Transcripts For CSPAN3 Federal Housing Finance Agency FHFA Director Testifies On Mortgages During... 20240712

Next the director of the federal Housing Finance agency testifying on housing and mortgages during the coronavirus pandemic. House Financial Services Committee Members asked him how his agency is handling the rice in foreclosures and forbearances as well as the operations of fannie mae and freddie mac. The hearing runs over three hours. The committee will come to order. Before we begin, i want to remind members of a few matters including some required by the regulations accompanying House Resolution 965, which established a framework for Remote Committee proceedings. First, i would ask all members to keep themselves muted when theyre not being recognized. It will minimize disturbances while members are asking questions of our witnesses. Members are responsible for muting and unmuting themselves. The staff have been instructed not to mute members except when theyre not being recognized and theres background noise. Members are reminded that they may only attend one remote hearing at a time. So if you are participating today, please remain with us during the hearing. Members should try to avoid coming in and out of the meeting particularly during the question period. If during the hearing, members wish to be recognized, the chair recommends that members identify themselves by name so as to facilitate the chairs recognition. I would ask that members be patient as the chair proceeds given the nature of the Online Platform the committee is in. This hearing is entitled prioritizing fannie and freddies capital over american homeowners and renters. A review of the federal Housing Finance agencys response to covid19 pandemic. I now recognize myself for five minutes to give an opening statement. Today this committee convenes for a hearing to conduct oversight over the federal Housing Finance agency that is fhfa. Our sole witness today is dr. Mark. The director of fhma. We have initially intended for dr. Ben carson, to also join us for todays hearing but we were told his calendar is booked. Secretary carson does appear to have enough time on his calendar to make nonpandemicrelated decisions that undermine fair housing protections and attend nonpanemicrelated events but apparently not enough time to talk to this committee about how hes responding to the Current National emergency. The leadership has come to define this administrations response to the pandemic which continues to have a terrible impact across the nation. Nearly 200,000 people in the United States have lost their lives to the virus. Our homes and the ability to shelter in place are the greatest protection we currently have against covid19. The u. S. Census survey recently found that 8. 4 million homeowners and 8. 2 million renters are behind on their rent and mortgage payments. Of those households, 33. 4 report that they are either somewhat or very likely to face eviction or foreclosure in the next two months. Meanwhile, over half a Million People in the United States were experiencing homelessness going into the current crisis. Historically red line communities are reporting higher rates of covid19. 69 of latin are unaware of mortgage relief options and black borrowers are citing higher Mortgage Rates and inability to refinance their mortgages as a result of lending discrimination. Unfortunately, this Administration Agenda continually gets in the way of meeting the current demands of the Housing Market and the people of our government stands to protect. Instead of focussing on how to help homeowners and renters and how to support the Housing Market during this National Emergency, director collaborates actions suggest hes first and foremost interested in filling the coffers of fannie mae and freddie mac so he can continue to move forward with his plans to release them from conservatoriship rather than allowing homeowners to take advantage of the historically low Mortgage Rates. Director announced a new refinance fee that would take some of the savings that would have gone into the pockets of families and instead redirect that money into the pockets of fannie and freddie. There was a new complex regulatory capital framework for fannie and freddie mac ignoring calls to delay this rule making in light of the pandemic. Not only is the timing of this major challenge inappropriate because it would cause serious market disruption in a middle of a recession, but many raised concerns these changes would actually make the Housing Market less prepared for the next economic crisis. Many have also raised concerns that the rule the director put forth would hamper the ability of the gse to carry out their mission of promoting access to credit to underserved borrowers. In the four months that Senate Republicans have failed to pass 100 billion in critical rent relief and the 75 billion homeowner Assistance Funds included in the h. E. R. O. S. Act, eviction filings continue to grow. Market delinquencies have reached their highest level since august 2014, despite forbearance measures in place and 3. 6 million mortgages are in forbearance. Meanwhile, mortgage credit supplies has fallen to the lowest level since march of 2014. Im very concerned that the response to this pandemic has fallen short and the director, like trump, is putting his personal, political agenda ahead of the american public. With that, i now recognize your Ranking Member of the committee the gentleman from north carolina, mr. Mchenry for five minutes well, director, thank you for testifying today. I would like to start with some of the basics here. Combining fannie and freddie guarantee or own a portfolio of roughly 28 million Single Family, multifamily mortgages for a value of approximately [ inaudible ] 5 trillion. Thats nearly half of all outstanding mortgage debt in the United States. These are significant numbers. Early on there was concern about what the pandemic might mean for Home Ownership and whether our Housing Markets could withstand the impact. Under your leadership, director, and Decisive Action by the fhfa, you confronted the challenges head on. I want to commend you for that. In march, fhfa started issuing statements to mortgage servicers about their responsibility to ensure, quote, hardship forbearance is an option for borrowers unable to make their monthly mortgage payments. On march 18th, they suspended foreclosures for the Single Family mortgages for at least 60 days. That was nine days before congress enacted the c. A. R. E. S. Act. That was nine days before congress enacted the c. A. R. E. S. Act that codified the two policies. Thats leadership. The results of fhfas leadership could not be clearer. In february, the gse had about 580,000 delinquent loans or about 2 of the portfolio. Approximately 9,000 were in some stage of foreclosure. Today the delinquency rate is almost tripled because of this pandemic. Yet loans and forbearance are just under 5 and number of foreclosure sales fell to just under 97 in may. Its clear these policies have worked to protect american homeowners impacted by the pandemic. In august, fhfa announced it was going extend the foreclosure and real estateowned Eviction Moratorium through at least december 31. However, these pandemicrelated actions and others come at a cost. Fhfa projected these costs in august to be at least 6 billion to the gses. Thats a concerning figure. What is more concerning was fhas poorly explained rollout in august of a new adverse market fee. The way this was announced and the initial threeweek timing for the implementation doomed it from the start. Clearly fhfa has a statutory obligation to ensure the gses operate in a safe and sound manner with sufficient resources to meet these obligations. Thats the 2008 law that created fhfa. A law that waters and all 11 other Committee Democrats in congress at the time supported. So let me repeat, the law the director is implementing and following is the one that chairman waters and 11 other current democrats on this committee who are in congress at that time supported. But this lastminute fee on moratorium finances rightfully received scrutiny. Im pleased that fhfa understood our concerns and revised the fee to protect homeowners with loan balances below 152,000 and delayed the implementation date until january. Thats a good example of how this process ought to work. Congress relying on fhfa to make smart decisions regarding the pandemic and fhfa listening to congress and responding to balanced to the balancing act to protect the american Home Ownership with the legal requirements to supervisor the gse. When you testified before the senate in june, director, you said you were, quote, proud of what fhfa has done to help borrowers, renters, and the Housing Market deal with this crisis but fhfa recognizes that more work remains that t tha the crisis caused by covid19 is not over yet. Thank you for your thoughtful approach to Home Ownership in america. I would like to yield the balance of my time to Ranking Member of the housing subcommittee, mr. Stivers. Mr. Stooimps . I would like to thank mr. Mchenry for yielding and ill be fairly brief. You know, i want to thank the director for his leadership and im looking forward to asking some questions today about the adverse finance fee as well as the capital rule and some other very important things i think mr. Mchenry really summed it up well on the leadership youve provided. I appreciate your leadership. We look forward to asking you some very important questions because were 12 years past the financial crisis and the only piece of work that is undone is fixing fannie and freddie. So weve got some work to do with you. [ inaudible ] i yield back. Thank you. Thank you very much. Very much. I want to welcome my witness today, dr. Marx calabria. Dr. Calabria has served since april 2019. Dr. Calabria has testified before the committee on previous occasions, and i believe he doesnt need introductions. Dr. Calabria, without objection, your written statement will be made part of the record. You will have five minutes to summarize your testimony. Time will go off at the end of your time. And i would ask you to wrap up your testimony so we can be respectful of the Committee Members time. Dr. Calabria, youre now recognized for five minutes to present your oral testimony. Chairwoman, Ranking Member mchenry, and distinguished members of the committee, thank you for the invitation to appears at todays hearing. The federal housing has acted swiftly and prudently to respond to covid19. Weve updated policies to face challenges. The success of our policy response to covid19 is foremost testament to our employees. They are fhas greatest asset. Our top priority is ensuring their well being. This includes fostering a Work Environment where everyone feels safe, respected and valued for our differences. The on russ across our nation has strengthened our resolve to uphold the nations fairness, diversity and inclusion in all we do. Central to this work is the office of equal opportunity and fairness. Foremost, during a Public Health emergency, americans should not have to worry about losing their homes. We have done this while ensuring the function of the Mortgage Market both during this crisis and laying the groundwork for after. Our actions have been and will continue to be data driven. Actions provide to mortgages fanny and freddy but have set workable standards for the rest of the market. For homeowners struggling before covid, we suspended evictions until the end of 2020 and will extend that further if needed. This has enabled roughly 200 million families facing fore close to your precovid to stay in their homes. Oth under fha direction, worked to develop low Modification Options and repayment plans to ensure borrows will not face payment. We allowed borrowers to repay what they missed when they sell their home or refi nance their lone. We have emphasized repeatedly those who can make their mortgage payments should continue doing so so we can focus our resources on those most in need. Of the borrowers and fore bearers to the enterprise backed mortgage, about one quarter continue to make payments. We will treat these borrowers as current if they want to buy a home or refi nance. And we developed the nationwide multifamily fore bear answer. We are now requiring land lords to notify tenants of their rights under these fore barns agreements. Allow renters and borrowers to determine. Weve updated and translated five additional languages to help clarify borrowers and make sure all borrowers are receiving the same service. We have emphasized no lump sum is required at the end of fore bear rans. Weve created a website consolidating federal relief resources for borrowers and renters. To provide stability and clarity to the market, institute a fourmonth limit to prevent interest on loans and fore bearance. Fha enabled fanny and freddy to purchase single mortgages and fore baerns for the first time in history. Im proud of the response to thisbearance for the first time in history. Im proud of the response to this baerns for the first time in history. Im proud of the response to this crisis. Im encouraged what the data