Banking

Fudge pledges to increase affordable housing, work with Congress at HUD

WASHINGTON — President Biden’s nominee to lead the Department of Housing and Urban Development pledged to lawmakers Thursday that if confirmed, she would consult with Congress on changes to mortgage insurance premiums and work to prevent a wave of COVID-19-related foreclosures.

Rep. Marcia Fudge, D-Ohio, also told the Senate Banking Committee in a hearing to examine her nomination that her first priority as secretary would be to assist struggling renters and homeowners and “get people the support they need to come back from the edge.”

“We need to make the dream of homeownership — and the security and wealth creation that comes with it — a reality for more Americans,” Fudge said in prepared remarks. “That will require us to end discriminatory practices in the housing market, and ensure that our fair housing rules are doing what they are supposed to do.”

Some in the mortgage industry have speculated that the Biden administration may move quickly to cut mortgage insurance premiums for Federal Housing Administration loans, an option that Fudge left open during the hearing.

“We want to be sure that FHA is available for people who want to take the next step,” she said. “That may be helping with down payment assistance, it may mean reducing rates.”

But Fudge committed to Sen. Pat Toomey of Pennsylvania, the top Republican on the committee, that she would discuss changes to the premium structure with Congress before making any decisions.

“If I’m fortunate enough to be confirmed, I will talk the staff at HUD,” she told Toomey. “We will figure out what the status is right now, and come back to you to have discussions about where we should go from there.”

Several lawmakers, including Sen. Sherrod Brown, D-Ohio, the incoming chairman of the Senate Banking Committee, also expressed concern about possible foreclosures and evictions if borrowers and renters affected by the pandemic are unable to make rent or mortgage payments.

“Many of us in Congress have said we have to do more to prevent waves of foreclosures and evictions to stop millions of people from taking a permanent financial hit because of the crisis,” Brown said.

Fudge brought up a number of ideas she said she would pursue as secretary to prevent borrowers and renters from losing their homes, including increasing the supply of affordable housing, preserving public housing, expanding housing choice vouchers and offering down payment assistance.

Fudge also indicated to lawmakers that if confirmed, she would look to roll back the Trump administration’s overhaul of HUD’s “disparate impact” standard in fair-lending rules.

The legal standard, which can be used to punish lenders for discriminatory effects even if none were intended, has long been unpopular with banks, but Democrats have called it “the most important tool” for enforcing the Fair Housing Act.

Fudge said she was “willing to consider” going through the notice and comment rulemaking process when taking a closer look at the rule, per President Biden’s recent executive order.

She also pledged that any changes she would make would be consistent with the 2015 Supreme Court ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project Inc., which upheld the use of a disparate impact theory if it disproportionately affects a protected class without a legally sufficient justification.


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