 percent of their tenants missed
    rent payments in April or May, and we see court dockets filled
    with eviction notices. That is why I am concerned that
    Arizonans are struggling to get access to rental assistance.
        The State of Arizona dedicated $5 million to help
    struggling renters, but there has been tons of red tape and
    substantial delays. Very little of those funds have gone out,
    and people need relief.
        Do you have people in the Department of Housing who can
    provide technical assistance and share best practices with the
    State of Arizona as we address these challenges?
        Mr. Carson. We do and we would be happy to provide them.
    And also we could use your help, in helping to deregulate some
    of the barriers that are preventing the building of affordable
    housing in Arizona and other parts of the country. This is what
    is creating a lot of the problem, skyrocketing prices while
    people's incomes are not going up.
        Senator Sinema. I will say, Secretary, I am surprised to
    hear the term of needing more deregulation in Arizona. As you
    may know, I am a strong proponent of regulatory reform, but
    Arizona is a State that has some of the most relaxed
    regulations of any State in the country.
        Mr. Carson. And we appreciate that.
        Senator Sinema. I just want to talk a little bit about my
    own experience. As you may know, Secretary, I was homeless as a
    child, and my family lived in housing insecurity for over 3
    years. I lived without running water and without electricity.
    So I am looking for a Department of Housing to provide more
    empathy and to provide active assistance to families who are on
    the verge of losing their homes, like my family did because of
    tough times.
        Right now, unprecedented numbers of families in Arizona are
    facing these tough times, through no fault of their own,
    through a global pandemic that is not manmade. And yet they are
    on the verge of homelessness without seeing any kind of help in
    sight.
        So before my times expires, I want to bring up one last
    issue for you. You know, we see increased rates of seniors who
    are experiencing homelessness in Arizona. The rate has nearly
    doubled in the last few years, and I do not think the Federal
    Government has a good solution for this population because most
    of the current efforts focus on getting people back to work.
        Your budget proposes a small increase in the Section 202
    program, but we clearly need more affordable housing options
    for seniors. Given that we are in this global pandemic that
    disproportionately impacts seniors, what can we do to quickly
    address this issue and help keep seniors in their homes?
        Mr. Carson. Well, I think we have to recognize that we have
    an ever-growing incidence of seniors and we need to start
    concentrating on the type of housing for seniors that is most
    appropriate, where they may have some shared living space but
    perhaps their private facilities for bathroom and sleeping.
    That also gives them the opportunity to intermingle with
    others, and as you probably know if you know anything about
    mental health, that that is essential as you grow older.
        So we need to be thinking about those kinds of things that
    are changing in our society and addressing them specifically.
        Senator Sinema. Well, Mr. Secretary, I see that my time has
    expired, and as a licensed clinical social worker I actually
    have a lot of experience in the issues of mental health. My
    concern is that we are not taking action to provide either the
    support that is needed for mental health or the physical
    security of many of our seniors who are facing homelessness in
    our country.
        Thank you, Mr. Chairman. I yield back.
        Chairman Crapo. Thank you. That concludes our testimony.
        Senator Brown. Mr. Chairman?
        Chairman Crapo. But Senator Menendez has asked for a few
    minutes for an additional question, and Senator Brown has asked
    to make a statement, a concluding statement. So we will
    conclude the hearing with that, and we will go to you, Senator
    Menendez.
        Senator Menendez. Thank you, Mr. Chairman, very much for
    the courtesy. Secretary Carson, briefly, I want to go back to
    the DACA issue, since you mentioned taking a closer look at the
    rules. Don't DACA recipients have social security numbers?
    Isn't that correct?
        Mr. Carson. I believe they do.
        Senator Menendez. And they have work permits--isn't that
    correct?
        Mr. Carson. Many of them do, yes.
        Senator Menendez. And most of them have lived in the United
    States since they were children. Is that correct?
        Mr. Carson. Yes.
        Senator Menendez. And they have legal presence. Isn't that
    correct?
        Mr. Carson. They are present, yes.
        Senator Menendez. There are here present and legally,
    according to DHS. The Department of Homeland Security has
    always defined DACA recipients as having legal presence, so
    that point is clear.
        So HUD could have made the determination to interpret
    lawful residency--as it has in the past because in the past
    DACA recipients did receive and were eligible for FHA and had
    dutifully performed their responsibilities--to include DACA. In
    fact, HUD made a choice to exclude DACA recipients from FHA
    loans by defining ``lawful residency'' in a different way, in a
    manner to exclude them, which is made clear in the FOIA
    documents.
        So HUD did change the rules, because before a DACA
    recipient not only was eligible but received mortgages, if they
    were a responsible borrower, and now they cannot. So HUD
    changed the rules, and they did not reveal this change
    publicly, and misrepresented to Congress that a change had
    taken place.
        Yesterday, several colleagues and I sent a letter to HUD's
    Inspector General, requesting that they open an investigation
    into how this decision was made and why Congress was misled for
    so long. And I just want to ask you, will you commit to fully
    cooperating with that investigation?
        Mr. Carson. Not only will we cooperate with the
    investigation but I would be delighted to work with you on
    looking at that rule.
        Senator Menendez. Well, I would accept that offer and
    hopefully look to return to what your Department used to do.
    And if somebody changed it underneath your--you know,
    underneath you, as somebody at a lower range, and that is not
    your view, then I would embrace you changing back to what it
    was, where DACA recipients who are lawfully present under the
    Department of Homeland Security were eligible, did receive
    mortgages, and have been responsible borrowers. I would love
    for that to be the outcome. I appreciate your answer to both
    deal with the Inspector General and your offer, which I would
    certainly accept.
        Mr. Carson. Great.
        Senator Menendez. Thank you.
        Mr. Carson. Thank you.
        Chairman Crapo. And then we will conclude with Senator
    Brown with a brief concluding statement. Senator Brown.
        Senator Brown. Mr. Chairman, thank you. Thank you for your
    courtesy always and your fair-mindedness. I appreciate that.
        I want to just close with a couple of points. First, Mr.
    Calabria, I appreciate your denial of rolling back civil rights
    protections and your comments. My comments were directed at the
    Secretary and at HUD. I apologize if you thought they were
    directed at you all. So your agency has a role in monitoring
    the Fair Housing Act. Your housing finance reform proposals
    will, in fact, though, disproportionately hurt Black and brown
    communities.
        Second, Mr. Calabria, I also appreciate your repeated
    emphasis relative to the few Americans who have lost their
    homes during this crisis so far, despite the worst unemployment
    numbers of our lifetimes. Dr. Carson, renters themselves,
    though, are telling us they are in trouble, particularly Black
    and brown renters. To the extent many are paying, they are
    taking on more debt that they cannot afford. They are making
    impossible choices.
        They are relying--really importantly, relying on the
    expanded unemployment insurance we passed. That expansion, as a
    number of my colleagues have noted, is set to expire in a
    little more than a month. The President and my Republican
    colleagues refuse to extend it. Many of you remember the only
    amendment Senator McConnell allowed on the Senate floor to the
    CARES Act was to eliminate the expanded unemployment. We need
    to act now to put money in workers' pockets and pass emergency
    rental assistance. We need to do both.
        Finally, Secretary Carson, over the weekend you said the
    President will offer up remarks about racial healing over the
    next week. I hope you are right about that. It is going to be
    pretty hard, though, when he has spent his entire career--and I
    know you know this and I know you cannot acknowledge it
    publicly. I assume you acknowledge it privately, but this
    President has spent his entire career dividing people, from the
    Central Park 5 to birtherism to calling Mexicans rapists, to
    immigrant children ripped from their parents, to dominating
    protesters. You know that. You ran against him. You know that.
        We know why he does it and so do you--to distract from his
    Administration's record, including your record, his
    Administration's record of betraying workers and treating Black
    and brown Americans as expendable. Ultimately it comes down to
    leadership.
        Just for a moment, contrast the President with the words of
    another leader responding to calls for justice in the streets,
    who said, we shouldn't use violence to silence protestors. He
    said, quote, ``We must eliminate the problems from which they
    stem.'' That came from the Governor of your State when you were
    growing up, a Republican Governor by the name of George Romney,
    in Detroit, in 1967. He responded by listening and taking
    action. He worked to pass a fair housing law in Michigan. He
    worked to implement the Fair Housing Act, in a job you have
    now, as HUD Secretary. President Nixon fired him for it.
        The American people are waiting on my Republican colleagues
    and you, Mr. Secretary, to show that same courage today. You
    have called for dialogue, Mr. Secretary, but you refuse to
    listen to all the people who have stood up against your civil
    rights rollbacks, against your budget cuts, against your
    housing finance reforms that would make it harder for people of
    color in this country to buy homes.
        You call for dialogue but today you said you were glad to
    not be able to hear what I have to say. That is OK, Mr.
    Secretary. Whether or not you prefer to hear me, I hope you
    listen to the demands for justice from people all over this
    country.
        Thank you, Mr. Chairman.
        Chairman Crapo. That concludes the questioning and comments
    for today's hearing. For Senators who wish to submit questions
    for the record those questions are due to the Committee by
    Tuesday, June 16th. We ask our witnesses to respond to those
    questions as quickly as you can.
        Again, to both of you, I appreciate the work that you are
    doing, and appreciate you being here to testify to us today in
    this oversight hearing.
        This hearing is adjourned.
        Mr. Carson. Thank you.
        [Whereupon, at 12:06 p.m., the hearing was adjourned.]
        [Prepared statements, responses to written questions, and
    additional material supplied for the record follow:]
                   PREPARED STATEMENT OF CHAIRMAN MIKE CRAPO
        Today, we welcome the Federal housing regulators, The Honorable
    Benjamin S. Carson, Secretary of Housing and Urban Development, and the
    Honorable Mark A. Calabria, Director, Federal Housing Finance Agency.
        Welcome back to you both. Today we will receive testimony on your
    agencies' recent activities, operations and ongoing efforts to promote
    access to quality, affordable housing while also ensuring the safety
    and soundness of the housing finance market.
        Your agencies' missions have never been more critical.
        The disruption of COVID-19 on the U.S. economy has hit homeowners
    and the housing market especially hard.
        We have already seen a huge number of mortgage borrowers enter
    forbearance, while many landlords are struggling to make ends meet, and
    countless renters are unsure whether they will be able to make their
    next payment.
        In March, HUD and FHFA acted swiftly to prohibit foreclosures and
    evictions for millions of residential borrowers facing financial
    hardship due to the pandemic.
        Soon after, Congress passed the Coronavirus Aid, Relief and
    Economic Security Act, or CARES Act, codifying and extending these
    protections and providing financial relief to renters.
        Title IV of the CARES Act contains three Housing provisions:
    Section 4022 imposes a 60-day eviction and foreclosure moratorium for
    single-family borrowers with a federally backed mortgage loan. It also
    allows struggling homeowners up to 1 year of loan forbearance.
        Section 4023 extends similar relief to federally backed multifamily
    borrowers who are current on their mortgage payments. They can request
    up to 90-days forbearance so long as they do not evict a tenant or
    charge late fees solely for nonpayment of rent during the pandemic.
        Section 4024 imposes a 120-day moratorium on evictions, fees and
    penalties for tenants who live in multifamily units that participate in
    a Federal assistance program or have a Government-backed mortgage.
        Title XII of the CARES Act provides $12.4 billion of emergency
    supplemental appropriations for HUD programs and activities, to further
    soften the economic blow of the pandemic across the many communities
    HUD serves.
        In addition to implementing the CARES Act, HUD and FHFA have taken
    important actions to further protect borrowers and mortgage servicers
    during pandemic.
        Both agencies have extended the eviction and foreclosure moratorium
    for qualifying homeowners through at least the end of June.
        The agencies have also taken steps to ensure borrowers are not
    facing large, looming debt payments. Director Calabria recently
    reiterated that borrowers in forbearance with a Fannie Mae- or Freddie
    Mac-backed mortgage will not owe a lump sum at the end of forbearance.
        FHFA has further announced a new payment deferral option which
    allows borrowers, who are able to return to making their normal monthly
    mortgage payment, the ability to repay their missed payments at the
    time the home is sold, refinanced, or at maturity.
        HUD has similarly implemented the National Emergency Partial Claim,
    which allows eligible FHA borrowers in forbearance to reinstate their
    loans by authorizing servicers to advance funds on their behalf. Like
    FHFA, repayment of any missed monthly payments is deferred until the
    back end of the loan.
        In recognizing the undue burden the pandemic has placed on the
    mortgage servicing industry, HUD and FHFA have acted quickly to address
    the liquidity gap. HUD has expanded issuer assistance to include the
    Pass-Through Assistance Program (PTAP), which allows servicers to apply
    for assistance in meeting principal and interest payments, and FHFA has
    announced that no mortgage servicer will be responsible for advancing
    more than four months of missed principal & interest payments on a
    loan.
        While America is taking steps to return to work and relax stay-at-
    home orders, the recovery is only just beginning. I thank our witnesses
    for their swift and prudent actions to date, and for their continued
    commitment and collaboration at this time.
        This Committee is also focused on working with HUD and FHFA to
    identify and tailor overly burdensome regulations in an effort to
    create conditions that will lead to a forceful economic recovery.
        Secretary Carson, I applaud you for spearheading the ongoing
    efforts to identify and eliminate regulatory barriers to affordable
    housing production in this country. This will play a big part in
    bringing about a stronger, quicker economic rebound.
        Finally, the pandemic has underscored the need for a stable, well-
    capitalized housing market in times of stress.
        FHFA has recently taken a crucial step toward safety and soundness
    in proposing a thorough, thoughtful regulatory capital framework for
    Fannie Mae and Freddie Mac.
        As Americans face financial uncertainty, it is long past time to
    make the hard decisions and address this last unfinished business of
    the 2008 financial crisis.
        Director Calabria, thank you for your considerable efforts here,
    and I look forward to our continued work together on this topic.
        Thank you once again to our witnesses for joining us here today.
                                     ______

                  PREPARED STATEMENT OF SENATOR SHERROD BROWN
        Thank you, Mr. Chairman, over the past two weeks, protesters have
    taken to the streets demanding justice: Justice for George Floyd and
    Breonna Taylor and Ahmaud Arbery and so many other Black Americans who
    have been killed in acts of extraordinary violence, too often at the
    hands of police.
        And justice for millions of Americans who for hundreds of years
    have lived under a system that perpetuates inequality and systemic
    racism.
        Protestors young and old, Black and white, in urban and rural
    communities are all marching, like generations before them, risking
    their lives, praying for and demanding justice--and real change.
        They are demanding economic justice. Our society calls their work
    essential but pays too many ``essential workers'' so little they can't
    afford an apartment, much less dream to own a home.
        Millions of workers don't have a bank account, and saving for
    retirement is out of reach. They don't benefit when the Dow Jones hits
    27,000.
        Americans are demanding reforms to our criminal justice system, an
    equitable healthcare system that protects Black and brown mothers and
    their babies, and support for Black and brown communities, so another
    economic crisis doesn't leave them further behind Wall Street and the
    wealthy and privileged.
        Both of you before us today are central to that fight for economic
    and racial justice.
        HUD's mission was shaped by our Nation's struggle for civil rights.
        Just 6 months after John Lewis and the footsoldiers of Selma were
    beaten crossing the Edmund Pettus Bridge, President Lyndon B. Johnson
    signed the bill that created HUD to address the need for investment in
    communities that had been left behind.
        Shortly after HUD's creation, the Kerner Commission warned that our
    Nation was moving towards ``two societies, one Black, one white--
    separate and unequal.''
        It took the assassination of Martin Luther King, Jr., for Congress
    to act on one of the central recommendations of that report--creating a
    fair housing law.
        Fifty years ago, Congress entrusted HUD with implementing the Fair
    Housing Act. Our country charged your agency with rooting out
    discrimination, and actively working to make it easier for EVERYONE to
    find and afford a home.
        Fundamentally, we all pretty much want the same thing--a place
    that's safe, in a community we care about, where we can get to work and
    our kids have a good school, with room for our family--whether that's
    three kids, or an aging parent, or a beloved pet.
        All of us should get to define what home looks like for us. We
    should be able to find it and afford it without crippling stress every
    single month. And everyone should have the opportunity to build wealth
    for their family by owning a home.
        To make that the reality for everyone, we can't rely on the housing
    market to sort itself out--not when centuries of discrimination are
    baked into it, not when we have decades of laws that distort the market
    in favor of banks and against families.
        That's what your job is--to fix that.
        Secretary Carson--under your leadership, instead of addressing the
    deep inequities in our housing system, you are trying to systematically
    dismantle basic civil rights protections that previous generations
    marched for and endured beatings for and laid down their lives for.
        And your Department refuses to do its job of promoting economic
    inclusion and undoing the historic, Government-driven patterns of
    housing discrimination like redlining and restrictive covenants.
        You want to abandon the legal standard--affirmed by the Supreme
    Court--used to bring housing discrimination lawsuits.
        This isn't just my opinion--look at letter after letter that civil
    rights leaders sent to your agency, opposing your actions.
        And both heads of the agencies before us today are pushing plans
    that will to make home ownership more expensive and harder to get,
    particularly for borrowers of color.
        This is what happens when the ideologues in this Administration
    push Wall Street's agenda, instead of what people actually need.
        Before this pandemic hit, families of color were spending more of
    their income on housing than white families, and they were
    disproportionately likely to experience homelessness.
        This was fueled in part by the Federal Government's failure to
    protect Black and brown and immigrant borrowers from predatory subprime
    lenders before the 2008 crisis, despite knowing that lenders were
    targeting them.
        Forty years of gains in Black home ownership and wealth were
    eviscerated.
        Now, Black families are experiencing this public health and
    economic crisis with just one-tenth of the wealth of White families,
    and they're more likely to work at jobs where their corporate employers
    didn't pay them enough to begin with.
        We are dangerously close to repeating the mistakes of a decade ago.
    Nearly half of Black and 40 percent of Latino renters report that
    they're unlikely to be able to make their next payment.
        We're in the middle of a crisis. And you either don't know, or
    don't care.
        You're plowing ahead with undoing civil rights protections, while
    in Ohio they're reopening eviction courts. Twenty million Americans are
    unemployed. Some have been able to pay the rent or the mortgage but
    only because we passed emergency Unemployment Insurance earlier this
    year. It's set to expire this summer--and the president and Leader
    McConnell are refusing to extend it. Of course we shouldn't be
    surprised--it's all part of Republican leaders' decades-long effort to
    weaken this social insurance that all of us pay into.
        Leader McConnell and President Trump see no urgency--Leader
    McConnell's words, no urgency--to help people.
        Democrats have plans to get more help directly to working families.
    Our emergency rental assistance bill provides $100 billion to help with
    rent and utility bills, so we can help renters avoid impossible
    choices--between rent and groceries, or prescriptions, or draining
    their savings, or going to a payday lender. It already passed the
    House. But it is sitting on the Majority Leader's desk collecting dust.
    For millions of families, the bills keep coming and the clock keeps
    ticking and the stress keeps mounting.
        Before this pandemic, President Trump and his wealthy cabinet
    members didn't realize or didn't care that behind the rosy stock market
    data, this economy was already broken for millions of workers--and for
    Black and brown workers, it never worked to begin with.
        And now the Trump administration either doesn't realize or doesn't
    care that the bottom is falling out for those families.
        People are tired of the lack of action and the lack of
    accountability. Before the pandemic, the Trump administration's idea of
    housing ``reform'' was to, quote, ``level the playing field'' . . . for
    Wall Street.
        That might be the definition of ``out of touch.''
        Enough is enough. Today we want to hear that you understand both
    the magnitude of the current crisis, and the inequities built into our
    housing system for generations. It's about time you actually going to
    do something to fix it, instead of making it worse.
                                     ______

                    PREPARED STATEMENT OF BENJAMIN S. CARSON
             Secretary, Department of Housing and Urban Development
                                  June 9, 2020
        Chairman Crapo, Ranking Member Brown, and Members of the Committee,
    thank you for this opportunity to discuss the steps the U.S. Department
    of Housing and Urban Development (HUD) is taking to maximize our
    Nation's response to the COVID-19 National Emergency. These actions
    reflect both my work with the White House Coronavirus Task Force and
    the measures developed at HUD to protect the health and safety of the
    American public.
        I want to begin by recognizing the unprecedented healthcare and
    economic challenges facing Americans today. This disease is impacting
    families and communities across the Nation. As HUD Secretary, my
    highest priority has been to ensure Americans don't lose their homes
    and to safeguard those at greatest risk of the virus--including
    homeless and low-income communities.
        I also want to thank our Nation's medical professionals and first-
    line responders who have sacrificed so much to keep Americans safe and
    healthy. As a medical doctor, I am inspired daily by their unwavering
    commitment to their fellow citizens.
    Coronavirus Aid, Relief, and Economic Security (CARES) Act
        On March 27, President Trump signed into law the CARES Act. In
    total, the CARES Act provided more than $12 billion in funding to HUD
    programs. Recognizing the unprecedented nature of the global pandemic,
    I directed my staff to immediately begin the process of getting these
    funds to communities most impacted by COVID-19.
        As of the beginning of the month, HUD has announced allocations for
    over $6 billion in funding. This includes:

        $3 billion in Community Development Block Grant (CDBG)
            funds

        $1 billion in Emergency Solutions Grant (ESG) funds

        $685 million for the Public Housing Operating fund

        $380 million for Tenant Based Rental Assistance (TBRA)

        $800 million in Project Based Rental Assistance (PBRA)

        $200 million in Indian Housing Block Grant (IHBG) funds

        $75 million for the Section 811 Mainstream Housing Choice
            Voucher program

        $65 million in Housing Opportunities for Persons with AIDS
            (HOPWA) funds

