Well come to order. Without objection, the chair is authorized to declare a recess of the committee at any time. This hearing is entitled the end of Affordable Housing, question mark. A review of the Trump Administrations plans to change Housing Finance in america. Before i recognize myself, members today its mr. Mchenrys birthday. If anyone wishes to sing happy birthday, please save it until later. Thank you. We all thank you for that, madam chair. Happy birthday. And i now recognize myself for four minutes to give an Opening Statement. Good morning. Today were here to discuss the impact of the Trump Administrations Housing Finance reform plans. We are joined by treasury secretary Steve Mnuchin, h. U. D. Secretary ben carson, and federal Housing Finance agency director. Welcome. Let me say up front that the Trump Administrations Housing Finance reform plan would be a disaster for our housing systems. The Trump Administration is threatening to end the conservatorship of the enterprise that is the gses without congressional action to provide an explicit government guarantee. If implemented in this way, it is likely it would create turmoil in the Housing Market, prevent Many Americans from obtaining 30 year fixed rate mo mortages and block families from obtaining the dream of the home owners ownership. With this plan on the table, the Trump Administration also recommends that Congress Make several harmful legislative reforms. For example, the trump plan would abolish the Affordable Housing goals, which help to support affordable Home Ownership and rental housing and replace them with a mortgage feel that Trump Officials have not bothered to spell out the details for. The plan would also fundamentally undermine the federal Housing Administrations ability to create affordable Home Ownership 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 for slashing and eliminating key housing funding for those most in need. This is an administration that has proposed tripling rents on our lowest income house holds and slashing h. U. D. s budget by 18 . This is an administration that has eliminated protections for lgbtq individuals. Blocked dreamers from fha 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, make fha mortgages more affordable, and protect dreamers, lgbtq individuals, families and children with mixed immigration statuses and foster youth. When it comes at that time Housing Finance system, ive long maintained that any Housing Finance reform proposal should adhere to certain key principles. These principles include maintaining access to the 30 year fixed Rate Mortgage, insuring sufficient private capital is in place to protect taxpayers. Providing stu providing stability and liquidity so we withstand any financial crisis. Requiring transparency and standardization in a way that insures a level Playing Field for all Financial Institutions, especially Credit Unions and community banks. Maintaining access for all qualified borrowers that can sustain Home Ownership and serving homeowners of the future and insuring access to affordable rental housing. Its clear that the Trump Administration proposal does not live up to these principles. Today this committee will examine why the official whose are our Witnesses Today are supporting such a harmful plan. I now recognize the Ranking Member of the committee, the gentleman from North Carolina, mr. Mchenry for four minutes for an Opening Statement. Thank you, madam chair. I want to thank the distinguished panel for being here today. Let me begin by saying this. This 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 long term. Divided government is not ideal for many things. But it is an ideal moment for difficult policy that divides both parties. Housing finance reform divides both parties. There is not a partisan only coalition that can produce fundamental Housing Finance reform. Democrats have tried it and failed. Republicans likewise have tried it and failed. In order to have a lasting change for our Housing Finance system. To put it on a sustainable path for our taxpayers, for our communities. Its important that we legislate in a bipartisan way and this is an ideal moment to do it. Im encouraged that secretary mnuchin and secretary carson have proposed a longterm solution. Its a positive first step on a multiyear path toward building a Housing Finance system that makes the goal of affordable Home Ownership more achievable. Why by no means perfect, it sketches a path forward and away from the status quo that puts taxpayers at risk and prevents competition within the market. Inaction puts taxpayers at risk. Let me say that again. Inaction, legislative inaction, regulatory inaction, puts taxpayers at risk. In january, i reached out to chairwoman waters with ideas for Committee Hearings i thought could be bipartisan. This was one of them. 11 months later were here today. 11 years ago, we the federal government, placing conservatorship, after the collapse of fanny mae with freddie mac, we dont want to relive that. And this administration cannot do it alone and put us on a satisfactory path. Today, fanny mae and freddie mac remain in conservatorship without competition. Our current economy is strong. This is the time to do housing reform because of the Economic Conditions as well. With an inevitable downturn at some point in time and without action and reform of the gses, a bailout of these institutions is more likely than not. In fact, until the director took over, the gses had a capital ratio of 1,000 to one. Even a small dip in the market would guarantee failure. Housing finance is too important to be put at that type of risk. Our Housing Market has been trending upward for at least the last eight years. So we may be reaching the top of the housing cycle. We have serious Systemic Risks with the gses. Its important we legislate for the long time. We know its not easy but its necessary. We cant can tkick the can down road. A new Housing Finance system must first set clear boundaries between the respective roles of the gses and fha. Second, Congress Needs to encourage competition by leveling the Playing Field and creating an open chartering process to provide a path for other companies to attain these benefits. I think we can Work Together and achieve a bipartisan outcome that creates that competition, that certainty in the marketplace. This can make the American People proud and put us on Economic Standing for a generation to come. Thank you. I now recognize the gentleman from georgia, mr. Scott, for one minute. Thank you very much, chairlady. Welcome. You know, chairlady, this marks the tenth anniversary of the passing of dodd frank and the tremendous financial crisis we went through. But there is no more Burning Point to show the great failure at this point than as we look across the country in every state and every community and it is filled with homelessness. So weve got to take a very serious look at this. And we are hopeful in this