Transcripts For CSPAN2 HUD Secretary Carson Treasury Secretary Mnuchin Testify On Housing... 20240714

[inaudible conversations] [inaudible conversations] this hearing will come to order. Today we are joined by the leading voices within the administration on reforming and strengthening our housing and finance system. The secretary of the treasury, and the secretary of housing and urban development, both of whom have just submitted Housing Finance reform for fossils to the president , as was the director of the federal Housing Finance agency who serves as the regulator and conservator of fannie mae and freddie mac. I want to thank each of you for coming to the committee this morning. Last friday marked 11 since the government bailed out and put fannie mae and freddie mac into conservatorship, where they remain today. Prior to 2008, the governmentsponsored Enterprises Held a 45 cents in capital for every 100 in mortgages they guaranteed. Now just 19 cents after a historic 200 billiondollar bailout from taxpayers. 11 years later they continue to be too big to fail and are even more leverage than they were before the financial crisis and taxpayers inevitably remain on the hook to developing for administrative and legislative reform of the federal Housing Finance system many of the legislative recommendations in the plans that were released on thursday or consistent with my offline in the system including attracting private capital back into the market as well as preserving certain incremental reforms that have already taken place during the conservatorship including a robust transfer of credit risk, the single security and common securitization platform and loan pricing that does not very based on the size. They have not been acceptable to fix it through comprehensive legislation. Five years ago the committee demonstrated that its possible. We came together to advance a comprehensive solution on this topic. This year i released my housing reform outlined that builds upon any of the same principles of the previous efforts. It sets out a blueprint for the permanent Sustainable Housing financing, the system that protects taxpayers by reducing the systemic too big to fail risks posed by the current mortgage guarantors. It preserves the existing infrastructure in the Housing Finance system that works well while increasing the role of private capital. The protection between mortgage credit and risk and taxpayers it ensures a level Playing Field for the originators of all sizes and types ill also walking in uniform responsible underwriting standards. And to promote broad accessibility to the mortgage credit including underserved markets. Ultimately, only congress has the tools to necessarily provide a holistic comprehensive reform to the system that will be durable through any market cycle. However, its important for the administration to begin moving forward with incremental steps to move the system in the right direction. After 11 years of conservatorship, it is long past time to make the decisions and address this last Unfinished Business of the last financial crisis. Senator brown. Thank you, mr. Chairman. To the witnesses, welcome back to my colleagues. We are going to hear from the trumpet Administration Today about the next steps on Housing Finance reform. It is clear from the plan they put out last week by President Trump thinks these steps should be. The plan will make the mortgages harder to get. We shouldnt have to tell the president we have an Affordable Housing crisis in this country. We all know it and we all see it. I see it when i talk to the residents of a manufactured Housing Community on the verge of losing their homes because they cant afford the rent increase in posed by private Equity Investors from outside of their states who just got their community. I see when i drive past the border of the houses that belonged to the predatory lending in the home city of cleveland in my neighborhood of the village those that went to buy it and drown in student debt anand cant save enough for a dn payment or affordable mortgage. These are the crisis facing families across the country. Printers, home owners, former homeowners, they all have one thing in common and cant afford a place to call home. Weve had a productive hearings in the committee where we talked about what it would take for the Housing Finance system to actually work for the working families. In march we held two hearings with representatives from the homebuilders, realtors, the bankers, Credit Unions and multifamily. The affordability and access arent just components of Housing Finance, they are the whole reason we have a finance system. They cant be an afterthought once weve answered other questions about the structure of the system. They have to be built into the system. We need a system built on a mission to serve borrowers had renters no matter who they are and what kind of work they do and where they live. That means we need policies that focus on increasing service in underserved markets like these rural areas and manufactured homeowners can read into those that have been locked out of the market for decades because of discrimination. We need a system that helps a wide variety of lenders and borrowers participate so they can meet all family needs particularly those who are have been left behind for generations. In the march hearings and in the hearings since, we have heard housing stakeholders remarkably coalescing around a few foundational principles of reform. They have consensus, they have said reforms should protect access to the affordable fixed Rate Mortgages. They said that the reform should provide a catastrophic government guarantee. They said we should structure the lone guarantors like the Public Utilities providing a regulated rate of return. They have said we should serve a Broad National marketplace and we should serve lenders of all types and sizes equitably. They said we should maintain theitheduty to serve all marketd borrowers. They said we should maintain Affordable Housing. We showed expand investment in Affordable Housing, and they said we should maintain a successful multifamily Business Models and insure the continued or better access for financing of Affordable Housing. Yet unsurprisingly, President Trump and his administration missed the point. Rather than create a system that addresses the needs of working families, the trumpet administration has put out halfbaked proposal that will make them expensive and harder to get. In addition to increasing the cost of the plan would make it harder for the lenders to compete and got the tools that we have now to finally find an Affordable Apartment or own their first home. The protections in the mr. Disclosures put in place following the financial crisis and as we know that theres been collective amnesia on the committee and in the administration to prevent predatory loans and toxic security from building up the Financial System, so lets be clear whether you are renting or want to buy a home or own a home and want to sell it, the plan hurts you. Old to funnel no surprise here, to the same wall street system that rocked the market and families lives in 2008. I was encouraged when i saw the treasury plan super proposals dedicatededicated is leveling oe the Playing Field. I thought that this might mean maybe hope against hope ive been leveling the Playing Field for communities of color, household who cant afford to save for a down payment. You could imagine my disappointment when i saw every last one of them is about leveling the Playing Field for wall street which is looking to make more money off of the mortgages. It looks like a retreat for wall street executives and the plan is the same as every other administration plan. The home city making it easy to profit off of hardworking families they come in the midst of a flurry of other proposals to weaken the fair housing and lending protections that god civilrights law and the Community Reinvestment act. Taken together, the president once again decided to betray working families and in youngstown and cleveland and baltimore, the city that the president cited with wall street, once again decided to side over the dignity of work. We dont need to make it easier. We need to quote secretary carson. Newsflash, rich people are going to get rich anyway. We need to make it easy to find an affordable place to call home for that housing should be optional. Its a basic need. No one should go without it in this great great. Thank you, mr. Chairman. The Witnesses Today are the honorable stephen addition to the 56 mnuchin and ben carson, Mark Calabria the director of the housing agency. You may begin. Mr. Chairman, Ranking Member brown and members of the committee, i am pleased to be with you to discuss the Treasury Department Housing Finance plan to protect the taxpayers and foster competition in the market. Id like to thank the chair man and the committee for your work on this important issue. The outline is a productive step to ensuring the safety in the Housing Finance system. In september of 2008, the governmentsponsored Enterprises Fannie mae and freddie mac were placed into conservatorship by the fhfa. They have over 190 billion in taxpayer assistance. 