        In the coming weeks, HUD will continue to expedite getting the
    funding provided by the CARES Act into the hands of communities.
    Federal Housing Administration (FHA)
        Prior to the passage of the CARES Act, FHA acted quickly to help
    protect single-family homeowners who lost their jobs or were
    experiencing economic hardship as a result of COVID-19 by implementing
    a 60-day moratorium on foreclosures and evictions, which was
    subsequently extended through June 30. The CARES Act also provided a
    120-day eviction moratorium for tenants in certain federally supported
    rental properties, including properties with FHA-insured single-family
    or multifamily mortgages.
        FHA further announced a tailored set of mortgage payment relief
    options for single-family homeowners with FHA-insured mortgages who are
    experiencing financial hardship because of the pandemic. This includes
    CARES Act forbearance, which allows borrowers to request up to 6 months
    of forbearance and extend for up to six months. Also included was an
    extension period for calling a loan due for those with a Home Equity
    Conversion Mortgages (HECM).
        FHA also implemented the COVID-19 National Emergency Standalone
    Partial Claim for borrowers on forbearance. This option will help
    eligible homeowners resume their mortgage payments and avoid a ``lump
    sum'' repayment of arrears by deferring repayment to the end of the
    mortgage.
    Ginnie Mae
        Ginnie Mae expanded its pass-through assistance program (PTAP) to
    help address potential issuer liquidity challenges caused by borrower
    forbearance requirements implemented by FHA and other Federal mortgage
    insurance programs. PTAP provides last-resort financing to cover the
    difference between issuers' available funds and scheduled payment of
    principal and interest (P&I) to mortgage-backed security (MBS) holders.
    The timely payment of P&I to MBS holders, consistent with Ginnie Mae's
    statutory guaranty, is essential to the liquidity of the MBS market and
    the confidence of investors who finance housing through the Ginnie Mae
    program.
    White House Opportunity and Revitalization Council
        In December 2018, President Trump signed Executive Order 13853
    establishing the White House Opportunity and Revitalization Council. I
    have had the honor of chairing this Council since its establishment.
        In response to the ongoing and unprecedented global pandemic,
    President Trump has directed me and the Council to utilize its talented
    structure and build on its original intent with a renewed focus to
    expand efforts to protect and promote our most vulnerable communities.
    The Council will work to ensure that minority and underserved
    communities are kept safe from this invisible enemy, now and into the
    future. In the coming weeks, the Council will identify different policy
    approaches needed to help advance opportunity for these communities.
    Conclusion
        Thanks to the leadership of President Trump, I'm proud of the work
    this entire Administration--and especially the 7,500 employees of HUD--
    are doing each and every day to fight this invisible enemy and meet the
    needs of the American people. I'm grateful to this Committee for its
    bipartisan commitment to meeting this challenge. Thank you.
                                     ______

                     PREPARED STATEMENT OF MARK A. CALABRIA
                    Director, Federal Housing Finance Agency
                                  June 9, 2020
        Chairman Crapo, Ranking Member Brown, and distinguished Members of
    the Committee, thank you for the invitation to appear at today's
    hearing.
        The Federal Housing Finance Agency (FHFA) has acted swiftly and
    prudently to respond to COVID-19. We continue to update our policies as
    the challenges facing renters, borrowers, and market participants
    evolve. We have worked in close partnership with FHA and Ginnie Mae in
    developing many of our policies. I want to thank Secretary Carson, HUD
    Deputy Secretary Montgomery, and Acting Ginnie Mae President Seth
    Appleton for their partnership and leadership.
    FHFA's Actions to Protect Agency Workforce and Maintain Mission Focus
        FHFA's hard-working employees are the Agency's greatest asset.
    Their well-being is my top priority. Our teleworking flexibilities have
    enabled our staff to remain safe and manage at-home obligations, while
    continuing to fulfill the Agency's vital mission.
        The FHFA team has gone above and beyond during these uncertain and
    challenging times. In March, our telework test transitioned the very
    next day into full-time mandatory telework for the Agency. FHFA
    employees quickly adapted to the new environment and the Agency
    maintained continuity of operations during this crisis with crucial
    support from the Office of the Chief Operating Officer.
        The Office of Technology and Information Management has kept the
    FHFA workforce productive and connected by rapidly deploying critical
    remote tools and staff training, meeting employees' IT equipment needs,
    and safeguarding the Agency's network capacity, connectivity, and
    security. The Office of Facilities Operations Management has
    established protocols and procedures for keeping our employees and
    headquarters safe and healthy, working tirelessly to provide employees
    with the equipment and office supplies needed to set up and sustain
    their remote workstations. The Office of Human Resources Management has
    been instrumental in ensuring employees have the support they need to
    remain engaged and productive, including by developing work schedule
    and leave flexibilities, expanding the Agency's Employee Assistance
    Program, and meeting special accommodation requests resulting from our
    remote-work posture.
        Across the board, the FHFA team has seamlessly transitioned to a
    virtual environment. This includes the hiring, on-boarding, and
    training processes that are essential for FHFA to continue developing
    and retaining a highly talented and effective workforce. The Office of
    Budget and Financial Management and Enterprise Program Management
    Office, working with FHFA's COVID-19 Task Force, have helped the Agency
    stay coordinated on the updated guidance provided by various Government
    entities, health officials, and local authorities. I am proud of the
    flexibility, cooperation, and hard work of every member of the FHFA
    team during this pandemic.
        The Office of Congressional Affairs and Communication has remained
    engaged with and accessible to members of Congress and their staff.
    Since March, FHFA's legislative affairs team has held dozens of remote
    congressional meetings and briefings to discuss Agency policies and
    provide technical assistance with legislation. This is a testament to
    FHFA's dedicated staff and our ongoing commitment to responding to
    congressional inquiries in a timely manner, maintaining transparency,
    and connecting the Agency's many subject matter experts to legislative
    staff.
        In responding to the COVID-19 national emergency, FHFA has worked
    closely with our peer financial regulators and other Federal agencies.
    Through regular communication channels, FHFA and these agencies
    continue to share, in real-time, challenges, ideas, and solutions to
    help each other develop best practices based on the latest guidance
    available. Timely information sharing has enabled FHFA to respond to
    evolving COVID-19 related challenges in a rapid, nimble, and effective
    manner.
        FHFA has continued to foster an environment where everyone feels
    safe, respected, and valued for our differences. The senseless violence
    and loss of innocent life that has roiled our Nation in recent weeks--
    and that tears apart too many
    communities across the country--highlight the importance of this work
    both in the workplace and beyond. The unrest across our Nation in
    recent weeks reaffirms why fairness, diversity, and inclusion are core
    values for me personally and our Agency. FHFA has one of the most
    diverse workforces amongst Federal regulatory agencies. Our diversity
    is--and will remain--a key source of FHFA's success. I commend FHFA's
    Office of Minority and Women Inclusion (OMWI) for its steadfast support
    of the Agency's workforce during this time. This includes OMWI's work,
    with my support, to launch FHFA's Diversity Advisory Council, which
    aims to ensure diversity in all aspects of the Agency's employment and
    contracting practices and to create regular programs that engage
    employees on professional and personal diversity and inclusion issues.
    OMWI is also playing an essential role in helping FHFA employees
    affected by the recent events and tensions across the country, offering
    training, listening sessions, and other resources.
        Across all divisions and offices, FHFA's employees have remained
    focused on fulfilling the Agency's important mission, united by a
    shared vision that, during this crisis, Americans should not have to
    worry about losing their homes. We have worked closely with our
    regulated entities, Fannie Mae and Freddie Mac (the Enterprises) and
    the Federal Home Loan Banks (FHLBanks), to support borrowers and
    renters, while ensuring the proper functioning of the mortgage market
    both during and after this crisis. Our actions have been--and continue
    to be--data driven.
    FHFA's Strong Research Capabilities Are Key to Agency's Data Driven
            Policymaking
        Through oversight of the regulated entities, FHFA collects and
    analyzes a significant amount of data on trends in the housing and
    mortgage markets. This enables the Agency to respond appropriately to
    market developments, promote market efficiency and stability, and
    disseminate information to improve the public's understanding of
    housing finance markets. Economic research and data analytics are core
    competencies of effective safety and soundness supervision, which is
    essential to preparing the Agency and the Enterprises to responsibly
    exit and operate safely outside of conservatorship. That is why, from
    the beginning of my term, one of my top priorities has been to
    strengthen FHFA's research and data analysis capabilities.
        For instance, the Agency has enhanced the accessibility of existing
    data products, such as quarterly and monthly house price indexes
    (HPIs). FHFA produces the Nation's only public, freely available HPIs
    that measure changes in single-family house prices based on data that
    cover all 50 States and over 400 American cities and extend back to the
    mid-1970s. The HPIs are built from tens of millions of home sales and
    offer insights about house price fluctuations at the national, census
    division, State, metro area, county, ZIP code, and census tract levels.
    On May 26, with the publication of the HPI report for the first quarter
    of 2020, FHFA launched a new interactive dashboard, available on the
    Agency's website, that illustrates house-price trends across the top
    100 Metropolitan Statistical Areas.
        In addition to increasing the exposure of existing data products,
    FHFA has taken several steps to elevate and expand the Agency's
    research capabilities and contributions. In January 2020, as part of an
    organizational realignment, FHFA created the Division of Research and
    Statistics (DRS) to strengthen the Agency's data collection and
    analysis capabilities. DRS is FHFA's center for economic and market
    research, data development, and statistical analysis to support the
    Agency's divisions and offices engaged in oversight, supervision,
    rulemaking, and policy development. The division examines trends and
    risks in housing and housing finance markets, advances modeling
    capabilities, develops and maintains data, evaluates policy impacts,
    and engages with research communities outside of the Agency.
        The research and data analysis capabilities that FHFA created and
    continues to strengthen within DRS have been critical to supporting the
    Agency's data-driven response to COVID-19. For instance, DRS has
    enhanced FHFA's capacity to monitor housing and mortgage markets by
    leveraging existing data sources and seeking out new ones. This has
    provided a comprehensive view of the state of the mortgage market prior
    to the pandemic and it has enabled FHFA to understand, in real time,
    how circumstances have changed over the course of the crisis.
    The State of the Market Before and During COVID-19 Crisis
        At the start of 2020, the American housing market was in a strong
    position. A low interest rate environment and stable labor markets
    drove robust demand and price appreciation. Home price growth in the
    first quarter of 2020 outpaced annual growth from the same period a
    year ago as falling interest rates and shrinking inventories for sale
    led prices higher just prior to the COVID-19 crisis. Nationwide, house
    prices increased 1.7 percent in the first quarter of 2020, up 5.7
    percent compared to the first quarter of 2019. FHFA's seasonally
    adjusted monthly index for March was up 0.1 percent from February.
    Because of the lag between contract signing and sale closing when
    FHFA's data are recorded, the first quarter's housing statistics were
    relatively unaffected by the COVID-19 outbreak. However, this does not
    account for any modifications or cancellations of sales later in March.
        Existing home sales had been on a steady upward trajectory since
    early 2019, after declining throughout 2018 due to rising rates. The
    National Association of Realtors' months' supply of existing homes for
    sale in February reached its lowest level since the series started in
    1999, driving home prices upward at a faster rate in the first quarter.
    Single-family housing starts in February 2020 reached the highest 3-
    month rate since November 2006, on a seasonally adjusted basis, after
    more than 10 years of slow but steady increases.
        In response to COVID-19, financial markets endured a severe
    dislocation in March. Uncertainty over public health and the economic
    impacts of the pandemic caused financial liquidity to dry up,
    significantly disrupting the financing, lending, and hedging activities
    of mortgage lenders as well as many other market participants. Spreads
    between the 30-year fixed rate mortgage rate and 10-year Treasury yield
    widened during this period. Even Treasuries experienced periods of
    rising yields as a marketwide rush to cash led investors to sell off
    their most liquid assets in response to redemption demands.
        Employment fell by more than 20 million jobs between February and
    May, an unprecedented demand shock and hardship to households. The
    unemployment rate reached 13.3 percent in May from its 50-year low of
    3.5 percent in February. Despite the dramatic drop in demand, the
    months' supply of existing homes for sale remained near historic lows
    in April as the inventory of homes available for sale also decreased.
    This has thus far provided support to home prices. In the multifamily
    market, thus far, turnover has been lower than normal, and more renters
    are continuing to pay rent than projections had forecasted.
    FHFA's Policy Response: Supporting Borrowers and Renters
        From the beginning of this crisis, FHFA's policy, conservatorship,
    and research teams have worked together to produce forecasts and
    estimates of the future impact of COVID-19 on our mortgage market,
    based on key indicators such as unemployment insurance claims and house
    prices. They have also developed models to support decision making
    regarding loan modifications, servicing, and other issues. This
    internal research, monitoring, and analysis have helped to inform and
    guide FHFA's policy actions.
        One of our top priorities has been to support renters and
    homeowners struggling to pay for housing because of COVID-19. To do
    this, FHFA has directed the Enterprises to put in place certain
    protections. The Enterprises own or guarantee approximately $5.7
    trillion in mortgages. That includes about 43 percent of multifamily
    units, which represents about 8.6 million households and more than half
    of single-family mortgages or about 28 million homeowners. FHFA's
    policies apply to all single-family homeowners and multifamily property
    owners with an Enterprise-backed mortgage. In addition, FHFA's policies
    also help to set workable standards for the entire market.
        For homeowners facing foreclosure before COVID-19, we suspended all
    foreclosures and evictions for at least 60 days. FHFA later extended
    this foreclosure and eviction moratorium through at least June 30.
        For borrowers financially impacted by COVID-19, we allowed
    homeowners to take a timeout from mortgage payments through
    forbearance. We then announced that borrowers in forbearance who can
    return to making their regular monthly payments can repay missed
    payments when they sell their home or refinance their loan. This new
    payment deferral option simplifies options for borrowers and provides
    an additional tool for mortgage servicers.
        FHFA also took action specifically to protect renters struggling to
    pay rent because of COVID-19. It is important to recognize that the
    Enterprises do not have a contractual relationship with tenants. Their
    relationship is with the property owners or landlords. Therefore, if a
    multifamily loan is performing and the property owner does not seek
    forbearance, the Enterprises cannot impose requirements on the
    landlords.
        On March 23, FHFA announced the Enterprises' policies providing a
    forbearance option for multifamily property owners with an Enterprise-
    backed mortgage that prohibits tenants from being evicted for the
    nonpayment of rent during forbearance. On March 27, the President
    signed the CARES Act, which provides a 120-day eviction moratorium for
    renters in properties with an Enterprise-backed mortgage, even if the
    property owner does not enter forbearance. As a result, renters living
    in multifamily properties with an Enterprise-backed mortgage cannot be
    evicted for either 4 months or the duration of the property owner's
    forbearance period, whichever is longer; and all late fees, charges,
    and penalties are waived for both borrowers and tenants during the
    eviction moratorium or forbearance period.
        While the single-family forbearance program was modeled on prior
    disaster response efforts, the multifamily forbearance programs with
    tenant protections were developed from the ground up. After putting
    these programs in place, at FHFA's direction, the Enterprises created
    online lookup tools that show whether a single-family or multifamily
    property has a mortgage owned or guaranteed by Fannie Mae or Freddie
    Mac. This information indicates whether renters are covered by the
    CARES Act's eviction protections and whether single-family borrowers
    are eligible to apply for forbearance.
        Since implementing the single-family and multifamily forbearance
    programs, FHFA has closely monitored the data to understand the
    responses by borrowers and the market. As a staffer on this Committee
    during the 2008 financial crisis, I saw firsthand the importance of
    resisting the pressure to ``act first, analyze later'' that arises in a
    period of financial stress. In a crisis, panic can lead to ill-
    conceived policy responses and send confounding signals to the market.
    It is imperative to remain calm and make decisions based on careful,
    thoughtful analysis of the most up-to-date data available. This has
    been a fundamental objective of FHFA during the COVID-19 national
    emergency.
        Early in the crisis, there were a wide variety of predictions about
    the future effects of COVID-19 on housing markets. Some observers
    contended that forbearance rates would reach as high as 25 to 50
    percent. Given the unprecedented nature of the pandemic and the high
    degree of uncertainty about the economic impact, FHFA carefully
    monitored the data we received from our Division of Research and
    Statistics, the Enterprises, and market participants to ensure we were
    developing and updating our policies in response to the facts on the
    ground. At this point, I remain encouraged by what the data is telling
    us about the trajectory of forbearance rates.
        Data developed internally at the Enterprises and by industry groups
    indicate that Enterprise forbearance rates remain manageable. After
    rising precipitously in April, the rate of forbearance uptake slowed
    during the last few weeks of May. According to data released by the
    Mortgage Bankers Association, as of May 24, 6.4 percent of total
    Enterprise-backed mortgages were in forbearance, compared to 11.8
    percent of mortgages backed by Ginnie Mae (see Figure 1). In March,
    just over 1 percent of borrowers with loans in Enterprise mortgage-
    backed securities (MBS) were 30- or 60-days delinquent on payment. By
    May, this rate increased to 5.2 percent, according to RiskSpan. The 30-
    and 60-day combined delinquency rate remains below the estimated rate
    of forbearance as some borrowers who have requested forbearance are
    nonetheless continuing to make payments on their loan. FHFA's internal
    analysis shows that approximately 130,000 units of multifamily housing
    are in properties receiving forbearance from Fannie Mae or Freddie Mac,
    representing about 1.5 percent of outstanding multifamily mortgage
    balances at the Enterprises.
    Figure 1

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The mortgage market still faces challenges. Responding to
    substantial Federal support in the form of MBS purchases by the Federal
    Reserve, spreads between the current coupon MBS and 10-year U.S.
    Treasury have largely returned to levels observed at the beginning of
    2020, at least for the to-be-announced (TBA) market. On the other hand,
    spreads between the 30-year fixed mortgage rate and the 10-year
    Treasury yield remain high. These primary market spreads have declined
    in recent weeks, but they have not yet returned to precrisis levels
    (see Figure 2). This is likely a result of ongoing uncertainty about
    the pace of economic and labor market recovery, the impacts on mortgage
    servicing rights, and constrained lender capacity to absorb increased
    levels of borrower demand.
    Figure 2

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        However, current mortgage rates reported by Freddie Mac and the
    Mortgage Bankers Association are at the lowest point on record in the
    series dating back to 1971 and 1990, respectively. And FHFA continues
    to work with the Enterprises to ensure that borrowers can access new
    purchase and refinancing opportunities at historically low rates. For
    instance, at FHFA's direction, the Enterprises have issued new guidance
    that borrowers in forbearance who continue to make payments will be
    treated as current when it comes to refinancing their loan or buying a
    new home. In addition, borrowers' credit history will not be negatively
    impacted by entering a COVID-19 related forbearance plan.
        We have also helped clarify consumers' options. We have emphasized
    that those who can make their mortgage payments should continue doing
    so. We updated the scripts that servicers use when talking to borrowers
    about forbearance. We have emphasized to servicers and the public that
    no lump sum repayment is required at the end of forbearance. We
    partnered with the Consumer Financial Protection Bureau to launch the
    Borrower Protection Program. And FHFA helped develop a website that
    consolidates Federal information about mortgage relief options, renter
    protections, and how to avoid scams.
    FHFA's Policy Response: Ensuring the Proper Functioning of the Mortgage
            Market
        Working with our regulated entities, FHFA has also taken several
    steps to ensure the mortgage market continues to function properly both
    during and after this crisis.
        To ensure the safety of market participants, FHFA authorized
    several loan-closing, employment-verification, and appraisal
    flexibilities. The changes include allowing desktop and exterior-only
    appraisals, providing alternative methods to demonstrate construction
    completion and satisfy borrower documentation requirements, allowing
    renovation disbursements, and expanding the use of power of attorney,
    appraisal waivers, and remote online notarization. FHFA put these
    flexibilities in place for 60 days and then extended them through at
    least June 30.
        Moving forward, we will continue to closely monitor the situation
    and update our policies based on what borrowers, appraisers, lenders,
    Government services, and other market participants are experiencing on
    the ground. This crisis has highlighted how much of the real estate
    process as we know it currently depends on face-to-face interactions.
    Changes made in response to the pandemic will likely accelerate the
    uptake of streamlined methods and models, jumpstarting the use of more
    e-mortgage tools across the industry. As business practices adapt to
    new realities, FHFA will continue working with stakeholders, consumer
    groups, and other regulators to streamline the homebuying process in a
    prudent manner that meets the health needs of the Nation.
        In April, FHFA recognized that nonbank servicers needed clarity to
    serve the market through the crisis. In response, we instituted a four-
    month limit on servicers' obligations to advance principal and interest
    payments on loans in forbearance. When a mortgage loan is in a MBS,
    Fannie Mae servicers with a scheduled payment remittance had been
    responsible for advancing the principal and interest payment regardless
    of borrower payments. Freddie Mac servicers, who are generally
    responsible for advancing scheduled interest, are only obligated to
    advance four months of missed borrower interest payments. FHFA's policy
    established a 4-month advance obligation limit for Fannie Mae scheduled
    servicing, which is consistent with the current policy at Freddie Mac.
        To keep the mortgage market working for current and future
    borrowers, and to help originators continue lending, FHFA enabled the
    Enterprises for a limited period of time to purchase certain single-
    family mortgages in forbearance that meet their criteria. Charging a
    fee for these transactions is consistent with FHFA's statutory mandate
    to ``preserve and conserve assets'' and the Enterprises' charter
    requirement to purchase only those loans that meet the standards
    imposed by private institutional mortgage investors. Prior to this, the
    Enterprises had never purchased loans in forbearance. Our policy
    provides a new option to lenders and the Enterprises.
        Additionally, FHFA took several steps to ensure the Federal Home
    Loan Bank System could continue to support member liquidity and housing
    finance markets. We relaxed liquidity requirements in a countercyclical
    fashion. We reminded the FHLBanks of their obligation to offer advances
    up to 10 years in maturity to meet their members' needs and their
    ability under FHFA regulations to provide below-cost advances during
    disasters like the COVID-19 pandemic.
        We allowed the FHLBanks to accept Paycheck Protection Program loans
    as collateral when making loans to their members and allowed them to
    accept as collateral loans that have been modified or that are in
    COVID-19 related forbearance. To avoid exacerbating potential liquidity
    problems, FHFA deferred certain deadlines related to the FHLBanks'
    transition from LIBOR-based exposures, while continuing our efforts to
    prepare for the eventual end of LIBOR. To protect the safety and
    soundness of the FHLBanks, FHFA issued guidance related to collateral
    and pricing policies aimed at ensuring that all members are treated
    fairly and that every FHLBank can continue to provide liquidity to
    institutions and communities in its district.
        It is important to recognize the vital support that the FHLBanks
    provided to the market in response to the financial stress caused by
    the pandemic. A core function of the FHLBanks is to provide liquidity
    in times of stress. This support is critical for small and community
    banks that often do not have access to other sources of low-cost
    funding. When the COVID-19 crisis began, the FHLBanks stepped up to
    keep liquidity in the market, meeting unprecedented advance demand from
    their member financial institutions.
        In March, while other liquidity sources dried up, FHLBank System
    advances grew by $189.4 billion--or 30.7 percent--at their peak. For
    the quarter ending March 31, FHLBank System advances increased 25.8
    percent to $806.9 billion. While access to long term debt markets was
    severely limited, the System was able to fund this increased advance
    demand largely through discount notes and floating rate bonds indexed
    to the Secured Overnight Financing Rate (SOFR). For the first quarter
    of 2020, outstanding debt increased to $1.18 trillion, growing at the
    fastest pace in recent history.
        As advances and assets grew, earnings decreased significantly
    because of reduced net interest spread and mark-to-market accounting
    effects. Compared to the fourth quarter of 2019, net interest income
    fell a substantial $350 million (28.6 percent) to $872 million, and net
    income decreased $262 million (29.5 percent) to $627 million.
    Nevertheless, for the first quarter of 2020, FHLBank System retained
    earnings grew $141 million to $20.7 billion, or 1.6 percent of total
    assets.
        Following the injections of liquidity provided by the Federal
    Reserve and the CARES Act, the FHLBanks' balance sheets--both advances
    and debt outstanding--have fallen to or below precrisis levels (see
    Figure 3). This is exactly what the FHLBanks are supposed to do as
    countercyclical providers of liquidity. And it is why FHFA is focused
    on protecting the System's safety and soundness. It is critical that
    the Banks remain capable of being a source of liquidity when their
    members and the economy need it most.
    Figure 3

