Transcripts For CSPAN Treasury Secretary Mnuchin HUD Secretary Carson Testify On Affordable... 20240713

Today, it is mr. Birthday. [applause] rep. Waters if anyone wishes to sing happy birthday, please save it for later. [laughter] we thank you for that, madam chair. Rep. Waters i recognize myself for four minutes to give an opening statement. Good morning. Discuss theto impact of the trump and ministrations housing reform plan. We are joined by stephen mnuchin, hud director, ben carson, and mark calabro. Welcome. Administrations housing reform plan would be disastrous for our housing system. The Trump Administration is threatening to end the conservatorship of the government sponsored enterprise. Without congressional action to provide explicit government guarantee, it is implemented in this way, it is likely it would create turmoil in the Housing Market, prevent Many Americans from obtaining 30 year fixed Rate Mortgages unblock families across the country from attaining the American Dream of homeownership. For this reckless plan administrative action on the table, the Trump Administration also recommends that Congress Make several harmful legislative reforms. For example, the trump plan would abolish the affordable sing goals, which of support Affordable Housing and replace them with a mortgage fee that Trump Officials have not bothered to spell out the details for. The plan would fundamentally undermine the federal housing and ministrations ability to create affordable homeownership opportunities. The Trump Administration has proven again and again that it is not to be trusted. It has consistently pushed for harmful housing policies and eliminating key housing funding for those most in need. This administration has proposed tripling risks to lower income slashing and sh huds budget by 18 . Dreamers also blocked from loans and proposed to make it nearly impossible for victims of housing discrimination to obtain justice. This is an administration that reportedly wants to raise homeless camps and round up persons experiencing homelessness and force them to live in decrepit federal buildings. By contrast, democrats on this committee have put forth measures to improve the affordability and availability of housing. For example, we have bills to end the homelessness crisis, mortgages more affordable and protect dreamers, lgbtq individuals, and families and children with mixed immigration statuses and foster youth. When it comes to the Housing Finance system, i have long maintained any housing reform proposal should adhere to certain key principles. These principles include maintaining access to the 30 year fixedRate Mortgage, ensuring sufficient capital is in place to protect house payers, providing stability and can withstande future financial crisis and , transparencyion and standardization in a way that ensures a level Playing Field for all financial institutions, especially Credit Unions and community banks. Maintaining access for all qualified borrowers, they can sustain ownership and serving homeowners of the future and ensuring access to affordable rental housing. It is clear the trump and ministration proposal does not live up to these principles. Today this committee will examine why the officials who are eyewitnesses today, are supporting such a harmful plan. I recognize the Ranking Member of the committee, the gentleman from North Carolina, mr. Mchenry, for four minutes. You, misses thank chair. Is a powerful opportunity for bipartisan cooperation. We have a willing administration who is engaged in a productive dialogue on Housing Finance reform for the longterm. Ideald government is not for many things, but it is an ideal moment for difficult policies that divide both parties. Dividesfinance reform both parties. There is not a partisan only coalition that can produce fundamental Housing Finance reform. Democrats have tried it and failed. Likewise have tried it and failed. In order to have lasting change ,o our Housing Finance system it is important we legislate in a bipartisan way, and this is an ideal moment to do it. I am encouraged that secretary mnuchin and secretary carson a longtermd solution. It is a positive step toward building a Housing Finance system that makes the goal of affordable homeownership more achievable. While by no means perfect, it awayhes a path forward and from the status quo that puts taxpayers at risk and creates competition within the market. Inaction puts taxpayers at risk. Legislative in action regulatory inaction, puts taxpayers at risk. Out toary i reached chairman waters for ideas on Committee Hearings i thought could be bipartisan. This was one of them. I offered that back in january and 11 months later we are here today. The federal government, placed conservatorship and nationalized after their collapse, fannie mae and freddie mac. We do not want to relive that. This administration cannot do it alone, put us on a satisfactory path. Macy fannie mae and freddie remain in conservatorship, without competition. Our current economy is strong. This is the time to do Housing Finance reform because Economic Conditions are doing well. With a downturn at some point in time and without congressional action, our bailout of these institutions is more likely than not. Calabro took over calabria took over. It is too important to give that type of risk. We have been trending upward the last eight years. We may be reaching the top of the housing cycle. Inhave serious Systemic Risk the federal Housing Administration. It is important we legislate for the long term. We know it is not easy, but it is necessary. We cannot kick the can down the road. I want to highlight proposals we are focused on. One, a new Housing Finance system must present clear boundaries between the respective roles of thegses and fha. Congress needs to encourage competition by leveling the Playing Field and creating an open chartering process to provide a path for other companies to obtain these benefits. I think we can Work Together and achieve a bipartisan outcome that creates that competition, that certainty in the marketplace. I think this can make the American People proud and put us on firm Economic Standing for a generation to come. With that, i yield back. Rep. Waters thank you. I now recognize the gentleman scott, for oner. Minute. Mr. Scott think you, misses chair lady. This marks the 10th anniversary andhe passing of dodd frank the tremendous financial crisis we went to. But there is no more burning the great failure lookis point than as we across the country and every state and every community and it is filled with homelessness. So we have got to take a very serious look at this. We are hopeful in this Community Committee we would do so. On protectingus that 30 year mortgage. We have to ensure sufficient private capital is in place to protect our taxpayers. There is so much for us to get to. The American People are depending on us and i sincerely hope you three gentlemen will open our eyes to much of what we are now only dimly aware. Thank you. The waters i now recognize gentleman from ohio, mr. Stivers. You. Tivers thank it fannie mae and freddie mac have already been in conservatorship. A long overdue process we need to deal with. And senaten house proposals, democrat and republican proposals. Witnesses have made it clear they prefer comprehensive reform from congress. If not, they intend to proceed with administrative reforms. Work wee can restart should have completed long ago. Bipartisan, comprehensive reform so americans can achieve the dream of homeownership and avoid further bailouts. Ande the skeptics wrong achieving those goals, i yield back to balance my time. I want to welcome todays distinguished panel. We will hear from the honorable stephent. Mnuchin, secretary of the treasury. Secretary mnuchin testified previously before the committee and needs no introduction. Welcome. We will then hear from honorable carson, secretary of housing and development. He has also testified previously and needs no introduction. Welcome. Finally, we will hear from the honorable dr. Mark a. Calabria. This is alert director calabrias first appearance before the committee. He has served as the director of the fha since april of this year. In recent years he served on the republican staff of banking, housing and urban development, worked at an institute and most recently, as chief economist to Vice President michael pence. Welcome, director calabro. For purposes of testimony, each of you will have five minutes to summarize your testimony. Secretary mnuchin, you are recognized for five minutes to present your oral testimony. Sec. Mnuchin thank you. Chairwoman waters, Ranking Members and members of the committee, i am pleased to be with you today to discuss the department of treasurys housing reform plan. Last month my colleagues and i testified rep. Waters mr. Secretary, would you move your microphone closer and speak directly into it, please . Sec. Mnuchin last month my colleagues and i testified before the Senate Banking committee after the release of the plan. The comments and legislative frameworks we have seen from members of both parties reflect bipartisan agreement on the need for legislative action, and on the general principles of reform. I am hopeful with good faith discussions, congress and the ministration will act in a comprehensive matter to support Affordable Housing, tailored to the federal governments influence over the housing sector, protect taxpayers from future bailouts, and foster competition that will benefit consumers. That is why i was surprised and disappointed by the title of this hearing, which asks if the endnistrations plan, an to Affordable Housing. Oppose reducing or eliminating governmentsponsored enterprises longstanding support for Affordable Housing. Grateful to clarify treasury recommendations today, and explain how our plan will preserve support for Affordable Housing, while also improving the efficiency, transparency and accountability of the mechanism for delivering that support. Treasuries plan advances for continued backing for and widespread availability of the 30 year fixed Rate Mortgage loan and the gses and their successors to help fund housing for low, moderate income, and other renters. Have ation, the gses least four statutory mandates to promote affordable mortgage credit for historically underserved borrowers and renters. One, a duty to serve focusing on three markets. Housingured housing, preservation and role markets. Two, making certain contributions to the Housing Trust fund and capital magnet fund. Three, Charter Authority for access to mortgage credit throughout the u. S. , including central cities, rural areas and underserved areas. Purchaseequirement of specified amounts of certain multifamily Mortgage Loans that support housing for specified underserved borrowers and renters. Includees plan does not specific recommendations to alter the duty to serve a specified underserved market or the Affordable Housing contribution. The treasury seeks to preserve the National Service requirement with added protections. With respect to the fourth mandate, the Affordable Housing goals, treasury recommends material changes that would establish a more efficient, transparent and accountable mechanism for delivering tailored support to underserved borrowers. Further, the plan recommends they coordinate withfha and fannie mae with fha and fannie mae. To assure an efficient and foropriate federal role housing. Treasury is not recommending a reduction in support for underserved borrowers. Treasury is recommending a more effective means of delivering support. I look forward to our conversation here today, one that i hope will continue after this hearing. We welcome your thoughts and suggestions to address challenges of underserved borrowers and renters. Preferencetrations is to work with congress to enact comprehensive Housing Finance regulation. Legislation could achieve lasting structural reform, competitive advantages over private sector. At the same time, we believe reform should proceed precede legislation. I am proud of the work we have done to create conditions for greater Economic Growth, better opportunities for families, and i hope both committees work with us on passing legislation. Thank you. I am pleased to answer any questions. Rep. Waters thank you, secretary carson. Dr. Carson thank you for the opportunity to appear before you discuss how we are supporting this administrations efforts to reform the nations Housing Finance system. Mnuchin, i secretary was taken aback by the title of this hearing. If we want to examine the end of Affordable Housing, this would be a field hearing in San Francisco or los angeles, two cities at the epicenter of the Affordable Housing crisis. Lawsicting load zoning have made housing prohibitively expensive, driving up rents and house prices to the highest in the country, and leading to california responsible for nearly half of our nations unsheltered Homeless Population. Latest data found californias Homeless Population increased 16 over the past year alone. Was it not for californias increase, homelessness would have declined nationally. Contrary to what is happening in proposala, huds addresses how to best serve Affordable Housing needs while staying within the principles outlined by leaders of both parties, including chairwoman waters. We look forward to working with congress to move this legislation forward. I am confident we are starting from a place of significant common ground, what a future housing system should look like. At hud, we support millions of families with Affordable Housing providing Credit Access and liquidity in the Mortgage Market. We allow the private market to work, but in those areas where it cant or wont, lets continue to target fha programs to borrowers not served by traditional underwriting. Our plan preserves and strengthens pivotal roles while continuing delivery of that support and protecting taxpayers. Historically serving unmet Housing Needs has been fsas most important contribution to the American Housing market, facilitating entry into responsible house ownership. Without it, millions of families with lack access to affordable mortgage credit. Take for instance a typical fha borrower. Last year they were 39 years old, had a credit score of 666 of 666, purchased a home for 220,000. Low or moderate income individuals. 