committee we would do so. Weve got to focus on certainly protecting that 30 year mortgage. Weve got to insure the sufficient private capital is in place to protect our taxpayers. So theres so much for us to get to. The American People are depending on us and i sincerely hope that you three gentlemen will open our eyes to much of what we are now only dimly aware. Thank you. I now recognize the gentleman from ohio for one minute. Thank you, madam chair. As the members are all aware, fanny mae and freddie mac have been in conservatorship for 11 years. This is a long overdue process we need to deal with. The committees seen proposals come and go. Weve seen house and senate proposals, democratic and republican proposals. Our witnesses say they prefer comprehensive reform imposed by congress. If not, they intend to proceed with administrative reforms. Its my hope we can use this hearing as an opportunity to restart this work we should have completed long ago. Comprehensive reform that insures americans can achieve the dream of Home Ownership and provide stability to the housing system and prevents future taxpayer funded bailouts. This hearing should be the fest of many aimed at proving the skeptics wrong and achieving those goals. I yield back the balance of my time. I want to welcome todays distinguished panel. Well first hear from the honorable Steve Mnuchin, secretary u. S. Department of the treasury. Secretary mnuchin has testified previously before the committee and needs no introduction. Welcome. Well then hear from the honorable dr. Ben carson. Secretary carson has also testified previously before the committee and needs no inferoduction. Welcome. Finally, well hear from the honorable dr. Mark a. Callabria. This is his first appearance before the committee. He has served as director of the fhfa since april of this year. In recent years, hes served on the republican staff of the committee on banking, housing and urban development, worked at the Cato Institute and most recently as chief economist to Vice President mike pence. Welcome, director. For purposes of testimony, each of you will have five minutes to summarize your testimony. Secretary mnuchin, youre now recognized for five minutes to present your oral testimony. Thank you. Chairwoman waters, Ranking Member mchenry and members of the committee, im pleased to be with you today to discuss the department of treasurys housing reform plan. Last month, my colleagues and i testified before the senate banging committee mr. Secretary, will you move your microphone a little bit closer and speak directly into it, please. Last month is that better . Thank you. 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. Im hopeful with some good faith Discussions Congress and the administration will act in a comprehensive manner to support Affordable Housing appropriately tailor the federal governments influence over the Housing Finance sector, protect taxpayer and foster competition that will benefit consumers. Thats why i was surprised and disappointed by the title of this hearing, which asks whether the administrations plan, an end to Affordable Housing. To be clear, treasury does not propose and indeed opposes reducing or eliminating the Government Sponsored Enterprises longstanding support for Affordable Housing. Im grateful for the opportunity to clarify treasurys recommendations here today and explain how our plan will preserve support for Affordable Housing, while also improving the efficiencies, transparency, and accountability of the mechanism for delivering that support. Treasurys plan advanced for continued government backing for and widespread availability of the 30 year fixed Rate Mortgage loan. And the gses for their successors should continue helping to fund multifamily housing for low income renters. In addition to the general support for Affordable Housing, the gses have at least four key statutory mandates to promote access to affordable mortgage credit or historically underserved borrowers and renters. One, a duty to serve focused on three specific underserved markets. Manufactured housing, Affordable Housing preservation and rural markets. Two a requirement to make certain contributions to the Housing Trust fund and the capital magnet fund. Three, Charter Authority to promote access to mortgage credit throughout the United States, including central cities, rural areas and underserved areas. Four, a requirement to purchase fhfa specified amounts of certain Single Family and multifamily Mortgage Loans that support housing for specified underserved borrowers and renters. Treasurys plan does not include specific recommendations to alter the duty to serve the specified underserved markets, or the Affordable Housing contribution. Treasury seeks to preserve the national serve requirement with some 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 support to underserved borrows. The plan recommends that fhfa continue to coordinate with those who have primary responsibility for providing support that cannot be fulfilled through traditional underwriting to insure an appropriate low for housing. Treasury is not recommending a reduction in support for underserved borrowers. On the contrary, treasury is recommending a more effective means of delivering the 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 the challenges facing underserved borrowers and representers nationwide. Finally, i must emphasize our recommendations made clear that the administrations preference is to work with congress to enact comprehensive Housing Finance legislation. Legislation could achieve lasting structural reform, competitive advantages over private sector. At the same time, we believe that reform can and should proceed administratively pending legislation. Under the leadership of President Trump im proud of the work weve done to create conditions for greater Economic Growth, more and better opportunities for working families and higher wages. I look forward to discussing with you critical Housing Finance reform. I hope the members of the committee from both parties will work with us on passing legislations. Thank you very much, im pleased today answer any questions. Thank you, secretary carson. Chairwoman waters, Ranking Member mchenry and members of the committee thank you for the opportunity to appear before you today to discuss how the department of housing and urban develop associaing committee is supporting this administrations effort. If we really 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 nations Affordable Housing crisis. Restrictive zoning laws have made housing sprve theexpensive driving prices to some of the highest of the country and leading to california leading to nearly half of our nations homeless population. The latest data found that californias homeless problem increased 16 over the last year alone. Were it not for california, homelessness would have declined. The proposal addresses how to best serve Affordable Housing need