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Assessing FHFA's Policy Response: The State of the Market Today
        I am proud of what FHFA has done to help borrowers, renters, and
    the housing market deal with this crisis. FHFA recognizes that more
    work remains. The crisis caused by COVID-19 is not over. The full
    economic and financial impact of the pandemic is not yet known. The
    future state of the labor market remains uncertain. The mortgage market
    is still under stress. For these reasons, the FHFA team is still hard
    at work to ensure our policies continue to respond to the challenges as
    they evolve. We remain committed to working with other Federal
    agencies, Congress, our regulated entities, and stakeholders to get
    through this difficult time. That said, at this point, I am encouraged
    by what the data tells us about the state of the mortgage market and
    the capacity of servicers following FHFA's robust policy response.
        Total monthly Enterprise principal and interest payments are
    approximately $32 billion. Of that, about 40 percent, approximately $13
    billion, of the advance obligation rests with the Enterprises. About
    $11 billion, approximately a third, rests with depositories. Therefore,
    roughly $8 billion, approximately a quarter, of the potential monthly
    advance obligation rests with nonbanks. At a 6.5 percent forbearance
    rate this translates into approximately $520 million per month of
    nonbank incremental advance needs. And, as noted above, not all
    borrowers in forbearance have stopped making mortgage payments. As a
    result of FHFA's 4-month limit on servicers' obligations to advance
    principal and interest payments on loans in forbearance, nonbanks'
    total 4-month obligation is approximately $2.1 billion.
        Were forbearance rates to rise dramatically to 15 percent, nonbank
    servicers' monthly advance obligations would be roughly $1.2 billion.
    FHFA's analysis of servicer capacity indicates that servicers as a
    whole have multiples of that number available should they need it.
    FHFA's internal modeling projects that forbearance rates will not reach
    as high as 15 percent. But this type of analysis provides useful
    context to the forbearance rates we are seeing today. In addition, both
    Fannie Mae and Freddie Mac programs allow servicers to use a portion of
    mortgage payoffs from refinancings to help cover these advance
    obligations. This has a significant impact especially under the Fannie
    Mae program.
        In addition, servicers have recently increased their available
    liquidity. Total nonbank liquidity increased by 9 percent to $36
    billion in the first quarter of 2020. Of that, unencumbered cash and
    equivalents made up $13 billion, an increase of 19 percent from
    December 31, 2019. At the end of April, nonbank servicers' cash
    positions improved compared to the end of March and profitability
    increased. This was driven by the stability in the 10-year Treasury
    bond, which led to stability in mortgage servicing rights (MSR) values
    combined with strong volume and wide margins.
        Servicing buyers are beginning to return to the MSR purchase
    market, providing access to liquidity especially for smaller firms that
    have been forced to hold servicing. Lenders have shown a willingness to
    renew warehouse lines of credit and some appetite to offer new credit
    for MSR Advance Facility Financing.
        Following some contraction in mortgage market activity in March and
    April, the purchase market appears to be rebounding (see Figure 4), and
    combined purchase and refinance mortgage application activity has
    increased to levels last seen in 2013. According to analysis by the
    American Enterprise Institute based on data from Optimal Blue on
    mortgage loan applications receiving rate locks in May, average credit
    scores, debt-to-income, and loan-to-value ratios have not changed
    dramatically on a year-over-year basis for conventional loans. The
    Enterprises, at the direction of FHFA, will continue to take measured
    and responsible steps to maintain a prudent risk profile and address
    layered risks. Moving forward, FHFA will continue to closely monitor
    all sources of market data and let the data drive our decisions.
    Figure 4

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Looking Ahead: The Urgent Need To Build Capital at the Enterprises and
            Advance Housing Finance Reform
        But this does not mean that all is well. This crisis has provided
    ample evidence of the critical vulnerabilities in our mortgage system
    that put taxpayers and our housing market at risk. Most notably, Fannie
    Mae and Freddie Mac lack the capital to withstand a serious housing
    downturn. This undermines their countercyclical role and jeopardizes
    their important mission.
        To provide the Enterprises a stronger foundation on which to
    weather periods of financial stress, on May 20, FHFA released a
    reproposed capital rule. This rule will help each Enterprise become
    safe and sound to fulfill its statutory mission across the economic
    cycle. It is essential to building a strong, resilient housing finance
    system that supports sustainable and affordable home ownership.
        Only Congress can enact the reforms necessary to fix the structural
    flaws in our housing finance system. To that end, next week, I will
    submit FHFA's Annual Report to Congress that includes several
    legislative recommendations to strengthen FHFA with additional
    regulatory and supervisory authorities similar to those of other
    independent Federal financial regulators. I stand ready to work with
    all who share the goal of building a stronger, more resilient housing
    finance system in America.
            RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN
                        FROM BENJAMIN S. CARSON

    Q.1. Under a final rule issued in December 2016, all housing
    counselors at HUD-certified housing counseling agencies must
    complete individual HUD certification by August 1, 2020, in
    order to provide counseling services. The COVID-19 pandemic may
    pose challenges to completing the testing requirement for
    certification, particularly if a counselor does not have the
    technological capability necessary to complete an online exam
    and planned to sit for an in-person, proctored exam. According
    to the latest information available from HUD Exchange, in 15
    States less than 40 percent of counseling agencies had even one
    counselor who had completed certification. Lack of certified
    counselors could pose a challenge to helping the many
    homeowners and renters who will face housing challenges in the
    months ahead.
        How will HUD ensure that counselors at HUD-certified
    counseling agencies have sufficient time to complete the
    certification process so that all States will have the
    necessary counseling resources for homeowners and renters? Will
    HUD move the August 1, 2020, deadline or otherwise alter
    certification requirements to ensure there are sufficient
    resources available in all States?

    A.1. HUD's Office of Housing Counseling has focused its work
    throughout the past year to ensure that housing counselors and
    housing counseling agencies have sufficient time and resources
    to prepare for and successfully complete the HUD Housing
    Counselor certification examination. Because of the difficulty
    adding new certified counselors due to the pandemic, HUD
    published an Interim Final Rule effective July 31 that extended
    the certification deadline through August 1, 2021.

    Q.2. Secretary Carson, in response to a question from Senator
    Scott about eviction moratoria, you said that HUD was
    interested in creating affordable housing. I share your
    interest in creating more affordable housing in all
    neighborhoods throughout the country. But new affordable units
    built in the coming years will not help families who are
    currently facing eviction. If they are displaced, these
    families may find themselves at increased risk of homelessness
    or doubling up, putting them at greater risk for contracting
    COVID-19. We have been told the homeless system already needs
    an additional $11.5 billion, on top of the $4 billion provided
    in the CARES Act, just to serve those without adequate,
    socially distanced shelter. That does not account for the
    increased need if more renters are displaced.
        Secretary Carson, how do you propose to help renters--
    particularly those who were not receiving Federal assistance
    before the pandemic--so that they do not find themselves
    homeless in the coming weeks and months?

    A.2. Earlier this month, the Administration issued its
    Executive order (EO) to temporarily HALT evictions during the
    COVID-19 pandemic. American renters who meet certain conditions
    cannot be evicted if they have exhausted their best efforts to
    pay rent, and are likely to become homeless as a result.
        HUD continues to work with housing providers and renters to
    prevent any threat to the housing stability of Americans, which
    is central to their health and well-being, especially in the
    wake of the coronavirus. Since the onset of this pandemic, the
    Department has taken proactive measures to keep Americans in
    their homes, including allowing the use of CDBG-CV and ESG-CV
    for the purposes of rental assistance.
        To assist families in mitigating any hardships that may
    arise, HUD has provided an Eviction Prevention and Stability
    Toolkit. The Toolkit encourages Public Housing Authorities
    (PHA) and Housing Choice Voucher (HCV) landlords to plan for
    and implement strategies to keep families stably housed and
    mitigate economic hardships due to Coronavirus. HUD also
    published a Multifamily Tenant Brochure to inform and address
    rent payment concerns of tenants living in multifamily
    properties.
        The Toolkit is composed of a PHA best practices guide,
    tenant brochure with tips to avoid eviction, HCV landlord flyer
    to encourage engagement with tenants before the moratorium
    expires, and repayment agreement guidance in addition to sample
    documents to provide increased clarity for landlords and
    renters utilizing the resources.
        For FHA-insured multifamily properties where the owner is
    receiving forbearance mortgage payment relief, tenants cannot
    be evicted solely for nonpayment of rent for the duration of
    the forbearance period. HUD issued guidance on July 1 for
    owners of these properties, including a new online brochure for
    owners to share with tenants.

    Q.3. In response to a question from Senator McSally, you stated
    that struggling renters could have a reassessment of their
    income in order to obtain a rent adjustment so they can avoid
    falling behind on their payments. The ability to come in for a
    rent adjustment when a family loses a job or income is an
    important feature of the federally assisted housing programs,
    in that it helps residents weather job losses and downturns
    without the further setback of an eviction or accrual of debts
    they won't be able to repay. This feature also provides
    reassurance to landlords participating in the Section 8 voucher
    program that they will be paid in full. As you know, however,
    such rent adjustments are only available for federally assisted
    renters. As HUD reported in March 2020, HUD assists only about
    1-in-4 very low-income renter households and only about 1-in-10
    renter households nationwide, leaving 9 out of 10 renters
    unable to ask for the rent adjustment you described.
        How does HUD propose to help the 9 in 10 renters who do not
    receive HUD assistance if they fall behind on rent payments, or
    are already 4 months behind, as Senator McSally described?

    A.3. For those families that are income eligible for HUD
    programs, they are encouraged to apply to any and all programs
    for which they qualify. In addition to the regular HCV program,
    there are also more than 500,000 special purpose vouchers for
    specific populations, projects for elderly and disabled
    families and others that can assist our most vulnerable
    unassisted families.
        Rental Assistance is also an eligible use of CDBG-CV
    funding, however, it is temporary assistance (6 months) and the
    families would need to work with the grantee to address longer
    term housing needs.

    Q.4. Several times during the hearing, you referenced the
    National Multifamily Housing Council (NMHC) rental payment
    tracker data as evidence that renters are continuing to make
    rental payments. While the NMHC presents one data point, this
    data only represents about 25 percent of all units and those
    units are in professionally-managed buildings. According to the
    NMHC on its June 9th release, this data does not paint a full
    picture of what is happening across the rental market:

            ``These are trying times for the country, and we are
            reminded on a regular basis how crucial safe and secure
            housing is during a period of uncertainty and upheaval,
            so we are glad to see that residents who live in
            professionally managed properties continue to pay their
            rent,'' said Doug Bibby, NMHC President. ``While our
            Rent Payment Tracker metric continues to show the
            resilience and strength of the professionally managed
            apartment industry, it does not necessarily tell the
            whole story, as it doesn't capture rent payments for
            smaller landlords or for affordable and subsidized
            properties, and according to Harvard, more than half of
            renters with at-risk wages due to the pandemic live in
            single-family and small multifamily rentals with 2-4
            units.''

            ``There are serious signs of economic dislocation
            outside of our reporting universe that underscore the
            need for Congress to pass a direct rental assistance
            program and extend unemployment benefits before it's
            too late,'' said Bibby. ``According to the Harvard
            Joint Center for Housing Studies, nearly a fifth of
            households with at-risk wages in small multifamily
            apartments may have difficulty paying rent. In
            addition, 32 percent of renter respondents to the
            Census Bureau's Household Pulse Survey reported no or
            slight confidence in their ability to pay next month's
            rent.''

        In addition to the NMHC data you referenced, what other
    data sources, including those provided by other agencies like
    the U.S. Census Household Pulse data, does HUD use to monitor
    the rental market? Given the limitations of the NMHC data, will
    you appropriately caveat the use of this data in the future?

    A.4. HUD is carefully monitoring the Census Pulse Survey data
    and working with the Census Bureau to edit the rent-related
    questions on the survey to improve its accuracy given the
    practices by property managers to collect partial rent payments
    throughout the month while still considering tenants current on
    rent. HUD is also working with industry partners to obtain rent
    payment data for Low-Income Housing Tax Credit and other
    professionally-managed subsidized rental housing.
        It is HUD's experience that collecting complete, accurate,
    and timely data from the millions of owners of small rental
    properties is difficult. This is why HUD is very supportive of
    the Census Bureau's Pulse Survey.

    Q.5. In response to a question from Senator Tester about the
    financial challenges facing smaller property owners if renters
    are unable to make payments, you stated that those property
    owners were
    eligible for PPP and that PPP seems to be meeting those needs.
    However, I continue to hear confusion about whether property
    owners are eligible for PPP based on the SBA's Interim Final
    Rule and FAQs, and the National Multifamily Housing Council
    reports that there is outstanding litigation on the issue. For
    PPP loans to be forgiven, the majority of the funds must go to
    payroll expenses, which may be a smaller proportion of the
    financial need for smaller or sole proprietor landlords.
        Please clarify whether small landlords are eligible for PPP
    under SBA rules.

    A.5. While the program has now terminated, the Small Business
    Administration is in the best position to respond to questions
    about PPP terms and conditions.

    Q.6. Through the CARES Act, Congress provided almost $2 billion
    ($1.935B) to help local communities serve their residents
    through the Public Housing and Housing Choice Voucher programs.
    To date, only about $1 billion ($1.065B) has been made
    available to public housing agencies for these purposes. The
    nearly $900 million in CARES Act funds remaining are needed to
    help our lowest-income residents maintain stable and safe
    housing.
        When and how do you plan to allocate the remainder of these
    funds?

    A.6. All Public Housing Operating Funds ($685 million) provided
    through the CARES Act were obligated to PHAs on May 1, 2020.
        The Office of Public and Indian Housing (PIH) published a
    notice on July 31, 2020, that established the eligibility
    criteria for the $400 million of supplemental HAP made
    available through the CARES Act. The supplemental HAP funding
    is available for PHAs that either (1) experience a significant
    increase in voucher PUC due to extraordinary
    circumstances (referred to as Extraordinary Circumstances), or
    (2) despite taking reasonable cost saving measures, as
    determined by the Secretary, would otherwise be required to
    terminate rental assistance for families as a result of
    insufficient funding (referred to as Shortfall Funds). The
    deadline for submitting Extraordinary Circumstances
    applications is October 31, 2020, and the eligibility
    evaluation and determination for funding awards will be
    performed on a rolling basis.
        As of September 14, 2020, the Office of Housing Voucher
    Programs (OHVP) has made available $849.9 million of the CARES
    Act admin fee supplemental funding. PIH Notice 2020-08 made
    available $377 million, and PIH Notice 2020-18 made available
    $472 million. From this total, $841.7 was awarded to PHAs
    administering the HCV Program and $8.2 million for PHAs
    administering the Mainstream Vouchers.
        Additionally, PIH Notice 2020-17 made available $400
    million in CARES Act HAP supplemental funding to PHAs
    administering the HCV Program. So far, $257.5 million has been
    awarded under the Extraordinary Circumstances category for
    COVID-19 related PUC increases. Shortfalls Funds will be
    awarded in December 2020.
        Finally, the OHVP, through PIH Notice 2020-20, made
    available $10 million to PHAs in CARES Act Mod Rehab HAP
    supplemental funding for owners participating in the Moderate
    Rehabilitation Program to respond to COVID related HAP cost
    increases, including vacancy payments. So far, $9.42 million
    has been obligated, and the PHAs will request these funds
    through budget revisions.

    Q.7. Senator Grassley and I have a bipartisan bill--the
    Fostering Stable Housing Opportunities Act--to make it easier
    for youth to access a voucher on demand as they age out of care
    anywhere in the country and encourage partnerships between
    housing and child welfare agencies. I am hopeful that Congress
    will enact our bill this year and set up a permanent pathway to
    housing stability for young people exiting foster care across
    the country.
        In the meantime, Congress also provided $20 million in
    FY2020 funding to provide new Family Unification Program (or
    FUP) vouchers for youth. Half of these funds are to be made
    available for youth through noncompetitive allocations to PHAs
    that have partnered with child welfare agencies, akin to the
    model in our bill. But I understand these FY2020 funds haven't
    been made available yet. Ohio foster care alumni are concerned
    that youth will face homelessness if they exit care into this
    economic crisis.
        Although HUD recently issued FY2019 FUP vouchers in April,
    they will be allocated to specific PHAs rather than being
    available nationwide as youth age out of care.
        I know this is an issue of concern to you, as well, so I am
    hopeful that you will work to make the FY2020 funds available
    for youth quickly.
        Can you tell me when you plan to make these new FY2020 FUP
    funds available for youth?

    A.7. There has been no gap in the availability of Foster Youth
    to Independence (FYI) initiative vouchers. HUD continues to
    make awards under FYI utilizing 2019 Tenant Protection Voucher
    (TPV) funds. An Office of Public and Indian Housing (PIH)
    notice announcing the availability of up to $10 million from
    FY2020 will be announced in the fall of 2020. HUD also expects
    to be able to announce the availability of an additional $10
    million to be made available competitively to serve the same
    population of foster youth.

    Q.8. Mr. Secretary, I am concerned that there are certain CARES
    Act funds that has not yet been disbursed for use in our
    communities. For example, the Department has not yet disbursed
    the $50 million appropriated for the Section 202 program for
    housing for the elderly and the $15 million appropriated for
    Section 811 housing for persons with disabilities. In fact, HUD
    has not yet published guidance on how owners of these
    properties can apply for the funds.
        These funds are urgently needed to help keep vulnerable
    elderly residents and those with disabilities safe during this
    pandemic, particularly those who live in buildings with
    congregate facilities. The nonprofit owners of this housing are
    responsible for the health and safety of their vulnerable
    residents and have incurred additional costs to meet these
    needs, including purchasing personal protective equipment for
    both staff and residents, adjusting staff hours and personnel,
    erecting barriers in dining areas, and other mitigation efforts
    to allow for appropriate physical distancing. Owners have also
    incurred expenses to help residents safely self-quarantine.
        While the Multifamily Office at HUD has put out several FAQ
    Guidance documents, there is still significant uncertainty
    among sponsors regarding which expenses incurred to address the
    health and safety needs of residents during COVID-19 will be
    considered operating costs that are eligible for Federal
    support.
        When does HUD plan to issue guidance to owners on eligible
    costs and process for applying for CARES Act funds necessary to
    keep residents safe during this emergency?

    A.8. In responding to this unprecedented national emergency,
    HUD's Office of Multifamily Housing has attempted to balance
    the known financial impacts from COVID-19 with the significant
    uncertainty about both potential future impacts and the
    possibility of additional congressionally appropriated
    emergency funding. HUD has met with many stakeholders to learn
    about the impacts they are facing and is carefully monitoring
    the impact on residents in HUD-assisted properties.
        HUD obligated a portion of the Section 202 CARES Act
    supplemental funds in July for processing contract renewals as
    well as funding shortfalls. In addition, HUD issued Housing
    Notice 2020-08 on July 23 to provide guidance to sponsors/
    owners of properties receiving HUD project-based assistance
    (including Section 202, Section 811 and Section 8) on accessing
    additional supplemental funds to provide assistance for project
    level COVID-19 expenses to prevent, prepare for, or respond to,
    COVID-19. HUD is currently processing an initial round of
    COVID-19 supplemental payment requests received from project
    owners in August and anticipates most of these requests will be
    paid by October 1.
                                    ------

             RESPONSE TO WRITTEN QUESTION OF SENATOR TILLIS
                        FROM BENJAMIN S. CARSON

    Q.1. I am concerned that HUD is contemplating new regulations
    that will reduce access to mortgage credit, specifically, FHA-
    insured loans with downpayment assistance (DPA) provided by a
    governmental entity. These loan products are utilized by
    minority populations at a higher rate, so regulation that
    reduce access to DPA will impact minority populations
    significantly. Even more concerning, HUD is apparently
    contemplating this rulemaking absent data on the pricing and
    performance of these loans on a governmental entity-specific
    level. Such action would be contrary to Congress' intent, as
    expressed when passing legislation in 1978, that HUD not limit
    DPA from a governmental entity except as clearly necessary to
    protect taxpayers. Can you commit to that you will not engage
    in rulemaking that has the potential of reducing access to
    mortgage credit for FHA-insured loans with DPA from a
    governmental entity without first collecting the pricing and
    performance on these loans on a governmental entity-specific
    level, as Congress requested in HUD's FY2020 appropriations
    bill?