34 were minorities. In addition to helping borrowers by their first home, we want to help them stay in their homes. To improvells on fha servicing by creating more flexible loss mitigation processes. We are working to get a more diverse base of lenders into the program. Today it represents just 15 . They will return to offering fha fhas ere revising annualcerses and clarifying when h. U. D. And the aftere department will go allegations of fraudulent lending. Another critical piece of our need to modernize technology. Operatedes, h. U. D. Has on antiquated, Obsolete Technology that inhibits its appropriately manage risk. A y are undertaking multiyear modernization effort to bring its i. T. Infrastructure 21st century. This is their opportunity to move generations ahead to a stateoftheart system that fully digitize the entire mortgage process and align it industry standards. Our plan also calls on congress cap iminate the statutory on the rental Assistance Program which allows Public Housing leverage nd owners to private capital to preserve properties for long term affordability. Its launch in 2012, red has proven to be an story. Rdinary success a report were releasing this long onfirms what weve suspected. Red is stimulating billions of dollars in capital improvements, improving Living Conditions for lower income residents and enhancing the Financial Health these critical Affordable Housing resources for future generations. Madam chair, woman, Housing Finance reform is the final Unfinished Business remaining from the financial crisis. It one of the committees to you have anties and administration committed and prepared to work with congress comprehensive legislation. Lets begin that work today and birthday, mr. Ranking member. Very much. U kabercalabria. Ize time to for taking meet with me. In my first productive many, meefully the first of m. Let also mention in my bio, having worked on the Senate Banking ommittee im proud that the last piece of legislation i itked on that committee for, was where we expanded for essness protection families. I would also note, having been of the primary staffers, i remind the committee, we did it san way. Cart i believe we can do that again today. Et me emphasize its my belief that far too Many Americans today lack what each of us place to an affordable call home whether its owned or rented. This is a problem across america. Many communities in our country but as dr. Carson impressed upon its fundamental problem. Ays a local a fundamental cause are local andcies that make it harder more expensive to build new housing. Zoning, odorous building codes, permitting requirements. These policies isproportionately hurt lowincome families. Our affordability problems, while they can be addressed here not be solved until local governments remove these impediments that limit the Affordable Housing in their communities. There are many communities, for instance, that are upzoning in a responsible wayta will bring more distancety and i recognize areas in california are trying to address this problem. One part of our Mortgage Finance system can play a role, in fact, parts can play a role, banks ability ensure mortgage throughout the economic cycle. This mission is critical to supporting sustainable home Affordable Housing especially when the economy is weak and mortgage credit tightens. In their current condition, fannie mae and freddie mac will on a downturn, as we learned in 2008 housing problems get worse. Together, fanny and rode from di 5. 6 trillion in single and multifamily mortgages, nearly half the market yet until recently thermlimited to just 6 billion in allowable capital. To do the math, when i walked in door the combined leverage ratio of fanny and freddie was to one. Thousand last month secretary mnuchin and i agreed to allow enterprises to up to 45 billion combined. This is a significant step forward. Retaining just one quarters net has improved their leverage ratio by nearly half so six roud to say in my months weve doubled the capital of freddie and fanny but it stands at nearly 500 to one and in contrast our nations argest banks have an average leverage ratio of 101. Let me put that into perspective. We see, fanny and freddie are leveraged 50 times that. Combined with low capital, has been increasing in recent years, some risk factors now exceed the levels uperved in the years leading to the crisis. While average borrower or credit today, the lower down payment and high mortgages are actually higher than they precrisis. This cyclical pattern of increasing mortgage risk hurts or home e loan borrowers and makes it easy for them to be highly leveraged at harder to makes it keep in their home when the cycle turns. Useful o debt is a measure, spelled out in dodd frank. Its adversely impacted in a incomes tend hen to stagnate or decline and house stays the same. 2006 and 2008 higher out in the elled qualified mortgage rule. Yes, market wide delinquency, but s rates are low today they were low before the crisis last time. They were low in 2004. In fact, low well into 20072008. Delinquency rates today are a of a strong labor crisis rising housing regardless of loan quality, when there are defaults when the tide turns, at the current levels of capital let me be countries school clear. Freddie will fail in a downturn in their current condition. It is my objective to get them condition. S Housing Finances system is supposed to serve homeowners and renters while protecting taxpayers. I believe its failed on both accounts. Let me commend my leagues for i believe ith what are reasonable, thoughtful plans that present a path out of this. Say these plans are broadly consistent with my Top Priorities which are smirs to as a world class regulator so as to ensure reddie and fanny operate in a safe, sound condition. Second to end the 11year conservative ships and third as by statute to foster an efficient and Resilient National system. E finance i chair the principles for housing and finances laid out at the beginning to this congress and i look forward to working move his committee as we forward. Thank you. M calabria. Calabria, you recently expected to make a move soon for a rule, to be a determining whether pricing will work for a broad base of future necessarily block credit worthy people out of American Dream of Home Ownership. You know, civil rights advocates and others have raised would s that this rule increase incentives for fanny and freddie to engage in more pricing which would eliminate cross subsidies that elp minorities and other jimpbded borrowers obtain mortgages at affordable rates. Concerns that you will require up to 5 capital believe to nalysts be too high. Faas final rules on leverage address these concerns . Question. You for that were in the role of rule making. I hope to announce if well have repropose the rule. I view this as perhaps the most important rule making that i engage in, in my tenure. Its incredibly important to get right. A number talking to at this time within sis, constituencies. I think were getting to a point where this will be balanced. I feel highly confident well maintain access and afford protect the lso system. Thank you very much. What level of capital would you believe, to be capitalized . I think its appropriate for to remain from giving specific answers on the rule making. Again believe that a higher level of capital would affect mortgage . Ng of a i believe that as this i systematicallyge important Financial Companies whether its citibank or whether its fannie mae, should be well capitalized. I understand that you i understand that you have an obligation to the taxpayers, but you also have an to ensure broad access to credit for credit borrowers. Your job requires you to strike an appropriate balance between these goals. On what i can see, from your actions and i am concernede, that youre overly focused on gses footprint even if it comes at the expense of blocking hard working of Home Ownership so i would encourage you to houghtfully consider the feedback that youre receiving others il advocates and about this proposed capital rule concerns that these are addressed in a final rule. Met at the very beginning of your tenure as irector of fha and in that conversation i stressed the importance of working to Home Ownership, opportunities for minorities. Inflate people can minority Home Ownership with affordable Home Ownership and i two to be clear these are different things. Weve made important strides in opening up affordable home but we p opportunity still have africanamerican Home Ownership levels at rates lower housing act fair was passed in 1968. Astonishing n racial wealth gap that reflects Home Ownership. Do you believe fha has a responsibility to address the Home Ownership gap and affordable ess to Home Ownership generally . First, let me reassure you, i meet with ou, well everybody and talk to everybody that wants to meet with us and do you remember best to see no are addressed. I would emphasize one of the increase ivers of the in the wealth gap, where low had higher ities leverage ratios going into the crisis and were hurt more in the so im committed to making sure we do not see a through what we went in 20082010. That was a devastating time on inority communities and im committed to making sure that did you not hatch on my watch. Are you telling me that you that is youc action have taken and actions that you plan to take to increase access o Home Ownership from minority borrowers . Let me first emphasize our emphasis on Home Ownership is on Home Ownership. I think its critical that they are able to stay in the Home Ownership. Do anybody a e we favor if they just lose their ouse, foreclosures are devastating. You use the word minority. I can use the word minority out for all o look families. I know you are but i specifically asked you about the the problems d that we have with Home Ownership for minorities. You address the word minority . You, its difficult for then i will yield my time back. That ill call on the gentleman from North Carolina questions. Inutes for safety and soundness. Soundness, to our Financial System, to the that the three of you oversee, is your primary to us as taxpayers. Safety and soundness. Calabria, safety and primary is your obligation. Financial collapse of these institutions under your watch is of you the three gentlemen would seek. I would hope. Of american terest taxpayers. Begin, we have 116 items of reform from the and h. U. D. 116 items. They fall into two different baskets. You can do through administrative action. Your right under law, that congress has written. Other requires legislative action. Almost 1 3 of all the recommendations in the plan were reforms. Ve 18 from treasury, 17 from h. U. D. , from my account. Sheer volume of work that needs to be done to build the modern Housing Finance American People deserve, how important is it up its gress roll sleeves and legislate. Well go across, secretary mnuchin . And s very important thats by far our first choice. I think its obviously very be able if we want to to have things that are sustained across administration that is help the American People. Absolutely critical. Director calabria, federal membership, this watts iewed under mel directorship and limited. Re you going to seek to have a review of the Federal Home Loan Bank membership requirements . We are. Large numberere is of membership questions at banks dealing with insurers, we decided that we will soon be doing a request for membership on the issue at large so we can hear from stake holders. Web get feedback. If, depending on what comes out of that request for information may or may not do a rule making clarifying this but i think its important that we try the membership issue holistically. There is a New York Times piece from september 30 of this ear, outlining work done by researchers at the university of montreal and Johns Hopkins about risk. Via the portfolios that fanny and freddie had outlined, that some Alarming Trends according to this study that nstitutions are passing off increased flood risk to certain mortgage properties, and they passing that off to fanny and freddie. Are you familiar with that study . Underlying d the study, yes. Madam chair, i submit for the New York Times that study. Ing risks thate a set of are pushed off. Are you you said youre this. Ar with do you agree with the premise conclusion . The well, i would probably take some issue with some of the methodology. Overall point of the study is largely correct and really underlines the importance effective reform at the nfip because i am concerned if dont have a functioning Sustainable