February 8, 2023

Housing Policymakers to Watch

Housing Policy
Capital Commentary

Happy February! The shortest month in terms of days and the longest in terms of winter.

In our previous Capital Commentary, we asked leading advocates about their top housing priorities in 2023.

This issue examines which policymakers will decide housing’s future, both as regulators and legislators.

Let’s dive in.

1. Big Thing – The Rise of Sandra Thompson

It becomes more apparent each month that Sandra Thompson, Director of the Federal Housing Finance Agency (FHFA), is the preeminent policymaker for housing in America.

Thompson has kept her promise upon taking the job to employ “a laser focus on mission and community investment” while ensuring that the GSEs her agency regulates operate in a “safe and sound manner.”

Why it matters: Every sector of the housing ecosystem is impacted by her decisions, not only Fannie Mae and Freddie Mac. Consider these actions taken by FHFA over the past 18 months:

  • Modified GSE capital standards to encourage transferring more risk to private investors in the structured finance and reinsurance markets.
  • Ordered Fannie and Freddie to create three-year plans to increase housing opportunities for minority households.
  • Announced that two credit scoring results will soon be required for any loan submitted to Fannie or Freddie to increase the number of borrowers who qualify for a home loan.
  • Adjusted risk-based pricing to focus the GSEs on serving less-well-off borrowers.

What’s next: Thisyear, FHFA is expected to release the findings of its ongoing study on the mission, membership eligibility requirements and operational efficiencies of the Federal Home Loan Bank system.

2. McHenry Takes the Gavel

North Carolina Congressman Patrick McHenry passed up a chance for a leadership position among House Republicans to become chair of the House Financial Services Committee.

  • His top three legislative priorities — digital currency, data privacy and capital formation — might not include housing, but any housing bills or oversight activity will need his stamp of approval.

The bottom line: Bloomberg cites McHenry as one of “The 10 US Lawmakers You Need to Know About in 2023,” and noted his intention to look for bipartisan opportunities to advance legislation.

  • Two former Democratic members of the House Financial Services Committee, Carolyn Maloney and Chuy Garcia, give McHenry high marks for being “open to ideas” and “an effective consensus builder.”

McHenry’s leadership skills will be put to the test. Due to House Republican rules, however, his tenure as chair will expire at the end of this Congress.

3. Warmer Ties Spark Hope in Senate

They may not agree on much, but they like one another.

Why it matters: The mutual respect between Sens. Sherrod Brown, D-Ohio, and Tim Scott, R-South Carolina, makes Washington insiders optimistic about the potential for bipartisan legislation in the Senate Banking, Housing and Urban Affairs Committee.

  • It is a positive change from the testy relationship between Brown and former Sen. Pat Toomey, the previous ranking Republican on the committee.
  • Brown calls Scott “an agreeable guy” and is said to have spent considerable time at Scott’s swearing-in party in early January.
  • Scott’s spokesman acknowledged their mutual passion on issues, adding, “we hope Senator Brown can set aside partisan rhetoric so that the two can focus on finding solutions to help empower all Americans.”

What to watch for: Housing is a topic where consensus might be forged.

  • Challenges of affordability for buyers and renters could make headlines soon as the committee is scheduled to hold a hearing on the state of the nation’s housing in early February.
  • Addressing the housing supply shortage and reauthorization of the National Flood Insurance Program are two of Brown’s top priorities.

4. Can’t Spell Housing without OHI(o)

As Ohio goes, so goes housing?

The big picture: Ohio’s Sen. Brown is well-positioned to influence housing in his role as chair of the Senate’s Banking, Housing and Urban Affairs Committee. But the Buckeye State gained further influence over housing affairs with the appointment of U.S. Rep. Warren Davidson to chair the Financial Services Committee’s Housing and Insurance Subcommittee.

  • Davidson first came to Washington after winning a special election to fill the vacancy created when Speaker John Boehner resigned in 2016.

Housing and Insurance is tasked with broad oversight responsibilities during the 118th Congress. Hearings could include a look at the following:

  • Operations of Fannie Mae and Freddie Mac while in conservatorship.
  • Financial stability of the Federal Home Loan Bank system.
  • Regulatory decisions at FHFA, the Federal Housing Administration (FHA) and Ginnie Mae.
  • The role that private mortgage insurance plays in “furthering the goal of robust private sector participation in our housing finance system.”

One fun thing: After returning to Ohio following military service, Davidson planned to go to work for his father’s manufacturing business.

  • His dad, however, was reluctant to change things up. So, Davidson started a manufacturing business of his own and later bought out his father. He grew the business from 20 to more than 200 employees.

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About Arch MI’s Capital Commentary

Capital Commentary newsletter reports on the public policy issues shaping the housing industry’s future. Each issue presents insights from a team led by Kirk Willison.

About Arch MI’s PolicyCast

PolicyCast — a video podcast series hosted by Kirk Willison — enables mortgage professionals to keep on top of the issues shaping the future of housing and the new policy initiatives under consideration in Washington, D.C., the state capitals and the financial markets.

About Kirk Willison

As VP of Government and Industry Relations for Arch MI and a mortgage finance expert with more than 25 years in government relations, Kirk speaks candidly with an array of the most influential industry and policy thought leaders in the nation.

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