11 years later cut they remained in conservatorship and continue to be supported by the treasury commitment to keep them solvent. The continued conservator ships have perpetuated farreaching government influence of Housing Finance sector. The lack of reform has left them exposed to future bailouts. Treasury housing includes almost 50 recommended actions. These measures would reduce the role of the federal government against future bailouts and increase privatesector competition in the housing system. As required by President Trumps productive, treasury shows that the gst can and should be reformed to ensure the safety and soundness. Although no one is prescribed to the endpoint for the conservatorshithe conservatorshs meant to be permanent, and that includes fhfa management of the gst. The plan provides a roadmap to police them from the conservatorship. The reform plan takes care to preserve what works in the system. Each of the recommended reforms as incremental, realistic and balanced. The plan would preserve the support of 30 year fixedRate Mortgage. That would be defined and paid for. Treasury recommends an exclusive pay for with the full faith and credit ofaith andcredit of the t that is limited to the timely principal and interest on the Mortgage Backed securities. To foster competition this guarantee is available to Regulatory Environment should be harmonized so that that the privatesector competitors offer it on a level Playing Field you for example under the patch to the Consumer Protection finance bureau ability to repay. In july, 2019, the announced it would expire in january 21 or after a short extension. Treasury supports the plan and expiration and also further revisions to ensure mortgage lenders continue to have a bright line safe harbor. Finally, i must emphasize the recommendations make it clear thatothe administration preferes to work with congress to enact comprehensive housing reform legislation that could achieve Structural Reforms that tailors the permits a part of the secondary market entry peels the congressional charters and other statutory privileges that have been competitive advantage. At the same time, we believe that the reform can and should proceed administratively. Pending legislation will continue to support the administrative actions to enhance regulation, promote competition and satisfy the conditions set forth in the plan for ending the conservatorship. Under the leadership of the president , im proud of all the work weve done to create conditions for greater economic growth, better opportunities for working families and high your wages for all americans. Today i look forward to discussing the Critical Issues of the Housing Finance reform. I truly hope that the committee will work with us on a bipartisan basis to move forward with legislation. Thank you very much and i look forward to answering your questions. Thank you, secretary mnuchin. Secretary carson asked thank you, member and for the opportunity to appear before you today to discuss how the department of housing and urban development. Fullstop for this Administration Efforts to reform the system and i also want to thank the tremendous team that we have assembled for the Ugliest Building but the best people, especially a special shout out to mike kelly whose birthday is today and in the years since the financial crisis, the federal government has continued to play an outside role in the nations Housing Finance system. Its imperative that congress and the administration have to be focused the system that we support access to credit and insurer the Government Programs do not overlap with and crowd out private capital. Im pleased to present an overview of the Housing Finance reform plan that was added to the president last week. He supports millions of families with affordable homeownership opportunities through the federal Housing Administration and providing Credit Access and liquidity in the Mortgage Market. In the financial crisis coming up because of the policies of the previous administration, fha and Balance Sheets were growing to approximately 353 and 400 prospectus he between the years of 2007 and 2018. The reform plan would reduce the federal government outside role in Housing Finance and protect taxpayers. To that end i ask congress to work with the administration on the four key pillars. Number one, returned to the core mission of serving low and moderate income families including firsttime home buyers who cannot be served through the traditional underwriting, to protect american taxpayers over the risk of bailouts, number three to provide fha and ginny made the tools they need to manage the risk associated with oversight portfolios and to provide liquidity to the Housing Finance system. It contains many recommendations, but for the sake of my oral testimony today, with the focus on just a few. First, returning to the core mission we are to allow the private architect working in those areas where it cant or wont work, we must make certain that we target the programs to not served by traditional underwriting. Historically this has been the fha most important contribution to the American Housing arcade facility that earlier for these families particularly firsttime homebuyers. Without the mortgage insurance, many of the families that lack access to affordable mortgage credit. Refocusing on the mission will strengthen the creditworthy build equity and avoid foreclosure. Second, the principle of the plan is for the federal mortgage credit policies should be better coordinated to allow the qualified borrowers to access responsible and Affordable Credit options. Our plan proposes that the fhfa will coordinated to ensure fannie mae, freddie mac and fha served the fine role within the marketplace. Hud recommends congress establish fha the department of Veterans Affairs and the department of agriculture as the sole source of the lowdown payment sourcing for borrowers not served by the conventional Mortgage Market. Third, to better protect the taxpayers we need to strengthen the Risk Management system. Fha currently insures more than 4. 4 chilean dollars and orchids meanwhile, ginny mae guarantees more than 2 trillion of mortgagebacked securities. It is imperative that fha and ginny may conduct their business in a manner that protects american taxpayers. And with broader protocols with staffing in procurement and technology. And it is recommended Congress Enact legislation to restructure those efforts of the Autonomous Corporation within had. And that memorandum provides an opportunity for the administration to Work Together to ensure they serve their Important Missions direct command congresses participation the ease agencies to have those responsibilities to the american taxpayer. Thank you and i look forward to answering your questions. Director. Chairman crapo and Ranking Member thank you for the invitation to appear this morning. Of the Financial System is deserving of more attention. It is an urgent need of reform the status quo poses a significant risk and the entire Financial System. Thank you to secretary nguyen to lay out a responsible roadmap also for the opportunity of that development and that consisted with my Top Priorities and that is a worldclass regulator and to restore fannie and freddie to safe and sound conditions by building capital. That begins the process which has lasted more than 11 years and by comparison that compare conservatorship is 18 months that room cause and backed by insufficient capital and that fundamental problem remains unresolved and like all the average Credit Scores improve the enterprise of the low down payment and high density income mortgages are back in 2004 levels feeling rapidly rising house prices for ez mortgage credit that is a mistake and will end in disaster. In the current Financial Condition they are not equipped to withstand the downturn in the Housing Market of five. 5 trillion of singlefamily mortgages out of a 12 trillion combined market. The enterprises approach to buy the leverage ratio of 1000 one. In comparison the largest institutions have a leverage of ten one in the most recent stress test illustrate this example and then under such conditions the enterprise loses 40 billion in capital. That was inelastic since the crisis we should have greater volatility going forward. And then to those capital levels to make sure they will fail in a downturn this post cyclical pattern makes it easier to extend credit when the economy is strong but harder to keep it when it is weekend we are supposed to serve homeowners while protecting taxpayers and in my view does neither the admissions plan aims to address these problems and i applaud them for their efforts. But Congress However is the only body to enact Structural Reforms needed to fix the broken system with a duopoly of enterprises a fair and competitive secondary Mortgage Market would better serve borrowers and renters to promote longterm stability and that no firm is too big to fail the Ranking Member mention increasing service and access and we have witnessed one industry after another the best guarantee for increasing access is open and competitive market not a monopoly or duopoly. Somewhat argue reforms wait for a crisis and this would be shortsighted we found the last crisis is as difficult to fix to paraphrase kennedy the time to repair the roof is when the sun is shining now is the time we need reforms because we are strong this will not always be the case. Although not forecasting a downturn i do believe its my responsibility as a potential regulator to hope for the best prepare for the