tell us. They lack the capital to withstand a serious downturn of the Housing Market. The 2008 housing crisis was financially devastating for countless families, especially low and minority house holds. We know a major driver is that minority households in the 2008 crisis with high mortgage leverage. I remember working on the banking committee, the considerable amount of calls i took answering phone calls from families facing foreclosure. We cannot forget those families and cannot forget families today. When Mortgage Finance goes bad, its americas families that pay the price. My job is to make sure fanny and freddy never fail families whose future depends on a market. The Enterprises Must build capital. Capital absorbs losses and enables fanny and freddy to support buyers. They are able to support the market. Its a critical framework enterprises, meeting the frameworks requirements will make fanny and fred di. Home thank you for the opportunity to testify. I look forward to answering your questions and i hope all Committee Members are in good health and good spirits. Thank you very much, director coll calabria. You recently enacted increase that would make it more expensive for homeowners to refi nance their mortgages, costing the average borrower 1,500. This fee will prevent roughly 255,000 borrowers from access affordable mortgage credit. And the revenue raised by the fee will be nominal. Researchers have found that borrowers who obtained lower rate mortgages through refinance have reduced Mortgage Rates by 40 and reduced defaults on nonmortgage debts by 25 . In other words, in the midst of the current pandemic when default rates are already at historic highs, youve made a decision that will likely not only harm families across the country but will likely harm the Balance Sheet of fannie mae and freddie mac after all. Dr. Calabria, how can you justify this fee increase . Thank you, madam chair. I respectfully will disagree with a bit of the analysis i just heard. Lets be very clear. First and foremost, the c. A. R. E. S. Act imposed unfunded cost on fannie and freddie. As the Ranking Member pointed out, we are by statute required to recoup those fees. Im simply following the law. And again, as the Ranking Member pointed out, a law you voted for. This fee does not go into the pockets of fannie and freddie. Its money that comes to help keep people in their homes. We had 200,000 families facing foreclosure in march when covid hit. For the last six months we paid property taxes and housing costs. It would be nice if local governments would give property taxes to some other families. Weve kept families in their home. I want to emphasize, nobody nobodys Monthly Payment will go up because of this fee, not a one. The only impact is people who have not lost their job and using that to keep people in their homes. Thats the important part of this. It doesnt build capital. It doesnt build anybodys bonuses. Doesnt build anybodys salaries. Certainly doesnt benefit me. It goes to keep people in their homes who would other wooisz be exposed to a deadly virus. Thats what were focused on, first and foremost, keeping those who lost their jobs ill remind you again, madam chair, congress provided no funding to allow us to be able to help millions of house holds. Weve done it without a penny of assistance. Dr. Calabria, despite your response and the excuses that you have given, i believe theres no excuse for the increase. This policy puts hundred of thousands at risk of default in the middle of an economic crisis. And instead of facilitating access to affordable credit, you are limiting the options. And so borrowers have to remain housed and financially stable. I urge you to reverse course immediately so homeowners will have a fighting chance. So, dr. Calabria, surely after you began your tenure, we met to discuss your priorities, including your intentions to move forward with rule making on Capital Requirements for fannie and freddie and specifically race td questions about the potential why the rule made to have adverse impact or lower income borrowers or borrowers of color. You committed to me that you would pay close attention to this issue, yet you recently released a capitol hill proposal that does not have the effect that it will have on underserved borrowers. How do you respond to that . I would say respectfully, madam chair, we believe this is a rule that protects lowincome families and provides stability in the market. If i could for a moment quote a letter that you wrote to chairman powell, the fed, two years ago, when you said, quote, strong Capital Requirements are the corner stoen of effective Regulatory Regime that supports stable economic growth. The financial crisis a decade ago taught a painful lesson about the damage that helped undercapitalized Financial Systems should be. You go on that it had not harmed the economy. I agree with you in this letter, madam chair. Thank you very much. I would still insist and encourage you to change direction and particularly to Pay Attention to the needs of the underserved and minorities that appear to be the victims of this pandemic in so many ways. Thank you very much, and i now recognize the distinguished Ranking Member, mr. Mchenry for five minutes for questions. Thanks, madam chair. Treasurer calabria, i know in anticipation for a lot of questions we have from Committee Members on your announcement of this additional fee. Look, why dont you give us the lay of the land on why you feel the decision was necessary and why this fee is an appropriate solution. And what are the alternatives . Thank you, congressman. Let me first say, you know, i certainly have no desire to raise fees in the Housing Market. In fact what were trying to do is a much worse outcome. But foremost, as i mentioned to the chair, were simply following the law of the c. A. R. E. S. Act and Unfunded Mandates on the Mortgage Market by the charters of the gses. Theyre required to recapture those costs during income. Both fannie and freddie approached me back in march and april, as early as that time as requested. I want to emphasize this was not my suggestion. This was fannie and freddies suggestion. And as a safety and soundness regulator, when ive got two multitrillion dollar entities coming to me saying if theyre not allowed to reduce income, theyre at distress, i have to take that seriously. I dont think we can ignore instability in the Mortgage Market. Foremost, this was a fannie and freddie request, although for the record, they requested a much higher amount and wanted to cover purchases. I went back to them and said let me know exactly what your costs are going to be. So, also the timing of this is september when we wanted to be able to capture the refinance wave because the losses, which were ultimately, by our estimates, between somewhere between 8 billion and 15 billion, we wanted to sfrpread that over as many mortgages as possible. I want to emphasize for the members of the committee, we delayed this to december to give congress an opportunity to fund these costs. While im, of course, not asking for that, i believe we can cover those costs within the market with our statutory mandate. Thank you. Look, as we look at the state of the Housing Market and whats gone through since covid, raising capital for the enterprising when you did, it appears to be a prudent step. If you hadnt started to bill capital at the beginning of last year, the gses would be without reserves and taxpayer money from the treasury. So, would you agree that we would have sufficient capital within these enterprises and Risk Mitigation tools around capital, again, credit Risk Transfer, for protection of the taxpayer so that these enterprises dont need to be bailed out again . Absolutely, congressman. As weve seen repeatedly, it is capital and Financial Institutions that protects homeowners, protects the economy, protects the taxpayers. Okay. Has the pandemic altered your plans to rebuild capital . We still think its absolutely necessary. While any capital increases, in the long run we simply need to build capital if we want to have a stable Mortgage Finance system. So, im aware that the fhfa is currently reviewing comments on the proposed capital framework. But generally how has your thinking about recapitalization changed since the on set of the pandemic . I think particularly as of march we saw in march that third week very similar behavior to what we saw in 2008 where we saw mortgage spreads and costs of credit blow out and become much higher even though the fed is lowering Interest Rates. So, the objective here is if we can have a wellcapitalized fannie and freddie, that we can be able to withstand a crisis that fannie and freddie can better support the market and you have less volatility and rights. More importantly, if we had come into this crisis with the appropriate amount of capital, this fee could have been delayed for years. The reason for the timing here is fannie and freddie are on the verge of solvency. Lets move to the question of the gulf coast. We have the earliest snamed storm heading to the gulf coast. I asked you back in october about the increased risk of flooding and how that poses a risk to portfolios and the tax pawer. We talked about the Johns Hopkins montreal study on Alarming Trends of lenders transferring floodrelated mortgage risks to the taxpayer. You stated the overall point of the study is largely correct, end quote, and that out of concern without meaningful reform, much that risk will be sent to fannie and freddie. Ko congress has not enacted any steps. Can you tell me what steps fhfa is doing to take into account the risk of flooding and more enhanced flooding as a result of our changing climate . First and foremost i think the most important thing we need to do to prepare fannie and freddie from any risks of flooding and Climate Change related activities is to build a buffer that accounts for that so we have a safe and sound system. Second, we are Building Research capacity here to spread across environmental economists and Data Infrastructure to be able to model these issues. And were working with both fannie and fred die to get more data on this. There will be more announcements to come on this front. Thank you, dr. Calabria, and i yield back. Thank you. I recognize ms. Velazquez. Thank you, chairwoman. Dr. Calabria, earlier this year, the fhfa took the administrative step of extending both the foreclosure and the victim moratorium for Single Family homes until the end of the year. Have you considered extending either of those moratorium into 2021 . What factors would be making this decision . Thank you, congresswoman. Let me commit to you, we will extend those measures if necessary. Well look at a lot of the same data that everybody is looking at, covid. Were looking at rental market. Were looking at the spread of the disease. Ill commit to you that if the data suggests we need to extend it, we will extend it. Thank you so much. And i just want to disclose new york city and other cities that are filled with mom and pop land lords and ceos with multiFamily Properties backed by gses, many of these are currently struggling with their own monthly obligations. Tenants have had difficulty paying their rent. In june, the fhfa approved forbearance extensions for multifamily Property Owners with gscbacked mortgages for up to six months. Have you considered extending the forbearance period . Congresswoman, yes, we have. And i very much agree with you and see the need that we are especially facing smaller rental properties. The worst impact of this has been the renters multiFamily Properties. I will commit to you we will examine if the data suggests the forbearance program, we will do so. I appreciate it. So, my next question is some experts predict that the fhfas proposed capital rule will result in higher Mortgage Rates, with rates increasing by an average of 15 to 20 basis points while the gscs remain in conservativeship and 30 to 35 basis points if they were released. And these numbers could be even higher with borrowers with higher loans who value ratios or credit score, especially in community of color. My question to you is given your charter that provide access to credit for the entire country with particular emphasis on lmi families and underserved communities, how do you plan on raising the Capital Requirements while still providing Affordable Access for credit to these communities that are in need . Thank you for the question, congresswoman. First and foremost, i believe that the more capital that fannie and freddie have, the more they have the ability to provide support to low income family. Every dollar invested in fannie and freddie is another dollar invested in affordable housing. Let me clear to members of the committee, theres nothing in the world that requires fannie and freddie to raise prices, nothing in the rule that requires them to do that. I want to emphasize that point. Well i i hopefully we will see what the data will show a month from now, a year from now, if its in fact going to have impact on the underserved community. Certainly, you know, its hard to know ahead of time, but ill certainly mention weve had over a