    A.1. FHA has documented that purchased mortgages with
    downpayment assistance (DPA) tend to perform worse than
    purchase mortgages without DPA in its Annual Report to Congress
    on the Financial Status of the FHA Mutual Mortgage Insurance
    Fund for Fiscal Year 2019. This report is available at https://
    www.hud.gov/sites/dfiles/Housing/documents/
    2019FHAAnnualReportMMIFund
    .pdf.
                                    ------

            RESPONSES TO WRITTEN QUESTIONS OF SENATOR MORAN
                        FROM BENJAMIN S. CARSON

    Q.1. In the wake of the COVID-19 crisis, several States have
    proposed laws or Executive orders that would include some form
    of mortgage foreclosure moratorium and forbearance and loan
    modification requirements.
        These bills would impose differing standards that would
    force lenders and servicers to follow a patchwork of State and
    potentially local regulation based on the location of the
    property making it impossible for lenders to employ a
    consistent national approach to aiding their customers
    financially impacted by the pandemic.
        If this State-by-State trend continues, could the resultant
    patchwork of laws and requirements make it more difficult for
    home buyers to obtain the credit that they need?

    A.1. See answer to Question 2 below.

    Q.2. In your view, should we be steering the States away from
    trying to impose these laws?

    A.2. When States issue loss mitigation requirements via law or
    Executive order that differ from FHA requirements or Federal
    law, FHA requirements preempt State laws. Further, the adoption
    of inconsistent State laws has the effect of increasing costs
    for servicers and increasing their risk of noncompliance with
    FHA requirements. As a result, servicers may be less willing to
    purchase or service new mortgages made to higher risk
    borrowers. This in turn may reduce the availability of credit
    and increase costs to borrowers.
                                    ------

                   RESPONSES TO WRITTEN QUESTIONS OF
                SENATOR MENENDEZ FROM BENJAMIN S. CARSON

    Housing Counseling

    Q.1. When the protections in the CARES Act run out, we could be
    facing a foreclosure crisis even greater than the one we faced
    in the Great Recession. Families unable to pay their mortgage
    will need to navigate the complexity of requesting and
    accessing mortgage relief programs. Homeowners already in
    forbearance will have to work with their mortgage servicers to
    repay forborne amounts and housing counselors can provide
    critical resources that allow them to keep their homes.
        As the COVID-19 pandemic continues to disproportionately
    affect minority and low-income communities, are you considering
    encouraging housing counselors to reach out to more minority
    and low-income borrowers?

    A.1. The Department consistently and strongly encourages HUD-
    approved Housing Counseling Agencies and their counselors to
    reach out to minority borrowers, low-income borrowers and
    renters, and consumers in rural and underserved areas. As
    community-based organizations, housing counseling agencies have
    a long history of being trusted partners in their local
    communities. Many HUD-approved Housing Counseling Agencies
    utilize proactive and culturally appropriate outreach
    strategies to assist individuals and families in need.
        HUD supports these efforts through regular outreach,
    informational materials, training, and dialogue with housing
    counselors and HUD-approved Housing Counseling Agencies on HUD,
    FHA, and other Federal policies and programs that can assist
    families impacted by the COVID-19 National Emergency.

    Q.2. On HUD's ``Coronavirus Resources'' webpage, HUD provides
    homeowners with a link to find HUD-approved housing counselors.
        Given that HUD is already referring homeowners to housing
    counselors, do you believe Congress should consider increasing
    resources for HUD-approved housing counselors to help American
    families make educated mortgage decisions as the country works
    through this crisis? If not, why not?

    A.2. Access to the housing counseling services can improve home
    retention, and prevent evictions, and as such HUD supports the
    continued provision of resources for this important function.
    The appropriate funding level for HUD's Housing Counseling
    program will be determined by assessing these needs in light of
    other HUD and COVID-related funding priorities.

    Section 202 Housing

    Q.3. More than 2 months ago, the CARES Act provided $50 million
    to HUD for the Section 202 Housing for the Elderly program,
    including up to $10 million to help affordable senior housing
    communities get residents through this pandemic. Section 202
    residents are older, have lower incomes, and face significant
    health challenges, compared to other seniors in the community.
    Meanwhile, HUD Section 202 senior housing communities are
    spending thousands if not tens of thousands a month on
    disinfecting and cleaning, PPE, services like security and
    meals, and extra staffing costs.
        Can you tell me why HUD has yet to get these emergency
    resources to the more than 3,000 Section 202 communities, and
    when does HUD expect to distribute these funds to Section 202
    communities?

    A.3. In responding to this unprecedented national emergency,
    HUD's Office of Multifamily Housing has attempted to balance
    the known financial impacts from COVID-19 with the significant
    uncertainty about both potential future impacts and the
    possibility of additional congressionally appropriated
    emergency funding. HUD has met with many stakeholders to learn
    about the impacts they are facing, and is carefully monitoring
    the impact on residents in HUD-assisted properties.
        HUD obligated a portion of the Section 202 CARES Act
    supplemental funds in July for processing contract renewals as
    well as funding shortfalls. In addition, HUD issued Housing
    Notice 2020-08 on July 23 to provide guidance to sponsors/
    owners of properties receiving HUD project-based assistance
    (including Section 202, Section 811 and Section 8) on accessing
    additional supplemental funds to provide assistance for project
    level COVID-19 expenses to prevent, prepare for, or respond to,
    COVID-19. HUD is currently processing an initial round of
    COVID-19 supplemental payment
    requests received from project owners in August and anticipates
    most of these requests will be paid by October 1.

    Public Housing

    Q.4. On Thursday, May 14, HUD sent an email informing Public
    Housing Agencies (PHAs) that ``CARES Act Supplemental Operating
    Funds may only be drawn down to pay for immediate needs and
    cannot be held as reserves.'' The email noted that, unlike
    regular Operating Funds, CARES Act Supplemental Operating Funds
    cannot be drawn down all at once, held by the agency, and then
    used for future costs of non-immediate eligible activities even
    if those expenses occur before the expiration of the CARES Act
    supplemental funding. Why has HUD placed restrictions on the
    draw down and use of the CARES Act Supplemental Operating
    Funds?

    A.4. PHAs may draw down CARES Act funding to pay for ongoing
    public housing costs, including regular Operating and Capital
    Fund activities, as well as expanded COVID-19 activities as
    described in PIH Notice 2020-07. The immediate needs
    requirement imposed by HUD is consistent with the current
    practice in the Capital Fund program, and required by the cash
    management requirements included in 2 CFR Part 200 whereby
    grantees and the Federal agency must limit the time between the
    draw down and expenditure of funding. Unlike ``regular''
    Operating Funds, which are required to be provided at a rate of
    \1/12\ th of eligibility per month regardless of
    immediate needs, HUD expedited the obligation of all CARES Act
    funding to PHAs to ensure that PHAs had access to their entire
    amount in less than 35 days to ensure PHAs could begin
    addressing program costs as quickly as possible.

    Q.5. Through the CARES Act, Congress provided $1.935 billion to
    help local communities serve their residents through the Public
    Housing Operating Fund and Housing Choice Voucher program but,
    as of June 8th, only $1.065 billion has been made available to
    Public Housing Agencies. Why has HUD failed to release the
    additional funding provided by Congress? When does HUD expect
    to release the remaining $870 million appropriated by Congress
    for the Public Housing Operating Fund and the Housing Choice
    Voucher program?

    A.5. All Public Housing Operating Funds ($685 million) provided
    through the CARES Act were obligated to PHAs on May 1, 2020.
        The Office of Public and Indian Housing (PIH) published a
    notice on July 31, 2020, that established the eligibility
    criteria for the $400 million of supplemental HAP made
    available through the CARES Act. The supplemental HAP funding
    is available for PHAs that either (1) experience a significant
    increase in voucher PUC due to extraordinary circumstances, or
    (2) despite taking reasonable cost saving measures, as
    determined by the Secretary, would otherwise be required to
    terminate rental assistance for families as a result of
    insufficient funding (heretofore referred to as Shortfall
    Funds). The deadline for submitting applications is October 31,
    2020, and the eligibility evaluation and determination for
    funding awards will be performed on a rolling basis.
        As of September 14, 2020, the Office of Housing Voucher
    Programs (OHVP) has made available $849.9 million of the CARES
    Act admin fee supplemental funding. PIH Notice 2020-08 made
    available $377 million, and PIH Notice 2020-18 made available
    $472 million. From this total, $841.7 was awarded to PHAs
    administering the HCV Program and $8.2 million for PHAs
    administering the Mainstream Vouchers.

    Q.6. Does HUD have a proposal on how to handle resident's past
    due rent payments once HUD's eviction moratorium ends, ensuring
    that residents are set-up for success and are not stuck with an
    unaffordable balloon payment?

    A.6. HUD has strongly encouraged PHAs and owners to enter into
    repayment agreements for past due rent to position residents
    for stability and circumvent an unaffordable balloon payment
    after the eviction moratorium expires. In July 2020, HUD
    provided PHAs with an ``Eviction Prevention and Stability
    Toolkit.'' The Toolkit promotes housing stability by offering
    several resources from existing HUD guidance and innovative
    practices from PHAs. For example, the Toolkit includes a PHA
    brochure that recommends PHAs adopt policies for retroactive
    interim reexaminations, conduct direct outreach to households
    behind on rent, and review policies on minimum rent and
    financial hardship exemptions. In addition, the Toolkit also
    centralizes HUD's current guidance on repayment agreements and
    provides three sample repayment agreements from PHAs. The
    Toolkit also includes a tenant brochure with weblinks and/or
    phone numbers to key benefits to ensure families are set-up for
    success. (e.g., weblinks to TANF, SNAP, unemployment services,
    economic impact payments, free tax preparation, childcare for
    essential workers, immediate jobs available during COVID-19,
    and non-Federal emergency assistance for rent, utilities, and
    other basic necessities.)
        Additionally, HUD has effectuated several statutory and
    regulatory waivers through the broad CARES Act waiver authority
    which will support PHAs in expeditiously processing requests
    for interim recertifications of income. These include waivers
    of third-party verifications of income, delays in routine
    annual recertifications of income, expedited adoption of
    administrative policies, and other administrative waivers to
    allow PHAs to focus efforts on those families hardest hit by
    the pandemic.

    Q.7. Does HUD have enough funds to cover all vouchers for
    families currently in Housing Choice Voucher program? If not,
    how much additional funding is required?

    A.7. When comparing current available funding to actual and
    estimated expenses for the CY, HUD may have enough money to
    cover all leased and issued vouchers for the remainder of the
    year, thus avoiding any potential terminations of vouchers for
    families due to insufficient funding. However, this premise is
    based solely on January to June 2020 financial systems data
    projected through 12/31/2020. This data is constantly evolving
    based on local conditions such as the state of PHA Operations,
    timeframes for processing interim income decreases that tenants
    experience and PHA policies on admission, recertifications and
    rent/occupancy issues.
        HUD will award $400 million in CARES Act Supplemental HAP
    funding to PHAs (including Moving to Work (MTW) PHAs) that
    experienced a significant increase in PUC due to extraordinary
    circumstances in CY 2020; or to shortfall PHAs that, despite
    taking reasonable cost savings measures, would otherwise be
    required to terminate rental assistance for families as a
    result of insufficient funding for either the Mainstream
    Program and/or HCV Program. HUD will continue to closely
    monitor the data associated with estimating HAP need and will
    provide updates as needed.

    Q.8. Since the start of the COVID-19 crisis, how many families
    is HUD serving through the Housing Choice Voucher program? Has
    HUD seen an increase, decrease, or continuity in the number of
    families it serves through the program?

    A.8. On March 1, the HCV program (both MTWs and non-MTWs) was
    serving 2.273 million families. In April, the program was
    serving 2.278 million families. With data to date, the HCV
    program is serving 5,000 more families than at the start of the
    COVID-19 national emergency. May numbers made available in mid-
    July showed that the HCV program held steady and continued to
    serve 2.278 million families.

    CARES Act Implementation and Access to Credit

    Q.9. Secretary Carson, even though mortgage interest rates are
    at historic lows, it's still too difficult for consumers to
    access credit to purchase or refinance their home. Obviously
    many factors contribute to this, but I'm concerned that the way
    FHA implemented the CARES Act forbearance provisions may have
    exacerbated this situation.
        For example, FHA last week released guidance on loans for
    which the borrower experiences a COVID-19-related hardship
    shortly after closing and enters forbearance. While these loans
    are now largely eligible for FHA insurance, FHA will hold the
    lender liable for a large share of the losses if the borrower
    can't resume payments.
        Likewise, Director Calabria, your agency belatedly allowed
    the GSEs to purchase loans that enter forbearance soon after
    closing, but only with steep price discounts. This may create a
    disincentive for banks to provide loans to any borrowers who
    may need CARES Act forbearance and may be perpetuating problems
    borrower are facing in accessing credit. It seems like the
    rational response for lenders is to turn away borrowers with a
    higher risk of going into forbearance, like people that work in
    restaurants or other businesses hurt by COVID, or borrowers
    with lower FICO scores.
        Can you both explain how you are evaluating the impact of
    these policies on access to credit?

    A.9. FHA issued a policy on June 4, 2020, that provided FHA
    insurance eligibility for single-family mortgages that went
    into forbearance after closing but before receiving an FHA
    insurance endorsement. The intention of this policy was to
    assure the residential real estate market that FHA insurance
    would be available for these mortgages. FHA believes the policy
    effectively manages risks to FHA's Mutual Mortgage Insurance
    Fund. Because the Department has provided this clarity, lenders
    may continue to offer FHA financing using prudent lending
    practices, without the need for credit overlays that would
    restrict the ability of traditional FHA borrowers to obtain
    mortgage financing.
        Under FHA's June 4, 2020, policy, lenders must indemnify
    FHA against the loss of up to 20 percent of the original
    mortgage amount for up to two years. This aligns the public and
    private incentives associated with these loans appropriately.
    While FHA currently estimates that the number of mortgages that
    it will endorse under the new policy will be small, the partial
    indemnification requirement ensures that the risks associated
    with these loans are not borne entirely by the American
    taxpayer. This policy also eliminates any private incentive to
    place borrowers affected by the COVID-19 National Emergency
    into mortgages that they are financially unable to sustain.
        FHA will track the loans insured under this policy and
    carefully monitor the market to ensure this policy is
    effective.

    Q.10. Can you share the overall projected losses for FHA and
    FHFA from buying loans that go into forbearance postclosing?

    A.10. On a preliminary basis and based on current loss
    mitigation policies, FHA expects 40 to 50 percent of FHA-
    insured single-family mortgages receiving COVID-19 forbearance
    to default. Overall projected losses for these mortgages are
    expected to be between 40 to 50 percent of the defaulted loan's
    unpaid principal balance, resulting in approximately a 20
    percent overall loss rate. Actual default and loss rates will
    depend on many variables, including unemployment and home price
    trends and potential changes to loss mitigation policies.

    MOU

    Q.11. In a speech earlier this year, Director Calabria
    mentioned a Memo of Understanding (MOU) was in development
    between FHFA and HUD. Secretary Carson and Director Calabria,
    can you provide details on what you expect to be included in
    this MOU? Additionally, please provide a timeline of when
    Congress can expect the MOU to be released.

    A.11. The revised MOU between the Federal Housing Finance
    Agency (FHFA) and HUD is intended to replace an existing MOU
    between HUD, through FHA, and FHFA regarding the sharing of
    information that was executed on January 21, 2010. The revised
    MOU continues to provide for the sharing of data, which will be
    used to further the respective supervisory, regulatory, and
    other lawful responsibilities of the agencies, which now
    specifically includes Ginnie Mae as an additional participating
    component of HUD.
        Additionally, consistent with the terms of the MOU, data
    may be shared to facilitate the development and implementation
    of the housing reform plans contained in the Presidential
    Memorandum dated March 27, 2019, including the ``Housing
    Finance Reform Plan'' issued by HUD, dated September 2019. The
    MOU provides for protections for the use and retention of all
    shared information. The MOU also identifies the applicable
    authorities for each agency to enter into and share
    information. There is not a timeline for completion at this
    time.
                                    ------

            RESPONSES TO WRITTEN QUESTIONS OF SENATOR TESTER
                        FROM BENJAMIN S. CARSON

    Q.1. Rented Homes and Apartments--Secretary Carson, during the
    hearing I asked you about what is being done for renters and
    for property owners. You responded that you thought the
    paycheck protection program was working and sufficient for
    these businesses.
        Can you please expand on how the Paycheck Protection
    Program is helping these folks who own the homes and apartments
    with mortgages that are being rented out and but are not
    receiving rent due to the crisis?

    A.1. While the program has now terminated, the Small Business
    Administration is in the best position to respond to questions
    about PPP terms and conditions.

    Q.2. Affordable Housing--I have been concerned about the
    availability and affordability of housing particularly in rural
    America since long before this crisis, as I discussed the last
    time you were both before this Committee. This crisis is only
    going to make those problems worse. Congress needs to work to
    address this affordability and availability crisis in America.
        What are you doing to make sure that the resources your
    agencies have are making it to rural America and other
    underserved areas?

    A.2. HUD is dedicated to ensuring that rural and underserved
    areas can make use of HUD programs to address affordability.
    FHA insurance programs are available without geographic limits
    and are utilized to facilitate more affordable debt for single-
    family, multifamily, and healthcare facility lending in
    underserved communities.
        HUD plans to announce $10 million in grant awards for the
    Self-Help Ownership Program next month to support home
    ownership. HUD published its NOFA on June 18, 2020, and is
    currently reviewing applications.
        In addition, manufactured housing is an important
    affordable home-ownership solution, including in rural and
    underserved areas. HUD's Office of Manufactured Housing
    Programs has been proactively addressing COVID-19 issues
    impacting the manufactured housing industry. Several policy
    waivers have been put in place to allow home installations to
    continue to occur, despite supply chain issues and social
    distancing measures. These measures, in addition to the
    successful continuation of administering all aspects of the
    Federal manufactured housing program during this period of
    crisis, are vital in support of the housing needs within rural
    America and other underserved areas.

    Housing Programs in Indian Country

    Q.3. During a Senate Committee on Indian Affairs oversight
    hearing in October, I asked Assistant Secretary Kurtz about the
    Section 184 Indian Home Loan Guarantee Program and HUD's work
    to update the Section 184 regulations. What's the status of
    these proposed regulations?

    A.3. HUD is still actively working on developing a proposed
    rule for publication and public comment. HUD conducted 18
    tribal
    consultation sessions and considered all tribal feedback
    received at these sessions when developing the rule. The
    current COVID-19 National Emergency has delayed rulemaking
    efforts as the Department has been working tirelessly to
    provide emergency funding to Tribal communities under the CARES
    Act, and help Tribes ensure the health and safety of families.
    Despite this delay, HUD is still planning on issuing the rule
    early next year and looks forward to receiving additional
    feedback from Tribes, borrowers, lenders, and the general
    public.

    Q.4. During the same hearing I asked the Department to look at
    ways to better partner with Native CDFIs on Section 184
    lending. Has HUD increased outreach to Native CDFIs?

    A.4. HUD has been working to increase outreach to Native CDFIs
    to promote the Section 184 Indian Home Loan Guarantee program
    and to encourage their participation in the program. Since the
    hearing, HUD staff met with the CDFI Fund to explore ways to
    conduct additional outreach and agreed to collaborate on future
    technical assistance targeting Native CDFIs.
        Additionally, in November of 2019, HUD actively
    participated in the Native CDFI Network's 2019 Policy Summit to
    promote the program to CDFIs in attendance. To date, there are
    at least four Native CDFIs that are actively participating in
    the program, and HUD will continue to encourage Native CDFIs to
    participate in the program and provide critical capital to
    Native American borrowers.

    Q.5. As you know, the biggest obstacle to home ownership facing
    many low- to moderate-income and minority families is not
    monthly payment, but rather down payment. As a result,
    downpayment assistance provided by national, State and local
    government downpayment assistance organizations can be critical
    to providing a pathway to home ownership, particularly for
    minority and low- to moderate-income borrowers.
        HUD announced that it intends to proceed with a rulemaking
    to limit downpayment assistance (DPA) programs offered by
    Government entities and, in particular, DPA programs that
    operate nationally, such as those offered by a number of Native
    American tribes. If promulgated as HUD has indicated, HUD's
    proposed rule would prevent these Native American housing
    finance agencies, which currently assist many low- to moderate-
    income and minority home buyers across the country from
    operating nationally. I have a number of concerns with HUD's
    initiative and will look forward to continuing a dialogue on
    this issue so that we can move forward on a well-informed and
    sensible housing policy that responsibly serves all Americans.

    A.5. HUD looks forward to this continued dialogue.

    Q.6. HUD's policy to limit tribal organizations to serving only
    enrolled members of their respective tribes is a very
    significant departure from the U.S. Government's 86-year policy
    of self-determination and self-governance. HUD's policy
    initiative as currently drafted would prevent Native American
    tribes from being able to operate businesses off of their
    respective reservations or to limit their products and services
    to only enrolled members. I have significant concerns that this
    initiative would set a terrible precedent and has been alarming
    to Native American tribal organizations. Why are HUD and the
    Trump administration advocating a policy that could prevent
    Native American tribes from being able to sustain themselves?

    A.6. The Administration is not advocating a policy that could
    prevent Native American tribes from being able to sustain
    themselves. HUD plans to engage in rulemaking to fully
    implement the amendments made by the Housing and Economic
    Recovery Act of 2008 (HERA), which prohibit any portion of a
    borrower's downpayment from being provided by an entity that
    financially benefits from the transaction.
        While HERA's prohibition on assistance from the seller is
    explicit in the statute, there are still questions as to the
    scope of the prohibition when the downpayment assistance is
    provided by Government entities that may benefit financially
    from the transaction. Because FHA has an obligation to ensure
    its programs are operating in full compliance with the law, FHA
    is pursuing rulemaking to define the circumstances in which
    governmental entities providing downpayment assistance are
    deriving a financial benefit from the transaction.