worst. Therefore i fulfill my duties to strengthen and with the master risk profiles these reforms are critical to protect taxpayers and deliver a diverse range at affordable prices in the interim they can help me do my job better and then similar to other financial regulators to develop start standards and the common sense proposals need not wait for broader reform and we face in Affordable Housing crisis with the misguided regulations in landuse and other areas with a lack of Construction Labor into play an Important Role to address the crisis they themselves must be fixed adding more weight to a cracked foundation is to invite collaps collapse. Thank you again for the opportunity testify or look forward to your questions. Thank you director. My first question is to all three of you. This could be yes or no but feel free to elaborate. Do you all agree that Fannie Mae Freddie mac are systemically Important Companies and that they continue to be too big to fail and have more outreach now than before the crisis quick. Yes in their current form. I would agree. Yes in the current form. I heard you each say this but i will ask, do each agree the ideal outcome is for congress to reach a comprehensive solution quick. I absolutely support that. That would be the best permanent outcome. I think only congress can reset solutions. So that doesnt mean the administration or the appropriate regulatory agencies make significant steps which leads to my next question that as we work to get a solution here in congress, do you also agree that it is time for the administration to act and to Start Building the foundation to take the necessary steps that it can take in order to address this issue and help congress get to a comprehensive solution quick. We have silly feel its our responsibility but our priority is to work with congress on a bipartisan basis and we will do everything we can to achieve that. Housing is obviously very important to everybody across any political spectrum and anything we do will be questioned as bias so yes working with congress is the best way to do it. Absolutely mister chairman the administration should move forward. As a safety regulator looking at 3 trilliondollar institution leveraged 1000 one keeps me up at night. I also believe that while as a proper role for congress to solve this to get the comprehensive solution neede needed, there are significant reforms that can be accomplished and can help move us in the direction of the reform i outlined that we need to achieve in congress. And i encourage you to act and to help us get to that point. In that context this question is more specific to treasury and hud, talk about the next steps that could be taken in that context. It seems to me a couple of important ones that have identified our capital and amending the tsp a switch answer that question if you believe we should start seeing prompt action . Our priority is to make sure gsts have more capital. We are in active discussions with the director and f h fsa renegotiating agreements with them which would allow for removing a significant amount of capital to be accumulated and in return to make sure the taxpayers are compensated for the ongoing treasury support and that is something that director and i hope to achieve very quickly. The most important thing is obviously refocusing ginnie mae and fha on a primary mission which is providing an opportunity for capital and credit to be extended to the nontraditional markets. Also providing the tools to these two entities to deal with the various risks associated with management and providing liquidity to the Worlds Largest financial market, and protecting the taxpayers. Really that is what this is all about and the last time around should never be allowed to happen again. Director you have a major role. My primary focus is capital but also making sure fha if they is ready for the post conservatorship world in terms of the powers we have for what we may need spent the president ial memorandum that directed your agencies to complete those plans were to be submitted to the president for approval has the president approved your plan quick. We have briefed the president and he has accepted it. He has approved it. Of hicks explicitly approved the plan but we brief the president and he accepted the plan know we briefed him the secretary and i went through briefing him extensively. I agree. Is it possible he did not approve the plan because he with his indepth knowledge of finance knows it would make it more expensive and harder to ge get . If the gsts and fha cut out the most profitable lines of business and still have to cover their cost they have to raise rates on the borrowers that are left. That is clear it seems to me you cannot come here to say the president approved the plan even though that whole process would be because the whole argument comes down to the trust wall street does not work. Secretary, the majority of new households between now and 2030 will be headed by people of color. We already have a 30point gap of homeownership between black and white households, 25 percent gap between hispanic and Nonhispanic White households. This isnt mentioned in any of these plans and to meet with the wide range of stakeholders with Affordable Housing advocates. How does your plan reflect those priorities and the need for Affordable Housing and Credit Access for people of color quick. We disagree that this will raise Mortgage Rates we are very careful we support the 30 year mortgage we will not jeopardize that. We very much support the duty to serve as well as Affordable Housing goals we look forward to working with you. We specifically say in the report we believe in Affordable Housing but we think they should be replaced with something that has more efficient transparent and accountable we want to make sure Affordable Housing that the money is being used carefully i look forward to working with you so if you have ideas how to do this in a better way. We do. There was a consensus i laid out in my Opening Statement i dont know how much of this you read but your sat one staff certainly was informed of those in hearings that there was a consensus almost the entire panel said we could do these things you pretty much have ignored that. So going back to this question why no mention of people of color . I think we reference the duty that is at a very important issue you have outlined and we look forward to working with yo you. Our priorities to make sure we maintain Affordable Housing but also to make sure that the taxpayers are not at continued risk with another bailout of these entities. Secretary mnuchin your plan calls for shrinking fannie and freddie cutting back, opening up their underwriting systems for anybody else to use give price advantages to new competitors who also say the gsts need more capital to suggest raising capital by Public Offering or ipl. You grew up in the private investor world and in the wall street world. You were a private investor would you invest under the Trump Administrations plan to give away your assets . I want to make you think to raise the capital they need to have to raise more money than any company ipo. Right after the Trump Administration shrunk their businesses giving away their most valuable asset with your privatization scheme . It just strikes me as highly unlikely they can raise or that successful ipo with that kind of money considering with what you have done on the record i have a letter from 22 record with 22 companies outlining principles of civil rights naacp, center for the Fair Housing Alliance National Capacity and leadership conference, they outline why the civil rights leaders what they see as the essential equitable finance system and fewer as we have seen from these answers or non answers on the secretary mnuchin from the president housing plan. Thank you to our witnesses and first of all thank you for launching this conversation and your thoughts how to move forward on gse reform i think with the treasury report has laid out is a very constructive set of ideas that we ought to consider very seriously. Want to thank all of our witnesses for contributing to that. Let me start by saying it is clear to me it is lack of Housing Stock rather than subsidies is the primary cause of the affordability problem which is the real problem. But that is government inflicted. But housing is not immune to laws of economics if there is not sufficient supply to meet the existing demand then it becomes more expensive and vice versa. And i never cease to be amazed by the jurisdictions with the severe affordability problems and what they do to exacerbate like San Francisco blocking a development because it cast a shadow for go that makes Affordable Housing morse expensive or to require all new houses have to have solar panels installed raising the cost of houses and rent control which clearly and obviously exacerbates the housing shortage. First of all thank you to doctor carson for the work you are doing to identify impediments in the delivery of new enforceable housing of light to direct you doctor if there are things we could be doing in the reform, acknowledging most of these obstacles occur at state and local level, to go to the fundamental underlying problem which is an adequate supply. First, i cannot agree more strongly the fundament problem is the adequate supply that primary driver is safe and local regulations it really does