decade of the financial crisis. And again, as the chair noted in her letter to chairman powell, increases in capital standards in banks have not required hosts in communities. We have a significant amount of data and evidence as it applies triezing capital of other institutions. And theres little reason to think its working differently here. I lastly want to emphasize, given the large body over the last decade, the estimates of 30 to 40 basis points are very much outside the range of accepted research in this area. We shall see. Multifamily owners with loans in forbearance are required to inform of evictions, suspensions, and enhanced applied in the period. How is the fhfa ensures land lords are informing tenants in carrying out these organizations . Thank you congresswoman. What we do is we go in and talk to rather fannie and freddie go in and talk. We can declare default. We try to work with the lenders to get them to behave. Thank you very much. The gentle ladys time has expired. I now recognize the gentle lady for five minutes. Ms. Wagner . I cant unmute. Youre unmuted. I cant unmute. It wont let me unmute. Congresswoman, can you hear us . Yes, i can hear you. Can you hear me . Yes, i can hear you. I i dont appear to be unmuted. There. Madam chairwoman . Welcome director calabria. I first want to thank you for your leadership at fhfa to protect borrowers and renters since the beginning of the covid19 pandemic. Fhfa has gone above and beyond what has been required of it in statute to arhssist american homers and renters and i comment you and your staff for hard work these past six months. America, as we discussed a little bit is currently seeing some of the lowest Interest Rates in history available for both purchase and refinancing of existing mortgage loans. In the st. Louis region, sir, where i represent, the Residential Real Estate market in august has experienced a dramatic increase in pending and closed sales of over 27 . These sales increases exceed the year over year monthly increase in 2020 and reflect the strength, i think, of american demand to purchase new homes during this pandemic. So, with home sales increasing and millions of americans considering taking advantage of record low refinance rates, youve talked about it a little bit and i dont want to beat a dead horse. But i still dont think i fully understand fhfas reasoning behind the announcement on august 12th to implement that new adverse market refinance fee, which in my estimate, i know the chairwoman said 1,500. We estimate about 1,400 to the consumer based on their average mortgage. I understand the fees been delayed. Youve explained it a bit. Delayed i think until december 1st. And youre doing reconfiguring work on this. I think i know where it came from and the initial thinking, but do you believe that the changes that fhfa has made to this fee are adequate to prevent placing uncertainty on both the finance the refinance market and on borrowers who choose to refinance their mortgage . This is a great concern to me and my constituents in missouris second congressional district, sir. Thank you, congresswoman. I appreciate that. First of all, let me emphasize that nobodys preexisting Monthly Payment will go up because of this. This only applies to people who have refinanced and are therefore going to get a lower rate regardless. We specifically and again i should also emphasize this was a fannie and freddie request, not fhfa request. That said, we asked to exclude mortgages because home purchases have a bigger impact on the economy. Our hope was that congress would come in and come up with a fix. Were trying to avoid a much bigg bigger disruption to borrowers. If we are able to get this lead, maybe it would be helpful for members of the committee if i just take a minute to walk through this. If you look at the net worth of fannie and freddie today is about 30 billion. About half of that, 15 billion or so is because of a crude interest on mortgages and forbearance. If i can put that in plain english, thats money they cant receive. They cant absorb losses. So, were fannie and freddie to take the loss from covid, they would hit zero. If they become insolvent, that would disrupt mortgage availability. We saw that in 2008. So, what i would emphasize to the committee is ive got a whole list of all bad choices. Ive tried to pick the least bad, and i would be slighted for the committee and congress to offer me better options. As we move forward in the recovery, what changes has covid19 brought to our Housing Market that will kind of stay with us in the future . And which segments of the Housing Market give you the most concern . What are performing the strongest throughout the pandemic, if you could elaborate a little bit, director . Thats a great question. We really do have a twotrack market, if you will. Obviously Single Family sales in many suburban areas have been booming. Prices have been quite strong. On the other hand, you know, urban markets, particularly multifamily, have been hit really hard. Both fannie and freddie have exposure to student housing. Thats under a tremendous amount of stress. Fannie and freddie have exposure to senior housing. Thats under an amount of stress. The commercial and retail market, particularly the Retail Shopping centers are under a complete mess. So, the rental market is extremely stressed today, which is very different from of course the purchase market. It sounds like time was up. I yield back. The gentleladys time has expired. I now recognize the gentleman from california for five minutes. Thank you. I believe that fannie and freddie should continue to be what they are now, government agencies. We tried having them be in this bifurcated position where the upside went to the shareholders and the down side seemed to go and it ended up going to the taxpayers. That is not the right answer. Theyve done very well and have made money for the taxpayer in their current situation. If its not broke, we dont need to fix it. In addition, all the fees were talking about now wouldnt be necessary if we werent gearing up to have these agencies become not private but halfway between private and public, which is not a good place for any agency to be. And i would hope that we would, instead of instituting these new fees, wait until next year when a new congress and hopefully a new administration can look anew as to whether we are going to recreate these entities in the same forum that didnt work last time. And if not, then we dont need the new fees. But ill start on the assumption that the current currently were hellbent to remove these agencies to the semiprivate sector. And im concerned about this half percent fee. Im not sure its necessary, even if we are moving forward privatizing these agencies. But if we do need that amount of money, i hope mr. Calabria that you would, as weve talked about on the phone, look at raising the same amount of capital with a lower fee over a longer period of time because right now we have people who are looking at their home to save them from their financial crisis and their refinancing. And taking a half point from them just makes that harder. I want to focus on apartments because obviously we all aspire to homeownership, or most of us. But a lot of people are renting. Nearly half. And the rents are too damn high. And when the rent is high, the middle class renter cant put together the down payment necessary to become a homeowner. And even worse, poor renters are just one step away from homelessness. So, we look at fannie and freddies multifamily mortgage underwriting programs, and we see a risk a recently proposed capital rule thats not clear as to its sensitive grid based on empirical multifamily Loan Performance data. So, mr. Calabria, can you produce information showing that you have to treat gse loans on multiFamily Properties as quite so risky and quite so in need of higher fees. Congressman, thank you. There was a lot to that question, so if i can touch on a few things. First of all, i very much share your observation that the preexisting model essentially privatized game and socialized loss well, if you could just address the multifamily, then ive got to try to squeeze in one more question. Before i do, i just want to emphasize for the record these are not government agencies, they are private companies. And i have to follow the law whether i think it makes sense or not. To the multifamily question, as perhaps youre aware, the multifamily grids changed very little from the 2018 rule, which is based upon the conservative capitalship theyve been working on for some time. The short answer is happy to figure out what data we can share with your staff, but i want to commit to you and emphasize the multipliers for the multifamily are completely driven by the Historical Data. This is empirical i look forward to you presenting that Historical Data as part of the record of this hearing, and my staff will go through it and try to convince you to look at it in a somewhat different light. I know a number of my colleagues will be asking about the credit Risk Transfer contracts and whether they whether youre taking them into account appropriately and competing the amount of capital that is needed. And i want to shift to the Consumer Credit scores. As part of the c. A. R. E. S. Act passed overwhelmingly, we directed the Credit Rating agencies not to look at accessing forbearance as part of their credit score. Now were told that somehow youre given that information perhaps from the Credit Rating agency, perhaps from another source, that it negatively impacts the homeowner. Are you making use of the very information we said shouldnt be used . I am certainly not. Okay. Well get back to you on the evidence that it is affecting people and of course by law it shouldnt. Absolutely. I yield back. I now recognize i now recognize the gentleman from florida, mr. Posey, for five minutes. Thank you very much, madam chair. Dr. Calabria, i commend you for your leadership, and i wondered if you could tell us how much the federal government has spent on Legal Defense teams in litigation of fannie and freddie decisions made by people like reigns, one of your predecessors, during the run up to the last financial crisis. Congressman, i dont have that information in front of me but happy to try to track down what we have internally and what i can fete from the fcc. Certainly my impression is youre certainly talking millions and millions of dollars. I think it was over 150 million many years ago when i asked that question. But i would greatly appreciate it if you would provide my office with that information at your earliest possible convenience. We would be happy to, sir. Over a decade after the financial crisis, were continuing to deal with the role that the Government Sponsored Enterprises fannie mae and freddie mac played in the meltdown of the entire Financial System. Many continue struggling to understand the lessons and whether we learned the lessons. Our federal government created these gses to overcome and foresee Housing Markets at scale and scope that met our goals for widespread homeownership. With the social and Political Goals, the federal government implicitly promised to provide a backstop to the enterprises while letting them act like private firms and take on risks that the market would not have underwritten. The result was the subprime mortgage crisis, untrusted in the bailout. We should work obviously to prevent that in the future, and i think youre doing a great job of doing just exactly that. The mortgage security zags footprint dominates that activity. Given our social and Political Goals in housing, we could pull out the segment of the market we seek to subsidize and give the job to a smaller as essentially a Government Agency inside hud, then leave the funding and mortgages outside to the market. That arrangement would give the government better regulatory control over underwriting standards and capitalization i believe and streamline governments involvement and give Congress Better oversight. We wouldnt be encouraging market level risk taking in pursuit of backstop mortgages of social and Political Goals and hazard on the grand scale like we did on the runup to the crisis. Can you comment on that concept . I absolutely agree with you. Its very interesting. As you know, despite the perception that im the person privatized in friday, it was president Lyndon Johnson who privatized fannie mae. As you may recall, thats when ginnie mae was created. So, i would very much agree that i think we should fix the situation. We should decide whats private, whats government, and be very clear about those lines. As you know, i came before the Committee Last year and ill encourage you to come forward today. Regarding that, you did propose new rules to capitalize gses. These rules are based on risk waiting like the government rules banking capital. Based on your stress testing results under these rules, what can you tell us about whether the Capital Requirements will cover another financial crisis like we experienced in the 2008 time frame or an even worse crisis . Well, i would say rules are geared at making sure fannie and freddie can survive a 2008 crisis. We have to be modest about the unknowns. We dont know if theres going to be another pandemic. We dont know the implications of Climate Change. Its important to have capital and be modest about what may happen in the future that you dont see coming. Thats why its so important to make sure fannie and freddie have sufficient capital to withstand both situations, if not all. Listen, i thank you very much. My time will expire before i get a chance to have your answer. Ill save us all a little briefing and yield back. Thank you very much. I now recognize the gentleman from georgia, mr. Scott, for five minutes. Thank you, chairwoman. Dr. Calabria, how are you . Im well and hope you are the same. I am. Dr. Calabria, you may recall back in 2010 when we had that financial meltdown, we were able to put together what we called the hardesthit program. You remember that, where we took the 18 states with the highest unemployment and the highest home foreclosure rate, and we were able to help that significantly. It was a very, very successful program. Do you recall that . Dont you agree . I do. The Development Block Grant Program where we provided assistance to a number that created this agency. Exactly. It helped nearly 500,000 homeowners stay in their homes and keep the Financial System. In georgia, it was close to 20,000. So, it had a very good impact. And do you agree with us that this hardesthit was helpful in stabilizing families, stabilizing the real estate market, and actually stabilizing our entire Financial System . Congressman, and first let me recognize that as we all remember georgia was hit particularly hard in the 2008 crisis. So, i do believe that that assistance allowed first was welltargeted, which i think is an important component of any system in this program. Indeed helped stabilize a number of markets. Now, sir calabria, thank you for that answer. Now, in august with this pandemic, we now have 8. 