National Flood Insurance program that much of fannyisk will get send to and freddie. Do fanny and freddie assessment of ny the underlying flood risk in portfolio . All not if the nfip is covering that risk, there is generally an something but this is were starting to look at and were very concerned about the on ct of natural disasters fanny and freddies profile especially given the fact that 51 leverage so even something modestly that goes wrong in the environment could water. Them under is there a separate assessment done by fanny and data or isng outside it only nfip and fema provided data . Follow up with the committee and get some more actual what fanny and freddie se in terms of yutd side resources i would be happy to provide that information. I think useful and helpful so risk here. Nd the there is serious risk. And what are you doing to ensure fha runs these risks, especially given the question of volatility and the relative storm size that is weve had of storms . T cycle of well, were looking at a lot of the risks. Hese happen to be in coastal areas, many high priced areas. Were trying to make sure at particularly given the leverage of fanny and freddie that they can withstand that may come. You. Ank the woman from new york, ms. Fivequez is recognized for minutes. Thank you, madam chair. Yourtary carson, last week chief Financial Officer and your Deputy Assistant for Community Planning and development admitted before h. U. D. That atentionally missed i will legally required deadline that would have made Funds Available puerto rico. Let me ask you, where law is ally in federal h. U. D. Empowered to unilaterally withhold cdbgdr funds that have congress . Cated by as you know, congress has the fically mandated that secretary of h. U. D. Make sure allocated that are were provided for certain jurisdictions, have the the capacity to manage my question. Wer your chief Financial Officer before the appropriations subcommittee on said that you withheld federally were appropriated by congress to puerto rico. Question to you is, where in federal law you are h. U. D. Is empowered to withhold money that was supposed to go to puerto rico . Cant give you chapter and verse but it does exist. Ongress has specifically said to the secretary you may not secretary carson. Unless you have since youre not going to answer my question. Seemed like an answer. Time. Aiming my your staff previously claimed are you looking for an answer sound bite . No, no, no. Let me give you more background. Your staff previously claimed the agency delayed grounds cbgdr funds to await oid audit. However, the Inspector General september, in mid she stated explicitly and i do not recommend that specifictment take any actions with respect to ncluding withholding funds, elaying finalization of grant agreements or delaying publishing so if it was not general pushing for this delay, i wonder if this motivated . Ally did anyone at the white house president , or the chiefofstaff ask you to supposedmoney that was to go to puerto rico . Interestingly enough, a lot of what we do is dictated by sense. If you have a jurisdiction in changes of are three government within a month and had has historically difficulty with financial management, to put an unprecedented amount of money in there without the appropriate controls is thats another question here, ig said that they have oversight steps in puerto rico. With you held the money just to you know what . D is, imple answer to this this disdain and contempt of this administration to the rico. E of puerto this is an abuse of power. T speaks to this administrations disregard for the people of puerto rico. 3,000 people die in puerto rico watch. Your and i will ask for your administration, h. U. D. , to send congress and to this committee every communication youted to puerto rico, and, know what, sir . Were going to find out what you to withhold of money for the people puerto rico. If this was about corruption, as claimed, in the press, so deal when fema officials were in puerto rico. We have nothing to hide so ill be glad for to you get that information. Yeah, one way or the other, were going to know the truth. So my next question to you, sir, back. Ill yield madam chair. Language, when youre accusing somebody testifying, of personal unbecoming of this institution, and not ppropriate in parliamentary language before this debate. Admonished to be keep their opinions, but to cabinet panelist and a secretary of personal corruption is not becoming. No. Yield . You im talking about two icials of fema the time belongs to the gentleman at this point. Have you finished your point. Yes, maam. Finished tleman has your point. Will you yield to the gentleman later from new york . Yield. Py to sir, im referring to two ema officials that were arrested in puerto rico. The excuse thats been used by this administration, that let the money flow take rto rico unless they steps to make sure that the intended sed with the goals. H. U. D. , in a g of letter sent to the secretary of says, that the people, the government of port has complied with everything that from them. Yet, on the 17th, 17th state and localities that got Disaster Relief funds, puerto the only one whose money was delayed. Enough. Is can i claim my time, madam chair . The time belongs to the chair. The gentleman has noticed his concerns. To. Have been responded and im sure they have not been responded to. Agency, and to the if your concern is about language unbecoming a member, address that to all of the members, at any given time. Language that one could consider unbecoming. Madam chair, madam chair well move on. To accuse a cabinet secretary of personal corruption, which is is not lady did becoming of members of this committee. The gentleman is out of order. Oklahoma, mr. From lucas is recognized for five minutes. Secretary mnuchin, lets return to treasurys plan that conditions to l meet before ending the conserve for fortorship. Ensuring iscussed there is no market disruption. Can you expand for a moment on timeline the treasury is looking at to meet these perhaps end d to the conservatorship. Thank you, its a pleasure to question on this subject. First of all, i think as weve bipartisan hese concerns are something that need to be addressed before we take of e entities out conservatorship. Director p was we amended an agreement to make ure that the entities could retain capital. A critical part is to make sure proper capital before we would consider ending conservatorship. The plan also recommends reforms to protect the u. S. Taxpayer. Could you expand on what reforms needed to ensure that shareholders, not taxpayers, any the losses during potential future downturn . I think the first issue is, to make sure we have proper capital. Sureecond issue is to make that the director has that riate reforms, and there is proper underwriting and proper allocations. And again, one more time. Would envision a timeline of this happening i want to be careful in speculating, but i would hope that its over the next one to two years, and again, it could quicker or longer, depending upon market circumstances. Thank you, secretary. Secretary carson. The h. U. D. Plan indicates that actions should be taken to barriers to further adoption of manufactured housing. Like my colleagues here, i am sensitive about my constituents, too, and anufactured housing is particularly important in the rule communities that i represent. In oklahoma. Elaborate on how hud can eliminating those regulatory barriers . Thank you. Subject of great concern fours in. Communities, manufactured housing accounts for about 20 of all the single spamly lot of the yet, a egulationes that have been in place treat manufactured housing as trailers and doublewides, in fact there, has been tremendous progress made with manufactured housing. I think at this stage of the in many cases would you not be able to distinguished housing from a trailer and they tend to be much more resilient. Updating that needs to be done and weve a lot of effort on that and have made progress. Ts an area where we can make progress with Affordable Housing because youre talking about cost considerably less than site bit homes. For many its an entry level housing opportunity. Exactly. With that, madam chair, i back the balance of my time. Thank you, gentleman from georgia, mr. Scott is recognized for five minutes. Director calabria, following 2008 financial crisis, the House Financial Services committee helped to enact i orms under dodd frank so would like to get an understanding from you of exactly where we are. I mentioned earlier in my pening remarks, were now at the 10year anniversary of dodd frank. Doesnt seem like 19 years but we kind of look back and see what is the current default risk in each of the gses portfolios . First let me say how much i strongly agree with you. I think its incredibly important and important time to take a look back. The most seriously rates for fannie and freddie are 0. 61, similar to what they were at the beginning of 2008. Theres an adage that the worst loans were made in the best of times and we should keep that in mind today. Let me ask how does that risk compare to the default risk in the gse portfolios in the latter stages of previous Economic Growth cycles . Time theresover been a trend increase. If one goes back to the 1960s or 1970s, my recollection is the default rates were significantly lower than they were in the last previous cycles , so the last was an elevated level of delicacies and are busy in the part of all Market Participants but in the gses and hence my concern about it the cycle turns , with my concern that the gse is ready. Its good to get your point on this as we look back but let me follow that there has been a lot of focus recently on debt to income ratio given the impending expiration of the qm, of ortgage patch. Rga so, director, do you feel that the debt to interest deal profile of the dti profile of the gses portfolio when taken in isolation is a good measure for us to determine default risk . I will start recognizing that the debt to income ratio was explicitly mentioned in dodd frank, and you mentioned it is perhaps the best measure of ability to pay rather than willingness to pay. And so the important factor in i would the first to say that borrower credit and loan value are strong predictors of the default, but we will note that dodd frank specifically was a set of factors to be considered. Well, you know the very highly respected urban institute found in a recent study that found in a recent study that borrowers with dti ratios above 45 had higher default rates 45 . Those below fighte buyers before and during the financial crisis but how dti bars had lower default since 2011. As i am sure you know. So with that in mind is debt to income the right measurement of underwriting quality . Certainly with appropriate overlays you can offset that risk, and i would be supportive of congress revisiting having that dti mandated within the statute and i would think its past time to reevaluate the effectiveness of the light mortgage rule. Secretary carson, i cannot let this opportunity to escape for you to answer us. Do you have, in your own opinion, a full grasp of the impact of homelessness in this nation . Do you . And if so, what are you willing to say about it . You are the person that is at the point of the spear. Government to deal with homelessness. Sec. Carson i have had a lot to say about it. The gentleladyy has brought the hammer down. I would like to hear what you have to say later on. Is requested to provide an answer in writing for the record. The gentleman from florida is recognized for five minutes. Thank you madam chair and Ranking Member for holding this hearing today on the administrations plans for reforming fannie mae and freddie mac. It is an important subject, and levelst it has fallen to of personally denigrating secretary carson, asking him questions and not allowing him time to answer. Many think dr. Carson has done an outstanding job for the country. Ive said it before and i dont know why in the world you would take the job with all you have gain. E, and nothing to and i know is for the betterment of our country and the government, and how people live in this country. I am eternally grateful to you. I would like to give you a few moments if you prefer to respond to the questions that you are not allowed to answer when asked still while be they threw insults your way. If you would like to take time to respond now, you have the time. Ec. Carson i appreciate that i took this job because i feel our country is in trouble, and we need to do everything we can to provide the right kind of opportunities. Organization focused on getting people into programs and under a roof. That is not a bad thing. I want to maneuver us to a place where we get people out of the program and to a level of selfsufficiency. We have aimed at that. The question that was asked about homelessness, this is a very serious problem and one that is solvable in our country. A place like tokyo has more people than new york city can solve homelessness, than certainly we have the capacity to do so with the regulatory barriers, home prices, and homelessness. And we need to be able to face that. We cannot solve this problem by just throwing money at it. We have to look at the ideology of the problem, and deal with the zoning restrictions and noise restrictions and density requirements, with all of them. Many regulatory barriers that caused the prices to go where they are. Ais is something that is problem for democrats, republicans, independents and everybody. We need to stop making everything into a political argument and fighting like threeyearolds, and spend time sitting down and talking together. That the tenants the chairwoman has placed, and they are the same ones that i agree with, and yet we have not been able to sit down and talk about it. We need to be able to discuss these things. We are intelligent people and can solve these problems. Demonizing each other makes no sense and will not result in progress. Thank you, dr. Octor. , if ie also demonized understood the words correctly, making sure that the money sent was spent as congress intended for it to be. You were cut off for you could explain. Sec. Carson i would like to explain that in puerto rico they have access to 1. 