- Key insight: The Senate's manager's amendment, which added FHA multifamily loan limit reductions and an institutional investor cap on single-family homes, cost the legislation support from the Mortgage Bankers Association.
- What's at stake: Community bank regulatory provisions championed by House Financial Services Committee Chairman French Hill were stripped from the Senate version, making it unlikely the House takes up the bill as-is; a conference committee is now seen as the probable next step.
- Forward look: Analysts say the bill ultimately passes, but narrowly — with the main risk being that White House pressure forces a floor vote on a version that leaves both chambers and key industry stakeholders unsatisfied.
WASHINGTON — Congress got off to a strong start on housing legislation, but intraparty fighting and a last-minute addition from the White House in the form of an
The Senate earlier this month passed a
The Senate version of the legislation that is now under consideration in the House has lost support from key segments of the banking industry, making passage harder — but not impossible.
Bill Killmer, Mortgage Bankers Association senior vice president of legislative and political affairs, said in an interview that two parts of the Senate's manager's amendment — which the upper chamber added to the bill after it passed the banking committee — are so problematic that the groups said it no longer supports the legislation.
Killmer said that the latest version's changes to the Federal Housing Administration's multifamily loan limits would require the FHA to decrease loan limits below those calculated by the U.S. Department of Housing and Urban Development under current law, which Killmer said would reduce housing volume growth.
"We were obviously not surprised that there was a negotiation about what that level of increase should be, and that there might be a compromise between the House and where the
Killmer said he's also concerned about language in the Senate version that would limit the number of single family homes that institutional investors could own. President Donald Trump championed this provision, joining Senate Banking Committee ranking member Sen. Elizabeth Warren, D-Mass., in calling for some kind of limit on single family home ownership during his
While the Senate bill language includes exceptions designed to minimize the impact on multifamily and townhome construction, Killmer said that there's enough uncertainty in the bill that the group is still concerned.
"The concern is obviously the chilling effect that that would have — particularly the way that capital flows into those particular projects — if there's a recognition that you might be covered and that you have to dispose of the property, you know, within seven years, either from the time that you first invested or going forward," he said, adding that those two sections of the bill "changed the equation" of whether they could support it.
The Senate bill is now before the House for consideration, though it is unlikely to get a straightforward vote on the House floor. The House had already passed its own version, spearheaded by House Financial Services Committee Chairman Rep. French Hill, R-Ark., that included a number of
Three people familiar with the negotiations between the House and Senate say Hill isn't likely to support moving on the Senate bill those community bank provisions or some other incentive. Negotiators have floated attaching those provisions to market structure crypto legislation instead, but the housing package is a more attractive option because of its wider bipartisan support.
Rep. Maxine Waters, D-Calif., ranking member of the House Financial Services Committee, yesterday called for a conference committee to reconcile the House and Senate versions of housing legislation.
"Unfortunately, the Senate removed several critical housing and banking provisions that House Democrats fought hard to include and that make the legislation stronger," Waters said in a dear colleague letter earlier this week. "Additionally, we need to address stakeholder concerns that have been raised since passage in the Senate, especially about whether the bill now curtails the construction of new homes and creates other unintended consequences. Given these changes, we must reconcile the House and Senate versions to produce the strongest possible housing legislation for our communities at home."
The community bank provisions, as well as changes to the FHA and institutional investor rules, are all in play if the bill goes to a conference committee, and two people familiar with the proceedings said that outcome is looking increasingly likely.
"With someone like Maxine Waters weighing in and calling for a conference committee, that to me, really indicates that there's going to be a longer process," said Kim Johnson, senior director of policy at the National Low Income Housing Coalition. "And it seems to me the next steps are going to be having that conference committee and figuring out what is the language that everybody can agree on."
Ian Katz, managing partner at Capital Alpha Partners, said that he believes the package at this point ultimately passes, but only narrowly.
"This really seems like an 'own goal,' as they say in soccer, if Congress can't pass a housing bill," he said. "But Congress commits plenty of own goals."
At this point, the danger is that the current version of the bill could pass in a way that many lawmakers and stakeholders aren't happy with, and a key consideration is whether the White House decides to weigh in.
"I think there are a fair number of Republicans in the Senate who voted for it but would like to see parts of it changed, so they wouldn't mind seeing the House make those changes," Katz said. "But if the president decides to weigh in and gets upset at Republicans for not passing it, that could force the House to vote for a bill that it doesn't like and that some Senate Republicans don't like."