4 million americans who are facing foreclosure. We also have 6. 2 million more homeowners who have entered forbearance. So, what we have done to help here, weve introduced legislation, our committee, and i was able to provide legislation that would give 75 million to be able to to doe same thing that we did. And we were able to save the economy with this. And its so vital. Were talking about 75 million. Its now billion. Im sorry. Not million, but billion dollars. Do you think that this type of program now certainly would have the same positive impact as it had back when we were in 2010 . Theres certainly some potential for that, congressman. And i certainly hope that the two houses in the administration. And certainly worth reminding the committee, im an independent regulator. I certainly dont speak on behalf of the administration or anyone else, but i work for folks that work to come together. I want you to work with us. Its in the h. E. R. O. E. S. Act. We feed had to get that out. We need to understand this pandemic has an even more detrimental impact. Weve got 15 to right now 15 Million People about to be put out. That means the Banking System are not getting their money. We are in a terrible shape. So, i hope that you would make these points known to the senate to get this help to our american people. Now, i want to ask you something else. President trump has put forward this moratorium on evictions. Now, you are a very knowledgeable person, a very respectful one. Dont you know that it is very devious to say, put a moratorium on evictions . How is the land lord going to pay for his end of it . How are the Property Owners that own the property from the renters are going to do that . In other words, how can you have an Eviction Moratorium and stop that without making sure that everybody along the line is covered . If not, you have an implosion of the economy. Can you help us with that . Thank you, congressman. Just a quick reminder that as an independent regulator, im not part of the administration. The gentlemans time has expired. Thank you. Now recognize the gentleman from missouri mr. Luetkemeyer for five minutes. Thank you, madam chair. Mr. Calabria, i would like to start off with a question regarding credit Risk Transfer. I would like to propose gses are properly capitalized and have exit from conservatorship. I want to specifically ask you about the treatment of the credit Risk Transfer crt and the framework. You and i talked and this at length. But it has been one of the biggest successes of conservatorship by reducing the credit risk at the gses. However i propose they would receive little to no capital relief which would significant increase their own routine credit risk exposure while the enterprises remain taxpayer backed. Can you comment on the treatment of crt, and can you commit to revisiting this part of the proposal to ensure a robust crt regime is preserved in the Market Going Forward . Certainly were in a comment period. We had a listening session on crt. Obviously well look at all the comments. Comment period closed two weeks ago. I certainly commit to you that we will examine the issue as we move forward. Yeah, i mean, i you know, if you just look at i was one of the folks who pressed the Flood Insurance folks to be more aggressive in the Reinsurance Market and purchase that to minimize taxpayer risk. Its worked out really well. In my opinion theres still not enough, it be at least it shows it works n. Your situation, to me, i think this is something that we need to be doing. And im not sure by the way your  wind up with minimizing the ability to show that it actually helps capital. Im curious about that. But, maybe you can great question. And two years ago we paid up in the Flood Insurance program. I thought that was a Great Success and great model. I would point the committee to things i wrote in a different position. I think over the course of my career ive established an extremely strong reputation for wanting to get as much risk out of fannie and freddie as possible. That said, certainly were trying to make this data driven. Were certainly open for other parameters and ways to do this. I would note that this role, while its not as generous to crt as the 2018 proposal, this rule is far more generous in the banking treatment of crt. We fully expect crt to continue to operate. Its still in the conservatives scorecards, for instance. I want to minimize as much impact as possible. But i do think the distinguishing principle is there were situations under the 2018 rule in which crt was given a dollar for dollar. Again we were in a situation in 2018 where there was no expectation of conservatorship. So, perhaps overincentivising that was appropriate. Going forward, we certainly know that a dollar of crt which only provides a dollar against losses on a reference pool is not the same on the Balance Sheet which covers any losses. I would think we would all agree theyre not one to one. We dont think its zero either. So, the relief is somewhere in the middle. I certainly commit to you with congressman to work with you and your office to figure out where that number is. Well, thank you. I certainly want to work with you on that, director. With regards to the ragz ising fees, its kind of interesting the chairwoman a while ago who i spent over a year trying to convince that we needed to have a hearing on cecil, which we now know is exacerbating or could exacerbate the situation here if it would be implemented and its now been delayed. And now shes talking about the very same principle of that of cecil causing people to not be able to access credit. But its not the same thing this time around because that was to build up reserves. This is to actually youre forced to cover costs, which is what youre trying to do. Is that not correct . So, theres a number of different elements to this. Certainly we implemented cecil at fannie and freddie in the First Quarter and it did reflect in what would otherwise be requirement to cover the expenses via income is something that comes out of the gses charter. But its different but certainly the way all the things interact is whats essentially driving the problem. Whats the percentage of refinancing of the longs versus the new longs youre covering right now . The gentlemans time has expired. Its just a quick question, madam chair, just give me the percentages. Go right ahead. Go aright ahead. About 60 of new loan volume is refinanced. Okay. Thank you. Thank you very much. I now recognize the gentleman from new york, mr. Meeks, for five minutes. Mr. Meeks, youre recognized for five minutes. Thank you, madam chair. And thank you for holding this important hearing. During the Great Recession that struck in 2008, the Housing Market collapsed and wealth across the country had been built up over the course of generations evaporated. Families saw their home values go under water, owing more on mortgages their homes were worth, and banks in peril foreclosed across the country. The black homeownership rate plummeted from just under 50 in the mid2000s to just above 40 over the course of a decade. Certain unscrupulous lender wrs targeting communities of color with tricky balloon mortgages that the lenders knew were junk, but they were able to get the lone off of their books and sell it to other Financial Institutions while pocketing the initial fees. When the bubble popped, banks had a bunch of bad debt on their hands and black and brown families were out of homes. Our country had had been decimated by a pandemic and weve lost nearly 200,000 people on this terrible virus. The Unemployment Rate briefly spiked to levels not seen since the depression era and remains over 8 . And some of our wonderful Small Businesses around this country have shut their doors probably forever. And we have a Public Health crisis on our hands and we have an economic crisis on our hands. But crucially we do not have a financial crisis or a housing crisis on our hands yet. Its working in my estimation and bank versus the capital they need. Instead of dragging the economy down, the Housing Market is propping it up actually. And homeownership rates have gone up during the pandemic and mortgage Interest Rates are at an alltime low. So, this brings me to my question, mr. Director. I cannot understand i just cant fathom why you would impose a sizable fee on home borrowers and mortgage refinances at this time. Youre talking about a fee which is functionally a tax that would take thousands of dollars out of the pocket from middle class borrowers. For people in my district in queens, for example, the cost will easily amount to more than 2,000 for a borrowers. Thats not a small fee for me. Thats a paycheck. Can you explain why a fee thats in essence a tax at this time . Respectfully, congressman, kong thats what were doing at all if i can take a moment to explain this. First of all, i think we are facing a housing crisis for renters today. And i think were facing a housing crisis for those who have lost their jobs. And again, we at fhfa have directed fannie and freddie provide assistance. Ill remind you there were 200,000 families facing foreclosure in march when covid hit. Weve covered their property taxes for the last six months. Im going to cover their property taxes for the next three, six months. Were paying to keep these families in their homes, and for these families, this is a housing crisis. This is an employment crisis. If we allow fannie and freddie to fail, well also have a financial crisis. Im going to push back on this fee amounts to about 5 basis points annually on the low. Again, i want to emphasize that i think higher income house holds and if i can give some demographic data. The typical refinanced house hold in the Second Quarter had an income of about 110,000 whereas a typical income of a borrower in forbearance who loses their job and their job is only 80,000, this committee may not have committed to families in their home. This is necessary to keep people in their homes. So, thats why this committee under the leadership of chairman waters put in a h. E. R. O. E. S. Act so we could prevent a housing crises and put in another 90 billion for those who are behind on their mortgage because individuals have lost a lot of their incomes. So, we this committee, under the guidance and leadership of this chairwoman is trying to make sure we prevent a housing crisis. Thats why weve been trying to get something through the senate so we can make sure that happens. At the same time, its communities like mine who are trying to who are still trying to get back on their feet as a result of the crises, and were trying to get an urged individual to go now is the time for them to buy a house so that they can own a house, which will be an appreciating asset, as opposed to buying a car. So, now youre taking the incentive and others who are struggling because somebody is saying people that owns owns now and needs to refinance in time to figure out. They are now struggling and this would be, in effect, a tax on them. And i think its at the wrong time. I yield back my taeime. I heard its out. I recognize the gentleman from michigan, mr. Huizenga for five minutes. Thank you. Glad youre able to be with us, dr. Calabria. My colleague mr. Luetkemeyer