At hearing on housing, Toomey and Democrats spar over reforms to boost affordability
Their divide before the Senate Banking, Housing, and Urban Affairs Committee was evident during the most comprehensive congressional hearing on housing issues since 2012.
While Mr. Toomey, the top Republican on the committee, zeroed in on rolling back government involvement in housing, Mr. Brown, the chairman, and other Democrats leaned on federal enforcement of anti-discrimination laws, expanding subsidies, building more public housing and increasing the National Housing Trust Fund.
Mr. Toomey pressed for a road map to end government control of the mortgage giants Fannie Mae and Freddie Mac, the biggest legacy issue of the 2008 financial crisis. The mortgage giants buy loans from lenders and package them into mortgage bonds for investors.
Mr. Toomey, in a statement Monday ahead of the hearing, said he would support ending government control with a federal guarantee of the trillions of dollars of mortgage bonds issued by the government-sponsored enterprises. That kind of federal backstop would have broader appeal among Democrats, Mr. Toomey said during his opening statement Tuesday.
But Mr. Toomey also called for other reforms that roll back government involvement in housing that would be non-starters with Democrats. He decried the $1.9 trillion American Rescue Plan, the COVID-19 relief bill advanced by Congressional Democrats and signed by President Joe Biden last week, as “another step toward socializing housing.”
“The solution is not to double down on the old ways,” he said, such as easing banks’ underwriting standards, lowering insurance premiums, and subsidizing mortgage debt. Instead, “we need to scale back the role of government and leverage the power of free enterprise to promote housing for all Americans.”
Mr. Brown was is no mood to talk about it during Tuesday’s hearing, which he called “Home = Life: The State of Housing in America.” Mr. Brown said there had been numerous hearings during the past six years on possible reforms for Fannie Mae and Freddie Mac, but “that’s not what today’s hearing is all about.”
“We’ve ignored how our entire housing system is working for homeowners looking to buy a lower-cost home, seniors on a fixed income, renters working a minimum wage job,” Mr. Brown said, noting it was the committee’s first hearing on broad housing policy in nine years.
Since then, “for many Americans, things have gotten better,” he said. “But that surely doesn’t tell the whole story.”
The hearing came a week after Marcia Fudge, a former congresswoman and small-town mayor from the Cleveland area, was confirmed by the Senate as secretary of the U.S. Department of Housing and Urban Development.
Lawmakers are grappling with housing policy as the country faces an uneven recovery from the COVID-19 pandemic, with many essential workers laid-off and unable to afford housing. About one in four renters — or 11 million — were paying more than half their income in rent before the pandemic hit, Mr. Brown said, and Black home ownership stands as low as it was when housing discrimination was still legal in the 1970s.
Over the past year, Congress has authorized a total of $47 billion for emergency rental assistance, $5 billion for emergency housing vouchers, $5 billion in homelessness assistance, $5 billion for utility payments, and nearly $10 billion in emergency mortgage payment assistance for low-income homeowners.
Diane Yentel, president and CEO of the National Low Income Housing Coalition, told lawmakers the emergency pandemic aid had served as a lifeline.
“We hear from dozens of people every day who are in this situation — they are struggling, they are hungry, they are homeless,” Ms. Yentel said during the hearing.
She called for Congress to expand rental assistance to make it universally available to all needy households; expansion of the national Housing Trust Fund; the preservation and construction of new public housing; and the creation of a permanent emergency rental assistance program.
Nikitra Bailey, executive vice president of the Center for Responsible Lending, told lawmakers that more down payment assistance for low-income and first-generation home buyers could help close the gap in home ownership rates.
She said lenders should use special purpose credit programs established by the 1974 Equal Credit Opportunity Act that would help lenders reach more under-served people.
“We often think about our fair lending laws as things that are penalties,” Ms. Bailey said. “But here we have a tool that we’re not using” that could grow home ownership by millions of people.
Sen. Elizabeth Warren, D-Mass., called for growing federal housing projects by repealing a 1998 Republican-sponsored housing provision that prohibits any net increase in public-housing units.
“We’ve needlessly restricted the creation of affordable housing,” Ms. Warren said.
Mr. Toomey, meanwhile, focused on the winding down of the government conservatorship at Fannie Mae and Freddie Mac.
Investors have said that any release of those institutions without a government backstop of their mortgage securities would make investors uncomfortable.
Mr. Toomey said he supports such a backstop and that the institutions are just as risky as they were before the 2008 financial crisis. They are still “too big to fail,” Mr. Toomey said, and more competition would lead to innovations in the housing market and ease risk on taxpayers.
“It really needs to be dealt with now,” agreed Ed DeMarco, president of the Housing Policy Council. “We’ve been delaying for 12 years.”
First Published March 17, 2021, 12:41am