    Q.7. The Administration and HUD's own requirements mandate that
    HUD engage in meaningful, face-to-face consultation before HUD
    begins to work on a rule that would impact Native American
    tribes. However, even before we were faced with the current
    Pandemic, HUD was moving towards rulemaking, without fulfilling
    its mandated tribal consultation requirements. It is my
    understanding that a number of tribal organizations have
    submitted comments and sent letters to HUD on this issue. Why
    has HUD failed to engage in meaningful tribal consultation?

    A.7. HUD's policy is to consult with tribal organizations early
    in the rulemaking process on matters that have tribal
    implications. On February 14, 2020, HUD issued a notice of
    Tribal Consultation on HUD's proposed rule regarding mortgage
    insurance for transactions involving downpayment assistance,
    with a comment period of 30 days. As further stated in that
    notice, if a proposed rule is published in the Federal
    Register, tribes will have another opportunity to comment
    through the public comment process.

    Q.8. HUD's upcoming rulemaking could set a very significant
    precedent by turning back the U.S. Government's 86-year policy
    of self-determination and self-governance towards Native
    American tribes if the department moves forward with this rule.
    Do you commit to engaging in a meaningful tribal consultation
    process before even working on a proposed rule? By engaging in
    meaningful tribal consultation, HUD would then be able to get a
    better understanding of these programs.

    A.8. See answer to Question 7 above.

    Q.9. It appears to me that HUD has taken the position that the
    FHA-insured loans being assisted by Government entities,
    particularly ``national'' Government entities, providing
    downpayment assistance are a risk to the FHA Mutual Mortgage
    Insurance Fund without sufficient, or any, data. I have
    significant concerns with HUD taking action without sufficient
    data or consultation to
    inform the process. Please provide an explanation as to why it
    believes that national lenders operating national programs are
    riskier than those that only operate in a narrow geographic
    area? And please provide an explanation as to why HUD believes
    low- to moderate-income and minority borrowers pose a greater
    risk than borrowers who are receiving downpayment assistance
    from their families or other sources? What is HUD's rational
    for concern over these two factors?

    A.9. FHA-insured purchase mortgages with downpayment assistance
    (DPA) tend to perform worse than those purchase mortgages
    without DPA. As discussed in the 2019 Annual Report to Congress
    on the Financial Status of the FHA Mutual Mortgage Insurance
    Fund (Annual Report to Congress):

        Early Payment Defaults (EPDs) for FHA-insured
            single-family mortgages with downpayment assistance are
            over 60 percent higher than for mortgages without
            downpayment assistance sources of funds over the last 2
            fiscal years (See FHA Annual Report to Congress,
            Exhibit I-18 and Table B-18.)

        Seriously delinquencies (SDQs) for FHA-insured
            single-family mortgages with downpayment assistance are
            between 50 percent and 60 percent higher than for
            mortgages without downpayment assistance. (See FHA
            Annual Report to Congress, Exhibit I-19 and Table B-
            19.)

        Serious delinquency rates tend to increase as
            mortgages age. Seasoned mortgages with downpayment
            assistance from governmental entities are associated
            with the highest serious delinquency rates (See FHA
            Annual Report to Congress Exhibit I-19 and Table B-19.)

        While HUD recognizes the importance of providing
    downpayment assistance for many FHA borrowers, FHA also has a
    statutory obligation to insure mortgages that meet the National
    Housing Act's requirements for the borrower's minimum cash
    investment, including its explicit prohibition on downpayment
    assistance from certain sources.

    Q.10. Because I am not alone in the concern that HUD does not
    have the granular level of data it needs to make informed
    decisions on this issue, in last year's congressional
    appropriations process, my colleagues and I added report
    language to the appropriations bill, which recommended that HUD
    begin to collect a more granular level of pricing and default
    performance data for each national, State, and local housing
    finance agency. Since 2000, this granular level of data has
    been collected for each nonprofit providing downpayment
    assistance to borrowers, and it would be valuable to both HUD
    and Congress for that the same type of data be collected for
    each Government entity. The language that we included in our
    Report was supported both the industry and the consumer
    advocacy community. However, despite Congress' recommendation
    that HUD begin to collect this data, which is very easy to do
    because the systems are already programmed to do so, HUD has
    failed to do so. Why? When will HUD begin collecting this data?

    A.10. FHA has documented that purchase mortgages with
    downpayment assistance (DPA) tend to perform worse than
    purchase mortgages without DPA in its Annual Report to Congress
    on the Financial Status of the FHA Mutual Mortgage Insurance
    Fund for Fiscal Year 2019. This report is available at https://
    www.hud.gov/sites/dfiles/Housing/documents/
    2019FHAAnnualReportMMI
    Fund.pdf.

    Q.11. Will you make this data public? This would provide the
    additional benefit of analysis performed by the broader housing
    community, including the housing industry, think tanks, and
    consumer advocate organizations.

    A.11. See answer to Question 10 above.

    Q.12. Will you commit to collecting, analyzing and making
    public this data before you proceed on any DPA rulemaking?
    Doing so would ensure that HUD would be able to make informed
    policy decisions on this issue.

    A.12. See answer to Question 10 above.
                                    ------

            RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN
                        FROM BENJAMIN S. CARSON

    Q.1. When will HUD release the $50 million in Section 202
    Housing for the Elderly program funding provided by the CARES
    Act?

    A.1. In responding to this unprecedented national emergency,
    HUD's Office of Multifamily Housing has attempted to balance
    the known financial impacts from COVID-19 with the significant
    uncertainty about both potential future impacts and the
    possibility of additional congressionally appropriated
    emergency funding. HUD has met with many stakeholders to learn
    about the impacts they are facing and is carefully monitoring
    the impact on residents in HUD-assisted properties.
        HUD obligated a portion of the Section 202 CARES Act
    supplemental funds in July for processing contract renewals as
    well as funding shortfalls. In addition, HUD issued Housing
    Notice 2020-08 on July 23 to provide guidance to sponsors/
    owners of properties receiving HUD project-based assistance
    (including Section 202, Section 811 and Section 8) on accessing
    additional supplemental funds to provide assistance for project
    level COVID-19 expenses to prevent, prepare for, or respond to,
    COVID-19. HUD is currently processing an initial round of
    COVID-19 supplemental payment requests received from project
    owners in August and anticipates most of these requests will be
    paid by October 1.

    Q.2. When will HUD release the remaining $200 million in
    Section 8 Project-Based Rental Assistance funding provided by
    the CARES Act?

    A.2. On July 23, HUD issued Housing Notice 2020-08 to provide
    guidance to owners on requesting CARES Act funds to address
    COVID-related expenses at properties with rental assistance in
    the project-based Section 8, Section 202, and Section 811
    programs. Together with CARES Act funds allocated to properties
    to offset reductions in tenant incomes related to the pandemic,
    this is expected to fully utilize CARES Act funds for the
    multifamily portfolio.

    Q.3. HUD does not require radon testing or mitigation in public
    housing units, despite indoor radon being the leading cause of
    lung cancer among nonsmokers. HUD is tasked, under law, with
    developing policy ``for dealing with radon contamination . . .
    to ensure that occupants of [public housing] are not exposed to
    hazardous levels of radon'' to meet the statutory national goal
    of having ``air within buildings in the United States . . . as
    free of radon as the ambient air outside of buildings.'' At the
    hearing, regarding radon in public housing, you stated, ``We've
    also changed the inspection protocol so that it will be a part
    of the inspection.''
        When did HUD update the Real Estate Assessment Center
    standards to include radon inspections or mitigation? How,
    specifically, is radon testing/mitigation scored in the updated
    inspection protocol?

    A.3. All HUD-assisted public housing must conform to HUD's
    Uniform Physical Condition Standards (UPCSRIN) in 24 CFR part
    5, subpart G. It is through these regulations that HUD has
    defined ``decent, safe, sanitary and in good repair.'' These
    regulations do not explicitly require testing for, or
    mitigation of, radon; nonetheless, PHAs' responsibility to
    maintain safe housing extends to the mitigation of radon when
    it is detected. Compliance with UPCS is confirmed through
    physical inspections performed by HUD's Real Estate Assessment
    Center (REAC). Physical inspections typically occur every 1-3
    years and include a visual assessment of unit conditions,
    hazards and certain documentation. REAC inspectors do not
    perform any environmental testing. However, to provide
    additional assurance that HUD-assisted housing properties are
    testing for and remediating radon in accordance with Federal
    laws, regulations and contract provisions during FY2020, HUD
    has worked with the Office of Management and Budget and
    incorporated this objective into the Single Audit Act
    compliance testing process. HUD has also included a requirement
    in the Uniform Guidance compliance supplement requiring PHA's
    auditors' test for this compliance objective. When
    noncompliance is identified, HUD will follow-up with the PHA to
    bring that agency into compliance.

    Q.4. Does HUD have any subsequent plans to require or support
    radon testing or mitigation in public housing?

    A.4. In FY21, REAC will continue its proactive approach of
    developing effective protocols directed at environmental
    hazards. REAC plans are to initiate the development of a
    quality control protocol for radon. To fully implement this
    service requires the funds be made available to ensure the REAC
    staff can obtain the appropriate training, certifications, and
    the purchase of required testing equipment and supplies. Once
    obtained, a demonstration/feasibility study will be conducted,
    which will assist in the development of a streamlined radon
    protocol intended as a means for HUD/REAC to conduct oversight
    inspections to ensure that HUD-assisted properties and their
    contractors are actively and correctly addressing the
    applicable laws and regulations concerning radon. Upon
    successful development of a streamlined radon oversight
    protocol, it is REAC's intention to propose the implementation
    of this oversight inspection as a new REAC service in FY22.

    Q.5. Do you support requiring Federal radon testing in public
    housing units?

    A.5. REAC will continue to coordinate with other offices and
    departments to develop information and guidance on radon for
    PHAs to provide important background information on the issue
    as well as guidance on radon testing and mitigation using the
    most current consensus standards. Also, HUD supports radon
    testing as part of its future environmental testing to be
    performed by REAC, but additional information from the FY21
    Budget request for OLHCHH for the radon testing and mitigation
    demonstration will be helpful to inform efforts.

    Q.6. HUD has expressed its intention to proceed with a
    rulemaking to limit downpayment assistance, including
    downpayment assistance offered by nationally operated
    Government entities, such as those programs offered by Native
    American tribal nations. Have you considered the impact of this
    potential rulemaking on self-governance and self-determination
    for tribal nations? Will HUD attempt to engage in meaningful
    tribal consultation before proceeding with any such rulemaking?

    A.6. HUD's policy is to consult with tribal organizations early
    in the rulemaking process on matters that have tribal
    implications. On February 14, 2020, HUD issued a notice of
    Tribal Consultation on HUD's proposed rule regarding mortgage
    insurance for transactions involving downpayment assistance,
    with a comment period of 30 days. As further stated in that
    notice, if a proposed rule is published in the Federal
    Register, tribes will have another opportunity to comment
    through the public comment process.

    Q.7. In 2016, HUD found that ``transgender and gender
    nonconforming persons continue to experience significant
    violence, harassment, and discrimination in attempting to
    access programs, benefits, services, and accommodations'' and
    reported that ``transgender persons are often discriminatorily
    excluded from shelters or face dangerous conditions in the
    shelters that correspond to their sex assigned at birth.'' Do
    you support the rights of transgender individuals to seek
    public shelter consistent with their gender identity?

    A.7. HUD expects shelter providers to follow all applicable
    laws related to discrimination.
                                    ------

                   RESPONSES TO WRITTEN QUESTIONS OF
               SENATOR VAN HOLLEN FROM BENJAMIN S. CARSON

    Q.1. Secretary Carson, the FY2019 Appropriations Bill [PL. 116-
    94] authorized the Housing Mobility Pilot Program. Can you
    please provide a status update on the program? What additional
    resources can Congress provide to encourage this program's
    success?

    A.1. On July 15, HUD published the Housing Choice Voucher
    Mobility Demonstration implementation notice in the Federal
    Register. PHAs have until October 13, 2020, to submit an
    application for participating in the demonstration. The
    implementation notice incorporates both the FY2019 funding as
    well as funds appropriated in the FY2020 bill for the
    demonstration. HUD anticipates making between 5-10 awards by
    the end of 2020.

    Income Recertification

    Q.2. How many HUD tenants have requested an income
    recertification? How many tenants does HUD estimate will ask
    for such recertification during the crisis?

    A.2. For the public housing program, PHAs have reported to HUD
    143,412 interim recertifications for the third FY quarter
    (April--June). For context, this is not significantly different
    than the first and second FFY quarters which reported interim
    recertifications of 142,915 and 141,071, respectively.
    Collectively, since the beginning of the FFY, total tenant
    payments (TTP) within the public housing program have dropped
    from about $313 million for the first quarter to about $300
    million in the third quarter, reflecting that families within
    the public housing program have experienced a 4 percent drop in
    TTP.
        HUD is not able to project a total number of
    recertifications during the pandemic because it is unclear when
    the pandemic will end, and the number of recertifications are
    impacted by actions taken by Congress and States to provide
    additional benefits to families.
        Within the same time period, the HCV program received
    378,000 income recertifications. The below chart offers a
    comparison of month-over-month since 2017.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        For the project-based Section 8. 202 and 811 programs,
    annual and interim recertifications increased dramatically
    after the start of the pandemic. The monthly total numbers and
    cumulative totals are reflected in the table below. HUD is not
    able to estimate a total number of recertifications during the
    pandemic because it is unclear when the pandemic will end, and
    the number of recertifications are impacted by actions by
    Congress and States to provide additional benefits to families.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Q.3. Has HUD proactively reached out to families to inform them
    of their right to request an interim recertification and, if
    so, what specific actions has HUD taken?

    A.3. PHAs administer the PH and HCV programs and are the
    primary communicator with the families participating in these
    programs. HUD has encouraged PHAs to reach out to families to
    remind them of their obligation to inform the PHAs should they
    experience a decrease in income. The right to request an
    interim income reexamination in the event of a decrease is a
    fundamental component of the programs and families are informed
    of this upon entry to the program and income is also verified
    during the annual reexamination process.
        HUD has also strongly encouraged PHAs to utilize their
    CARES Act PH and HCV funds, along with regular appropriated
    eligible funding to purchase or upgrade technology that would
    enable a PHA to conduct its processes virtually and reduce any
    delays in acting on these requests.
        Similar to the Office of Public Housing, Multifamily
    housing does not have direct communications with subsidized
    renters and relies on other means to broadly reach them. To
    that end Multifamily Housing issued COVID-19 guidance for
    residents, https://www.hud.gov/sites/dfiles/Housing/documents/
    MF-Tenant-Concerns-COVID-19-Brochure.pdf, and COVID-19 guidance
    for landlords https://www.hud.gov/sites/dfiles/Housing/
    documents/Tenant-Brochure-Final.pdf, to all Multifamily
    stakeholders, subsidized tenant stakeholder groups, and owner/
    management agent groups. These brochures are also on
    Multifamily Housing's webpage under Asset Management COVID-19
    Guidance. Additionally, Multifamily has extensive COVID-19
    related Q&As on the HUD website related to the recertification
    and interim recertification processes, including relaxing
    documentation submission and in person meeting requirements.
    The brochures and Q&As remind tenants of their ability to have
    their income recertified when they experience an income loss
    and instruct landlords to inform and work with tenants on
    recertifications.

    Q.4. Would HUD consider instructing PHAs and owners to
    interpret a nonpayment of rent as a request for an interim
    recertification?

    A.4. No. HUD regulations require families to request an interim
    recertification when they have lost income. Although some
    residents may not be aware of the availability of interim
    reporting requirements for income decreases, there could be
    other factors involved for nonpayment of rent. Thus, in July
    2020, HUD provided PHAs with a brochure in the ``Eviction
    Prevention and Stability Toolkit'' that encourages PHAs to
    conduct direct outreach to households behind on rent to
    determine the cause of nonpayment. PHAs were advised to review
    their records, and coordinate with HCV owners, to determine how
    many, and which families are behind on rent. From there, PHAs
    were encouraged to coordinate with staff that are most
    connected to residents in order to engage in direct outreach to
    families with past due balances to have immediate and ongoing
    conversation with the families in order to prevent eviction.
        The PHA brochure also informed PHAs that some households
    may not be aware of the availability of interim reporting
    requirements if their income decreases and to consider
    reviewing their policy on retroactive interim recertifications.
    In addition, some households may have mistakenly believed that
    they did not need to pay rent during the moratorium or they
    chose not to pay rent. Direct outreach would help clarify
    uncertainties and ensure that families continue being housed.
    Several other best practices specific to direct outreach were
    included in the PHA brochure, as well as information on key
    partners and resources that could be made available to the PHA
    and/or tenant.
        Multifamily Housing requirements also require residents to
    request an interim recertification when there has been a loss
    of income. It should be noted that the Offices of Multifamily
    Housing and Public Housing have consistently attempted to align
    their policy guidance on these issues to ensure programmatic
    consistency and reduce administrative burden on our program
    participants and staff.

    Q.5. Throughout the duration of the pandemic would HUD agree to
    cease all of its regulatory guidance that permits the denial or
    delay of prompt interim recertifications?

    A.5. HUD has strongly encouraged PHAs to review and potentially
    revise their interim reexamination policies to allow for
    retroactive adjustments in response to the COVID-19 pandemic.
    Given that PHAs are facing operational concerns due to COVID-19
    and are facing increasing requests for interim reinstatement,
    HUD is reluctant to proscribe additional deadlines on the
    processing of interim recertifications. Nevertheless, HUD
    encourages PHAs to make interim recertifications retroactive to
    the date of income loss, and to provide for flexible repayment
    agreements to ensure families are not burdened with untenable
    rent payments. Ultimately, however, PHAs have discretion for
    the timing of interim recertifications, and the terms of
    repayment agreements.
        The Office of Multifamily Housing has encouraged landlords
    to work with tenants on interim recertifications and, as
    previously mentioned, has issued Q&As to allow for interim
    recertifications and recertifications without direct contact
    and submission of paper documentation. Multifamily Housing
    interim recertifications can be processed retroactively when
    extenuating circumstances may cause delays in reporting loss of
    income, so the Office sees no need to cease its current
    guidance.
                                    ------

                   RESPONSES TO WRITTEN QUESTIONS OF
              SENATOR CORTEZ MASTO FROM BENJAMIN S. CARSON

    Q.1. Will the Department of Housing and Urban Development
    rescind the disparate impact rule and the Affirmatively
    Furthering Fair Housing rule, both of which are opposed by fair
    housing leaders, attorneys general, and members of the Senate?

    A.1. On September 3, 2020, HUD issued on its website the
    ``HUD's Implementation of the Fair Housing Act's Disparate
    Impact Standard'' final rule (FR-6111-F-03)(RIN: 2529-AA98).
    See https://www.hud.gov/program-offices/general-counsel/
    OtherOpinions (the rule is pending publication in the Federal
    Register). The final rule amends HUD's 2013 disparate impact
    standard regulation to better reflect the Supreme Court's 2015
    ruling in Texas Department of Housing and Community Affairs v.
    Inclusive Communities Project, Inc. and to provide
    clarification regarding the application of the standard to
    State laws governing the business of insurance. This Final Rule
    also establishes a uniform standard for determining when a
    housing policy or practice with a discriminatory effect
    violates the Fair Housing Act and provides greater clarity of
    the law for individuals, litigants, regulators, and industry
    professionals.
        HUD is planning to withdraw the ``Affirmatively Furthering
    Fair Housing'' final rule (FR-6123-P-02)(RIN: 2577-AA97). The
    withdrawal of RIN 2577-AA97 will be reflected on HUD's Fall
    2020 Semiannual agenda. On August 7, 2020, HUD issued the
    ``Preserving Community and Neighborhood Choice'' (PCNC) final
    rule which became effective on September 8, 2020. https://
    www.federalregister.gov/documents/2020/08/07/2020-16320/
    preserving-community-and-neighborhood-choice. The PCNC final
    rule repealed the 2015 AFFH rule and its related accretions.
    The new rule returns to the original understanding of what the
    AFFH certification was for the first 11 years of its existence:
    AFFH certifications will be deemed sufficient provided grantees
    took affirmative steps to further fair housing policy during
    the relevant period.

    Q.2. Do you see it as HUD's responsibility to eliminate
    discrimination in housing, reduce racial and income
    segregation, and provide housing that enable children to attend
    good schools and parents to have access to jobs and services?

    A.2. HUD is concerned about any policy or practice that limits
    housing choice on a basis prohibited by the Fair Housing Act
    and other applicable civil rights authorities. The Fair Housing
    Act is administered by HUD and prohibits discrimination in the
    sale, rental and financing of most housing in the United States
    because of race, color, religion, sex, national origin,
    disability, or familial status. Significantly, HUD improved its
    complaint processing time from FY18 to FY19 by 16 percent and
    in FY19 HUD obtained over $12 million in compensation for
    victims of housing discrimination.
        In addition to HUD's important day-to-day complaint
    processing, HUD has also tackled significant national issues
    like discriminatory online advertising practices by major
    advertisers such as Facebook and Google to ensure people are
    not being denied housing opportunities on a prohibited basis.

    Q.3. Do you think racial segregation erodes the economic well-
    being of families of color by limiting them to neighborhoods
    with high levels of poverty?

    A.3. HUD is concerned about any policy or practice that limits
    housing choice on a basis prohibited by the Fair Housing Act
    and continues to vigorously enforce this law. However, the
    greater force in housing segregation is poverty--people not
    having the financial means to live where they want to live,
    closer to jobs and better schools. Segregation today is rarely
    caused by overt discriminatory policies. It is caused by a lack
    of housing choice and regulatory barriers that limit the
    availability of affordable housing.
        To promote greater housing choice and economic opportunity,
    the Trump administration has signed into law programs like
    Opportunity Zones that are driving billions of dollars of
    capital into underserved communities where affordable housing
    may exist, but opportunity currently does not. The White House
    Council on Eliminating Regulatory Barriers to Affordable
    Housing, chaired by Secretary Carson, is also examining ways to
    increase housing supply by removing the multitude of overly
    burdensome regulatory barriers that artificially raise the cost
    of housing development.