hit on the crts, credit Risk Transfers. You had a bit of a discussion on that. I am curious though i mean obviously the pandemic has been disruptive to various financial markets. And crt relies on those private Capital Markets for its funding. Are investors and reinsurers still buying crt deals . So, we saw in march and april the crt market basically shut down. Ill also note for the committee that march and april, we had a number of investors with the expectation fannie and freddie would repurchase their crt in a stress environment which undercuts the entire purpose of crt. But over time freddie has gone to a deal since then so were starting to see the crt market open up. As you know, the Capital Markets today are much calmer than they were that third week of march. Yes. All right. Lets talk a little bit about the capital rule and multifamily situation. As you may recall, i one year before the committee back in last october, i had asked a question about what Economic Analysis fhfa did to study the impact of multifamily Capital Requirements on multifamily Housing Market. You said you could not go into detail to answer the question since fhfa was in another Enterprise Capital rule making process. That period ended august 31st, so ill ask the question again but in the context of based on the most recent rule making. What Economic Analysis did you perform to study the impact of the multifamily Capital Requirements on the secondary and tertiary markets and are you able to publish that . Since some of the internal analysis relies on confidential data, let me see what you can release publicly without releasing confidential data. I think an important point to make on this is that this proposal on the multifamily side is extremely similar to the 2018 proposal. In the 2018 proposal, its based on thethe 2018 proposal was basn the conservative capital framework for a number of years. And so to the extent that the pricing their multi family book off that. Theyre basically pricing as if theyre already on the role, with the largest players in the market during the last several years theyve gone from 20 to 40 of the multi family. I think the last thing for all intents and purposes been pricing as if this rule were already in place. Shows that theyve been quite competitive and we certainly hear regularly from other markets such as Insurance Companies, that they have a very hard time competing on price. I would argue that the data is fairly clear the, experiences fairly clear. Heavily emphasize were making progress were going to hear from everybody we are going to take that into consideration so its likely to change. I think the evidence is pretty clear that theyve been valuable to write a successful multi Family Business in these parameters. Youre saying that fhfa provided basically has the analysis to demonstrate the capital proposals with historical reappearance and actual reality. I quickly as i have a little bit of time here left i want to talk about capital multi family that kind of space. It seems that multi family is still doing much higher capital standard than Single Family. Despite what i think is clear and welldocumented Historical Data demonstrating multi family performance was actually superior. When applying the capital standards in the similar as opposed to multi family, to realize losses. The worst historical vantage Single Family capital is half the two one 2007 vantage loss. While multi family is charged five times worse vintage loss. Why is that . It really depends on the timeframe you look at, in 2008 crisis multi family came with as much if you look at the early eighties multi family did worse. And of course in this current environment, both my tall family is i want to emphasize the grids are driven by historical experience no ones changing the map the map as what the map is, and were happy to do that. I also just think its important to recognize we cant simply just take the 2008 experience and assume that every cycle for multifamily is going to perform similarly. I believe my time has expired. Your time has expired. I now recognize the gentleman from texas, mr. Green, for five minutes. Thank you very much madam chair. I thank the witness for appearing, i also think the staff for the outstanding job theyre doing in providing intelligence. Mister director youve indicated that there is a housing crisis for renters. You have so indicating i assume that youre talking about 30 to 40 Million People, who have gone through eviction throughout the end of the year. I assume that you are talking about the 1. 5 million renters in the same survey who reported that theyve not paid their previous rental payment. Im assuming youre talking about the 40 of people who have not made their august rent, due to the pandemic. I assume that all of these things are correct. And my correct in assuming these things mister director . Congressman i would say there is very clearly a stress about renters today. And thats where the greatest housing remains. I would also call your attention, two words of dr. King. He reminded us that life is inaudible impacts one direct, one direct impacts all in direct. This inability to pay rent, while its a direct impact on the renter. It also has the impact on the person who happens to be called a landlord, who may has a mortgage that needs to be paid. Then that has an impact on the mortgage holder, so theres a chain of events that take place when the renter cannot make the rental payment. Do you agree . Absolutely yes. And so agreeing, then it becomes a paramount importance that we not allow the chain to get beyond the renter. If the rent is paid, then the landlord, who happens to be a mortgage point is paid. The Mortgage Company gets paid. I believe that paying the rent is of paramount importance. Ultimately dont have the landlord, and landlords still has bills to pay, and is depending upon the rent. So the rent must be paid. And this is why, under the leadership of honorable theres 100 billion dollars for the heroes act, that has passed the house mister director. 100 billion dollars for renters who assist them. But in so doing it will assist a landlord as well as the Mortgage Company. Remember, Inescapable Network of mutuality. This mutuality would also afford us the opportunity to maintain a stronger economy. It all comes together. Theres also in the heroes act, a 75 billion dollars to help mortgage holders. This is significant money, probably is the means by which we can salvage what may become an economic downturn that may exceed the last Great Recession. So my question to you is simply this. Isnt it true that we have to pay the rent so that we can take care of all the other persons in this chain . Otherwise all we are doing is delaying the delaying the inevitable. Before answering the question directly. Just my time is of the essence. Why dont you start with answering my question and then will see if we get to the other answer. We are providing full variance to multifamily renters. We do have to deal with the rental situation. I mentioned to you this in this fashion. You said earlier, and i made a note of it, the committee had not provided a penny to help you with the situation. Let me just ask you to rethink that for a moment, in the sense. The committee under the honorable leadership of maxime, has passed legislation to deal with paying the rent. Pay the mortgages, the house has voted on the legislation provided by the honorable maxime worn. It is passed the house the truth is that the house has done its part. Its the senate that wont take up the houses legislation. Im not trying to create an argument i want you to have some degree of respect for what the committee had done, and how it has met its mandate for the needs of the american people. I talked to the people who engaged in this business, theyre called realtors, they help us in various ways. The retailers tell me, theyre very much concerned about not only the run but the mortgages. This committee is dealing with the issue with the realtors can you agree that way we have to pay the rent so that we can pay the mortgage . Your final response, degree we have to pay the rent so that we can pay the mortgages. I agree with all these issues, i have to deal with issues. And i cant wait for the houses to come to agreement. Respectfully, i urge everyone to work together. His time has expired. Id like to advise members that both votes have been called on the floor. We will continue with the hearing, for those members who have spoken we want to go and take votes while we continue. Thank you very much. I now recognize the gentleman from ohio,. And thank you madam chair appreciate you holding this hearing, welcome. Since you brought it up in answer to a couple of other couple members questions. I want to give you some time to expand upon it, you said you chose in your market finance fee, the least better option you can find. I know you dont want to lobby congress, what other options could Congress Give you . If members of congress dont like the adverse finance fee. Since this fee is resulting from costs that arise out of the cares act, that are on funded. Congress could come in and funded at, im not asking for a penny because i think we at this agency, can make this work without any taxpayer assistance. So the question is, were congress to provide taxpayer assistance, what would that number be. What. You said you want to congressional financing how much . I think it would have to be in the neighborhood of about ten billion that would make sure that we would not have to recess any fees. I certainly what i emphasize, thats heavy on the economy and i understand you are not asking for it. I just wanted to understand, if congress were to do something to avoid that fee. Because none of us want to go bankrupt. And frankly the option, if you do nothing is that company has no reserves and is on the verge of insolvency. Is that correct . That is correct, again, we are congress to provide the funding to cover that whole, and again as you recognize im not requesting anything. We think we can make this work on our own. I want to be able to give congress the opportunity to find other solutions. I appreciate you delaying the implementation through december to give congress time. To decide what we want to do, i think thats really important. I want to move on to the capital role. I know that mr. Luke talked a lot about credit restraints, in sort of ask you about those. One of the other things that doesnt get credit is and my coverage thats above the original level. It doesnt seem to get credit in your capital rules. Im curious, if you can explain to us why that doesnt get much credit in your capital roles. Where we were trying to basis on the Bank Framework, and the Bank Framework doesnt give credit. But again i would say, we do factor in the ultimate losses, so if we think there is a degree to which credit. But im happy to provide a formal analysis for the record. Id like to note for the record, that the gfs ease are not banks, and while i understand the bank capital rules as far as the level of capital, its okay. I dont think you need to follow the bain capital rules up and down, and frankly credit restrains for, while i understand may not be dollar per dollar, or a very important piece of managing risk. The other thing id like to add about credit Risk Transfers, because you and i have had this conversation privately. Its going to take years to the gses to be fully capitalized. And credit restrains can infuse some amount of shock absorber, were less capital is needed immediately. Without the Capital Markets problems that gses will have that they tried to go to school full capitalization too quickly. I guess i like to put in a plug for how important credit restraints are during the transition. I also dont think they play a role in the future of the gses because they would require less total capital to have still the taxpayers off the hooks. I guess im not really asking you to comment on that, because i know you already commented on it with mr. Loop. If you can take another look at that you could just tell us you might take another look at both on i coverage and credit restraints. If you want to follow up on a fuller analysis on both of those to my office that be great. Absolutely we will do, let me commit to that along as the gses or can we will be requiring them to engage in some crtc transactions. Since you bring that up, fanny has stopped credit restraints first. Im curious, if youre going to encourage them to restart them . We certainly are we have not stopped under my direction let me be clear about that. Okay i know my time is wrapping up, im going to follow up with some questions and writing to you. Thanks for being here thanks for your leadership. Thank you. I yield back. Thank you very much i now recognize the gentleman from missouri, for five minutes. Mr. Cleaver . I now recognize the gentleman from missouri missouri, mr. Cleaver . On mute im sorry madam chair im sorry. Are you familiar with Norman Whitfield and baron strong . Not off the top of my head. I didnt expect you to be, i consider myself somewhat of an amateur historian all motown. They were big songwriters, and i wrote a bunch of hits. One