Housing in America: Oversight of the Federal Housing Finance Agency (EventID=115033)

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Connect with the House Financial Services Committee Get the latest news: https://financialservices.house.gov/ Follow us on Facebook: https://www.facebook.com/HouseFinancialCmte Follow us on Twitter: https://twitter.com/FSCDems ___________________________________ On Wednesday, June 20, 2022, at 10:00 a.m. (ET) full Committee Chairwoman Waters and Ranking Member McHenry will host a virtual hearing entitled, “Housing in America: Oversight of the Federal Housing Finance Agency." ___________________________________ Witness for this one-panel hearing will be: • The Honorable Sandra L. Thompson, Director, Federal Housing Finance Agency Background Established by the Housing and Economic Recovery Act of 2008 (HERA), the Federal Housing Finance Agency (FHFA) is responsible for the supervision, regulation, and oversight of the government sponsored enterprises (GSEs), which include Fannie Mae and Freddie Mac (the Enterprises), as well as the Federal Home Loan Bank System, which includes Federal Home Loan Banks (FHLBs) and the Office of Finance. FHFA oversees these entities with the goal of maintaining a competitive, liquid, efficient, and resilient housing finance market. FHFA has served as conservator for the Enterprises since 2008, with the aim of ensuring the Enterprises remain financially sustainable while providing market stability for borrowers and renters. FHFA and the Enterprises play a key role in the U.S. housing finance market. By providing stability and support for the secondary mortgage market, the Enterprises create liquidity in the housing market and facilitate access to homeownership and affordable rental homes. The Enterprises purchase, package, and guarantee single-family home loans as well as multi-family housing loans. In times of economic crisis, the Enterprises function in a countercyclical manner by ensuring access to mortgage credit when the private sector pulls back from the market. Sandra L. Thompson serves as the Director of FHFA. She was appointed as Acting Director of FHFA in 2021 following Mark Calabria’s resignation. Prior to her appointment, Director Thompson served as Deputy Director of FHFA’s Division of Housing Mission and Goals and before that led the Federal Deposit Insurance Corporation’s (FDIC) Bank Supervision Department. President Biden’s nomination of Sandra Thompson to be the Director of FHFA, and her Senate confirmation in May 2022, marked a milestone as she is the first woman and woman of color to hold the position. Housing Trends During the Pandemic The onset of the COVID-19 pandemic in 2020 led to significant losses of work, pay, and financial stability, especially among lower-income households and households of color. As a result, many homeowners fell behind on their housing costs leading to increased delinquencies and the need for forbearance. Due in large part to swift and decisive action by Congress, FHFA, and other federal agencies to provide forbearance and other relief for struggling borrowers with federally backed mortgages (which are discussed in greater detail below), the economy was spared a wave of foreclosures and evictions, as well as all of the associated economic fallout experienced during the 2008 financial crisis. As the pandemic waned, the housing market remained strong as interest rates bottomed out, competition for homes heated up, and home prices skyrocketed. Mortgage originations reached record highs in 2021 at $4.8 trillion, surpassing the previous record of $4.1 trillion in 2020 and more than doubling 2019 pre-pandemic levels ($2.4 trillion). Leading up to the pandemic, home prices were rising at an average of 5.9% annually between 2014 and 2019. In stark contrast, home prices increased by 10.8% between the fourth quarters (Q4) of 2019 and 2020 and increased another 17.5% between Q4 2021 and 2022. As of mid-May 2021, half of all homes in the U.S. sold for above the listing price and the number of homes selling for more than $100,000 over the listing price increased by more than 260% from 2021 to 2022. Many borrowers were driven into intense bidding wars, and in many cases, homebuyers either fully or partially waived contingencies. This housing boom activity resulted in an annual net income in 2021 of $22.2 billion for Fannie Mae and $12.1 billion for Freddie Mac. ... https://financialservices.house.gov/events/eventsingle.aspx?EventID=409650