concern the damage that is done to the economy and affordability of access truly is causing the Affordable Housing crisis in many parts of the country so we have to recognize while the Mortgage Market does play a role you cannot fix the problem by itself. To the extent we can encourage and work with localities to bring focus to reform local land use with regulation. As i understand the treasury acknowledges there is a statutory role to support affordability. But as i read it the report identifies a flaw of the mechanism of the gses use and it seems to me they have in direct subsidy. The subsidy doesnt go directly to have a low income but high credit risk loans. You may think but its really not the very wealthy person can have extraordinarily high risk loan and modest means could have a very prudent and low risk loan. Isnt it true we could design the subsidy clear and efficient fashion that if we provide as subsidy it targeted low income folks rather than distorting and encouraging one encouraging quick. I absolutely agree a handful of studies with the correlatio correlation, then as weak you are right plenty of people with high income have poor credit or low income have good credit we need to target our resources to get them into homeownership even if it is sustainable. Secretary it seems like you were alluding to this is or something you like to add quick. I agree completely. First we absently support wanting to make sure there is Affordable Housing but in the most effective way. I think we all agree the previous system did not work and thats part of the reason why the gses got into trouble so i hope they will work with us on a bipartisan basis to figure out the best way to deliver the support in Affordable Housing. Thank you to our witnesses for god like to start with an important issue for new jersey as part of the plan for higher principal balance loans that they had to lower those conforming loans with those states like new jersey so secretary nguyen why word you recommend they solicit information on whether the faa should effectively lower those loans that does not have the authority to administratively change those conforming loan limits. Congress has no responsibility to have the changes to say that we have to solicit information on the markets we dont want to jeopardize the markets in new jersey and we understand in the tristate area the cost is significantly higher. There are many but i was just referring to new jersey it is an important local issue but not parochial but you do agree as whose testimony at the nomination hearing he does not have the authority to administratively change those conforming laws as they defer to him on his legal analysis. Is that the same director is when you testified quick. Yes. We establish that. Let me turn to the multifamily rental housing which is a critical part of the Housing Market in new jersey and across the country more than 18 million households in the United States live in multifamily rental housing including 1 million from new jersey the gses provide a vital role to ensure it is widely available to the economic cycle. The multifamily businesses fannie and freddie perform quite well and remain profitable during the worst of the financial crisis when we saw most private investors exit this segment of the market entirely. Secretary mnuchin they say that fha should limit support of the gse multifamily business we heard from witnesses before the same committee in march that private capital alone cannot fill the void without gse financing that means aggravating the housing crisis that already exist in states across the country to leave renters with fewer and more expensive housing options. Have you conducted any analysis of the private sector financing for the multi sector Housing Market if that capacity to purchase multi family loans is curtailed. We dont think its curtailed but we just have to limit that contact there are people they thought they gse should get out of the multifamily business. I dont agree i think they need to be in the multifamily business. I would say more broadly there are issues given the gse exposure of multi family there are certain rent control rules im concerned will limit the Housing Stocked. So as an analysis will make shoe confident the private market can fill the void or do you not quick. Im not saying it can or cannot but we will continue to do more analysis we just want to make sure the gses have the appropriate risk we very much support multi family lending with the gse. Secretary carson, in previous cases where blood was found in Drinking Water systems and to remediate systems with lead exposure the city of newark recently discovered elevated above one lead levels from samples and epa had on the Ground Support and in 2016 had assigned a fulltime staff member to assist had residents in the flint region to provide Technical Assistance to city and state agencies. As the city of newark continues to address this issue would you say that properties are affected you will assign a fulltime staff member to assist residents and state agencies looking to tailor their funding to mitigate the risk quick. Thank you for your interest in this and thank you for your help with the Carbon Monoxide issue. As you noticed in the budgetary request over the last two or three years, we have placed a great deal of influence on red one lead. So i will commit to continue to do that and raise the profile of this issue in new jersey and elsewhere. I appreciate that. But would you commit to have a person who is designated in the surrounding communities that are affected to assist them as it relates that has been shown in the past quick. I will commit to doing everything we possibly can to alleviate the problem there and if that involves a specific person or a dozen we will do what is necessary. Thank you. And thank you for appearing today for coming down to arkansas earlier this year. Looking at an issue the senator touched upon with supply special local restrictions with an agreement between senator toomey a wellknown conservative with high Housing Finance policy just another statement i would like to get your thoughts. Locally constructed barriers of new houses development epa or wellintentioned permit process for Historic Preservation rules but also designed to exclude multifamilys for Affordable Housing local policies acting as barriers to supply is landuse restrictions making developed land much more costly in zoning restrictions offstreet Street Parking requirements residential restrictions unnecessarily slow permit process. Secretary carson is that a good luck catalog of supply quick spirit that does so make a good catalog interestingly enough they have the greatest Affordable Housing need our homeless people. Bills have the largest number of restrictions. Confore architectural and cultural issues in the area. We are not talking about putting multifamily house or complex in the middle of singlefamily neighborhoods. People have wrong impressions of what we are doing. It can be done in the rightbrace of the firemen, wi, policemen, nurses can live in the same area they work. Let me say i agree and the process has multiple vetoes people can object or reject obstruction. That is what i think that we should list the cities that have done a good job. Minneapolis has been a very smart maneuver in the local levelevel that will help afforde housing so i think there are good lessons to learn as well as in the cities that dont work. Another restriction towards the supply of Affordable Housing, none other than Barack Obamas white house housing plan. I dont know between barack obama, pat toomey addressing the local level yet another policy of chriss education policy. With middleclass families and an overwhelming majority of cases, they pick a childs school, not appearance. Ththe parent. The way to exercise that choice is to help the bidding war started. The crisis in education is not only a crisis of reading and arithmetic but also a crisis middleclass family economics and at the core of the problem where you live dictates where you go to school and any policy between location, location and schools would eliminate the need for parents to pay a price for a home because it happens to live within the boundaries of the school district. A welldesigned Voucher Program would fit the bill. Fully funded vouchers would relieve parents from the terrible choice of a fingertip in a lousy score bankrupting themselves to escape the schools. If a meaningful Public School voucher system were instituted, the Housing Market was changed forever. Those are from senator warren spoke in support of a Voucher Program. Do you agree that local education can negatively impact Affordable Housing . Let me also say the passages in the book are a delightful read that i would encourage members of the committee to take a look at. I know my time is expired, but perhaps you can find an ally on the other side of the aisle to improve education in america and Affordable Housing. Thank you mr. Tester. I will tell you at the outset it is good to have you in front of the committee that which we have you here more often. It doesnt happen enough we have folks in the administration to visit with us. Doctor carson are always welcoms welcomed back in montana. Youve got the chance he some housing and i dont want to talk about San Francisco, la, denver, houston. I want to talk about housing in my own city in great