of them in 1970 was called ball of confusion. I mention it because i want to talk about certain things real fast. I hope you can deal with them. One of them, cant happen just this past week inaudible talk to me about an issue that several of the members have talked about earlier. And that is, with the landlords. Contrary to what people believe, many of the landlords, most of them, our small landlords. There people who saved money and bought a duplex, or they bought some kind of compartment building and theyre trying to make a little money on it. And so, theyre in trouble. And theyre going to be in greater trouble if we cant do anything. How are they going to do repairs and so forth is there something that you can do as it relates to these landlords . Let me first of all 100 agree with you on the problem. The small landlords are under tremendous stress. If that small landlord has a mortgage that fanny and freddy hold, we can all forbearance during however time theyre under stress. Weve been doing this for three months at a time. We can provide essentially a bridge if you will if if there are funding for any borrow, then we dont have a direct relationship with them. I appreciate that im going to make sure ill get some information about it. Im trying to rush. The second issue is, last week one of the bankers in my district, and a small rural bank, looked into the newspaper and saw a story in the wall street journal about freddy and finney adding this one half of 1 fee, to our loans beginning september since september 1st. When they found that out, it was the day after it was done. Which means, the small banks, they have to go out and pay for somebody to come in and try to undo and redo loans. I just think thats a bit much to drop on any bank. But certainly, the small banks in a little town like marshall, missouri, with 12,000 people. Can that be delayed . Do you have the capacity . We will delay that,. Madam chair thank you, my work is done here today. Thank you congressman. Thank you very much mister cleaver. I now recognize mr. From kentucky. Mr. Thank you for being here today and for your testimony and your work. At fhfa. As you may know, the democrat build, the heroes act, called for an additional hundred billion dollars and rental assistance i want to underscore the work that you have already done in this area at fhfa. Keeping renters and their homes throughout this pandemic as you noted in your testimony fhfa multifamily forbearance programs from the ground up during the crisis. And i applaud your efforts. Tenets residing in multi Family Properties with federally backed loans and forbearance may not be evicted on august six you i announced protection including rent payment flexibility and a prohibition of late fees. Note in your testimony, renters and approximately 170,000 rental units and multi Family Housing are eligible for evolution protection. And fhfa created an online tool that allows tenants to know their options. My question is, to what extent are renters utilizing this online look of tool that you created to see if they qualify for fhfa renters Systems Program . Thank you for that question. We need to go back and determine the number of unique hits. We can find out how many people have looked. Thanks for sharing that and again, i think that the actions that you have taken reduce the need for congress to act maybe congress does need to act, but certainly youve done a good job to help renters in this pandemic. I also want to echo my colleague congressman cyber thoughts on crtc. Unfortunately we have heard from the proposed gst capital framework doesnt account for the value of crt there is a risk of disincentivizing private market participation. Do you agree with that . Do you disagree with that . I would disagree a blanket statement. I think its a lesson issue there is some inaudible . We certainly count for it. Are we as generous to someone that we should be. Well thanks and my colleague congressman cyber said it very well, i do believe its a very valuable to our all use attempt to recap of the gses. In december 2019, f sock in ounce it will take an activities based approach rather than it entities based approach when identify potential systemic risks. During the july 2020 of stock meeting, if salk said it will begin that review posed by the secondary market you issued a statement in support of that decision. What observations or suggestions will you bring to f sock on how to ensure the safety and soundness of the gses. Particularly considering the market during the pandemic economic challengers . I would say i think you should be more understanding deliberations with the we have been in conversations with other members of f sock but all these issues im very hopeful they will be released from fsoc on this issue soon. Do you anticipate any adjustments given the pandemic . Or the post pandemic market. Adjustments to propose gses capital . I think were gonna stay the course because one of the reasons to essentially account for anna quantifiable risk. And at this point why like and of course we hope we dont get another pandemic. The chance to certainly not zero but its certainly hard to qualify in the capital world. I think its so important that we have numbers we have that go beyond measure credit risk. Because there are so many our cant abound unaccountable factors. Like the pandemic we simply at this point dont have the data to properly model and qualify it. Director thanks for your Service Thanks for your work especially during these challenging times, madam chairwoman all yield back. I now recognize the gentleman from connecticut, for five minutes. I turned the gavel and over to mr. Chairman. Are you and muted . Mr. Hines is not available, i will now recognize mr. Casten. The gentleman from illinois for five minutes. Mister casten are you and muted . Let us move on, thank you for your patience Mark Calabria im going to call a five minute recess. Thank you very much. We had to have a five minute recess, we will now move on. Madam chair . We need a five minute recess we have two republicans waiting in line. They were perhaps unavailable. We had an emergency thank you. I hope everyones okay, it was not a health emergency, but i hope everything is okay. Everything is okay now. Thank you. I will now recognize the gentleman from texas for five minutes. Thank you for coming before us today, in this virtual setting. As many as my republican colleagues i miss today i appreciate the fhfa has been one of the most proactive agencies throughout this covid19 pandemic. That could early march before we invested the cares act, and you had already suspended infections where people would federally backed mortgages. I think these were very productive steps to take when there was such uncertainty surrounding this virus. Without being, said im starting to worry about the length that some of these prohibitions have been in effect. In texas where i come from alone, there are 1. 7 million Single Family rental homes. The majority of these are owned by landlords, for many of actions and allowing people to go without paying rent for an extended period. We are shifting the burden from the renter from the landlord. The underlying problem is not being fixed someone down the line is not being paid, was the rightfully owed. Most of these landlords are not Massive Companies that are sitting on millions of dollars to cover the cost of owning property without any rent. A stop in rental income does not mean a landlord selling does not need to pay property taxes. It remains unfair expenses dont go away for the mortgage payments and theyre no longer owed every month. So im very concerned the second Third Quarter effect can alter milley incomplete the gsts balance fee if a great deal of mortgage payments are no longer to be paid. So mister director again thank you for being with us today, id like to get your thoughts on if you think that a National Eviction could introduce introduce safety and soundness issues for the housing system. In other words, what problems are we creating for the apartment owners, who have their cash flow interrupted . Due to nonpayment of rent. Congressman thank you for that question, for most to let me really emphasize this is particularly the case for any landlords that are listening. If you have a fee with and finding in loan you are eligible forbearance as a landlord at this time. Id which we can give you some relief if your tenants are not paying. I really do want to emphasize, who and landlords to have a loan out fretting in phone. I do appreciate also that the four barbers delays of the inevitable mortgage payments i do want to make sure within the finding in freddy space people are aware of what their options are and dealing with the stress. On the broader question of we certainly are taking a look at the Mortgage Market as its been mentioned you centrally of a two track Housing Market. We have extremely healthy Single Family market which we unfortunately have a lot of stress on the rental side. We are concerned i am concerned that continued stress of the multi family side and that being a threat to were seeing that under distress but hopefully at this point its not so to be large to be systemic its an issue we continue to watch. Thank you and august the fhfa we propose that our capital framework for Freddie Fannie, this is an important step to get these enterprises out of the government control and on sound financial footing for the future. Which weve talked about. I want to thank this new framework for the step in the right direction i was hoping you would utilize the private sector and the benefits of credit Risk Transfers to a great extent. The private sector is willing and able to shield taxpayers froms potential losses and reduce volatility. If the Housing Market take a turn for the worse. Mister director, can you discuss why the Capital Credit crtc and the new proposal was reduced for the enterprises Capital Requirements . Let me emphasize up crt under the new rule is more generous than the bank treatment. A change from 2018 was the 2018 there was no perception no intention option of raising outside capital. So was appropriate in 2018 to and sent a five there was no additional capital. But go before in the world where we expect to be actually we see that crt power graded roll and we do want to emphasize that we see a role for crtc in the future. I dont see that going away under some circumstances in the 2018 world, a dollar capital relief because crt his only tie to it specific reference pool. Its not usable against all losses. Its one obvious that a dollar of crt is not your question here is right whats the right calibration we have a listening session last week will continue to talk with people work with that element. Thank you i yield my time. Thank you i will turn to gavel over to mr. Chairman and mr. Hill will be next, thank you. Thank you madam chair. Gentleman from arkansas is recognized. Thank you mister chairman and madam chairman, thank you for the opportunity to be with director Mark Calabria today on this timely hearing about how fhfa and Fannie Freddie are handling the pandemic. In trying to help our families across this country that are hurting. From the coronavirus. Mr. Mark calabria, could you just lets have a little fact check could you tell me what freddie mac and fannie mae market share is as you measure it . Say for 2019 versus 2008. It certainly on the multi family side to just over 40 , 42 of the market in 2019 i believe on the Single Family side close to about 60 of the market if i recall correctly. Approximately obviously on both those metrics they were much larger than they were in 2018. When they were less than 50 of the markers certainly in Single Family. Close to 40 . I believe the multi family build back in 2008 was much closer to say 20 . Let me double check the numbers for the record off the top of my head for my recollection. So theyve increased market share in the past few years is that right . Absolutely without a doubt. And to mr. Chairmans per order, the government sponsored enterprise Fannie Mae Freddie mac are they private corporations . By statue the private corporations. And they were putting to conservatorship when . They were put into conservatorship and september 2008. Has the federal government taken any steps to take them out of conservatorship since that time . I have taken steps consistent with my obligations under the statute, that they potentially could acts of conservatorship adds supplied under the law. Would you consider that more to the state . Theyre in conservatorship right. They search they solely exist because we have we have a 250 billion dollar line of credit to them is that right . I think its an open legal question legally not wards of the state so we should of course essentially administrative. Lots of companies go into support and dont become words of the state. Judges are employees of the state, i dont think see simply being a conservatorship the number of court cases specifically almost and i think youre the lawyer not me. My understanding is the litigation in this issue thats built on whether the conservatorship is let me move on. Im not a lawyer so i dont want to lawyers