[inaudible conversations] [inaudible conversations] this hearing will come to order. Today we are joined by the leading voices within the administration on reforming and strengthening our housing and finance system. The secretary of the treasury, and the secretary of housing and urban development, both of whom have just submitted Housing Finance reform for fossils to the president , as was the director of the federal Housing Finance agency who serves as the regulator and conservator of fannie mae and freddie mac. I want to thank each of you for coming to the committee this morning. Last friday marked 11 since the government bailed out and put fannie mae and freddie mac into conservatorship, where they remain today. Prior to 2008, the governmentsponsored Enterprises Held a 45 cents in capital for every 100 in mortgages they guaranteed. Now just 19 cents after a historic 200 billiondollar bailout from taxpayers. 11 years later they continue to be too big to fail and are even more leverage than they were before the financial crisis and taxpayers inevitably remain on the hook to developing for administrative and legislative reform of the federal Housing Finance system many of the legislative recommendations in the plans that were released on thursday or consistent with my offline in the system including attracting private capital back into the market as well as preserving certain incremental reforms that have already taken place during the conservatorship including a robust transfer of credit risk, the single security and common securitization platform and loan pricing that does not very based on the size. They have not been acceptable to fix it through comprehensive legislation. Five years ago the committee demonstrated that its possible. We came together to advance a comprehensive solution on this topic. This year i released my housing reform outlined that builds upon any of the same principles of the previous efforts. It sets out a blueprint for the permanent Sustainable Housing financing, the system that protects taxpayers by reducing the systemic too big to fail risks posed by the current mortgage guarantors. It preserves the existing infrastructure in the Housing Finance system that works well while increasing the role of private capital. The protection between mortgage credit and risk and taxpayers it ensures a level Playing Field for the originators of all sizes and types ill also walking in uniform responsible underwriting standards. And to promote broad accessibility to the mortgage credit including underserved markets. Ultimately, only congress has the tools to necessarily provide a holistic comprehensive reform to the system that will be durable through any market cycle. However, its important for the administration to begin moving forward with incremental steps to move the system in the right direction. After 11 years of conservatorship, it is long past time to make the decisions and address this last Unfinished Business of the last financial crisis. Senator brown. Thank you, mr. Chairman. To the witnesses, welcome back to my colleagues. We are going to hear from the trumpet Administration Today about the next steps on Housing Finance reform. It is clear from the plan they put out last week by President Trump thinks these steps should be. The plan will make the mortgages harder to get. We shouldnt have to tell the president we have an Affordable Housing crisis in this country. We all know it and we all see it. I see it when i talk to the residents of a manufactured Housing Community on the verge of losing their homes because they cant afford the rent increase in posed by private Equity Investors from outside of their states who just got their community. I see when i drive past the border of the houses that belonged to the predatory lending in the home city of cleveland in my neighborhood of the village those that went to buy it and drown in student debt anand cant save enough for a dn payment or affordable mortgage. These are the crisis facing families across the country. Printers, home owners, former homeowners, they all have one thing in common and cant afford a place to call home. Weve had a productive hearings in the committee where we talked about what it would take for the Housing Finance system to actually work for the working families. In march we held two hearings with representatives from the homebuilders, realtors, the bankers, Credit Unions and multifamily. The affordability and access arent just components of Housing Finance, they are the whole reason we have a finance system. They cant be an afterthought once weve answered other questions about the structure of the system. They have to be built into the system. We need a system built on a mission to serve borrowers had renters no matter who they are and what kind of work they do and where they live. That means we need policies that focus on increasing service in underserved markets like these rural areas and manufactured homeowners can read into those that have been locked out of the market for decades because of discrimination. We need a system that helps a wide variety of lenders and borrowers participate so they can meet all family needs particularly those who are have been left behind for generations. In the march hearings and in the hearings since, we have heard housing