5 billion, and about 2 million has been drawn down. I do not want anybody under the impression that they are having a crisis that cannot be resolved by utilizing the money already available. Normally it takes between a year and a half to three years to spend that much money. Having said that, the money for will needs and mitigation be got to them as soon as possible in a way that is safe ,ith a federal monitor in place and we would do that for virtually anybody. This is the largest amount of money that has been given to any jurisdiction in the history of an, and i think we have obligation to the taxpayers to make sure it is properly utilized to impact in a positive way the people of puerto rico. Do we have your assurances we are doing everything humanly possible through your agency to assist the people in puerto rico . Sec. Carson absolutely, and that is one of our highest realities. Thank you, sir. The gentleman from missouri, who is also the chair of the subcommittee on National Security and it Monetary Policy is recognized for five minutes. Thank you madam chair. Actually, i am deviating from Affordable Housing issue because i have two people here, and i would like to deal with the opportunity on housing because i have the hud secretary, but because of what we have on our agenda tomorrow, an examination of facebook, i am going to deviate a bit. Mr. Secretary, thank you for the letter, and thank you for looking proactively probing the issue of libra. I want to look at a little section of your letter and ask for a little more. Your letter says the working group on Digital Assets is monitoring developments related to the libra project as working to identify and assess potential risks and gaps on authority that may require more attention. Can you go just a little further on that, secretary . Absolutely. Thank you for your interest in the subject. I understand the diversion, it is an important subject. We spent a lifetime on this and we look forward to working with you. I met multiple times with the representatives of facebook. We told them that we thought their launch was premature, they had not addressed fundamental. Ssues around Money Laundering we have set up a subcommittee not just to address this, but to address other crypto asset and make sure we have the proper regulatory. We are working on interagency basis effectively. Lastluded meetings thursday and friday to see what our National Bank governors and finance ministers this is a discussion going on at the g20, the g7 and fsb as well. Thank you. Is the working group going to assess Systemic Risks and apply regulationsropriate are needed . Sec. Mnuchin that will be one of the issues amongst many we will look at. Implies theer Financial Solution participating in the Libra Network may be an avenue in which libra is regulated. Is my interpretation correct . Sec. Mnuchin that is correct. Do you think financial regulators have sufficient tools now to confront the potential Systemic Risk associated with libra . Be cromagnonto lodytic. Rog this frightens me, this whole issue with libra. U. S. Orclear whether foreign regulators will have the ability to monitor the libra market to require corrective actions if necessary. The mnuchin right now in United States we have the proper tools, but if we need more tools, we will come back to congress. My concern is internationally, and we are working with International Organizations to make sure they have similar standards to what we have in the United States to combat terrorist finances. Mr. Secretary, i was excited about the opportunity zones. I am still optimistic and excited, but the response has not been what i thought it would need. It seemed it was perfect for housing because of the 10 year. Capital gains tax being forgiven, but it is not turning out the activity is not turning out at a level i anticipated. I do not know what the National Picture looks like. Can you address the need to tweak it, or what do we need to get a greater response . Sec. Mnuchin one of the things that will be helpful is for us to make known to individuals what is actually happening. Projectsat some of the going on in miami in your own area there is a nice project going on. We are in the process of putting together on the website information to be used later. Thank you. Madam chair i would like to have this letter from the secretary in the record. Without objection, as so ordered. The german yields back. The gentleman yields back. Mr. Secretary, last week i sent you a letter. I hope you are able to receive it. The letter outlines requirements which is to examine issues that could affect financial stability. I have discussed this with many members and they tell me they are supportive of that position. Every agency, every federal and inwould do a study order to issue a ruling, it is required by the administrative procedures act. But they have not done that. This particular accounting standard is a similar issue to this committee in the standpoint of what it can do to the economy, to the housing industry. My question to you is, have you are you the letter, and willing to ask for a study . Sec. Mnuchin i have received your letter and i appreciate your interest in this subject. We have talked about this subject several times. We are pleased there are delays and implementations. I will discuss your request at the next meeting to see if the committee thinks we should do this as you said. Thank you for your interest. I appreciate that. This is an enormous issue. Stated that 57 of the loans are low to moderate income. What does the total percentage of loans out of those made this year, what percentage would fha be involved in . Sec. Carson the total centage of y loans what percentage made this year is fha involved with . If there are 100 loans made this year, how many are fha involved . I will see if the director has the answer to that. My recollection, i do not have the number in front of me. Fha is close to half, 40 to 50 , probably a third of the overall market is my recollection. We can get the data for you. What is the percentage of low to moderate income for you . If you want the bigger picture, you come im fannie and freddie and you are between 80 to 90 . Different from the precrisis. Almost all of the mortgage risk and market today is being backed directly by the taxpayers. I do not think the taxpayers have been more exposed at any time in history than they are today. My question do you have a percentage for your agencies with percentage do you think the total would be . Mr. Carson said 57 . Do. Carson 34 of what we is for minority, and as was mentioned, low and moderate income, about 57 . Would that be about the totality that you are looking at . Yes, i will emphasize that the footprint on low income minorities is higher for fha than fannie and freddie. What is your source of income for fannie and freddie . Moderateily portfolio earnings. Carson . Sec. Carson our money comes from the financial activity, the loans. If you have to increase your , increase your position to absorb losses, you said it is 500 to one. As an was a banker, examiner, this cannot happen. Source oronly revenue loan fees, it would seem you have to raise those fees to handle additional reserves . Is that correct . Sec. Carson of the entire 50 , it is is not like 14 to 16 . You are going to have to raise fees to raise capital. I will emphasize we have been studying fees in the past based on the capital. Thank you. The gentleman from illinois is recognized for five minutes. Thank you madam chairwoman. I would like to pick up with the fees and profits, and where it goes. Prior to the changes you are in the process of making, where did the profits and up . End u . P . After you make the changes, whose pocket does it end up in . It builds capital. The shareholders of the gses retain that . The taxpayer in case the gse becomes insolvent. And ends up with the shareholders with the gses, they will be able to sell those. In the Letter Agreement that we signed there was an increase of treasuries liquidity preference at the same time there was an increase on capital. The taxpayer is being attempted. Gses are profitable. That will have a huge impact on the profitability. You will be in complete control of the success of gses or any new competitors. Let me emphasize by statute they are private shareholder, there is no privatization, they are already privatized. I am following the instructions given me to get them out of conservatorship. That is what we are doing. We aim to recognize that these would not exist had the taxpayer not bailed them out. During a comparable crisis in the future, these entities or any comparable entities that you are contemplating will be bailed out because of you cannot let the Housing Market implode in a comfortable situation. Correct. And also why the government has to figure out how to charge for this guarantee . In the amount of time it would take to build sufficient capital, this body will have significant time to legislate a different path forward. That youriculty is decision to do this, and other decisions you are making is having a huge impact on the share prices they were traded. Lets talk about those shares. It was welldocumented in the subcommittee investigation that hedge funds such as paulson and fundsy the same hedge want shares in the gses for pennies on the dollar after the government bailed out fannie and freddie. Some of those hedge funds including paulson have served on advisory committees to the president on this issue. To secretarys mnuchin, what conflict of concludetook place to that was appropriate . Sec. Mnuchin let me explain the treasury has a giant obligation that needs to be paid back. I want you to describe the conflict of interest. Saying ahin youre premise that the shareholders are getting a benefit. Has the trading shareprice gone up . Sec. Mnuchin i do not look at that. Can you get back to us. Sec. Mnuchin it relates to any conflict of interest at treasury. To the entire administration and everyone who is making decisions about the shareholders, that applies. Do you have anything to say about that . Let me add i am on the record over the years sang in 2008 we should have wiped out the shareholders. Thatagree completely, and should be your guiding principle Going Forward instead of putting more money in their pocket. Presents circumstance itself to wipe out the shareholders, we will. I look forward to that. I was concerned on october 10 that you were looking at ways for fannie and freddie to increase their return on equity. That means that would presumably increase the amount that was eventually going into the shareholders pockets. It is unclear to me who you are working for. Why are you concerned about the return on equity . Entitiese these leverage 500 to one, it is essential to build capital now for a downturn. If you are planning on privatizing them. I agree completely that we should wipe out these shareholders and i look forward to working with you on that. Gentleman from michigan is recognized for five minutes. Thank you madam chair. I want to make sure you are able thatap up your thoughts extended over the last two questions. I would emphasize, and i hope we never see another downturn in the Housing Market, but i believe that its my responsibility as the regulator to hope for the best but plan for the worst, and having the devastation how this impacts the families and communities that i think it is absolutely critical to get fannie and freddie in the position they can decide the downturn, and that requires building capital as soon as possible. The fha attempted to grow its way out of some of the problems and displace the private capital and has expanded its taxpayer risk. Correct . Sec. Carson we are not trying to grow our way out of risk. Accordion to make capital available, and credit available in times of economic distress. So it should be countercyclical . Sec. Carson yes. We are not seeing that right now, are we . Think we are. At the time of the height of the crisis, fha expanded enormously. I wholeheartedly agree. What i wholeheartedly agree. What am concerned about is how do we get private risk back into the system . That is what i am really trying to drive at. Sec. Carson one of the things you probably noticed in the plan is having some tiered risk where we make the contracts based on the risk factors involved rather than having a one size fits all model. Im puzzled by some of my colleagues who seem to think we ought to declare everyone has a 720 fica score, and we should treat all debt and mortgages the same, and it should not be any risk analysis, yet we will castigate you for having risk in there. It sounds like have