[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.
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    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.
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