stakeholders remarkably coalescing around a few foundational principles of reform. They have consensus, they have said reforms should protect access to the affordable fixed Rate Mortgages. They said that the reform should provide a catastrophic government guarantee. They said we should structure the lone guarantors like the Public Utilities providing a regulated rate of return. They have said we should serve a Broad National marketplace and we should serve lenders of all types and sizes equitably. They said we should maintain theitheduty to serve all marketd borrowers. They said we should maintain Affordable Housing. We showed expand investment in Affordable Housing, and they said we should maintain a successful multifamily Business Models and insure the continued or better access for financing of Affordable Housing. Yet unsurprisingly, President Trump and his administration missed the point. Rather than create a system that addresses the needs of working families, the trumpet administration has put out halfbaked proposal that will make them expensive and harder to get. In addition to increasing the cost of the plan would make it harder for the lenders to compete and got the tools that we have now to finally find an Affordable Apartment or own their first home. The protections in the mr. Disclosures put in place following the financial crisis and as we know that theres been collective amnesia on the committee and in the administration to prevent predatory loans and toxic security from building up the Financial System, so lets be clear whether you are renting or want to buy a home or own a home and want to sell it, the plan hurts you. Old to funnel no surprise here, to the same wall street system that rocked the market and families lives in 2008. I was encouraged when i saw the treasury plan super proposals dedicatededicated is leveling oe the Playing Field. I thought that this might mean maybe hope against hope ive been leveling the Playing Field for communities of color, household who cant afford to save for a down payment. You could imagine my disappointment when i saw every last one of them is about leveling the Playing Field for wall street which is looking to make more money off of the mortgages. It looks like a retreat for wall street executives and the plan is the same as every other administration plan. The home city making it easy to profit off of hardworking families they come in the midst of a flurry of other proposals to weaken the fair housing and lending protections that god civilrights law and the Community Reinvestment act. Taken together, the president once again decided to betray working families and in youngstown and cleveland and baltimore, the city that the president cited with wall street, once again decided to side over the dignity of work. We dont need to make it easier. We need to quote secretary carson. Newsflash, rich people are going to get rich anyway. We need to make it easy to find an affordable place to call home for that housing should be optional. Its a basic need. No one should go without it in this great great. Thank you, mr. Chairman. The Witnesses Today are the honorable stephen addition to the 56 mnuchin and ben carson, Mark Calabria the director of the housing agency. You may begin. Mr. Chairman, Ranking Member brown and members of the committee, i am pleased to be with you to discuss the Treasury DepartmentHousing Finance plan to protect the taxpayers and foster competition in the market. Id like to thank the chair man and the committee for your work on this important issue. The outline is a productive step to ensuring the safety in the Housing Finance system. In september of 2008, the governmentsponsored Enterprises Fannie mae and freddie mac were placed into conservatorship by the fhfa. They have over 190 billion in taxpayer assistance. 11 years later cut they remained in conservatorship and continue to be supported by the treasury commitment to keep them solvent. The continued conservator ships have perpetuated farreaching government influence of Housing Finance sector. The lack of reform has left them exposed to future bailouts. Treasury housing includes almost 50 recommended actions. These measures would reduce the role of the federal government against future bailouts and increase privatesector competition in the housing system. As required by President Trumps productive, treasury shows that the gst can and should be reformed to ensure the safety and soundness. Although no one is prescribed to the endpoint for the conservatorshithe conservatorshs meant to be permanent, and that includes fhfa management of the gst. The plan provides a roadmap to police them from the conservatorship. The reform plan takes care to preserve what works in the system. Each of the recommended reforms as incremental, realistic and balanced. The plan would preserve the support of 30 year fixedRate Mortgage. That would be defined and paid for. Treasury recommends an exclusive pay for with the full faith and credit ofaith andcredit of the t that is limited to the timely principal and interest on the Mortgage Backed securities. To foster competition this guarantee is available to Regulatory Environment should be harmonized so that that the privatesector competitors offer it on a level Playing Field you for example under the patch to the