your cake and eat it too kind of scenario in many ways. That is what i am trying to drive at, what are the key components of the Market Infrastructure that need to be thatace to incent Additional Capital into the market . I want to emphasize the important question that congressman scott asked. A, a qualified market that works for all lenders. Its also important that the sec gets to something that works toward securization, so part of why so much of the risk has gone to fanny and exemptedthey have been from so many of the rules that other Market Participants have i think its so critical we get to a level field so that all can compete in a level Playing Field. Greater akes standardization, correct . Correct. About 1 1 2 minutes here. Cla director calabria, consistent ies not with what constitutional or, im sorry, congressional charters out. Laid congressman, its a really good question. Within ally, the agency conservatorship has used conserve for ship, ere thinking about what we need to be able to do as soup vision. Ere very close to reviewing and examining the supervision team, if we need to bring in more resources well bring in resources. We need to strengthen of fanny freddie. A good time to do the review . Absolutely. In my last thing remaining 30 seconds, about lending, fanny has been very involved with the u. S. Lender model, which is a risk model. On i know you believe youve got some rules that have been interesting m not answers on that. Ut im curious what Economic Analysis did hfa perform to justify the Capital Requirements . There is a ntioned part of the capital rule that applies to the gscs multifamily business and we were closely looking at that. We make final decisions moving youve noticed since were in rule making we cant go into detail on that today. Thank you. Yield back. I would like to announce that i intend to adjourn this hearing votes are called on the floor that will likely 1 15 today. D the woman from ohio, mrs. Beatty, was also the chair for subcommittee on diversity and inclusion, is recognized for five minutes. Chairwoman, i need a fiveminute biological break. Youre excused for five minutes. Wool recess for five minutes. Well come to order. The woman from ohio, mrs. The chair for the subcommittee on conversety recognized n and is for five minutes. Thank you, chair, ranking ember and the three witnesses today. Madam chairwoman, let me start y saying, i dont know why any of my colleagues on the other side of the aisle or our panelists here oday are shocked by the title of this hearing. Irst, let me say, if i could, Affordable Housing advocates have broadly criticized your to overhaul the Housing Finance system, especially the roposal to get rid of Affordable Housing. Also, if i look at the statement you have made, starting with you, mr. Director, too many mericans lack what each of us deserve, an affordable place to call home. Owned. R its rented or the National Problem that exists in communities across the country. Affordable housing, you further say, our Housing Finance system homeowners to serve and rent, while protecting taxpayers. Fails on both counts. So, this Administration Says the of homel not raise cost ownership or decrease access but Affordable Housing experts disagree with that. Carson, you said far too Many Americans who seek units ore price rental sustainable Home Ownership still cannot get their foot in the door. Further say many of our nurses, construction workers, olice, et cetera, et cetera, simply cant afford to live around the communities they serve. Youll have to forgive me for of Affordable Housing experts over this administration, who can asked to slash the housing by fordable more than almost 20 every year since coming into office. Secretary, mr. Carson, when on the e of you were panel in the senate, you stated these u do not believe plans will increase cost of home access to r decrease mortgage credit. I cant accept this belief, said before i have dozens of organizations who have called my office saying, this the exact opposite of what you believe and will home ly raise costs of ownership and make it more difficult for credit worthy american to unlock the dream of Home Ownership. Do you Analytical Data have, secretary carson, what tudies, cost benefit analysis, to back up these beliefs and have you run any kind of impactal analysis on the of u. S. Mortgage market and the on the sumer based report . Which specific aspect are you talking about . Are you looking for . In the studies that you presented to the u. S. Senate, there were documents in response about your trump housing proposed plan. That thei can tell you proposals that were advocating are to increase the ability, particularly of underserved to have es, to be able housing. And, you know claim my time. Not your beliefs, not what you eel what did you base it on, Empirical Data, analysis, so in a way that this is why were doing it because this is what the report this shows. The data its the same thing that the people were saying, opposite, they come into my district, into they give me data showing that we have a real problem here. Thats the reason for the title. National association of home dataers, for instance, has demonstrating that the cost of a one, efamily house, a new 25 to 27 increase. Let me ask you, i want others federal Housing Administration is responsible, as you probably know or should nearly half of all the mortgages accessed by hispanics. Ericans and are you recommending moving forward with plans to overhaul and its functions without Empirical Data . We have plenty of Empirical Data. Were happy to supply that to you. The point being one of the that there is a big ealth gap is because of housing. And were looking do off plan that you can submit to me because my time is up. G to go let me ask you a last question. S this plan calling for gses to get out of the business of low downpayment loans, yes, no, three of you quickly . Yes or no, my time is clicking. It yes or no. Wer how about you mr. Secretary mnuchin . Thats a decision of director. And he refuses to answer or doesnt have an answer. Thank you, im sorry. Is up. Gentleman from ohio, mr. Stylingers is rosed for five minutes. Into the 1 years conservatorship of fannie mae an freddie mac. Weve seen proposals from republicans and democrats and i time to do some bipartisan Work Together. The witnesses a few questions have all of you had a chance to see chairman Housing Finance reform principles . A couple of you have commented that you already support them. Do support them. So youre the only one who hasnt said, mr. Secretary so all three of you, can you just affirmatively tell me that you actually are okay that the rinciples chair has put out . Very much so. Yes. Thank you. So all three of you have said youre okay with the principles that the chair has put out, and your written testimony and what i have seen of your previous comments, do of you prefer a congressionally worked out by finance reform proposal to Administration Action . Correct. S can yall three comment . Yes. Earlier,sly, as i said if we have something thats worked out on a bipartisan basis that was my question, yes. Bipartisan. Essentially agree on the basic principles it should be possible if you take the out. Tics thats where im trying to go. Let me say yes and i dont anything yself doing administratively other than carrying out the law as it is written today. Thank you, director. The three of you and your teams be willing to work in group on an working housing reform with republicans and democrats from this committee . Absolutely. Not only would we be willing, the nt to, both across house and the senate so we can get legislation to the president to sign. Would be delighted to. So in two minutes weve frankly, you at all three agree with the principles that the chairwoman as laid out on Housing Finance reform. I also dont have any problem with the principles, and that action er congressional and that youre willing to work with us. To, you hats going know, make some of the skeptics feel like its not true but i think really, we disagree ore than we on. We all want to look out for availability, affordability, and we all affordability, and we all want to protect the taxpayers, whether thats republicans or democrats, regardless of where were from, we bring our own unique perspective based on the geography we represent and the we represent, and those economic and Housing Conditions, but i do believe that we can make meaningful bipartisan reforms of our system, and this s the only piece thats left undone from the crisis. We have an obligation to the United States to together to try to come up with things. I think the chairwomans principles are acceptable to me. Willing to start there, and ork, and i would ask the chairwoman to please take this ffering of trying to Work Together and lets see if we cant do something because it is something happen, nd, you know, not only are taxpayers on the hook right now, but we arent doing everything affordable make housing work for people and take differences between populations. I know that there is, in some communities, including the africanamerican community, a lower percentage of home on want, than you want, and i think, you know, these witnesses want. So i think we can and should try you know,gether, and, i am hopeful that we can and i sleeves asle roup my the Ranking Member on the insurance and housing subcommittee. There is a lot more in the name but lets focus on the housing piece and lets try to and i wanting happen to work with the three of you and your teams and the chair and republicans and democrats, and i appreciate you being here today. Tough there are sometimes questions but i know you, the believe in making the housing system and Housing Finance system in the united tates the best in the world, the most affordable and available in the world for the American Dream. With you and work the members of this committee, make this , to happen, and democrats, and for that. Illingness to do i yield back my time. The gentleman from alifornia, mr. Vargas, is recognized for five minutes. Lost my glasses. Thank you very much. Chairwoman, for this hearing. I do want to thank the general for his words there. I think they were very appropriate. I do have to say, we have a little bit of short memories around here. I do recall to the Ranking Member, it might be instructive atwe go back and take a look the record of some of the comments that were made in the about the ars, director, the cfpb from your side of the aisle, and to take a look at the words that were on , just to make it even both sides. And thats a fair analysis nd fair and level headed analysis, something we all should note including me. Thank you for raising that. Thank you. And then i would like to ask, sides, i talk both to loot of people. Dream is still the same. Most people want a safe place for themselves, their family, to do a little better than they did and most people want to own a home. Think thats changing in home, rnia, type of especially millennials, they are looking at different types of living arrangements. Think its appropriate but its still the same. They want a place of their own. When lso dont understand things get a little rough and tough, in the economy, why it is hard time ave a paying for their home, why they why thet bailed out and big banks do. Think that thats fair. To that point, im not confident Administrative Changes that you want to make here are fair. Want to ask you directly this. If i could read it, and if you it, you mment about talked a little bit about it this is with regard cnbc. Ur appearance on you mentioned the common shareholders, a comment that they were surprised, i guess, and this is what i on. D like to you comment [inaudible] calabrias comments were somewhat rushed as he tried to explain the nuances behind offering of public for companies that already have shares outstanding. Holders of the Common Shares out, he said. Ed whether we can do some kind of onversion with preferreds or whether they would give par, its way too early to figure that out. Reminder, the plan that rushed freddie into conservatorship as a financial melted down in 2008 and subsequent amendments, gave the 8 of y department about each enterprise payable as senior preferred shares. In other words, they are concern is going to get bailed out once again. And thats my concern, too. Ould you comment on that and ill give you some time to comment. Thank you, congressman. And e very strongly forcefully say i agree with you. None of this is unfair. I would have preferred to have situation when i walked in the door. I inherited a mess. To fix nsibility is fanny and freddie. You have two options in conserve for conservatorship. Limbo is not an option. I ould have preferred that had had a fair situation. I think fanny and freddie got out and homeowners did not. Pisses me off to this day. My numbeone objective is to see that we never, ever, have to fanny and freddie out again. I would also caution that freddie and fanny have allowed people to own homes that would not have had homes before. When you look around the world, the 0year mortgage with fairly low downpayment is what has allowed a lot of americans own homes. Every country doesnt have it. Its very unique almost to our ountry and i hope we dont destroy that in the process. Do i want to give the secretary an opportunity to comment on they wish. First of all, you have my commitment. Ive been around the housing 35 years and i can assure you i very much support he 30year market