falls and billings, quite frankly, we are talking about large cities and we have just as big a crisis in rural america. If not worse. And nobody is paying attention to it. So, i want to start with you, secretary mnuchin, when this plan was developed, how much effort was put into getting information from frontier america on the Affordable Housing . [laughter] i very much appreciate and support. This shouldnt be a big city housing plan, it should be a plan how much information did you gather when you developed this plan from the frontier areas because it is the area between both bar and washington, d. C. And in some peoples eyes we dont have that kind of population even in the most populated areas. So how much information was gathered . I think we solicited from a variety that im going to get back to you on the specifics. I was assured you more importantly, this should very much hope for people i the peop, not just the people in new york and california. I will get into that in a second. Those are good issues for us to talk about. But in montana the only regulation is you cant build in a floodplain. And we still dont have housing. So, thats the point and it in your plan, i just want to get an idea. You talked about the need to serve a national market, but then its also suggested that congress should not require them to serve a National Plan that individual markets. Where are you on that, and i assume that you are saying is the one to have a rule that supports national service, but congress should undermine that and make it individual markets . No, thats not the case. We support the national concept, but we are looking at that and saying it cant just be a National Plan it has to have specific plans because you sit in at places like montana and make sure that they are not left behind. Said the intent was to promote more access for the frontier areas. Could it be used to do exactly the opposite of . Our priority is to work with congress so there is clarit then these issues. We want to make sure if it is is stricter or any other future director. Make sure that if you are saying the right thing right now but the truth is if you have a National Plan and then it can be undermined to serve individual markets it looks like money would flow to the bigger areas. We will define these issues. Let me talk about a fixed Rate Mortgage. In the report suggests maintaining a 30 year fixed Rate Mortgage but also says that its possible that it could remain widely available and in similar prices under the Market Structure that does not depend on government support. Can you tell me why this line is in their . I think first of all of them let me emphasize we very much support the 30 year mortgage if i could noit might not be fo, and there are i forgot it, but what i hear is that it could exist without any government backing. Do you believe that . I dont. It could be part. The large markets do not need government guarantees. You would agree with how the government backing that it would have a pretty negative impact on housing whether it is regardless of . We need implicit or explicit government backing and that is why we brought them having this compensated. Thank you mr. Chairman and i want to thank you for the hard work of the proposal. Finance reform is difficult and i appreciate the dedication to and in the decadelong conservatorship. Something else i would like to get out of this time there are challenges within the United States and rural areas. My colleagues on the other side of th the idle indicated they wl give an example, secretary carson we had a discussion the other day the indian reservations, the we have a challenge because we have these lamps trying to find a way to move forward so that they can also purchase houses. This is something of importance in south dakota. They do va loan for veterans with his back on the reservation. Minneapolis office about a year ago received recognition because they have the highest number of those issued in the previous year. I dont think this is republican or democrat. Its a case we have to find a way forward to the challenges. I would like to say to all of my colleagues on both sides of the aisle the door should be opened when it comes to working on a pathway forward into the conservatorship. The chairman was able to come to a consensus with the then chairman who was my predecessor on how to unwind at the conservatorship and pass it out of the committee on a bipartisan vote there is no reason we shouldnt be able to navigate the same concerns today. It should also serve as a warning. As we all read the administration is determined to bring the conservatorship to an end and in a way that it can do so. While my colleagues might object to certain parts of the plan, these are no justification or attempting to within this committee. Theres Common Ground that could be had, and it is very unfortunate if we are not able to walk remark upon this approach. Its been 500 days since the committee is holding market. If your concerns are genuine, this is the time that we can find some Common Ground. My first question i would like to direct, i note with great interest to transform into an independently chartered government corporation. I agree that this would provide fha the autonomy that it needs to execute its missions especially serving firsttime at the below income. I would like to point out to my colleagues on the other side of the idle this doesnt come from the radical right. The fha commissioner has proposed the same reform. Nevertheless, i drafted legislation that would do just as you proposed, but some of my colleagues have expressed reservations of reforming the fha would impact the funding for other programs. My view is that offset the cost of other spending and i offered to get my colleagues on the other side of the aisle in opportunity to have input into this section of the bill but i havent received any takers. My question is could you briefly discuss how to achieve a more and fha without jeopardizing the funding. Thank you for the question. I did very much enjoyed the time i spent in your state. Interestingly enough, we have not said anything about the receipt of being swept into any particular area. That isnt going to be a particular problem. The reason we wanted it separated out into the corporation very much like cheney may is so that they can have the flexibility of doing their own procurement, their own hiring a, stamping, being able to respond quickly and with agility to the Market Conditions that occur. They would still report to the secretary to airline. Consider the fact that right now sha commissioner has to deal with a lot of Housing Assistance needs also. Those require their own separate entity so that we can context. My time is expired. Ive asked for the opportunity to ask several questions from the record. Thank you, mr. Chairman. Senator warner. Thank you, mr. Chairman. Good to see the witnesses. I spent a lot of time on this over the many years and its less fun for what you aspire too legislatively and what might have been. I have to say at the outset im a little concerned that appears tit appears tome from your admie proposals, we could end up with a system that actually doesnt end too big to fail and doesnt increase Affordable Access to credit, and that is a grave concern. First, i want to associate myself with senator evan is. In the administrative component that you try to lower the cap and to me that means. We continue to see this around lowering the gsd footprint. If we have higher capital requirements, just the logic of that with me you would have a smaller revenue base, and under that assumption within that mean that they would deliver less . I want to acknowledge the work that yo you have done and lakes with the hope that you will work with us because i know you spend a lot of time. We hope not to lose hope that knowledge. So, again i just want to comment on the multifamily. Youve gone from 25 to 40 of marketshare. Again going to make another question, if you are making the footprint smaller, if you are raising capital, isnt that going to mean a decrease o in te subsidies that take place . Not necessarily. Again come across subsidy is something that we have. We talked about it and some of it is efficient. Let me ask you this time if yo, if youend up on your admini, will you continue to trust the Housing Trust fund, yes or no . Yes. You are committing to continue. [inaudible] i am bound by what the statute says. You talk about additional entrants coming into the market, but my concern is on your legislative proposal that what you are really talking about is. It will put us right back to where we were prior to 2008. I dont think it is our too big to fail issue. One of the things answered were both addressed. They are too big to fail. If you go forward, if you go ahead and go through on a release program, would you both recommend the gse be designated. First, we do not believe in a simple recap and release. I just want to make that clear. The second thing is, we absolutely would expect either in the administrative way were working with congress. We would make sure we understood there was enough c. They didnt need to be designated. I would agree with the secretary of state. Under the recap release scheme. I believe theres more than enough sufficient information. As a member ofs until you have actually run the process. New into the Ranking Member have a helpful hearing on