    Q.4. Do you think it is HUD's responsibility to identify
    segregation and promote integration?

    A.4. The Fair Housing Act prohibits discrimination and HUD
    enforces this important law. HUD is concerned about any policy
    or practice that limits housing choice on a basis prohibited by
    the Fair Housing Act and other civil rights authorities. HUD
    will do everything possible to address these issues wherever
    they arise.

    Q.5. Do you believe that the racial segregation that we see in
    our communities is a result of policy--not choice--but Federal,
    State, and local policies that invested in white communities
    and disinvested in Black communities?

    A.5. The Fair Housing Act prohibits discrimination and HUD
    enforces this important law. HUD is concerned about any policy
    or practice that limits housing choice on a basis prohibited by
    the Fair Housing Act and other civil rights authorities. HUD
    will do everything possible to address these issues wherever
    they arise.

    Q.6. What has HUD done to ensure that the 5 million households
    assisted by HUD benefited from the $1,200 relief payments and
    the expanded Unemployment Insurance?

    A.6. To ensure families receive maximum benefit from the
    expanded unemployment benefits and $1,200 Economic Impact
    Payments, HUD, using its existing statutory authorities, has
    excluded these payments from the calculation of income in its
    rental assistance and community development programs, thus
    preventing tenant rent payments from increasing. Additionally,
    HUD released the 2020 Economic Impact Payments Toolkit as a
    guide for HUD grantees to reach all eligible Americans who may
    not have received the Economic Impact Payments.

    Q.7. Nationwide, there are 47 million rental units. According
    to the Urban Institute, more than 17 million of them will need
    help paying rent due to job loss. How much does HUD estimate it
    would cost to keep all eligible low-income renters housed for 6
    months?

    A.7. Unemployment benefits and the Paycheck Protection Program
    have helped many renters make rent payments. Prior to the
    pandemic, 7.72 million Very Low-Income (VLI) renters had worst-
    case housing needs, primarily paying more than half their
    income for rent, and about 10 percent were 30 days or more
    behind on their rents. Increased unemployment could make this
    problem worse.
        However, the amount of additional rental assistance needed
    is highly dependent on (i) unemployment benefit amounts, (ii)
    the speed of economic recovery, and (iii) schools employing
    remote learning. On this last point, many VLI renters are
    household heads with children who could have more difficulty
    returning to work if children are at home. This, in turn, could
    impact their ability to pay rent. Because there is a good deal
    of uncertainty on these three points, HUD cannot provide an
    estimated amount of funding needed for rental assistance.
        HUD looks forward to continued conversations with Congress
    on the right mix of benefits to prevent evictions and
    homelessness.

    Q.8. The Urban Institute estimates it would cost approximately
    $96 billion to assist an estimated 17.6 million renter
    households needing rental assistance due to the economic
    impacts of COVID-19 for 6 months. Do you agree with their
    estimate of funds needed for the 17 million families to facing
    eviction?

    A.8. HUD is unable to provide an estimated cost at this time.

    Q.9. What is HUD's plan to avoid evictions of 17 million
    families due to the COVID-19 depression?

    A.9. Earlier this month, the Administration issued its
    Executive order (EO) to temporarily HALT evictions during the
    COVID-19 pandemic. American renters who meet certain conditions
    cannot be evicted if they have exhausted their best efforts to
    pay rent, and are likely to become homeless as a result.
        HUD has also strongly encouraged PHAs and owners to enter
    into repayment agreements for past due rent to position
    residents for stability and circumvent an unaffordable balloon
    payment after the eviction moratorium expired.
        In July 2020, HUD provided PHAs with an ``Eviction
    Prevention and Stability Toolkit,'' https://www.hud.gov/
    program_offices/public_indian_housing/covid_19_resources. The
    Toolkit promotes housing stability by offering several
    resources from existing HUD guidance and innovative practices
    from PHAs. For example, the Toolkit includes a PHA brochure
    that recommends PHAs adopt policies for retroactive interim
    reexaminations, conduct direct outreach to households behind on
    rent, and review policies on minimum rent and financial
    hardship exemptions. In addition, the Toolkit also centralizes
    HUD's current guidance on repayment agreements and provides
    three sample repayment agreements from PHAs. The Toolkit also
    includes a tenant brochure with weblinks and/or phone numbers
    to key benefits to ensure families are set-up for success,
    e.g., weblinks to TANF, SNAP, unemployment services, economic
    impact payments, free tax preparation, childcare for essential
    workers, immediate jobs available during COVID-19, and non-
    Federal emergency assistance for rent, utilities and other
    basic necessities. HUD also published a Multifamily Tenant
    Brochure to inform and address rent payment concerns of tenants
    living in multifamily properties.
        For FHA-insured multifamily properties where the owner is
    receiving forbearance mortgage payment relief, tenants cannot
    be evicted solely for nonpayment of rent for the duration of
    the forbearance period. HUD issued guidance on July 1 for
    owners of these properties, including a new online brochure for
    owners to share with tenants.
        Additionally, HUD has effectuated several statutory and
    regulatory waivers through the broad CARES Act waiver authority
    that will support PHAs in expeditiously processing requests for
    interim recertifications of income. These include waivers of
    third-party verifications of income, delays in routine annual
    recertifications of income, expedited adoption of
    administrative policies, and other administrative waivers to
    allow PHAs to focus efforts on those families hardest hit by
    the pandemic.

    Q.10. How many vouchers will HUD request to help families who
    have lost family members to the pandemic or had jobs that will
    not return quickly?

    A.10. Under current Housing Choice Vouchers (HCV) program
    rules, PHAs can set preferences for families based on community
    needs. PHAs could provide a preference for recently unemployed
    families or for families that have experienced other financial
    hardships due to COVID-19.

    Q.11. If the Emergency Rental Assistance Act which provides
    rental assistance funds were to pass, would HUD be able to
    qualify and assist families with rental assistance quickly? Why
    or why not? What resources will HUD need to distribute rental
    assistance funds quickly?

    A.11. HUD does not perform client eligibility determinations.
    Qualifying families for assistance would be determined by the
    grantee (e.g., State and local entities) administering the
    funding.

    Q.12. How quickly could HUD certify landlords to participate in
    voucher programs?

    A.12. Landlord eligibility is determined at the PHA level and
    not at HUD. PHAs have the discretion to adopt screening
    policies and eligibility criteria that govern landlord
    participation. As such, the amount of time to determine
    eligibility of an owner will differ at each PHA.

    Q.13. In Nevada, we have seen a dramatic increase in demand for
    housing since the outbreak of the pandemic. The funds Congress
    provided for Veterans housing vouchers--VASH--have been very
    helpful. Would you support additional vouchers in the next
    congressional relief package, so that these men and women can
    transition into a permanent housing solution without delay?

    A.13. The FY2020 Appropriations bill provided an additional $40
    million for HUD-VASH, and a PIH notice for PHAs to self-
    identify their interest in receiving additional HUD-VASH
    vouchers was released on July 8, 2020. The HUD-VASH FY20
    Registration of Interest Notice details the availability of
    additional HUD-VASH vouchers in 2020 that HUD will be awarding
    this year.
        Statistics on HUD-VASH in Nevada:

        There are 3 PHAs currently administering 1,834
            total HUD-VASH vouchers. Of those, 1,464 were leased as
            of April. That is an overall utilization rate of 80
            percent.
        Leasing breakout by PHA:

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Q.14. Will HUD work closely with eviction courts to keep
    families safely housed? If so, how?

    A.14. HUD encourages PHAs and owners to provide residents with
    frequent and accurate information and to take steps to keep as
    many residents stably housed as possible. As part of this
    effort, HUD encourages PHA leadership and multifamily owners to
    ensure that residents and staff across the agency are aware of
    new policies and procedures. PHA staff are encouraged to also
    review their records, and coordinate with owners, to determine
    which households are behind on rent and determine the cause of
    nonpayment. In tandem with this effort, PHAs can identify the
    range of options and resources available to promote housing
    stability.

    Q.15. In light of the need for stable and affordable housing
    for everyone in our country to avoid spreading COVID-19, will
    you withdraw HUD's rule that would prohibit any ineligible
    family member from living in a unit in which one or more
    eligible members are receiving assistance?

    A.15. HUD remains committed to serving the American people
    through its ordinary operations. Suspending all rulemaking
    would be inconsistent with this work.

    Q.16. Are DACA recipients eligible for FHA-insured loans?

    A.16. See answer to Question 18 below.

    Q.17. If not, HUD previously permitted DACA recipients to
    obtain FHA-insured loans as a matter of practice. What changed
    in HUD's interpretation of the law?

    A.17. See answer to Question 18 below.

    Q.18. If DACA recipients are not able to receive FHA-insured
    loans, why did HUD not offer the opportunity for public input
    or communicate this information to approved lenders or
    Congress?

    A.18. These questions incorrectly state that DACA recipients
    were previously eligible to obtain FHA-insured mortgages and
    that there was a change in policy. Both statements are
    incorrect. DACA recipients were ineligible for FHA-insured
    loans during the Obama administration, and HUD has not
    implemented any policy changes during the Trump administration,
    either formal or informal, with respect to FHA eligibility
    requirements for DACA recipients.
        DACA recipients are not eligible for FHA-insured mortgages.
    This policy predates the creation of DACA by at least nine
    years. Since at least 2003, FHA has maintained published policy
    that non-U.S. citizens without lawful residency ``are not
    eligible for FHA-insured loans.'' This same policy was
    incorporated into FHA's Single-Family Housing Policy Handbook
    in September 2015--under the previous Administration--and
    clearly states that ``[n]on-U.S. citizens without lawful
    residency in the United States are not eligible for FHA-insured
    mortgages.''

    Q.19. In light of the current pandemic, will HUD cancel the
    2020 Continuum of Care NOFA and provide funding based on the
    previous year's allocation?

    A.19. HUD is currently evaluating the most effective way to
    allocate FY2020 CoC funding so it can be used to assist
    grantees respond to COVID-19.

    Q.20. I am concerned by how long it took to get CARES Act
    Emergency Solutions Grants funding out into the field--when, in
    much of the country, it was needed in March. Could you explain
    why it took so long for HUD to get these funds out?

    A.20. HUD's Emergency Solutions Grants (ESG) funds were fully
    allocated within 90 days of enactment and are now available to
    be disbursed to grantees. All ESG grantees are, and have been,
    encouraged to submit substantial amendments and action plans to
    their local HUD field office at their earliest convenience in
    order to have their grant agreements signed, at which point
    they can begin accessing funds.

    Q.21. Last month, the HUD Office of Inspector General published
    another report on its review of 30 FHA servicers' website. The
    report found that servicers' websites provided incomplete,
    inconsistent, dated, and unclear guidance to borrowers related
    to their forbearance options under the CARES Act. Servicers
    should not provide misleading information that lump sum
    payments at the end of the forbearance period are expected. How
    will you ensure that servicers provide clear and fair guidance
    on forbearance to homeowners?

    A.21. None of FHA's Single-Family loss mitigation home
    retention options require a lump-sum payment at the end of a
    forbearance period. FHA published Mortgagee Letter 2020-06 on
    April 1, 2020, which provided servicers of FHA-insured
    mortgages with a specific COVID-19 loss mitigation option
    intended to assist FHA-insured borrowers with their forborne
    payments.
        FHA has taken extensive steps to ensure servicers are
    fairly and correctly applying loss mitigation guidance,
    including forbearances under the CARES Act. For instance, HUD
    presented a live webinar on April 8, 2020, open to all FHA
    servicers, covering all new COVID-19 National Emergency policy
    contained in Mortgagee Letter 2020-06. To date, FHA has also
    held three additional live webinars, open to all FHA servicers,
    to ensure that servicers provide clear and fair guidance on the
    application of CARES Act forbearance and other loss mitigation
    policies. More than 2,300 individuals attended these sessions.
    Additional tools for servicers are also available, including a
    resource page on HUD.gov that includes interagency fact sheets
    for both servicers and borrowers detailing the key requirements
    for forbearance under the CARES Act.
        To ensure homeowners and renters have the most up-to-date
    and accurate housing assistance information during the COVID-19
    National Emergency, HUD is a partner in an interagency mortgage
    and housing assistance website in conjunction with the Federal
    Housing Finance Agency, Consumer Financial Protection Bureau,
    and Departments of Veterans Affairs and Agriculture, available
    at https://www.cfpb.gov/housing.

    Q.22. How will you ensure any lender seeking payment on the FHA
    guarantee has provided documentation on its compliance with
    loss mitigation requirements?

    A.22. FHA ensures compliance with its requirements in
    connection with FHA insurance claim payments through a post
    claim audit process. Additionally, FHA conducts quality
    assurance reviews to ensure servicers are operating under FHA
    guidelines when administering the loss mitigation program.

    Q.23. Will you ensure FHA conducts oversight of servicers with
    appropriate sampling and review of companies and borrowers?

    A.23. Such oversight is part of FHA's standard operational
    practices. FHA ensures compliance with its requirements in
    connection with FHA insurance claim payments through a post
    claim audit process. Additionally, FHA conducts quality
    assurance reviews to ensure servicers are operating under FHA
    guidelines when administering their loss mitigation programs.

    Q.24. Will you ensure FHA establishes a robust complaint and
    appeals process for borrowers who believe they have been
    subject to unfair treatment related to noncompliance with FHA's
    servicing requirements, including its loss mitigation
    requirements?

    A.24. Yes. FHA has a vested interest in preventing foreclosures
    and helping delinquent borrowers remain in their homes.
    Borrowers may contact the FHA Resource Center for assistance
    with questions regarding loss mitigation. Furthermore, HUD is a
    partner with the Federal Housing Finance Agency, Consumer
    Financial Protection Bureau, and Departments of Veterans
    Affairs and Agriculture on a COVID-19 consumer resources
    website that includes prominent links for consumers to file
    complaints if they believe they are being unfairly treated. The
    website can be found at https://www.cfpb.gov/housing.

    Q.25. Will you report annually to Congress regarding the types
    and volume of complaints received from borrowers who allege the
    rules for loss mitigation were not followed?

    A.25. FHA will respond to congressional information requests,
    as legally appropriate.
                                    ------

            RESPONSES TO WRITTEN QUESTIONS OF SENATOR SMITH
                        FROM BENJAMIN S. CARSON

    Fire Sprinklers in Public Housing

    Q.1. Secretary Carson, late last year, five Minnesotans were
    killed in a tragic fire in the Cedar-Riverside neighborhood of
    Minneapolis. The fire ravaged a 25-story apartment tower
    managed by HUD through the Minneapolis Public Housing
    Authority.
        The building in Minneapolis, like so many other public
    housing high-rises, was built long before 1992, when the
    Federal law requiring sprinkler systems in new multifamily
    public housing properties was passed. Because this apartment
    complex is exempt from the sprinkler requirement, MPHA would
    have to divert funding from other maintenance needs in order to
    voluntarily install an automatic sprinkler system.
        Unfortunately, this is easier said than done. Prior to the
    fire, Minneapolis Public Housing Authority reported $152
    million in immediate capital needs, including $69 million that
    it required for mechanical systems--which includes plumbing and
    fire safety needs.
        Minneapolis, like other public housing authorities, has
    limited funding available to address these deferred maintenance
    needs. In December, I wrote to you about this issue and asked
    you why your Department continues to propose ``zeroing out''
    the Public Housing Capital Fund--the primary source of
    maintenance and construction funding for public housing
    authorities.
        In your response, you identified the nationwide backlog of
    maintenance needs but did not commit to supporting increased
    appropriations in the Capital Fund or for fire sprinkler
    installations specifically.
        Secretary Carson, can you commit to supporting increases in
    the Public Housing Capital Fund so that local public housing
    authorities can do the work necessary to make these buildings
    safe for the families that live there?

    A.1. HUD shares the understanding that fire sprinkler systems
    are an essential element of fire safety. Public Housing has an
    estimated capital needs backlog of approximately $26 billion,
    and Capital Fund grants alone are not sufficient to address the
    significant needs in the portfolio. Given fiscal constraints,
    HUD recognizes the need for State and local governments to
    share a greater role in the provision of affordable housing.
    The Administration encourages PHAs to work with State and local
    governments to supplement the Federal appropriation with non-
    Federal funding to address additional public housing needs.

    Q.2. Are you aware of the number of public housing high rises
    that do not have fire sprinkler systems installed?

    A.2. HUD provides oversight of PHAs that manage and operate
    Public Housing programs. PHAs are required to comply with
    Federal laws and HUD regulations as well as State and local
    laws. In this case, Federal law exempts multifamily properties
    with housing assistance constructed prior to October 26, 1992,
    from the requirement to install fire sprinkler systems.
    However, this law does not limit the authority of a State to
    implement or enforce laws or standards to establish
    requirements for fire prevention and control. Furthermore,
    HUD's regulations related to physical condition standards and
    inspection requirements under 24 CFR 5.703(c) require a
    building's fire protection system to be free of health and
    safety hazards, operable, and in good repair.
        In order to conduct a ``complete assessment,'' HUD
    anticipates that a formal research study would have to be
    undertaken which would involve additional planning and a
    resource commitment but would provide the most reliable
    information on this issue. HUD does not currently have
    sufficient information to provide the number of units that
    currently lack a sprinkler system.
                                    ------

            RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN
                         FROM MARK A. CALABRIA

    Q.1. In your testimony you stated that Fannie Mae and Freddie
    Mac's default option is to add forborne payments to the end of
    the loan. However, Fannie Mae's Lender Letter states that a
    borrower must be evaluated for a workout option, starting with
    the payment deferral option you referenced, ``[i]f the servicer
    determines that the borrower is unable to resolve the
    delinquency through a reinstatement and cannot afford a
    repayment plan.''\1\ Similarly, Freddie Mac's Bulletin requires
    a servicer to verify that a borrower ``[i]s unable to afford a
    repayment plan or full reinstatement of the Mortgage.''\2\
    These guides appear to make payment deferral the third step in
    the Enterprises' loss mitigation waterfalls--behind
    reinstatement and repayment plans--and it is unclear how
    servicers will determine that borrowers are unable to afford
    reinstatement or a repayment plan. Further, recently released
    servicer incentive payments show that repayment plans and
    payment deferral each offer servicers a $500 incentive, making
    them financially equal for servicers even if they are not for
    borrowers.
    ---------------------------------------------------------------------------
         \1\ LL-2020-07.
         \2\ Bulletin 2020-15.
    ---------------------------------------------------------------------------
        Does FHFA interpret payment deferral to be the third step
    in the loss mitigation waterfall for borrowers experiencing a
    hardship due to COVID-19? If so, how are servicers to determine
    whether a borrower is or is not able to make a reinstatement
    payment or complete a repayment plan? If not, why do the
    Enterprises' guides include references to reinstatement and
    repayment plans in the evaluation criteria for payment
    deferral?

    A.1. Recognizing that most homeowners will not be able to repay
    their COVID-19 forbearance in a lump sum after the forbearance
    period ends, the Federal Housing Finance Agency (FHFA)
    established the payment deferral option, which adds the
    homeowners' missed payments to the end of their mortgage.
    Servicers are instructed to evaluate borrowers for the
    appropriate loss mitigation option at the end of the
    forbearance period. This evaluation should take place in a
    conversation between the homeowner and the servicer with a goal
    of figuring out the best option for the homeowner upon exiting
    forbearance. Additionally, choosing which option is best will
    entirely depend on the homeowner's circumstances at the time,
    chief among them is whether the homeowner can afford the same
    payment in effect before the forbearance.
        Servicers are instructed to follow a ``waterfall'' of
    options that proceed in the following order:

      1.  Reinstatement (lump sum payment)

      2.  Repayment (payment above the regular mortgage payment
            until the homeowner is caught up)

      3.  Payment deferral (adding the payments to the end of the
            mortgage), or

      4.  Flex Mod (extending the term of the loan and/or lowering
            the interest rate until the payment becomes affordable
            to the borrower).

        While less likely to be utilized, the first two options
    should be available to homeowners who are willing and have the
    financial means to use them. It is important to emphasize, as
    FHFA has done since the start of the COVID forbearance
    programs, that homeowners do not have to repay a forbearance in
    a lump sum unless they choose to do so.

    Fair Lending Analysis Capital Rule

    Q.2. Did FHFA's Office of Fair Lending Oversight or any other
    office within FHFA conduct a fair lending review of the capital
    rule FHFA released on May 20, 2020? If so, please provide the
    results of that analysis. If not, why not?

    A.2. FHFA's reproposed Regulatory Capital Framework Rule for
    Fannie Mae and Freddie Mac (the Enterprises) is based on the
    same structure as the prior proposal that was issued in July
    2018. For the July 2018 proposed rule, the Agency completed a
    fair lending analysis on certain risk multipliers and that
    analysis led to changes incorporated into the May 2020 proposed
    capital rule. In general, there were limited changes from the
    first proposal and those changes were mission driven. As with
    the process followed by former FHFA Director Mel Watt with the
    2018 proposal, the FHFA analysis of fair lending is used to
    address any needed changes in a rule and those changes are
    affected prior to finalization and publication of the rule.

    Q.3. Please provide FHFA's analysis of the affect FHFA's
    capital rule proposal, issued on May 20, 2020, would have on
    mortgage costs for single-family mortgage borrowers. Please
    provide any analysis by income, FICO score, downpayment amount,
    debt-to-income ratio, or product features that FHFA may have
    done, as well as any breakdown of changes that result from
    adjustments to up-front and ongoing guarantee fee costs. Please
    also provide any assumptions that FHFA made in this
    calculations.