and want to make sure we do this but i would also comment on your previous issue. To e made no decision as whether they would exit by conservatorship or receivership, that i uld just comment represent the largest creditor, the u. S. Government, and we would need to be part of any decision. Again, were focused on how to make them safe and sound and we pitalize them and then can figure out the process of raising exterior capital. I, too, am very much defense the whole bailout issue, the fail i would, which is why a lot of this revision is also recognize the importance of the American Dream. People wanting to be able to own a home. Thank you. The gentleman from kentucky, recognized for five minutes. Thank you, madam chairwoman, of todays hearing is revealing. Of title is the end Affordable Housing a review of to ident trumps plans change housing in america. This suggests that my friends on side of the aisle believe any effort by the administration to reform Housing Housing ill cheese prices and disadvantage low and milk in borrowers. Reality the proposal set forth lay the groundwork to protect taxpayers, retain mortgage, improve efficiencies in the Mortgage Market and lower prices for qualified borrowers. By pushing back against common sense reforms to housing are ce, the democrats endangering the very low and middle income citizens they protect. Y want to unreformed gses will lure homes beyond uy their means and then default result. Reclosure as the thats not helping low income americans at all. This train wreck before. Democrats opposition to meaningful Housing Finance back will take us right to where we were prior to the financial crisis. Or years, the governments policy was to drive up mortgage indebtedness above what the could naturally sustain. For example, lets rewind the tape. 2003, this Committee Held a hearing on ways to improve Regulatory Oversight of gses, and during that hearing, then Ranking Member frank said this. I think its clear that fanny nd freddie are sufficiently secure so they are in no great danger. E continued, fannie mae and freddie mac do very good work and they are not endangering the this country. F how wrong he was. Conversation this about Housing Finance reform end the same way. Alarming that the Enterprises Share of low downpayment and high to debt higher ortgages are now than before the financial crisis but i would suggest thats what alarming is that the democratic majority today is defending this state of affairs. Said those wholl fail to learn from history are condemned to repeat it. Administrations proposals seek to place our Housing Finance system on a stable, protect us path and from another housing crisis, and their ud our panel for leadership. Now, my first question i want to relates to the credit risk ransfer issue to secretary mnuchin. He treasury report calls on them to including by cease ceasing reliance on institution capital. Unfortunately, current capital rules hinder banks willingness credit risk from the gses. Structural plified finance approach are grossly risk. Gned with gse credit the sfaa was intended to make banks are not making unsecured subprime loans. Make secure rprise prime loans and thus capital charges can be as high as five to lose t banks expect in the worst of recessions. Make economic n sense for banks to take on more risk from the gses despite their desire to do so. Secretary mnuchin, do you agree that International Capital roles adversely affect our private banks willingness to take on commit to ll you working with the Bank Regulators to explore ways to better taylor so that the private sector may assume more credit risk from the taxpayers . Yes and yes. Thank you. Ecretary carson, pmi, private mortgage insurance can help borrowers with small downpayments and help them houses and t into stay there without putting the taxpayers at risk. Hat role does your plan contemplate shifting some of the private the fha to mortgage insurers . We very much want private mortgage insurers to become a significant part particularly fter the gses exit conservatorship, and, you know, particularly in smaller communities and in rural communities, they can play a very substantial role, and were ooking at ways to make it even easier for them. I appreciate that. I think pmi is a good solution afford abilities and for protecting the taxpayer. Calabria, private label securization, what, in your mind the ideal proportion of mortgages held versus portfolio ending and private label . I think we need to see more diverse sources of capital. Studied economics, i learned that duopolies and monopolies are not good for in moreion and bringing competition is critical and i dont want to say the exact percentage but i think there be a wide range of sources of capital. Level the Playing Field on egulations to encourage more portfolio ending and more private securization is the right way to go and i applaud moving in that direction. I yield back. Absolutely. Thank you a, the gentleman from florida, mr. Lawson is recognized for five minutes. Thank you, madam chair and welcome to the committee today. Electricity carson, this question goes to you and you im bly understand what going to say. You had an opportunity to visit n my district with the Housing Conditions that exist, specially in the jacksonville area. But my concern has been, one of we talked about definitely filed a bill, for setting up housing iras for our young people. Eferred iras so they can save in those iras on a tax eductible basis until they accumulate enough capital, which can be capped maybe at 20,000 so they can use those funds for a downpayment, and the eason why i talk about it, and ill have you elaborate on it, is so many of the young people dont see buying a home as an option. You know, and i live in an area here, lot of them up where a lot of them rent and get a chance to talk to them. They dont see how they are to get ahead with Student Loans and other things that are of sing on them coming out school. So what are your opinions on the iras for downpayments, except in emergency situations, to be used for a downpayment on homes . Your interest. R that happens to be a great interest of mine as well. Entertain alld to the ideas. Its one of the reasons why know, pushing, you selfsufficiency programs, which people can accumulate money and in terms of zed their rent going up. And then that can go into an can be used for a downpayment or other things of nature. Iras or whatever mechanisms we can use is very much appreciated because, as you know, Home Ownership is the principle accumulationwealth in this country. And one of the reasons that the know, gap has, you deteriorated significantly is because a lot of people, minority ly in the community and particularly in the africanamerican community, ruined, and as a result of that, you see the Home Ownership rate decrease. Were looking at ways to ameliorate that situation. See if the to director wanted to comment on that. Absolutely agree. The government did some work the Consumer Federation of america saves initiative and im a very big believer. Be appropriate if there were another route of savings m, universal account, could be very helpful in terms of helping particularly households save. Okay. I look forward to continuing to this ith you, as legislation is being developed. Chair, i hat, madam yield back. Thank you, the gentleman from colorado, mr. Tipton is recognized for five minutes. I thank you, madam chair, would would like to be able to speak somewhat to the issues of and guaranteed businesses while in conservatorship. I appreciate the comments made colleague, mr. Scott, in regards to the passage of doddfrank, where prior to it, would have loans that had been made with no documentation r loans with risky product features such as negative amortization. Director calabria, could you maybe speak, how can we ensure be the gses continue to able to avoid such products moving forward as fannie mae and freddie mac exit from conservatorship . First i think its important borrowers e that the enjoy the same Consumer Protections as other borrowers the patch to expire and replace it with a set of xhourm protections that work for borrowers. Thats most critical. Foremost, making sure there is the capital there to support the risk. Obviously all financial gsestutions including the exist to take some degree of risk. The real question is having the to support the risk so they can engage in opportunities and also try and make sure we have better making es in place and sure that the underwriting is there, making sure the products dont come back and making sure soundness isty and there. That speaks a little bit to spoke about on the leverage ratio . Even if every single loan fanny and freddie made were still fail y would with that amount of leverage. Thank you for that. You know, ability of the to be able to repay health of ly to the our Financial System and we need borrowers aresure taking on only what they can handle. About your alking watt, essor, director mel he made some fairly risky programs during his tenure while he was in office. Would the administrations proposal make the gses more adverse and also, how would the rest to come aversion priorities currently in place the long term . Let me emphasize i believe quite uction could be modest. Where were dealing with its insurance ny sort of program, its the tanld of the distribution and quite frankly, he sort of any reduction of risk would really be ones we dont want to get families into, in icularly at this point the cycle. Keep in mind this has been a long behind us and what we really need to be able to focus on is how we prepare the families and how we prepare damiana freddie and the economy for the potential ter turn in the housig market. Secretary carson, do you have anything to add to that . Agreement. Thanks. We have a love of places in the industry right now and across the aisle that are questioning the timing of the administrations proposal and director, you just noted that right now in terms of the current default rates 0. 61. We have a Pretty Healthy economy right now. They are during good times so why is the administrations proposal needed now . If i can paraphrase the time to repair the roof is when the sun is shining and right now the Housing Market and the economy is strong. This is the time to do it and i fear that if we dont do that now we will not be able to make these reforms in the time of stress. Do you have a comment on that . I solely a very. When is a better time to fix it then when things are good, absolutely. I appreciate the comments and the administrations position in terms of trying to be able to reform fannie mae and freddie mac some paths are simply not sustainable. I think every individual, we want people to be able to have a home but we also want to make sure we are putting people in homes they afford and make sure we have a sustainable system when we are talking about being able to build up wealth and a primary residence is obviously the biggest wealth most people are able to accumulate in their lifetime and it is important that we have a system that isnt going to be punitive and put people into a position to where they will lose those dollars in the event of ultimately what would happen in the Business Cycles we will see economic downturns. I wholeheartedly agree with six the roof while the sun is shining and i applaud the administrations proposal to be able to try to address this and appreciate the gentleman being here today and i will yield back. The gentleman from michigan is recognized for five minutes. Thank you, madam chair. An investigation in whic investn detroit found that about 40 of people in the protected classes experienced unlawful differences in treatment by Housing Providers. This Unlawful Discrimination is usually hidden and its not like we are going to find sign assigs that are outdoors and homes that say dont rent to black families or no muslim families or lgbtq families. Yes or no come as a degree course and do you believe landlords or Property Owners are Housing Providers anywhere in the United States have ever engaged in the discriminatory practices against protected groups . Of course they have coming an, and westrongly oppose that. Yes or no do you believe that there should be some level of protection to prevent or stop discrimination that is rarely explicit nowadays . Of course there should be. Under your leadership, the proposal to make substantial changes to the impact standards under the Fair Housing Act the rule would make it harder for families facing housing discrimination to seek justice by shifting the burden of proof onto them. Can you explain why the Agency Charged the Fair Housing Act proposing to make it more difficult for the plaintiffs to bring Forward Housing discrimination claims under the disparate impact standards . I can probably give an example if congress decided they want to raise the minimum wage to 15 an hour the people who would be most impacted would be low skilled individuals, and a lot of those low skilled individuals would be in the minority classes and therefore they could bring a disparate impact. We want to make sure that obvious cases of discrimination can still be addressed appropriately. Complete intention is to showtht is discriminatory against the family. The different impacts help with going after those that are going to hide the discrimination. Its not like theyre putting signs up anymore. Its not like we will find emails. Sometimes we do but this impact allows people access to