answer but thank you very much. I have one of my family i married to her. Did this day the federal Government Order these companies to take certain actions to help our families during the pandemic . Yes. And youve talked this morning about the cost about what did you say the approximate cost of these measures . Six to 15 billion a number of private institutions such as banks took some forbearance action. I believe all the actions that we have taken a really what any institution could do public or private. So since the state order these two companies that are in bankruptcys conservatorship to this. You believe congress should make up that difference instead are sticking our families with these fees is that a Fair Assessment . I leave up to congress to decide how to regulate those fees thats a better question for this body timed so rather than me. On the subject of your capital rule what is the leverage of the gst is right now . They are 250 to one. Whats your proposed equitable rule suggesting the leverage the . Five to one. Which i will notice to as larger largest banks. Lets clarify some in no way the capital rule require five bubbles of capital. But you believe that 25 times leverage which is really an agency type leverage ratio. The Brokerage Companies before they were all forced to become banks, and the crisis, many of them operated about 25,000 leverage while the book banks were closer to ten. They were an agency business, not a Principal Risk business. The gsts taking Principal Risk . They are taking Principal Risk. So the tentime leverage ratio might be more appropriate given that mix of business . I do believe there is an argument for that. Thank you i appreciate the time and madam chair and mister chair, i yield back thank you. Im an optimist and believe we will over the next year make Fannie Mae Freddie mac government agencies. The pessimistic is to whether we can continue hearing right now, because im being interrupted by staff. They would like a five minute recess thats what im doing. Wanted us to me forward, it is not my pleasure to recognize the gentleman from illinois. Thank you all may and visible . Yes you. Are okay director Mark Calabria i want to thank you for what i regard is a very confident execution of a very misguided concept. Which is doing us towards the eventual recapitalization, of these entities. Which i dont thing was ever really the intention when this was passed more than a decade ago now. But thats what as you pointed out, thats what you inherited. Now i also want to concur you respect for what was done in an emergency basis here. To deal with the covid crisis, the relief youve been able to provide. You can go through the list of your announcement of limit the number of payment services, the eviction, all the sort of thing. My question though, do you think the gsa is couldve provided this much relief, and this quickly, if they were in fact fully private companies out of conservatorship. Of primary duty to make shareholder profits. What questions should be made when we try to think about what charter may or may not be released on . First congressman i would say, if these enterprises were out, we would have bleeding capital sandals that provided even more relief without in danger. I believe the statue of requirements to i certainly would be delighted if congress to clarify the situation. Of what the enterprises should be. I think thats certainly an appropriate thing for the committee to address. I worry specifically about their mission, which is not the natural response to private entities. Second general question, having to do with the implementation of the capital rule. When the capital rule is implemented, theres going to be a fraction of a trillion dollars retain capital in fanny and freddy. Have you done the analysis, theres going to be significant market rebalancing, the market share will change and so on. There will be for example when gps are ultimately a big fraction borne by the cost of homeownership, were people in renters longer. The rents will go up, they also maybe slightly better off. When you rebalance the entire market, to reflect the impact of your capital. Where is the capital come from, and who are the winners and losers . Have you done that analysis of third parties . First of all congressman, theres absolutely nothing in the rule that requires finding in freddy to change the pricing. In a ways the rule meant to drop market shares, or market structure. How do you anticipate that they will raise the money to generate that much capital . In fact, could they have lowered the gps or something if the rule was not in place . First of all, we expect them to continue to pertain earnings. Were hopeful at some point, we are hopeful about the treasury will eventually sell off its share to keep the taxpayer investment. Again, they have earnings they continue to have earnings, that doesnt mean theyre necessarily it ultimately has to be their decision. I share your observations as well, about the tension under the nature of the status of these companies. Greatly encourage congress to resolve the started. Its a conflicted status as you say. Weve been living with for a long time. I would be interested if you had a baseline implementation of the recap of delay station. The way you describe it sounds like the looters largely would be the taxpayers who will no longer be getting the earnings sweep, is that correct . Congressman, i think the taxpayer is better off because we have an infusion of capital to protect the taxpayer from financial stability. But the retained earnings would come as you described it, largely by an earnings sweep that wont happen at least to the same degree anymore. The vote of capitol rays would be expected to be into a Public Offering, which would allow treasury to exercise its warned so it would be a good investment. The Public Offering is the only way the treasury could have a very sizeable investment on that. What is your attitude on the tail risk, you have to hold 100 capital not to have a scenario where you actually where there isnt enough capital and the government has to step in. You really envisage a future where that would not be a possibility . Theres always some possibility, whether its our largest bat or where there is finding in freddy that protects taxpayers. I recognize title to, i dont think anybody believes that our largest banks on how some sort of an plied backing. Right, what is missing there is a way to catch the entire industry to recapitalize when that happens. I hear a gavel, and my time has expired thank you. We now move on to mr. Scott tipton from colorado. Thank you mister chairman, doctor collaborative thank you i want to thank you for all of the hard work that youre doing. I did want to have a followup question in regards to inaudible all paraphrase you commented that you had a lot of bad choices, effectively try to make them to do the least amount of damage. Do you have some recommendations made before this committee, in terms of what tools you might really need to be able to do your job i think being able to getting Fannie Freddie out of conservative ship. One admiral mobile goals. What tools would statutory movements reduce would you say be beneficial to you and your mission . Thank you congressman great question i would say foremost among those Bank Regulators who have authorities on services act to examines third parties that we do not. For instance i have no authority to examine all of the non Bank Services we service fanny freddy loans. Just like the banks fried finding unfriendly are moving to the cloud. Which has unlike the Bank Regulators to go when in have this on web services and have that name protected appropriately. First of all having thirdparty exam similar to that under the quebec the Bank Services act would be absolutely crucial. Thats for most. I would say have an decisional for your return really to what benefits consumers most is competition. I dont know what you really think, benefits. The charter authorities so i could agree more competition to this marketplace. I think ultimately what would would be ultimately. I appreciate your thoughts on that, i think weve proven in this country competition actually works. And to be able to have that competitiveness, listening to a couple of my colleagues i dont want to misinterpret their comments, but it seems some are comfortable having conservatives ship over finding in freddy. Would you may be like to explain why its important for the american taxpayer for the companies themselves . I really want to emphasize a statutory foam work is that youve either face are you going into receivership. The longest ever bank conservatorship was 18 months this simply is not the statutory framework i know its 1tatutory framework i know its my objective. To get them out of conservatorship, im just carrying out my objective. My objective here more importantly the process to get them out of conservatorship is the same process that we take to make them say can sound. Dealing with supervisory concerns and change the culture at these companies the corporate citizens. All of these things all the things you want to do to make sure youre safe and sound. Youve taken some admirable steps to be able to build that capital prior to covid19 i dont know if youve done any analysis in terms of how do you not made those efforts, what did the impacts have been . Thats a great question. All reminded committee that when i walked in the door april of 2019 Freddie Fannie leverage 1000 to one. No institution escapes trouble from 1000 to one leverage. We were able to in conjunction with senator mnuchin, the six milling they had combine we were able to get them up to about 20 billion. We were able to take some losses even if we had not been able we would have been forced to raise these adverse markets back in the spring. Which i think wouldve been the worst time. If we had been able to put more capital we could go this further. The process of having built capital is appropriate to try and bring some safety to Fannie Freddie. Apologize for the buzzer. I guess following up a little bit, since pandemic have your views on the capitalization changed at all . Just all over the place . If anything the pandemic has really proven how important it is to have an out of court capital. Also in not taking that solely risk station to solely based on credit risk that you can measure going back. Pandemic again thoughts about Climate Change and such really emphasize we need to have an adequate capital that protects us from the unknown. Thank you with that i yield back mister chairman. I appreciate it. Thank you recognize the gentle lady from new york thank you doctor. Thank you so much chairman. And thank you for your Service Doctor Mark Calabria. You stated that one of your Top Priorities is to release Freddie Fannie from conservatorship. I think we all agree that we can keep Fannie Freddie and conservatorship forever. We want to make sure they have enough capital, and that they write regulatory in place before we release them. I think we need to be very cautious about this. Im very concerned that the administration is going to russia number of major decisions before the end of the year. And certainly before dawn in january 20th. I think rushing to release Fannie Freddie before the end of the year would be catastrophic. With that in mind, can you commit that you will not under any circumstances release Fannie Freddie from conservatorship before the end of the year . I very much for your concerns i feel this vision of scenario would be ready to leave before the end of the year. I take that as a yes . Youve also stated that you hope to have ipos for fanny and freddy in 2021 or 2022 even before they are released from conservatorship. So will you also commit that you will not rush an ipo of either fanny or freddy before the end of the year . I promise you absolutely this is not calendar dependent. This is process dependent. Under normal circumstances will i release them if they were not ready to be released. I can absolutely commit that to you. As you know one of the key missions of fanny and freddy is to increase access to credit for underserved communities. However as chairwoman and congresswoman touched upon earlier, some commentators have argued that your propose capital rule will harm access to credit for underserved communities by increasing costs for the very borrowers they were targeted to help. Given these concerns, how do you justify a capital role that will have a disproportionate impact on underserved borrowers . I appreciate the question we have yet to see evidence of the proper would help in this proportion, in fact we believe it would disproportionately benefit low rent communities. Avoid financial crises as weve repeatedly its a low income minority communities to pay the price for financial credit for this capital is meant to prevent financial crises. Has fhfa bother to conduct an analysis of how this rule might impact, black, latino and underserved borrowed in communities . Their words a analysis done in regard to the 2018 rule, weve made a number of changes from the reproposal. For instance we which disproportionately impacted African American