Consumer Protection finance bureau ability to repay. In july, 2019, the announced it would expire in january 21 or after a short extension. Treasury supports the plan and expiration and also further revisions to ensure mortgage lenders continue to have a bright line safe harbor. Finally, i must emphasize the recommendations make it clear thatothe administration preferes to work with congress to enact comprehensive housing reform legislation that could achieve Structural Reforms that tailors the permits a part of the secondary market entry peels the congressional charters and other statutory privileges that have been competitive advantage. At the same time, we believe that the reform can and should proceed administratively. Pending legislation will continue to support the administrative actions to enhance regulation, promote competition and satisfy the conditions set forth in the plan for ending the conservatorship. Under the leadership of the president , im proud of all the work weve done to create conditions for greater economic growth, better opportunities for working families and high your wages for all americans. Today i look forward to discussing the Critical Issues of the Housing Finance reform. I truly hope that the committee will work with us on a bipartisan basis to move forward with legislation. Thank you very much and i look forward to answering your questions. Thank you, secretary mnuchin. Secretary carson asked thank you, member and for the opportunity to appear before you today to discuss how the department of housing and urban development. Fullstop for this Administration Efforts to reform the system and i also want to thank the tremendous team that we have assembled for the Ugliest Building but the best people, especially a special shout out to mike kelly whose birthday is today and in the years since the financial crisis, the federal government has continued to play an outside role in the nations Housing Finance system. Its imperative that congress and the administration have to be focused the system that we support access to credit and insurer the Government Programs do not overlap with and crowd out private capital. Im pleased to present an overview of the Housing Finance reform plan that was added to the president last week. He supports millions of families with affordable homeownership opportunities through the federal Housing Administration and providing Credit Access and liquidity in the Mortgage Market. In the financial crisis coming up because of the policies of the previous administration, fha and Balance Sheets were growing to approximately 353 and 400 prospectus he between the years of 2007 and 2018. The reform plan would reduce the federal government outside role in Housing Finance and protect taxpayers. To that end i ask congress to work with the administration on the four key pillars. Number one, returned to the core mission of serving low and moderate income families including firsttime home buyers who cannot be served through the traditional underwriting, to protect american taxpayers over the risk of bailouts, number three to provide fha and ginny made the tools they need to manage the risk associated with oversight portfolios and to provide liquidity to the Housing Finance system. It contains many recommendations, but for the sake of my oral testimony today, with the focus on just a few. First, returning to the core mission we are to allow the private architect working in those areas where it cant or wont work, we must make certain that we target the programs to not served by traditional underwriting. Historically this has been the fha most important contribution to the American Housing arcade facility that earlier for these families particularly firsttime homebuyers. Without the mortgage insurance, many of the families that lack access to affordable mortgage credit. Refocusing on the mission will strengthen the creditworthy build equity and avoid foreclosure. Second, the principle of the plan is for the federal mortgage credit policies should be better coordinated to allow the qualified borrowers to access responsible and Affordable Credit options. Our plan proposes that the fhfa will coordinated to ensure fannie mae, freddie mac and fha served the fine role within the marketplace. Hud recommends congress establish fha the department of Veterans Affairs and the department of agriculture as the sole source of the lowdown payment sourcing for borrowers not served by the conventional Mortgage Market. Third, to better protect the taxpayers we need to strengthen the Risk Management system. Fha currently insures more than 4. 4 chilean dollars and orchids meanwhile, ginny mae guarantees more than 2 trillion of mortgagebacked securities. It is imperative that fha and ginny may conduct their business in a manner that protects american taxpayers. And with broader protocols with staffing in procurement and technology. And it is recommended Congress Enact legislation to restructure those efforts of the Autonomous Corporation within had. And that memorandum provides an opportunity for the administration to Work Together to ensure they serve their Important Missions direct command congresses participation the ease agencies to have those responsibilities to the american taxpayer. Thank you and i look forward to answering your qu