justice to show how the discrimination. Im disagreed with your example with you showing that most of the claims coming forward, you still had a huge burden to show that impact. Its not as easy as it claims. I had a number of clients and residents come forward and we love more black homeownership in michigan than any other state and weve seen shifting of homeownership away from communities and we do believe it stems around housing discrimination initial be equal access to bring the claims forward. I strongly disagree with and also to bring forward and advise your department to push back against the impact making it impossible secretary carson to bring a housing discrimination claim. But director, we know that a quarter of the mortgages provided by government sponsored enterprise i know its been discussed. The Treasury Department acclaimed in order to protect it making housing more affordable, federal Housing Finance you should bring private lenders to foster in the Financial System. Any time fostering competition be brought up or used is resulting is Enterprises Getting richer than ordinary people. These private lenders also have an obligation to make a quarter of the mortgages they back to lowincome borrowers. All of the private lenders who every genetic mortgages and the gse are directly impacted by the housing goals because they have to meet the housing goals. Lets say youre a lender that sold 100 of your loans to fannie or freddie you would on average meet those goals. Indirectly it impacts the originators and servicers with fannie and freddie. What my residence would ask is about accountability. How can we make sure these private Market Participants are to the american homebuyers rather than shareholder profit. I think thats a great question. I have no ability to regulate the counterparty in a regulate directly fannie and freddie in our accountability is when they meet those goals they can only meet those by the ones that they buy from essentially meet those goals. Lastly, always remember your creating a structure that allows it. I appreciate that. We might thank you so much chairwoman. The the german from texas as reckoning for five minutes. I think all of you for coming here today. I asked both the secretaries when they been here in the past, this is the first time i have had the opportunity to ask, are you a capitalist or socialist. , pretty hard in capital. Thank you for that. I look forward to working with you all over the next few years and Housing Finance reform. And there is a problem with the Affordable Housing in this country but not because the recommendations laid out in the last two reports. Its a direct result of local regulation. They validated zoning the laws and parking mandates are just a few dat things developing new Affordable Housing units and have prevented supply for meeting demand. Secretary carson, regardless of the ministry did Housing Finance system will it make a difference to the Affordable Housing stock if state and local government do not address the root of the cause of the issue. No in order to be effective it will require a combination of federal, state and local jurisdictions. A lot of the problems obviously our local regulations, 80 of the regulations are local in nature and many of them archaic. Instead of placing one regulation with another one they come up with Something Better and layer it on top. We become a complex labyrinth to get from point a to point b. Each one of those is an expense as well as creating more timelapse. D c is the worst financial state now than they were before the financial crisis. Even after they retained 45 billion and earning over the next 18 months they will still be drastically undercapitalized for the 5. 5 trillion in assets. Secretary mnuchin, what do believe is appropriate capital standard for the gses and do you think they can raise the amount of capital from the private sector. In regards to the first issue again i different to board of directors analysis before we. I believe the gses can raise a significant amount of capital from the private sector. We do anticipate the combination of retention and thirdparty capital raise. There will be sufficient capital to get to the new standards. Okay. The gse has significant market advantage because of the congressional charge and other statutory privileges. Theres also been several things tlc self done with conservatorship that have increased their advantage over private sector participants. You briefly touched on this but as we move forward in this process can we elaborate how their ministration plans to level the Playing Field to the market entrants can fairly compete with fannie and freddie in a reform Housing Finance system. Thank you. I think this is critical, i want fannie and freddie to be successful and effective but i want them to be successful and effective because of Good Business practice not because her help to lower standards and everybody else. Imagine the qualified mortgage real i believe there making progress and that was mentioned as a treasure report as well. I have a number of conversations talking to the sec and the Bank Regulators trying to get to get the Mortgage Market to move again. All the quarter nation is a number of things were working on. One last question you say one of the critical changes prior to the end of the conservatorship and strengthening the powers of the regulator. What changes are needed to the fh if a to be equipped as a regulator in a postconservatorship world. One of the powers i asked and i know its being discussed within the committee we all remember postkaplan the transition to the cloud and the Federal Reserve and other Bank Regulators to the Bank Services act to look up service providers. They are transitioning to the cloud and all the mortgage data, i have no authority to go in and do the same thing that the Federal Reserve and others to make sure the cybersecurity that made unto me threaten fannie or freddie. Like every other regulator i think its important to bring competition to the marketplace and id like greater discussion, if youd like to know what i like under capital standards look at 38 under the insurance act, if you can give me that id be delighted. Competition is good. Absolutely. None of you have touched on this but also a astros in six and i yield back. [laughter] thank you the gentleman from illinois is recognized for five minutes. Thank you, madam chair. Circuitry mentioned undersecrete Treasury Department sanctioned the targeted strategy believed to be close to prudent and designed to punish for western emergencies the Treasury Department look to those in 2018. As you know the Mueller Report having financial dealings with Paul Manafort who is not in jail. Early this year they reported that he began collecting 10 million a year in 2006 to advance prudence interest in western government in june 23, 2016 he was named Trumps Campaign chair and listen to weeks later june 7, he asked for intermediary pass, if he needs private briefings. Two halfyear sanctions were lifted and after that they announced it was investing 200 million into a project in kentucky. In april this year you testified on this committee that you delisted the sanctions because this is your quote, the Company Approach does not approach them they approach us a large group of people. Was senator mcconnell among the people who approach you . Im not sure what this has to do with housing reform. The trust in our Financial System depends on the entire system. Again im happy to answer but i dont see the relevance to housing reform. No ive never spoken to Mitch Mcconnell about that other than when we briefed the entire senate. Did secretary approaching to that the sanctions . No he did not. Did any member of congress approach with respect to lifting the sanctions . Not that i can recall that we had extensive discussions with many people on what we would do about lifting the sanctions. Did craig of Brady Industries approach about lifting the sanctions . Im not even sure im aware of who that is. Brady industries the company of substantial beneficiary in kentucky. Im not aware of who that is. Did anyone associated with Brady Industries approach you . Again as ive testified before, we lifted the sanction sanctions a yes or no is fine. Im just asking if you understand. I get to that because of last week, it was reported in december of 2018 largely with your decision to lift sanctions there was a seizure of documents from Tariff Services ltb, a londonbased company, Real Estate Firm that he controlled. As that rate has been described as being in connection with the special counsel investigation and of course the one led by mr. This rate is substantially ca contemporaneous with lifting sanctions and you depreciate im sure about this all looks so the question is, did you have any knowledge of the raid or the preparation for the raid at the time you made a decision to lift the sanctions . I find it interesting when were here to discuss housing reform that youre trying to grow me on something that happened months ago. I would reiterate if you can isolate the Financial Sector Lehman Brothers would still be here today. Im concerned whether or not people trust the Treasury Department is acting in the best interest paid to do have knowledge of the raid or the preparation at the time you lift the sanctions . I did not know the raid with a special counsel. Any of the incidents that youve given me can i assume that your lack of knowledge can be applied to the entire Treasury Department, were there people in the treasury of course you cannot assume that im not making this presentation for people within the Treasury Department. Hagan the final question if you have concerns work happy to discuss at the appropriate time. My final question and your willingness to share. Were you here today to ensure the ploys of the Treasury Department under control will comply with any congressional subpoenas relating to this. I will assure you we will follow the law that is reviewed by the general counsel. I think as you know we have received subpoenas that were not legal in all refer them to my general counsel and they will be reviewed. I can assure you will always follow the law. That is our intent. Lets hope so. Are you back. The gentleman from arkansas. Mr. Hill is working nice for five minutes. Thank you, chairman own waters i appreciate secondary mentorship and cursive for being here today. In your presentation to the senate, you can tell all the interest that we have on this topic in the committee about a year ago i wrote about huffing and freddie have been violating this is my view of violating their charters and Misleading Congress and misleading investors dating back to the 1980s and i am always very suspicious of reform ideas since the 80s, 90s and the 2000 have really not delivered very successfully on those. The agencies have entered an activity including but not limited to mortgage insurance to nonbank and Mortgage Servicing rights. These concerns regarding the proper role in the overall Housing Market which we talked about today. Additionally the gse has continued to grow footprint by increasing the loan limit allowing subsidies for second homes and increasing caps for multifamily lending. To collaborate, you looked at this issue now that your head of regulatory body, how are you going to ensure the gses stay within their charters. Thank you, congressman and let me emphasize, this is a critical concern anytime a player in the marketplace has considerable market power they try to leverage in other lines and i think that something we have to be cautious about when fannie and freddie have the ability to put anybody out of business that they can compete with. Its a large concern of mine in the housing economic recovery act in 2008 set up a structure for product approval and this is a big concern going into the crisis and im disappointed were 11 years later and theres not been an establishment before we got there. What will set up a rulemaking and have a clear process to make sure i thank you for that. I think you can echo Mitch Daniels former governor of indiana in the yellow pages, it does not need to be done by the government. I urge you to be very disciplined in looking at the process. You reference in your testimony on page three that your job to remove the gses from conservatorship with reorganization, rehabilitation or other affairs, a ticket from the treasury report and the hud report there is a biased towards recapping and releasing, those are my words, not your words. But its the appearance that the implication by whats been said is that we will release these and they will raise capital with reduction and renegotiate the for preferred stock negotiation and going back out to the marketplace. Do support recapping and releasing fannie mae and freddie. I do not support putting them back after the way they were before the crisis. I will say i share secretary mnuchin earlier point that no decision has been made moving forward. I have a responsibility in the interim to help those enterprises. Secretary mnuchin would you like to comment. I would say your characterization of a bias i dont agree with that. I think outside testified earlier we have the option to take them out through conservatorship or receivership. We have not had any discussion in my senses what we do agree on they need more capital and we would hire appropriate advisors to determine whats in the best interest of the taxpayer. So youre openminded about the various models of