    A.3. In developing the reproposed Enterprise Regulatory Capital
    Framework Rule, the Agency undertook its normal review of
    factors that could be affected by a change in capital standards
    and will look to public comments received as important to the
    adoption of a final rule. Throughout the rulemaking process,
    FHFA remains bound to the statutory requirements of Congress in
    the Housing and Economic Recovery Act of 2008 (HERA), as
    specified in Section 1110 of HERA.
        I share the observation of then-Chair of the Federal
    Reserve, Janet Yellen, as voiced before this Committee in 2016:

            We are putting our rules very often in situations where
            Congress has decided there is a safety and soundness
            issue they want us to address by imposing safeguards in
            a particular area, and our job is to figure out how to
            do that where Congress has already judged that the
            benefits are worthwhile.\3\
    ---------------------------------------------------------------------------
         \3\ https://www.govinfo.gov/content/pkg/CHRG-114shrg99726/pdf/
    CHRG-114shrg99726.pdf.
    ---------------------------------------------------------------------------
        The decision to impose a risk-based capital standard on
    Fannie Mae and Freddie Mac was a decision made by Congress in
    2008. Accordingly, Congress has already judged the benefits of
    such a rule as exceeding any potential costs.
        I would also agree with those on this Committee who have
    stated that cost-benefit analysis can help resist any type of
    regulatory change. The enhancements in the reproposal ensure
    each Enterprise's safety and soundness and its ability to
    fulfill its statutory mission across the economic cycle,
    particularly during periods of financial stress. The reproposal
    is also a critical step toward responsibly ending the
    conservatorships, as directed by Congress.
        Despite comment period procedures, your Committee should
    communicate with FHFA on any data or other matters related to
    the rulemaking that would be helpful to our adoption and
    implementation of the rule. We will examine the information you
    provide to make an informed decision.

    Q.4. In response to a question from Senator Tester, you stated
    that FHFA had not seen any evidence of whether properties where
    landlords were moving forward with evictions had loans backed
    by Fannie Mae or Freddie Mac. The ProPublica story Senator
    Tester referenced in his question, published in April, cited
    eviction filings made since the CARES Act passed at least two
    Fannie Mae financed properties. Subsequent reporting has
    indicated that at least some of these eviction filings were
    reversed, which suggests that the evictions did not comply with
    either the CARES Act or State or local law.\4\ Last week, I
    wrote to you regarding concerns I'd received about evictions
    taking place in additional properties with Fannie Mae- and
    Freddie Mac-backed loans. It is my understanding that the
    concerns referenced in my letter were also submitted directly
    to FHFA.
    ---------------------------------------------------------------------------
         \4\ https://www.propublica.org/article/despite-federal-ban-
    landlords-are-still-moving-to-evict-people-during-the-pandemic
    ---------------------------------------------------------------------------
        Director Calabria, in light of court records indicating
    that property owners with enterprise-backed loans are
    continuing to file for eviction, what is FHFA doing to ensure
    that enterprise borrowers are complying with Federal law? Does
    FHFA need additional authority to ensure compliance with
    Section 4023 or Section 4024 of the CARES Act?

    A.4. FHFA has worked closely with the Enterprises to review and
    address any new evictions on multifamily properties with
    mortgages backed by Fannie Mae and Freddie Mac. When we learn
    of a situation like this, the Enterprise will contact the
    servicer of the loan, who will contact the borrower/landlord to
    assess the situation. FHFA has been made aware of approximately
    250 cases wherein an improper eviction appeared to occur and,
    after review with the servicer and Enterprise, we determined
    that very few of these were evictions for nonpayment of rent
    (some of them filed just before the CARES Act was enacted).
    Those evictions were withdrawn by the landlord. It should be
    noted that evictions unrelated to COVID-19 may proceed. These
    include health violations, noise rules, conduct of illegal
    activities, and requests from State authorities.
        The CARES Act did not give FHFA the authority to directly
    deal with landlords on this, and the Agency is not the
    appropriate enforcement organization since eviction processes
    are driven by State and local courts. Neither FHFA nor the
    Enterprises have contractual authority over, or a relationship
    to, tenants. FHFA and the Enterprises also have little ability
    to penalize a landlord. However, landlords should be complying
    with all laws and regulations, including the CARES Act
    moratorium on evicting a tenant for nonpayment of rent. If a
    landlord has been found in violation of law and has not
    corrected the situation, their forbearance agreement may be
    canceled and/or their mortgage may be accelerated.
                                    ------

            RESPONSES TO WRITTEN QUESTIONS OF SENATOR TILLIS
                         FROM MARK A. CALABRIA

    Q.1. Do you think the recently proposed Enterprise Capital Rule
    will reduce the GSEs' footprint in the market, and--if so--what
    is FHFA doing to ensure that replacement lending is available,
    either on bank balance sheets or through PLS?

    A.1. My goal for the proposed capital rule is to ensure that
    the Enterprises have a sufficient level of high-quality capital
    they need to survive a downturn while fulfilling their
    countercyclical mission, balancing the need to preserve
    affordability in the mortgage market. Ensuring that the
    Enterprises are appropriately capitalized to their risk helps
    to ensure that they can continue to fulfill their mission to
    support home ownership and affordable rental housing. The
    objective of the rule is not to drive a particular market
    share.

    Q.2. For multifamily housing, initial analysis suggests the
    reproposal requires approximately 67 percent more total capital
    than the 2018 proposal which could result in an increased cost
    to multifamily mortgages of up to 39 basis points.
        What analysis has FHFA done on the impact of this cost
    increase on affordable and workforce Multifamily development
    activity?

    A.2. FHFA's newly proposed capital rule is based on the 2018
    proposal with some simplifications and refinements. This
    framework captures the unique nature of each Enterprise's
    multifamily business and its particular risk drivers, and sets
    exposure-specific credit risk capital requirements that are
    generally similar to those in the 2018 proposal. The two main
    risk characteristics are debt service coverage ratio and mark-
    to-market loan-to-value ratio. By focusing on the risks of the
    Enterprises' multifamily portfolios with a greater level of
    refinement than an equivalent bank capital requirement, each
    Enterprise will have sufficient capital to continue its
    affordable housing mission.

    Q.3. How will the increase in mortgage costs from Fannie and
    Freddie increase housing costs in secondary and tertiary
    markets where Fannie and Freddie are often the primary source
    of lending?

    A.3. The proposed capital rule does not mandate an increase in
    mortgage costs. That said, FHFA has received comments that
    address a range of potential effects of capital rule changes,
    and they are currently under review. FHFA will consider the
    information provided through comments in moving to a final
    rule.

    Q.4. What analysis has FHFA performed regarding the ability of
    private capital to fill funding gaps, especially in the
    secondary and tertiary markets?

    A.4. FHFA monitors the effects of the Enterprises' current
    practices and standards on secondary and tertiary markets and
    will continue to do so. The comments provided on the proposed
    capital rule on the impact across the range of market
    participants will be considered.

    Q.5. What analysis did FHFA perform to determine the updated
    multifamily capital risk weighting should be effectively double
    that of single family (51 percent vs. 26 percent)?

    A.5. When adjusted for the quality of the portfolios and credit
    risk transfer, the multifamily risk weighting under the new
    proposed rule is only 30 percent. This compares to bank capital
    requirements for multifamily of 50 percent. Our analysis
    included in the proposed rule shows that, compared to the 2018
    proposal, the estimated amount of capital dedicated to
    multifamily under the new rule has increased by less than $1
    billion (from $16.9 billion to $17.8 billion) on $655 billion
    of multifamily assets.
                                    ------

            RESPONSES TO WRITTEN QUESTIONS OF SENATOR MORAN
                         FROM MARK A. CALABRIA

    Q.1. In the wake of the COVID-19 crisis, several States have
    proposed laws or Executive orders that would include some form
    of mortgage foreclosure moratorium and forbearance and loan
    modification requirements.
        These bills would impose differing standards that would
    force lenders and servicers to follow a patchwork of State and
    potentially local regulation based on the location of the
    property making it impossible for lenders to employ a
    consistent national approach to aiding their customers
    financially impacted by the pandemic.
        If this State-by-State trend continues, could the resultant
    patchwork of laws and requirements make it more difficult for
    home buyers to obtain the credit that they need?

    A.1. Yes, that is a possibility. While States have a role in
    foreclosures and evictions, the efforts of FHFA, the
    Enterprises and Enterprise servicers are frustrated at times by
    hurriedly enacted and conflicting State laws and Executive
    orders. Where such laws or orders provide differing dates,
    differing requirements or new liabilities, it becomes difficult
    for Federal programs to operate in a seamless fashion. These
    laws may impose more obligations or, in some instances, fewer.
    Simply put, the comprehensive Federal programs should not face
    added uncertainty and confusion in assisting homeowners and
    tenants. Some States have acted to exclude ``federally
    related'' mortgages from their actions, which avoids this
    problem.

    Q.2. In your view, should we be steering the States away from
    trying to impose these laws?

    A.2. While States have a role in foreclosures and evictions,
    the efforts of FHFA, the Enterprises and Enterprise servicers
    are frustrated at times by hurriedly enacted and conflicting
    State laws and Executive orders. Where such laws or orders
    provide differing dates, differing requirements or new
    liabilities, it becomes difficult for Federal programs to
    operate in a seamless fashion. These laws may provide more
    obligations or, in some instances, fewer. Simply put, the
    comprehensive Federal programs should not face added
    uncertainty and confusion in assisting homeowners and tenants.
    Some States have acted to exclude ``federally related''
    mortgages from their actions, which avoids this problem.
                                    ------

                   RESPONSES TO WRITTEN QUESTIONS OF
                 SENATOR MENENDEZ FROM MARK A. CALABRIA

    CARES Act Implementation and Access to Credit

    Q.1. Secretary Carson, even though mortgage interest rates are
    at historic lows, it's still too difficult for consumers to
    access credit to purchase or refinance their home. Obviously
    many factors contribute to this, but I'm concerned that the way
    FHA implemented the CARES Act forbearance provisions may have
    exacerbated this situation.
        For example, FHA last week released guidance on loans for
    which the borrower experiences a COVID-19-related hardship
    shortly after closing and enters forbearance. While these loans
    are now largely eligible for FHA insurance, FHA will hold the
    lender liable for a large share of the losses if the borrower
    can't resume payments.
        Likewise, Director Calabria, your agency belatedly allowed
    the GSEs to purchase loans that enter forbearance soon after
    closing, but only with steep price discounts. This may create a
    disincentive for banks to provide loans to any borrowers who
    may need CARES Act forbearance and may be perpetuating problems
    borrower are facing in accessing credit. It seems like the
    rational response for lenders is to turn away borrowers with a
    higher risk of going into forbearance, like people that work in
    restaurants or other businesses hurt by COVID, or borrowers
    with lower FICO scores.
        Can you both explain how you are evaluating the impact of
    these policies on access to credit?

    A.1. To keep the mortgage market working for current and future
    borrowers, and to help originators continue lending, FHFA
    enabled the Enterprises to purchase certain single-family
    mortgages in forbearance that meet their other underwriting
    criteria. On April 22, 2020, FHFA announced that the
    Enterprises would be able to purchase loans that went into
    forbearance after closing. This was a new flexibility that had
    not been an option before. Prior to this announcement, lenders
    would not have been able to deliver those loans to the
    Enterprises. By definition, this action provided additional
    liquidity to the mortgage market that would have otherwise been
    absent.
        Deliveries of these loans to the Enterprises remained low.
    Through mid-September, about 5,900 loans in forbearance were
    delivered at a time the industry was experiencing a record
    number of originations. Based on the Enterprises' second
    quarter acquisitions of purchase mortgages in 2019 and 2020,
    loan risk factors such as average credit scores, debt-to-income
    (DTI), and loan-to-value (LTV) ratios have changed only
    slightly this year compared to last. Refinance acquisitions in
    the second quarter had higher credit scores, lower DTIs, and
    lower LTVs.
        Because the additional charge was applied only to the
    lender, and after closing, individual borrowers were not
    charged higher fees on their mortgage.
        There were no ``steep price discounts'' applied to these
    loans. There was simply a pricing change that reflected the
    decline in the value of said loans. The Enterprises have
    offered to purchase such loans at prices far higher than that
    found in the remainder of the mortgage market. News reports
    indicate that such loans sold in the private market have faced
    a pricing decline of as much as 25 percent.

    Q.2. Can you share the overall projected losses for FHA and
    FHFA from buying loans that go into forbearance postclosing?

    A.2. Prior to our April 22, 2020, announcement, lenders were
    unable to deliver loans that entered forbearance after closing
    but before delivery, therefore there is no historical
    information available. FHFA approved the Enterprises purchasing
    these loans with appropriate pricing adjustments to reflect the
    additional risk of the loan. While lenders and mortgage
    borrowers could not have anticipated the pandemic emergency,
    the Enterprises have a responsibility to purchase loans that
    are made responsibly and are sustainable. The actions taken by
    the Enterprises during the pandemic to protect renters and
    borrowers are conservatively projected to cost the Enterprises
    at least $6 billion and could be higher depending on the path
    of the economic recovery.
        Those expenses are expected to at least include:

        $4 billion in loan losses due to projected
            forbearance defaults;

        $1 billion in foreclosure moratorium losses; and

        $1 billion in servicer compensation and other
            forbearance expenses.

        FHFA has a statutory responsibility to ensure safety and
    soundness at the Enterprises through prudential regulation. The
    Enterprises' Congressional Charters require expenses to be
    recovered via income, allowing the Enterprises to continue
    helping those most in need during the pandemic.

    MOU

    Q.3. In a speech earlier this year, Director Calabria mentioned
    a Memo of Understanding (MOU) was in development between FHFA
    and HUD. Secretary Carson and Director Calabria, can you
    provide details on what you expect to be included in this MOU?
    Additionally, please provide a timeline of when Congress can
    expect the MOU to be released.

    A.3. The MOU with HUD remains under discussion and would update
    a decade old document. The updated MOU would clarify
    information sharing between FHFA and FHA and Ginnie Mae. For
    example, the MOU would facilitate communication on servicer
    eligibility and liquidity issues.

    Credit Risk Transfer

    Q.4. Previously, FHFA issued guidance for Credit Risk Transfer
    (CRT) market following the increase in forbearance requests in
    the aftermath of Hurricane Harvey. Now that 4.73 million
    homeowners--or 8.9 percent of all mortgages--are in mortgage
    forbearance plans as a result of the coronavirus pandemic, does
    the FHFA plan to issue similar guidance to the CRT market?

    A.4. No. The Federal Housing Finance Agency will not direct the
    Enterprises to override the plain language of the prospectus.
    This decision is founded in legal constructs as well as the
    agency's duties as regulator and conservator, detailed in the
    Housing and Economic Recovery Act of 2008.
                                    ------

            RESPONSES TO WRITTEN QUESTIONS OF SENATOR TESTER
                         FROM MARK A. CALABRIA

    Q.1. I have been concerned about the availability and
    affordability of housing particularly in rural America since
    long before this crisis, as I discussed the last time you were
    both before this Committee. This crisis is only going to make
    those problems worse. Congress needs to work to address this
    affordability and availability crisis in America.
        What are you doing to make sure that the resources your
    agencies have are making it to rural America and other
    underserved areas?

    A.1. I share those concerns, particularly as someone who grew
    up in rural America. The housing problems facing rural America
    are distinctly different from those facing urban and suburban
    communities. While FHFA is not a grant-making agency, and hence
    does not directly have resources to commit to rural, or other,
    areas, the entities under our jurisdiction, Fannie Mae, Freddie
    Mac and the Federal Home Loan Banks are addressing underserved
    markets, specifically including the rural housing market, is
    through the Duty to Serve Program. This program requires the
    Enterprises to facilitate a secondary market for mortgages on
    housing for very low-, low-, and moderate-income families in:
    manufactured housing, affordable housing preservation, and
    rural housing markets.
        When the Enterprises began limited re-entry into the Low-
    Income Housing Tax Credit equity market in 2017, FHFA's
    approval included an annual cap of $500 million in equity per
    Enterprise. Within this funding cap, all investments above $300
    million in a given year are required to be in Duty to Serve-
    defined rural areas or must support particular types of
    transactions that have difficulty attracting investment. Duty
    to Serve credit is provided for Enterprise LIHTC equity
    investments in rural areas due to the lower share of LIHTCs
    invested in rural areas and the less advantageous pricing that
    LIHTCs in rural areas may command. We now have 2 full years of
    Duty to Serve performance, 2018 and 2019.
        FHFA expects to use the planning process conducted by the
    Enterprises when developing their next 3-year plan for the
    Affordable Housing Goals and the Duty to Serve program to
    ensure that there is improvement in providing housing
    opportunities in these difficult-to-serve areas.
        Among the accomplishments the Enterprises reported from
    their 2 full years of Duty to Serve performance in 2018 and
    2019 were:

    Rural Housing Market

        Both Enterprises re-entered the LIHTC equity market
            in 2018. Fannie Mae committed $118 million in LIHTC
            equity to rural areas in 2018 and $196.2 million in
            2019, much in high-needs rural regions such as Middle
            Appalachia and Mississippi Delta.

        Freddie Mac committed $72.8 million in LIHTC equity
            in rural areas in 2018 and $111.9 million in 2019, also
            with much committed in high needs rural regions.

        Both Enterprises exceeded the 2018 targets in their
            plans for loan purchases in high-needs rural regions.

        In 2019, Fannie Mae invested in 98 rural LIHTC
            projects, including 4,263 units affordable to
            households earning 60 percent of the area median income
            or below, which is about 98 percent of the total units
            in those rural projects. This more than doubles their
            transactions compared to 2018.

        Fannie Mae committed significant resources to
            establishing its Initiative for Native American Home
            Ownership.

    Manufactured Housing Market:

        The Enterprises have increased Duty to Serve-
            eligible manufactured housing unit loan purchases by a
            combined 39 percent from 2016 to 2019.

        Both Enterprises made extensive efforts in rolling
            out new products that support manufactured housing that
            looks like site-built housing.

        Both Enterprises have also conducted extensive
            research and evaluation of manufactured housing titled
            as chattel.

        Both Enterprises have created new products and
            purchased substantial loans that provide for tenant pad
            lease protections.

    Affordable Housing Preservation Market:

        Both Enterprises supported preserving and
            renovating distressed public housing units by
            purchasing loans on properties participating in HUD's
            Rental Assistance Demonstration Program.

        Freddie Mac increased its support for financing
            small multifamily buildings, including through small
            financial institutions. These products have not
            commonly been successful in secondary market execution.

        Fannie Mae has increased its support for loans that
            fund purchasing or rehabilitating distressed
            properties.
                                    ------

            RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN
                         FROM MARK A. CALABRIA

    Q.1. At the hearing you stated you are considering extending
    the June 30 eviction and foreclosure moratorium ``if
    necessary.''
        What information are you using to make a determination
    about extending the moratorium?

    A.1. On August 27, 2020, FHFA extended the single-family
    eviction and foreclosure moratorium until at least December 31,
    2020, and it may be extended again. FHFA has been closely
    monitoring unemployment rates, delinquencies, forbearance
    rates, as well as stay at home orders and national and State
    emergency orders in effect due to the coronavirus. We do not
    want to put anyone out of their home during a pandemic. We also
    try to coordinate with other Federal agencies, including HUD,
    VA, and USDA. Consistent with the CFPB Servicing Rules,
    foreclosure proceedings are paused while borrowers are actively
    pursuing loss mitigation.

    Q.2. Based on that information, what specifically would lead
    you to extend, or not extend, the moratorium?

    A.2. On August 27, 2020, FHFA extended the eviction and
    foreclosure moratorium until at least December 31, 2020, and it
    may be extended again. As I mentioned during the June 9th
    hearing, FHFA has the authority to extend the eviction and
    foreclosure moratorium for single-family Enterprise loans, and
    we will be monitoring the markets and other developments
    closely to make those decisions. Our goal in this extension is
    to help keep people in their homes during the pandemic by
    minimizing the numbers of foreclosures and evictions.

    Q.3. If you are modeling unemployment as part of your
    decisionmaking, what levels of unemployment are you testing
    your model at?

    A.3. FHFA monitors the official unemployment rate published by
    the Bureau of Labor and Statistics (U-3), as well as the
    measure of total unemployed, plus all marginally attached
    workers, plus total employed part time for economic reasons as
    a percent of the civilian labor force plus all marginally
    attached workers (U-6).

    Q.4. In making your decision, are you modeling or considering
    the impact of millions of Americans losing access to the
    additional $600 in unemployment benefits after July 31, 2020?

    A.4. Yes, such enters into FHFA's consideration. Both the
    extended unemployment benefits and the stimulus checks
    certainly helped homeowners pay their bills. Because of the
    CARES Act forbearance programs implemented at the Enterprises
    and the solutions for borrowers as they exit forbearance, at
    this time we do not foresee an immediate wave of new
    foreclosures, although there were 200,000 foreclosures in
    process pre-COVID-19 that are also on hold.

    Q.5. In making your decision, are you considering the results
    of the most recent U.S. Census Bureau Household Pulse Survey
    regarding renter and owner confidence to make next month's
    housing payments?

    A.5. Yes, our analysis of the unemployment data indicates that
    renters have been particularly affected by this crisis. At this
    time the forbearance rate for Enterprise single-family loans
    has stabilized and public data from the National Multifamily
    Housing Council Rent Payment Tracker show that more than 86
    percent of renters paid their rent as of mid-September 2020.
    The most recent U.S. Census Bureau Household Pulse Survey (Week
    1) is consistent with this information, with about 88 percent
    of renters and percent of homeowners having confidence in their
    ability to make next month's payment. We will continue to
    monitor these statistics.

    Q.6. The latest U.S. Census Bureau Household Pulse Survey
    contains a concerning warning about ending the eviction and
    foreclosure moratoriums prematurely. The data shows that 9
    percent of U.S. homeowners and 30 percent of renters have no or
    little confidence they can make their next month's housing
    payment. This concern is particularly pronounced for Black and
    Hispanic or Latino Americans. Fifteen percent of Black
    homeowners and more than 43 percent of Black renters have no or
    little confidence they can make their next month's housing
    payment. More than 18 percent of Hispanic or Latino homeowners
    and more than 40 percent of renters have no or little
    confidence they can make their next month's housing payments.
        Is FHFA considering these racial disparities in making a
    decision about extending the eviction and foreclosure
    moratorium?