this, i believe. This concerns me greatly that we could somehow end up with this where we end up with a duopoly. Somehow, they are not even going to get the designation, and i believe we are right back in the middle of the too big to fail. Mr. Director, as an american, do you believe that i have the right to own a home even if i cant afford . I think you have the right to own property, yes. Own a home, whether you can afford it opens up to whether you can. Its the same as you have the right to. Do you think that as an american if i cant afford a home, i have a fundamental right to have other. I think everybody on this committee, i think everybody on this panel. Absolutely, 100 . Why would someone your aches alone without verifying and complex i think the only reason a lender would reduce Due Diligence is because they can pass the risk on. They can sell it to you guys. Absolutely. I mean, is a fundamental problem here, we got in trouble with underwriting standards. Absolutely. We are the ones holding the back at the end of the day after everybody in the process has made money and walked away. What have you done to fix that . Tomorrow we will mark five months on the job. What did your predecessor do too fix that over 11 years . Senator, to me im looking at what needs to be done going forward. Obviously i would have preferred to inherit a different situation than i did. Have my underwriting standards gotten any more realistic . Theyve gotten worse, not better. Certainly the gses. We saw massive expansion, a lot were done or not previously been done, so it is the road. Thats what i thought, and it concerns me greatly. This whole thing is a car wreck. We spend taxpayers money and were in worse shape. This where. Im not in love with every aspect of your plan, but im encouraging you to get somebody to put it in the form of a bill if you havent already come and introduce the market of the committee. Mr. Chairman and mr. Ranking member, lets put it in front of the committee. And lets send the truth. What do we have to lose . Doing nothing is hard. You know why come you never know when you are finished. [laughter] i couldnt agree more. If that doesnt work, and im not going to mislead you, its going to be like slamming a revolving door. What can you do if your committee to point this out, and by that i mean encouraging people to make. We will be what does that mean . If you leveraged in 2001, you cant make fun of are almost guaranteed to go back. We have to follow the wording in a way that is. If we do nothing and this is going to end very badly. Of course it is. We will have a recession at some point. What was the ratio, 19 tens for every 100 . 10001. Let me say it again. I have one second left. With the bill in front of the committee, mr. Chairman and mr. Ranking than her and see what we can do. Ive listened to the comments, he made some good points. I dont agree with all, but i think that we ought to address it and if not, lets admit congress is going to sit, do nothing and you need to get started fixing this. Senator jones. I want to follow up with senator kennedy. I agreed with that. We need to get this in front of the committee and we meet to hash out. What littlbut with older respece senator, we need to go forward on more than just the housing issue in this committee. We need to get things the lord of the senate and talk about gun violencviolence in healthcare. We need to talk about election security. It acts as the independent body. Thank you, senator, and i apologize if i took it a little further than what you anticipa anticipate. I completely agree. Second thing, quick comments, secretary mnuchin and then i will follow for the record. I believe that you really are testified, and i could be wrong but i thought i heard you testified that the duty to deserve a very low and moderate income family in this country was maintained in this report. I dont read it that way. I see it in 23 and 24 of the report where you talk about reforming and taking the mandate and replacing it with something that would involve assessments and congressional appropriatio appropriations. Senator leahy and senator shelbys approach that may not always be the case. Subject to the whim of the congress of the administration, i will follow up with a question for the record. Mr. Secretary, i appreciate the efforts to move forward on housing reform and i do believe that overall reform is going can make it harder for the working class families to achieve, and potentially for the dream of homeownership, my view opened the discussion on that. But more importantly while they are being discussed today, i think we also have to talk about some other socalled reforms that the administration is making a housing in america. A year and a half as a matter of fact i dont know if we will get to see you again anytime in the future, so i want to ask about a recent proposal regarding rules that i believe are going to dramatically undermined the ability to enforce the fair housing act. Ive taught time and time again in the committee and others housing discrimination and 2019 is persistent, but more often than not, subtle, not always direct in the years of legal doctrine the Supreme Court made it clear the businesses unintentionally discriminate against racial minorities and protected classes. Its called disparate impact and the new rules i think make it tt impossible to bring forward a discrimination case based on disparate impact. Fair housing is only as fair as it can be and if we cant bring disparate impact, it is unfair. And i have concern about this every single major housing rights and civil rights advocates agree that this rule is a major blow. Across the board, it introduces new hurdles for the plaintiffs including the fivepart test. Mr. Secretary, i think we can all agree housing discrimination still exists in this country. And we know that these complaints exist so my question to you is simply explained this to me. Explained why we need this rule why is this important if we know it exist . Give me an opportunity to explain why you make it nearly impossible for people to bring disparate impact statements. I will mention the fact our record stands for itself we have initiated the facebook complaints, we have an agreement out of los angeles taking care of disabled peoples Housing Needs weve launched against San Francisco for discriminating against low income for housing and if you look at the list of suits brought they compare favorably with anybody else as far as disparate impact is concerned we try to bring that into alignment with the Supreme Court ruling. Come on mister secretary i am a lawyer. The Supreme Court barely wrote about this. What you are doing, i have been practicing law 40 years you are making it damn near impossible for a plaintiff to bring a disparate impact statement it is not in line with the Supreme Court. We brought up complaint against San Francisco on disparate impact. Go read it but if congress were to raise the rate the minimum wage rate of 15 would be disproportionately affected . Low skilled or unskilled workers . Primarily minorities in that area. That becomes a disparate impact against congress. You can begin to see what im talking about so we want to clarify the way it is done to save taxpayers money. My time is up i will follow up for the record it has been offered for Public Comment i want to make sure my Public Comment is recorded right now if i need to do it in writing with a black sharpie i will do that but this is wrong. It is absolutely wrong mister secretary this discrimination still exist in the country we need to do something about it and not make it more difficult. Chairman thank you to hide and the treasury proposal to have a distinct situation between fha financing and those that you gse. How is this achieved and how does the separation affect homebuyers i think the objective here is to try to reduce that competition at the margin which is historically driven what we saw before the crisis where the gses aggressively tried to grab fha market share and unfortunately it turned out unsustainable leaving homeowners in a position so to try to encourage responsible homeownership is the objective but to echo what doctor carson has said to focus on the first time home buyer low down payment first of all to emphasize theres not that many gaps in the market but the objective is to reduce the competition. It seems the goal is to have the multiple guarantor system. That is to boost accountability to taxpayers. I assume there are things that go on the gse that deserve our attention with accountability to taxpayers. We want financial innovatio innovation, Greater Consumer choice through competition. When we separate the gsa gse and fha does that help achieve those goals whoever has the answer i can understand. [laughter] what our goals are and the principal for focus of this reorganization is to concentrate on the first time home buyers on minorities and people who frequently dont have access to traditional credit markets. This plan actually facilitates that rather than takes away from them. One of the things it seems to me that gses have been able to accumulate in this timeframe we are in, is greater access to technology and information. If we have a new system, how do we force the sharing of the benefits of data and technology that are established . I can tell you that the gses were able to significantly upgrade the it performance