substitution that might be proposed . In other words we have proposals to have a mutual that is a utility nonprofit that the utility government thats utility. Or the recapping release with competition where the director has Congressional Authority to charter new energies, you are open to considering all these options . I would say our number one objective is to make sure we meet the housing goals that they have been outplayed into protect the cow taxpayers. Whatever the best alternative is. Thinking mr. Secretary. Secretary carson, earlier this year when he testified i recommended fha commissioner Brian Montgomery test about the committee and i still hope our chair will courag encourage hime and discuss fhas book of business. Im concerned its deteriorated at loan quality over the last couple of years and fica scores are lower that dictate income ratios are higher and thats concerning to me. And also they have mentioned the gses competing with fha for the same firsttime homebuyer market. So carson do agree the gse should not compete with the fha firsttime homebuyer market the secondary market . I think the gses have a different Mission Target than fha does. And can they both work with than that, of course they can but one is more specialized like a cardiac surgeon and a urologist. They both could probably operate on your heart but i think youd probably rather have a cardiac surgeon. Will put you down on the next witness for that. I yield back. The gentlewoman from virginia your mechanics for five minutes. Thank you, madam chairwoman and thank you for everyone here on the right side. And thank you for the distinguished gentleman to coming to talk to us about the important topic. Secretary carson, fha charges a flat fee for mortgages that it backs. Your plan for Housing Finance reform recommends a risk based for fha loans. Advocates have expressed concern that its fundamentally undermine the commission to underserved borrowers by charging them higher premiums to those who can least afford them. Has hud evaluated the facts of riskbased pricing throughout the current section . Specifically what would be the effect of tiered pricing on the least wealthy americans whose Credit Scores are below 650. This is been a subject of great conversation. We have looked at the different scenarios and we feel if we just have a onesizefitsall model, it has a tendency to attract higher risk people into the pool. In the long run it could actually elevate the cost for the lowincome individual. You didnt answer the question but with the fee be higher for highrisk individuals and lower for lower risk individuals. Yes. Has the hud conducted a fair housing analysis to determine if protective classes of borrowers would be disproportionally impacted by the new policy . Protected classes would undergo the same type of credit risk analysis. And they would have the fees appropriately scheduled for them. Are you saying the fees would not be based on the risk it would be based on whether or not protected class. These are based on risk whether youre a protected class or not. So has hud conducted a housing analysis to determine what the impact would be . Its in the information. Did hud conduct an analysis. Of course we looked at the various scenarios and we have the information. Is information that protective classes are disproportionately impacted by these risk based fees questioning. No they are not. If you would share that analysis that would be fantastic. Thank you. Secretary carson, huds plan for Housing Finance reform recommends congress established fha, v8 and usda as a solesource of low down payment financing for borrowers not served by the conventional Mortgage Market. Are you recommending that fannie and freddie get out of the business of backing low down payment loans . I think it would be good if we have segments of the Housing Finance market focus on particular Mission Targets it does not mean there will be some overlap. If fha va has monopoly on the lowdown payment loans one of that crowd out private sector participation in those loans . The private sector could decide which segment of the population they want to specialize in. No one would try to tell them what they could or could not do. That would probably disproportionally impact less creditworthy protected classes as well would it not . It depends. Some people in the private mortgage Insurance Market might decide they want to focus primarily on lowincome high risk individuals but that probably is not going to be the financially best move to make but they might feel social obligation to do that. We would not preclude them from doing that if they wanted to. If not social obligation or social desires to be a motivating factor among those to these. Secretary carson i see we only have one minute left so i want to give you a chance to apologize for, you made during a meeting with hud staff last month where you describe transgender as men. I was relating a story of the womens group that told me about big hairy men who were not transgender women by the way coming into your facility and having to be accepted because of the rules that were in place what was the womens group that told you the story . It was a group from alaska. What was the name. I dont remember. Can you get that first please. So you dont feel the need to apologize for the common. No i think this will concept of correctness you can say this you can say that you cant repeat what someone said is foolishness and we need to be more mature than that. Very good. Thank you very much. I yield back. The gentleman from georgia mr. Letterman is darkness for five minutes. Thank you madame chair. Thank you all three of you for being here. And doctor carson, secretary mnuchin u. S. Have been here before and youre aware that tricks that go on. And i appreciate you being here. Sometimes im amazed myself with what happens here. There is a Popular Television commercial about these young people in the middle of a horse show and the have an opportunity to run away from this terrible incident they are in and they jump in a running car to go behind chain cells instead in rancho cemetery. I often relate that to congress. As it seems like when we find yourselves in the middle of a really bad situation some of us look for the running car and others want to run to the chainsaw to make the situation worse and worse. I appreciate what youre trying to do with the reforms of the dsps. Youre looking for the running car. The economy is the running car that we can jump in and strength the power to make changes Going Forward. An economy is strong in my hometown of georgia we just posted in august the lowest on employment rate and history of that county. And to give you an example in 2010 unemployment was 12point to percent in august and 2018 it was 3. 8 and issue 3. 5 . We are seeing manufacturing return. However, we also see problems associated good problems but problems with the strong economy. One is the jobs made available we just have skill workers getting into those jobs and i held a skilled jobs fair at the beginning of this month where we bought employers and put the invitation out to every high school in our district in every High High School respond in over 400 showed up to get matched with employers. We are addressing those. The other issue i hear from employers is the lack of entrylevel homes for their employees and they are bringing in. Because my soninlaw and daughter are looking for home and he said basically anything in the starter home level in the area of georgia is 140,000 to 180,000 is sold by the time it hits the market and sells for more than the asking price of the home. Return to find ways to address that. It is pushing the new employees to take long commutes from other communities because they cannot find the Affordable Housing and our area and we say into the housing, or theyre moving into multifamily housing which is creating a supply and demand issue which is causing apartment complexes and other multifamily homes prices to go up. So my question, and i appreciate the efforts to retain capital. Because we do need to have the Rainy Day Fund if and when we do get into the next financial crisis. I think that is Good Business decision and a good running car to be in. I concern is i know this will was proposed by the predecessor. If we make that a permanent role with conservatorship and things are going again in a permanent rule is a requirement for multilevel family or multifamily dwellings to be double of that of a Single Family and the concern is because that further impact the availability of these homes that are needed and are parts of the country . I thank you for the question. We want to make sure fundamentally with a well thought out strong rule that fannie and freddie are there during stress time so they can provide the credit and ill remind the committee if you go back and look, 2008 and 2009, 2010 fannie mae pulled back from the marketplace and focused on saving themselves. I think any enterprise wouldve done the same. We need to make sure they are strong going into a stressful environment so they continue to be there. We are not looking to penalize multifamily or singlefamily relative to each other but to make sure that the riskbased capital can reflect the relative risk and fortunately the multifamily portfolio largely came to the crisis will much stronger way underwriting there. But make it to the risk and the capital is balanced. I just want to make sure by doubling the retaining from the multifamily it does not create an unbalanced barrier. One other quick question, there has been a prohibition against the lobbying on conservatorship. I want to make sure that we continue that Going Forward and will you support a ban on lobbying the congress about the geocities. It depends on how much structure. Even fannie and freddie have First Amendment rights. I want to make sure we respect this. I yield back. The gentlewoman from North Carolina mrs. Adams is recognized for five minutes. Thank you madame chair and thank you gentlemen for being here today. Firsttime homebuyers that traditionally have been the driving force in the Housing Market they traditionally lie on low down payment mortgages to purchase their homes. In fact over the past several years nearly 80 of firsttime homebuyers with mortgages purchased on using low down payment products. Can you speak to how the fh fa will ensure borrowers continue to have access to affordable payment options. We will certainly continue to make sure that they are sustainable and when we get people into homeownership they are there to stay and i think down payments are part of the question as is dti, fica and we want to make sure we get them to stay and thats what we will trying to do. Thank you for the commitment and for each of you if you could answer yes or no it will be helpful. He. Extensive details on other recommendations in the plan you provide no details on the kind of Affordable Housing programs of the fund or how you would expect this would be an adequate replacement for the Affordable Housing goals. Its clear on the details of the plan when it comes to Affordable Housing. The Affordable Housing cannot be an active fault on the finance reform. Its got to be at the center. So, can you please tell us why you have decided not to spell out the key details of your own plan on Affordable Housing . As i said in my opening testimony because i want to clarify, we want to make sure there is Affordable Housing that is one alternative that has been proposed and isnt necessarily our only alternative. What we are saying is we want to make sure they are accountable in a bipartisan basis and figuring out how we do not have was Affordable Housing if anything hopefully. You do have some details than. We have views absolutely that we would sit down on a bipartisan basis and want this resolved. Thank you. They made several changes to the affordable lending products. Fannie mae and freddie mac was possible and previously the programs had limits of 100 of the area of the Median Income and now the income limits are 80 . 80 . Director, are you concerned that these will deprive them of mortgage options but potentially lock them out of the conventional market . I think its important that we make sure the Affordable Housing efforts are well targeted so for instance the statutory framework has little housing holes build on in based on income and while it is correlated, they are actually only weakly so we are in a situation historically where higher credit, low income borrowers had been cross subsidizing and higher income borrowers so one of the things we are trying to make sure its essentially make sure that the announcer cspans washington journal live every day with news and policy issues that impact you. Coming up friday morning, black discusstter activists criminal justice reform. Cyber Threat Intelligence analyst Charity Cyber threats and disinformation campaigns. Targeting the 2020 elections. Be sure to watch cspans washington journal live at 7 00 eastern friday morning. Join the discussion. Announcer Funeral Services for remembering elijah cummings, who died last week, are tomorrow at new psalm Baptist Church in baltimore. We will have live coverage friday morning at 10 00 eastern on cspan, online at cspan. Org, or you can listen on the free cspan radio app. The casket of the late congressman arrived at the u. S. Capitol this morning for a ceremony before lying in state. Leadership from both the house and senate made remarks, including ho