    A.6. FHFA recognizes the broad impact of COVID-19 on various
    markets and borrowers and tenants. Actions taken by FHFA and
    the Enterprises have helped all borrowers or tenants across all
    geographic and demographic segments.

    Q.7. How will FHFA ensure that ending either moratorium will
    not have a disproportionate negative impact on Black and
    Hispanic or Latino renters and homeowners, potentially leading
    to significant racial disparities in evictions and
    foreclosures?

    A.7. As I mentioned during the June 9th hearing, FHFA has the
    authority to extend the foreclosure and REO eviction moratorium
    for single-family Enterprise loans, and we will be monitoring
    the markets and other developments closely to make those
    decisions. On August 27, 2020, FHFA extended the foreclosure
    and REO eviction moratorium until at least December 31, 2020,
    and it may be extended again. There are available solutions for
    homeowners who have been negatively affected by COVID-19 or its
    economic effects, including the CARES Act forbearance programs
    implemented at the Enterprises, and options like payment
    deferral and flex mod when the forbearance ends. We encourage
    homeowners who have been negatively affected by COVID-19 to
    reach out to their servicer for a forbearance if they need one.
        FHFA recognizes the broad impact of COVID-19 on various
    markets, borrowers, and tenants. Actions taken by FHFA and the
    Enterprises have helped all borrowers or tenants across all
    geographic and demographic segments.

    Q.8. You have stated your plan to deal with distressed
    servicers is to turn them into subservicers or transfer their
    servicing to other parties, and have said, ``We've seen that we
    can transfer servicing in a way that's not too disruptive.''
    Servicers have legal consumer protection obligations during
    loan servicing transfers. In 2013 the CFPB expressed concern
    about the large number and size of servicing transfers, made
    loan servicing transfers a focus of its supervision activities,
    and issued guidance for mortgage servicing companies on their
    legal obligations to consumers. Have there been any servicer
    transfers since March 27, 2020? What is your plan to protect
    consumer rights in any servicer transfers?

    A.8. We have been monitoring servicer liquidity very closely
    and it has remained sufficient throughout this emergency due to
    servicers raising capital themselves, Ginnie Mae's Pass-Through
    Assistance Program, and our own decision to limit servicer
    obligations to 4 months of principal and interest. Because of
    this, we have not had to transfer servicing due to distressed
    servicers, and I am hopeful that we will not need to do so.
    That said, it is more costly to service delinquent loans,
    including those with a CARES Act forbearance, and servicing
    compensation has not changed since before the 2008 crisis.
        In an effort to ensure that there is no disruption to
    borrowers, FHFA conducts after action reviews for 3 months for
    large servicing transfers, including review of any
    delinquencies, complaints to call centers, and distressed
    loans. Current Enterprise practice when loan servicing is
    transferred, is to exclude from those transfers any loans with
    loss mitigation such as forbearance still in process to
    minimize the effect on the borrower. We have also established a
    partnership with CFPB that allows us to review complaints
    against mortgage loan servicers.
        The partnership will allow us to better understand the
    nature of complaints being filed and identify opportunities for
    FHFA to work with the Enterprises to address any policy issues.

    Q.9. FHFA recently issued a notice of proposed rulemaking for
    the Proposed Enterprise Regulatory Capital Framework.
        Please describe how DFAST results informed the development
    of the proposal.

    A.9. The proposed rule includes a stress capital buffer of 75
    basis points of adjusted total assets. FHFA considered the
    Enterprises' comprehensive losses in the DFAST scenario, along
    with other factors, to inform the calibration of the stress
    capital buffer in the proposed rule.

    Q.10. In response to my QFRs from the September 10, 2019,
    Banking Committee on housing reform, I asked whether FHFA has
    analyzed the effects of bank-like capital requirements on home
    prices. You said that you had not yet done so. Have you
    conducted this analysis in conjunction with the proposal?

    A.10. In developing the reproposed Enterprise Regulatory
    Capital Framework Rule, the Agency undertook its normal review
    of factors that may be affected by a change in capital
    standards and looks to public comments received as important to
    the adoption of a final rule. Throughout, FHFA remains bound to
    the statutory requirements of Congress and conducted a
    thoughtful review of the impact while remaining bound to the
    statutory requirements in the Housing and Economic Recovery Act
    of 2008 (HERA), as specified in Section 1110.
        Similar to what then-Chair of the Federal Reserve Janet
    Yellen told this Committee in 2016:

            We are putting our rules very often in situations where
            Congress has decided there is a safety and soundness
            issue they want us to address by imposing safeguards in
            a particular area, and our job is to figure out how to
            do that where Congress has already judged that the
            benefits are worthwhile.

        I would also agree with those on this Committee who have
    stated that cost-benefit analysis can help resist any type of
    regulatory change. The enhancements in the reproposal ensure
    each Enterprise's safety and soundness and its ability to
    fulfill its statutory mission across the economic cycle, in
    particular during periods of financial stress. The reproposal
    is also a critical step toward responsibly ending the
    conservatorships, as directed by Congress.

    Q.11. In response to my QFRs from the September 10, 2019,
    Banking Committee on housing reform, I asked whether FHFA has
    analyzed the effects of bank-like capital requirements on low-,
    moderate-, and middle-income borrowers and first-time home
    buyers. You said that you had not yet done so. Have you
    conducted this analysis in conjunction with the proposal?

    A.11. As I mentioned in response to a prior question, FHFA is
    continuing to evaluate data and conduct empirical work on this
    issue. FHFA recognizes the broad impact of COVID-19 on various
    markets and borrowers and tenants. Actions taken by FHFA and
    the Enterprises have helped all borrowers or tenants across all
    geographic and demographic segments.
                                    ------

                   RESPONSES TO WRITTEN QUESTIONS OF
                SENATOR VAN HOLLEN FROM MARK A. CALABRIA

    Q.1. Director Calabria, can you please provide an analysis of
    how the Enterprise Regulatory Capital Framework [RIN-2590-AA95]
    will impact housing prices of low- and moderate-income
    families? If the price of housing increases as a result of this
    proposed rule, how might that impact the housing market? If an
    analysis has not been conducted, please explain why not, and
    whether the FHFA plans to conduct one?

    A.1. In developing the reproposed Enterprise Regulatory Capital
    Framework Rule, the agency conducted a thoughtful review of the
    impact while remaining bound to the statutory requirements from
    Congress in HERA.
        Similar to what then Chair of the Federal Reserve Janet
    Yellen told this Committee in 2016:

            We are putting our rules very often in situations where
            Congress has decided there is a safety and soundness
            issue they want us to address by imposing safeguards in
            a particular area, and our job is to figure out how to
            do that where Congress has already judged that the
            benefits are worthwhile.\1\
    ---------------------------------------------------------------------------
         \1\ https://www.govinfo.gov/content/pkg/CHRG-114shrg99726/pdf/
    CHRG-114shrg99726.pdf.

        I would also agree with those on this Committee who have
    stated that cost-benefit analysis can help resist any type of
    regulatory change. The enhancements in the reproposal ensure
    each Enterprise's safety and soundness and its ability to
    fulfill its statutory mission across the economic cycle, in
    particular during periods of financial stress. The reproposal
    is also a critical step toward responsibly ending the
    conservatorships, as directed by Congress.
        FHFA monitors effects under current Enterprise practices
    and standards on all market segments including low- and
    moderate-income households. In line with statutory
    requirements, the comments provided on the Proposed Capital
    Rule will be considered for analyses provided on the impact
    across the range of market participants.

    Q.2. The affordable housing goals and the Duty to Serve
    underserved markets rule are important to ensure the GSEs are
    meeting their chartered public mission. Is FHFA planning to
    make significant changes to the affordable housing goals and
    the duty to serve underserved markets rule? What is the agency
    weighing in rewriting these rules? Will access to credit,
    equity, and fair lending be central components of any new rule?

    A.2. On July 17, 2020, FHFA issued a proposed rulemaking for
    the affordable housing goals. Because of the uncertainty
    affecting the market during the coronavirus emergency, the
    Agency has proposed continuing with the current housing goals
    through 2021 and expects to propose a longer-term rule next
    year. The Enterprises are on a 3-year cycle with their Duty to
    Serve plans, and we will be working with them to seek public
    comment on a revised plan for 2021 given the current economic
    uncertainty.
                                    ------

                   RESPONSES TO WRITTEN QUESTIONS OF
               SENATOR CORTEZ MASTO FROM MARK A. CALABRIA

    Q.1. How will the FHFA ensure that the servicers and lenders
    follow your required forbearance plans?

    A.1. Each Enterprise has issued guidance to its servicers
    outlining the terms of CARES Act forbearance and how to ensure
    that a homeowner's request for forbearance is handled
    appropriately. To avoid confusion, FHFA and the Enterprises
    have released scripts that servicers should use to communicate
    options for both entering and exiting forbearance.
        In addition to the regular review and oversight that each
    Enterprise conducts with its servicers to assess compliance
    with the Enterprises' respective servicing guidelines, FHFA has
    established a partnership with CFPB, called the Borrower
    Protection Program, that allows us to review complaints filed
    by homeowners against mortgage loan servicers. The partnership
    has allowed us to better understand the nature of complaints
    being filed, and identify opportunities for FHFA to work with
    the Enterprises on policy and communication challenges.
    Finally, servicers are aware that repeated violations for which
    they do not undertake corrective actions can lead to alteration
    of Enterprise business dealings with the servicer.

    Q.2. What information will the FHFA receive from its Borrower
    Protection Agreement with the Consumer Financial Protection
    Bureau?

    A.2. FHFA was pleased to announce the Borrower Protection
    Program as a joint initiative with CFPB on April 15, 2020. The
    program was created to enable CFPB and FHFA to share servicing
    information in order to protect homeowners seeking assistance
    during the coronavirus national emergency. Under the program,
    CFPB has made complaint information available to FHFA via a
    secure electronic interface. In return, FHFA has made
    information available to CFPB about forbearances,
    modifications, and other loss mitigation initiatives undertaken
    by the Enterprises.
        Currently, FHFA has been surveying the types and frequency
    of complaints. FHFA has been reviewing particular complaints
    that have been made against individual firms identified in the
    complaint database as well as complaints made in the press,
    congressional inquiries, or by other means. We have also been
    conducting more regular searches for complaints made against a
    subset of servicers. The Agency will, as applicable, use what
    it learns to inform its routine interactions with the
    Enterprises, highlighting opportunities for additional follow-
    up or investigation to ensure that Enterprise policy is being
    carried out in accordance with the seller/servicer guides.

    Q.3. How will the FHFA monitor and address disparities in
    delinquency rates amongst servicers to ensure that those
    borrowers who are facing a financial hardship and eligible for
    forbearance can receive it?

    A.3. If FHFA identifies disparate outcomes that it believes
    Enterprise or FHFA policy changes could address, the Agency
    will work to address them using all available authority. The
    Agency does not have enforcement or examination authorities
    related to mortgage servicers.

    Q.4. If the FHFA receives information or identifies trends
    among mortgage servicers that do not fall within the CFPB's
    supervisory authority, will the FHFA communicate those findings
    to the appropriate regulator to ensure compliance with
    servicing laws and policies? If not, why not?

    A.4. Yes. Prior to the establishment of the Borrower Protection
    Program, FHFA lacked a formalized mechanism to refer potential
    legal violations to the appropriate regulatory authorities. I
    am committed to ensuring that Fannie Mae and Freddie Mac
    servicers and originators fully comply with all their legal
    obligations. FHFA will not tolerate the Enterprises
    facilitating bad behavior by their counterparties. As there was
    no existing mechanism to address these issues when I started my
    term as Director, I thank the Committee and its Members for
    their patience as we create such a mechanism.

    Q.5. Will the FHFA and the CFPB publish regular, public updates
    on the Borrower Protection Program to share findings and
    actions? If not, why not?

    A.5. Given that the Borrower Protection Program is quite new,
    it is simply too early to know what we will find and if such
    information can be shared publicly. FHFA will look to share
    whatever findings can be appropriately and legally made public.
    However, at the present time, FHFA does not have plans to
    publish any findings or actions based on data related to the
    complaint database, as it is owned and controlled by CFPB. When
    any changes or adjustments are made to a policy based on
    complaints lodged with CFPB, FHFA or the Enterprises will make
    those policy decisions public through news releases or guide
    changes.

    Q.6. Last year, I, Senator Menendez, and 19 other senators
    wrote to you, urging FHFA to keep a language preference
    question and housing counseling information on the Uniform
    Residential Loan Application. As we continue to work through
    this crisis, people who do not speak English as a first
    language will be among those hardest hit. In light of this
    pandemic, will FHFA rescind its rule and include the language
    preference question on the Uniform Residential Loan Application
    form?

    A.6. No. In August 2019, FHFA directed the Enterprises
    regarding changes to the Uniform Residential Loan Application
    (URLA) and released them from any previous directives that
    required adherence to instructions that were inconsistent with
    FHFA's authorities as a conservator. The URLA was transferred
    back to the Enterprises after the design and development phase
    was completed. As a result, the Enterprises have transitioned
    to industry's implementation of the URLA form and collection of
    data that will modernize the Enterprises' underwriting systems.
    The new form and data
    collection began testing in March 2020, will become effective
    in January 2021, and will become mandatory in March 2021.
    Further questions on changes to the URLA should be posed
    directly to the Enterprises.

    Q.7. How will FHFA ensure servicers provide assistance to
    borrowers who are not proficient in English?

    A.7. FHFA recognizes the importance of homeowners receiving
    accurate information when they talk to their servicers about
    forbearance. Therefore, FHFA directed the Enterprises to
    publish scripts for servicers to use that walk a borrower
    through the basics of a COVID-19 forbearance and their options
    for repayment when the forbearance is over. In June 2020,
    FHFA's Mortgage Translations clearinghouse was updated to add
    forbearance servicer scripts and the revised Mortgage
    Assistance Application from Fannie Mae and Freddie Mac in
    English, Spanish, Chinese, Vietnamese, Korean, and Tagalog
    (www.fhfa.gov/MortgageTranslations).
        The Enterprises completed their drafting of a COVID-19
    Servicing Educational Brochure. The brochure highlights
    mortgage relief options and other borrower resources for COVID-
    19 impacted borrowers. Translation of the brochure into
    Spanish, Chinese, Vietnamese, Korean, and Tagalog should be
    complete by the end of September 2020.

    Q.8. Will you require the inclusion of housing counseling
    information on the Uniform Residential Loan Application?

    A.8. No. In August 2019, FHFA instructed the Enterprises
    regarding changes to the Uniform Residential Loan Application
    (URLA) and released them from any previous directives that
    required adherence to instructions that were inconsistent with
    FHFA's authorities as a conservator. The URLA was transferred
    back to the Enterprises after the design and development phase
    had been completed. As a result, the Enterprises have
    transitioned to industry's implementation of the URLA form and
    collection of data that will modernize the Enterprises'
    underwriting systems. This will improve overall efficiency. The
    new form and data began testing in March 2020, will become
    effective in January 2021, and will become mandatory in March
    2021.
        FHFA committed to developing an optional standardized
    format and question for use by stakeholders regarding housing
    counseling information. This standardized format would enable
    standardized data collection for those stakeholders using and
    collecting such data.

    Q.9. Does the Federal Housing Finance Agency plan to review the
    Community Lending Plans of the 11 Federal Home Loan Banks to
    ensure they are meeting the needs of cities, towns and Native
    American reservations struggling with unemployment and business
    closure?

    A.9. FHFA currently conducts annual reviews of the 11 Federal
    Home Loan Banks' (FHLBanks) Community Lending Plans to ensure
    that the FHLBanks describe the credit needs and market
    opportunities for targeted community lending in their Districts
    and that they describe their strategies to address those
    identified needs. The Affordable Housing Program (AHP) final
    rule published in November 2018, expanded the scope of those
    Community Lending Plans. Beginning in 2021, the FHLBanks will
    also be required to identify and assess significant affordable
    housing needs in their Districts, and to describe their
    strategies to address those needs through the (AHP). FHFA will
    continue to review the plans. But the Agency does not currently
    conduct, nor does it plan in the future to conduct, an
    independent review of the FHLBanks' identified credit needs,
    market opportunities for targeted community lending, or
    significant affordable housing needs.

    Q.10. In that review of Community Lending Plans, will you raise
    concerns if you find areas lagging, such as investments for
    tribes or Black and Latino neighborhoods hard hit by job loss?
    In your review, are the Federal Home Loan Banks investing in
    low-income minority communities with fewer nonprofit and
    private developers or are their investments, specifically in
    the AHP and CICA programs, or are they investing in communities
    with more experienced nonprofit developers with more private
    sector partners?

    A.10. As noted above, FHFA reviews the FHLBanks' strategies to
    address the credit needs identified in the Community Lending
    Plans. In 2021, FHFA will expand its review to include an
    assessment of the FHLBanks' strategies to address the
    significant affordable housing needs identified in the
    Community Lending Plans in accordance with the 2018 amendments
    to the AHP regulation. However, FHFA does not conduct
    independent analyses of the FHLBanks' identified needs.

    Q.11. Do you think the Federal Home Loan Banks are responding
    adequately to the economic crisis in their States and
    communities?

    A.11. The FHLBanks have responded to this economic crisis by
    continuing to be available to meet their members' liquidity
    needs. Because of FHFA's supervisory emphasis on business
    resiliency planning, nearly all FHLBank staff were able to work
    remotely during the peak of the crisis while continuing to
    perform their usual functions. The FHLBanks have also
    established special programs to support members and their
    communities.
        The central function of the FHLBanks is to provide
    liquidity to the housing finance market so that potential
    homeowners can access mortgages, thereby providing an important
    economic support to members and their communities. The Banks
    served this role most notably in the early weeks of the crisis,
    responding to member demand and increasing advances by slightly
    over 30 percent during March. They continue to serve this role.
    In line with guidance from FHFA, the FHLBanks have offered
    flexibility on pledged collateral to include loans in
    forbearance due to COVID-19, have allowed members to pledge PPP
    loans, and/or have facilitated subordination agreements to
    allow members to pledge loans to their Federal Reserve Bank.
        In addition, the FHLBanks have responded to the crisis by
    offering discounted or zero-cost advances to members, using
    regulatory exceptions that allow for pricing below the cost of
    funds for special purposes that involve some social benefit,
    such as providing relief from a natural disaster. FHFA has also
    worked with the FHLBanks to allow them to offer Community
    Investment Cash Advance (CICA) program funds to assist the
    types of entities eligible for loans under the PPP. Some Banks
    have also provided grants to certain community partners or made
    charitable contributions in their communities.

    Q.12. Please provide information on Federal Home Loan Bank
    investments and grants to tribal reservations. Please provide
    annual investment by program type--CICA, CIP, AHP, etc.--by
    year and by FHLBank over the past 20 years.

    A.12. FHFA collects information on AHP awards to projects
    located on tribal land (not reservations) and does not collect
    this information for CICA or CIP. Because the data is not
    public, we have sent this information to your staff under
    separate cover as confidential and not intended for public
    dissemination. The data sent includes information only for
    those FHLBanks that have made awards on tribal lands and does
    not include AHP awards made to projects sponsored by tribal or
    Native entities that are not located on tribal lands.

    Q.13. Did the Federal Home Loan Bank provide the same loan
    maturity extension for the half-a-million mortgages in their
    Mortgage Partnership Program?

    A.13. Three FHL Banks currently operate as providers for the
    approved mortgage purchase programs:

        Mortgage Partnership Finance (MPF) with the Chicago
            Bank as provider and nine Banks holding mortgage
            loans--Boston, New York, Pittsburgh, Atlanta, Chicago,
            Des Moines, Topeka, Dallas, and San Francisco
            (currently, Atlanta no longer purchases AMA);

        Mortgage Purchase Program (MPP) at the Cincinnati
            Bank and at the Indianapolis Bank.

        Though mortgage loans owned by the Banks are not subject to
    the requirements of the CARES Act, the MPF and MPP programs
    offer forbearance and loss mitigation options for borrowers
    negatively affected by COVID-19.
        The MPF program closely aligns to the CARES Act and allows
    for forbearance and forbearance extensions for a period of up
    to 12 months for a COVID-19 hardship. The first 90-day COVID-19
    forbearance will be granted without a hardship documentation
    requirement. Following the initial 90-day forbearance, an MPF
    servicer may extend forbearance in separate, shorter
    incremental periods, not to exceed 12 months. Forbearance
    beyond the initial 90-days requires borrower-hardship
    certification.

        Cincinnati MPP has authorized up to 6 months of
            forbearance for COVID-19 hardship. The servicer must
            make quality right party contact and receive verbal
            verification of the hardship for a borrower to be
            eligible for forbearance. Forbearance for longer than 6
            months must be approved by the Cincinnati Bank.

        Indianapolis MPP has authorized an initial 90-days
            of forbearance for a COVID-19 hardship, but the
            forbearance can be extended in 60-day increments up to
            210 days. The borrower must certify they are
            experiencing a COVID-19 hardship to be eligible for
            forbearance. After 210 days of forbearance, the loan
            can be sent to the Indianapolis Bank for review and
            possible further extension.

        The CARES Act does not address options at the end of the
    forbearance period. The Enterprises offer various options at
    the end of the forbearance period, including the option to
    defer payments to the end of the mortgage term (payment
    deferral). MPF and MPP offer repayment options other than full
    reinstatement (lump sum), and the MPF program offers an option
    for payment deferral similar to the program offered by the
    Enterprises.

        The MPF program's COVID-19 post-forbearance options
            include full reinstatement, repayment plan, COVID-19
            payment deferral plan, and loan modification.

        The Cincinnati MPP program's COVID-19 post-
            forbearance options include full reinstatement, a
            repayment plan (up to 12 months), and loan
            modification. Cincinnati MPP servicers must obtain
            prior approval for payment plans in excess of 12 months
            or for a modification to any terms of the mortgage.

        The Indianapolis MPP program's COVID-19 post-
            forbearance options (reviewed for in the following
            order) include full reinstatement, repayment plan, and
            loan modification.
                  Additional Material Supplied for the Record
                            LETTER SUBMITTED BY CUNA

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                           LETTER SUBMITTED BY NAFCU

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]