while in conservatorship. Thanks to the taxpayer. Therefore, what they have achieved in that area they should be willing to share and they recognize that and congress should recognize that. So you see an increase transparency the gse data shared with the industry could that be a precondition to be released from conservatorship . I think thats the question for the fh faa but i would agree what you are alluding to one of the issues we should be looking at. Tell me where we are in regard to capitalization and where we need to be what level of capitalization do you see as necessary mister secretary at the gses to operate efficiently and most importantly to withstand any future significant downturn . They need a lot of capital. Were looking at 3 billion and that is irresponsible in terms of the capital they have. Theres no way they can operate but they can draw the treasury but the fact that is the capital back stock backstop. Thats one way to accumulate capital and then we have to raise thirdparty capital but if we give you a range of a number its more like 100 billion than 6 billion. What is that capitalization today than before the crisis . That is minuscule. We are in worse shape going into any major downturn than we were . They could not operate today if not for the treasury. Thank you mister chair and Ranking Member for being here today. Doing a whole series of meetings around minnesota with small towns and rural areas in big cities and i just want to make a note to senator chester for bringing up this issue testing the rural areas and tribal areas. And i heard if you dont have a safe affordable option than nothing else works your job, schooling, house, companies dont work because your employees dont have a place to live. So the way that i look at these complex questions about what we do with the gse. Doctor, you and i had a chance to talk about this in july and you indicated you thought the treasury report might be flexible enough to accommodate the gses operating like a utility with a regulated rate of return. You even thought even considering that model for all the families that we need equities for. After reviewing the treasury plan, do you think a utility model would work . I think under certain circumstances it could work it would be helpful for members to start to flesh that out but what i take away they mean regulated pricing because currently conservatorship we do regulate the pricing of the gses and i welcome that is the upside of conservatorship. As we have been looking at this the idea the utility type model has emerged that seems to be a lot of consensus for i think its important we continue that conversation because we see a way to make sure to get the access that we need to fulfill the dream that people can own a house. We have had very specific conversations with the chairman about this and the director and myself we support working with this committee on what you may consider to be a utility model and there are plenty of utilities where the price is regulated we do think fh faa should maintain regulation oversight of the pricing of the guarantee we look forward to working with this committee to meet objectives. I would be interested in continuing that conversation but secretary mnuchin i have to take the opportunity since i have a chance i just got back from minnesota and as you probably know madison minnesota agriculture is the bedrock of our economy and then so goes the small towns and rural areas and i spoke to a lot of people at the state fair and all over the place we dont like conflict. Not like my colleagues from louisiana, we are low key but the farmers are telling me they are devastated. That is their word by the president s tariffs in china the Minnesota Farm Bureau said it has already driven some farmers off the farm not only hurts the Farming Committee for small Rural Communities that have been devastated. Mister secretary on fox news you talked about the chinese tariff war and said we have not yet seen any impact on the direct economy i just dont see how you can say that and in 2017 china imported 19 billion of ag products and in 2018 there was a 50 percent drop minnesota farm families they are afraid they will lose their farms. So do you really believe these tariffs or this tariff or has not had an effect on the econom economy . First of i look forward to coming and spending time with you i will have my office reach out. My comment was on a broad impact on a 22 trilliondollar economy but i also went on to say clearly are there are specific situations some we have given waivers and i acknowledge on the farm area we spent a lot of time trying to get the internal agreement to have china by agriculture. I very much appreciate what is going on and never thought i would become an expert on soybeans i have been accused of just wanting to sell soybeans and thats not what were wanting to do but we have to make sure china treats our farmers fairly and does not retaliate against the farmers in an unfair way to maybe have been doing it. Minnesota soybean farmers see their sales drop by 75 percent. They dont have any place to store the beans anymore they are Collateral Damage in this trade war and i think it is urgent. I understand that we are specific with those demands that they do not follow up on and that is a grave concern for the us farmers. Thank you gentlemen for your testimony and i am from arizona in the last housing crisis i was serving in the military. So many of my neighbors in a middleclass neighborhood , they lost their homes. Hardworking families. The phone cost drops 56 percent in five years before that they had nearly doubled. Which today sounds more dangerous than the conditions of the last crisis. As i am in this new role they expect we had the last crisis so many people lose their home with those modifications that prevent this from happening again but if we do nothing if not of the changes of what you are offering with the status quo than a similar or higher risk so how is it we didnt learn things of the last crisis to bring us to a better place for how the government is functioning to protect homebuyers and people from arizona . That 1000 one ratio is scary. Absolutely we recognize arizona was ground zero for the crisis we want to avoid that and also make sure you got a review of servicing practices internally these things changed weakly there is very little guidance to borrowers so to make sure when we do have the next downturn when i hope that is a long ways away but the borrowers and lenders and we all know the rules of the game and people will be treated fairly. Perhaps glass halffull being on the staff of the committee before the crisis if you would even suggest housing prices might decline to be problems you were left at. We have made progress there is broad recognition that we dont want to repeat the crisis but we can if we dont make positive efforts so having tried to do this once before i feel in a better spot. It seems like we are in similar conditions how is this preventing us from being in similar conditions . I share that frustration tomorrow will mark five months for me i am frustrated we are 11 years later still having the conservatorship of thousands one lever ship this is not a safe situation i commit willie will be working as best as we can. Fha substantial delinquency rates that soloist that they have then we recognize with that manipulation of debt to income ratios and credit scoring possibilities. Putting people in a home that they cannot afford they lose their home and credit and future possibility. For instance in the Minority Community we have fewer homeowners today than before the crisis because the credit was ruined and these people did have good credit before we to see how we can help with that situation but we want to make sure we do learn from those things. Affordable housing whether rental or buying is a real challenge for many communities in arizona it is something that is really impacting the people i represent and then to provide better access. Thank you. Thank you for being here we talked about Affordable Housing this is the most unanimous sense there are two programs that directly aid the Housing Trust fund they are funded with assessments not the appropriations process , will you commit to ensure these are fully funded . Mimic within constraints of the statute, absolutely. Secretary you have done the analysis. So in that categorical or general sense what is under your proposal . I dont think there is anybody who wont get a mortgage may be certain people today who shouldnt because they cannot afford them but affordable mortgages are what we want to make you have not identified any group or group of individuals that would be disadvantaged . The only thing is the director is looking at the gse that is his responsibility maybe there are higher risk loans they are making that they shouldnt but that is his responsibility. Secretary carson any groups that are left out quick. Certainly there are some people who should not be mortgage holders. And in many cases elderly or disabled or drug addicted you cannot make the payments. We have programs for individuals like that. It is the administrations plan to do that analysis. Will it cost more to get mortgages that rates quick. We dont think it will cost more. And on the first questio question, people might have giant cash out mortgages that have a great risk to the gse but there should not be if there are people who will not get mortgages. Of that supposition is not the analytical analysis. We would do that as part of that but we have not done that yet. We dont have any analysis to dictate or suggest prices would be raised but we are working with the servicers to lower the prices to make sure they do appropriate things specifically before foreclosure. To offer commentary its important to look for increased competition becca wood has been a few years since i was in grad school that those competitive markets with those duopolys and its hard to believe bringing competition in the market will result in anything but lower prices thats a strong amount of evidence with other sectors across the economy theres pretty good evidence. Conceptually make a point that if you get that evidence we would love to have that. How about Community Banks and Credit Unions . Mimic we have to make sure we have to be treated fairly thats an important part of a future plan. Thats key. We have been working with them and to provide education about high on housing financial managers. Mentioning earlier the control that we have done in conservatorship is to eliminate the volume discounts fannie and freddie gave two large lenders countrywide made a lower price they drove consolidation on the origination side. Its important for me to have the authority to limit fannie and freddie have it ability to drive consolidation. There is no discussion of the lack of capitalization of fannie and freddie that they rely upon the treasury to survive. But its interesting because since the crisis began we have invested 191 billion in fannie and freddie and the treasury has received about 400 million i believe in terms of dividends so couldnt you correct this to lend from the dividends quick. That taxpayers have been compensated historically going forward. If they put money in the stock market they would have multiple success. If we took away the entities cannot exist as long as taxpayers are at risk we expect the taxpayers to be compensated. Isnt your model to allow these individuals and entities . Two different things. On the cash flow and capital standpoint, yes they will keep the cash and increase the capitalization but what we are negotiating with the director right now is a return for that and expect the taxpayers are compensated to increase the liquidated profits but thats what we are discussing now. First of all let me think the chairman and Ranking Member. This is key in what we have been talking about. But the cost of healthcare is the number one issue. But some of the discussion is not pertinent of what i am hearing referring to Affordable Housing. Ive been talking on this on the rural and urban areas 17 counties 15 are rural. I could tell you right now rent controls not causing the Affordable Housing crisis in fact nevada does not have any type of law that amanda tate rent control. Id also like to point out streamlining local permits will help but it will not solve the problem and it is not made as an impact. And our state the only roundtables i have had have those have been at the table with the private sector. I am looking for answers. I think we can come together to address this issue if we Work Together. But secretary carson, does head support continuation should of the Housing Trust fund . The purpose of the Housing Trust fund we certainly support that. You do support that you support keeping that intact the way it is quick. I dont know if i wouldnt be happy with changes. What kind . We really want to take a more comprehensive look when it comes to how do we get people into Affordable Housing situations. Im not sure what that means but the changes that you are making with a 3 million for extremely low income families. That men have good option. Is that what youre looking to work with congress quick. Of course. But i want to make it clear that traditionally just throwing money at the problem has not solved it as this has been going on for several decades and we want to look at the deeper issues that cause the problems and address those. I absolutely agree this needs to be addressed. We have to have substance and that is what we are looking for. There is bipartisan support and then just to be clear in the report there should be more many and then to be more efficient and then to put more money for political housing this is what the administration would be happy with this. What is your definition of Affordable Housing . It depends but with Affordable Housing how do you know where to send it quick. We have to work with this committee. You have not designed it yet. Traditional is to spend less than 30 percent otherwise they are distressed. That is a parameter how to focus on the needs that fall within the Affordable Housing . I think generally. Any other identifiers . At the number of different formulas to be reallocated and the tax credits per capita basis we have a number of formulas across the states and multiple occasions. And manufactured housing is very important in nevada and particularly with the Rural Communities. Hud includes manufactured housing so without specifics would you ensure remain in any policy quick. Making sure 10 percent of the single families people think of trailers and double wives but there is tremendous Technological Progress made in that area. And there is a removal of regulation but they have severely impeded the ability to utilize. And they are willing to address those issues so to what extent are you having an impact. And obviously is the regulator now we have taken and manufactured housing as a separate entity and then to pay a lot of attention to this. We will expand as necessary. And secretary carson i want to follow up. And those that would have the ability of housing discrimination to have that disparate impact analysis. And then to bring the rule in alignment with the Supreme Court position. So i am confused because i havent weekend from the 2017 filing where you are the defendant and the plaintiff is alleging the existing rule is not in compliance of the Supreme Court decision in this pleading you took the opposite position and a quote from your own brief stating, the Supreme Court holding in Inclusive Community with heads longstanding interpretation that they offer disparate and clap impact claims. So which is it . This is a position of a court filing that rule is consistent with the but then in a recent. Is your testimony today that and that is the position you took in this filing. It is your position it is the same as in 2017 quick. My position and the ideal of the supreme. That mister secretary took the position in this filing the existing rule complies with the supreme. But now i understand you just move that as a pretext but where you rewriting the rule that you said is consistent earlier with the Supreme Court decision that i would like to talk to solution. They say dont answer yes or no but this is pretty simple. And with this court filing 2017 to say the existing rule is compliant and earlier stated to say. So there are aspects. Mister secretary you are the latest in the rule going way beyond what the Supreme Court required which is proving discrimination and in fact you took the opposite back in 2017. So if i can show you a proposed rule change that is consistent with the Supreme Court decision but does not make it is difficult to file on a discrimination case so lets talk about what is logical. What we are trying to do is allow. The Supreme Court has upheld the disparate impact but this is because of your race. Thats the whole purpose of this. You took a position in support of the earlier rule berkeley hope we can Work Together during this comment. It would be happy to work with you and for the record to pursue cases. But you brought some of those cases under the existing rule and now you are changing that. I cannot agree with disparate impact. Lets interpret in a way that allows people to bring discrimination cases. That concludes our questioning it before we conclude senator brown has a couple. Talking about moving regulatory barriers and so the housing role he said it would give head too much say in local zoning. And then secretary carson suspended the rule that he advocates to help communities identify and remove the barrier barriers. So i will later ask senator cotton to join me and ask you to reinstate the rule. The other i just joined i look forward to working with you on this and figure out how we can push out our details and i will ask the staff to provide Technical Assistance that you have a regulated rate of return. Thank you that does conclude the hearing for senators which she to submit for the record those are due in one week tuesday september 17 and for the witnesses to respond as promptly as you can. Again we thank you for being here today and look forward to our continuing Work Together on this topic and we are adjourned. [inaudible conversations] [inaudible conversations] mr. Cornyn mr. President , one of the most poignant moments of my life and certainly of my career here in the senate came in 2017 when a gunman opened fire on a sunday service at a Little Baptist Church right outside of sutherland springs, texas. 26 lives were lost that day. 20 people were injured. And the entire community, that small, Little Community outside of san antonio, was shaken to their core by this hateful act. Well, it didnt take us too long to learn about the shooter, a man with a record of me