women, we also moved the penalty that was on small borough lending. We made a number of changes in 2018 proposal that the requested us to do as well as in response to the fair lending analysis. Four days after the National Emergency was declared, i read a letter with more than 100 of my colleagues requesting that your agency immediately institute a nationwide moratorium on all four closures from gse backed mortgages. The very next day fhfa announced the directive the gst to suspend for foreclosures and evictions. At the end of july i requested the fhfa do the smore tory games again to the end of 2020. At the end of august the fhfa did just that. The gsez plummeted these moratoriums and other forbearance programs billions were at risk of losing their homes, the private Mortgage Markets have struggled to do the same. Do you think that the gses couldve provided this relief . As quickly or fully private companies out of conservatory ship . I believe they do have provided more quickly. More supportive, if they remain the capital to even more losses i do think its a fully capitalize private companies which are private companies today. I believe they had capital they could move far more quickly. Mr. Davidson is recognized for five minutes. Thank you all for coordinating this meeting. Director collaborative thank you for your work really to keep our fhfa duties and responsibilities of that first and foremost. Just for bringing the great experience you have into a as you can tell from this hearing sometime very thankless job so i appreciate it. A lot of the things that you oversee, are things that the private sector market, the the free market, free market would wouldnt actually not actually create some of these products create some of these right. I products. Guess im i guess curious, if you can list im curious if you a few of those things could list a few of those that you do that the things that you federal government has do that the federal decided you government has to sign know. We really. We really think its important to think its important have these to have these programs could you programs highlight some of those. Can you programs that you highlight some of those programs oversee . That you oversee . Thats a great good question congressman. Question im not sure on a daily basis i decided. I will i will try to do my try to do best for you. My best i. Would probably i would probably create two broad categories, create to block categories. One i would say, i would say on and onehanders an extremely large one hand amount of business that is extremely high there quality is an amount. The number of business of loans extremely high that Fannie Freddie quality will be less than rested 70 , where 70 theyre substantial down payments. With substantial down very low that, payments any lender would feel comfortable any lender would feel making is very is significant i very significant would maybe say and i its as much as would maybe say perhaps its perhaps 80 of the as much as 80 fannie and freddie business. But its probably another probably another 15 of the 15 of their business that under most business that under oops in the most hermes of the private sector would do, but i would say that, private sector we do maybe again i want to. Emphasize this. I want to real approximation. Emphasize its a real approximation probably around. Probably 5 around 5 unless of your or less business, is this of the of course business of course otherwise not counting fha, but go to fha. This is business that this most private probably say that lenders would probably this would be say that this is or else they would simply too risky or else they would have to have the price considerably higher rise considerably higher whether we want to explicitly subsidize kind of alone products most of what they do the private sector the rest of the private sector would be. Thats without naming the exact programs. Much of the portfolio would surely be able to be priced in a sense that the market could provide a price. I think its really important that that parts able to reenter the market and to be able to do that is the transfer is incredibly important whether you are talking in any of the four main sectors of it but it is certainly a big portion of comes under fhfa and so when we think about how important that is the structure credit market is a massive part of how he kept nominal rates low for the vast majority of bars. The yield is able to have if the vast majority of things in a structured credit market are really things that the market understands half priced would price, when you pass that on to the secondary market than the market knows how to uprights that unifies a standalone vehicle or market risks my concern us, you refer to it as 5 of the portfolio, that the market really wouldnt do im not debating whether the government should or should not do those things, but my concern is they should really not enter into the credit restraints for the pool and be considered market risk. A lot of people know its in there so youve got a cover for it and diluted with other things, why would you put poison into an otherwise healthy food chain . How can you protect . Whats your thought on how to protect the market from non market risk in that sense . I think the crtc market has been so helpful there actually are investors and certainly for very long time when in the arguments nobody else would take mortgage credit rates i think the way that the g8 agencies have traditionally to your point is that theyve had rather high what you call attachment points. Until you hit the attachment points if you take 5 of the pool structure of the pool generally leads that 5 with fannie and freddie. I know recognize my fellow colleague. Thank, you mister chairman. I want to take thank the chair and Ranking Member. Thank you very much for being here. I appreciate it. In normal economy when uber requests for bearings, it could be a sign that the loan was totally underwritten and therefore problematic for the enterprise. During the pandemic request for forbearance have become more common than are likely an indication of economic that poor underwriting or responsibility ultimately fhfa seem to agree with this reason about fannie and freddie purchase into early forbearance as fhfa 2019 report to Congress Said purchases of these previously previously knowledgeable loans help provide acquitted for Mortgage Markets and allow original originators to continue landing. Could you explain that to us . Thank you congressman we are monitoring that situation as it impacts the market. More directly to the point, probably to covid if along after closing but yet before delivery because its important to keep in mind its not freddie and fannie until its purchased. Its a Freddie Fannie long delivery. So of fannie refused buy those loans at all so we had a number of lenders particularly nonprofits such as the housing and financing. We are told it they were unable to keep those zones so we want to provide a source for liquidity but also wanted to make sure the large Portfolio Lenders such as the wealthy of the world could not move all the loans off their portfolio cohen so we wanted to be able to price this in a way that we are providing liquidity without encouraging people to put risks to us. If our legal an analysis announces to us that what we see is a broader issue, were not intentionally supposed to overpay the loans who take losses, instead we price this in a way where essentially it was meant to be if you were a buyer last resorts. Are you talking about the 507 . Hundred yes i am. How does doing that that has put a burden on that long. Could you explain that a little bit . The way the loan pricing works is we have calculated, again i should say start guesses the comparison, there is a private market for those loans and the pricing discounts are 20 to 25 off. There are alternative reminders but when we want to look at the sense a given that loans entering forbearance, higher ultimately in youre automatically not gonna get pm we have to calculate with the lawson value was. Historically its always been the case that anything can negatively impact lets always been the case. We want to respect that. The lenders are not employers that have worked for me. We want to be able to profit price and decline. Just to be clear, its not a penalty. It really is just alone is only work this. Now i understand. I would like to continue to work on that. I appreciate you speaking to. That i want to ask you this question. I dont think my time has expired. I want to ask you this. The issue of Climate Change. You asked about my family. I do appreciate that. Do you believe in Climate Change . I believe it represents a significant probably stick risk that we had financial regulators need to i was an insurance for a while and they certainly believed in it. The actuaries do. I do think we have to prepare ourselves for that. I dont think that the fires in california and in the west in these larger hurricanes are accidents. Its climate. Change i do have to say we have a few second left. Im happy people are starting to talk about that. We used to talk about that all the time. Republicans call it a fake. Think its a hoax. Its a chinese hoax. Its not its real. Its urgent. I think people like yourself i believe believes in science really need to take a look at it and say how can we act as a nation to protect our people and especially protect people who are mostly affected by Climate Change . I do think that people that are pour the most affected. I thank you very much i would like to continue to work on forbearance. Thank you. I recognize the gentleman from georgia. The gentleman from georgias recognized . Are you there . We are going to move on to the gentleman from north carolina. Thank you, mister chairman and again director, thanks for being here. Question about the origination flexibilities that have been put in place by the gses. They have been crucial to conducting mortgage transactions safely toward the pandemic and help the Mortgage Market remain a bright spot in the economy. During these recent times but these flexibilities which impact such as appraisals, their implications of income, power of attorney, theyve been extended on a month by month basis. Given that the current Public Health crisis remains ongoing for the foreseeable future, maybe after the election, we will see, are there any plans to extend the flexibilities for longer periods of time just to provide more certainty and stability . We are currently in the process of evaluating the impact of these flexibilities. I certainly want to make sure that we are thoughtful about making longterm changes like the appraisal Industries Like you mentioned. All these factors. We want to make sure before we make longterm changes that we hear from those organizations that we hear from those constituencies. So we are engaged in first and foremost right now in internal risk review to see the impact of the risks flexibility on the risks. We intend before the end of the year to issue a request for and put on some of the flexibility so that we could hear from Market Participants and others on what the impact has been and what we should keep, extend or modify. Thank you director. Just burrow and analogy. Health care, we are doing more telemedicine now. We should have done that precovid and we should continue to do that after covid. Theres things like that that we are seeing in home mortgages and the home purchase process that we probably should not be doing and should be doing long after. Keep in mind if you would. I want to say that i like fhfa s to move the risk away from fannie and freddie taxpayer. As we look at the long term frame for capitalization of looks like a really good idea to protect taxpayers from another possibility of a housing downturn. Would you be willing to commit to working with me and others on the committee to ensure the taxpayers are adequately protected during this time . Particularly including during the possibility of offloaded and downside risk, private Capital Markets ensures, excuse me rangers and other qualified risks for partners . We look forward to working with every member. That would be great. Thank you. Last question is before the pandemic, i know your agency was involved in a comprehensive review of all the pilot programs of fanny and freddie. It continues to concern me that both fannie and freddie said the capital standards for mortgage Insurance Industry and then turned around and creates mortgage insurance pilots to compete against the very industry that you see. Im speaking specifically about the integrated mortgage insurance and enterprise options. Should a gse and conservatorship and any state, should be permitted to set capital for a Counter Party and commit compete against him in a primary market . Im sure your concern we hoped to have that issue resolved before covid hits. Obviously this is more of a regulatory issue i certainly want to commit to you. This is an issue we want to resolve. Thank you, director. I appreciate you being today. I yield back. Already thank you very much mister chairman. I now recognize the general from ohio. Michigan, i am sorry its okay. You will get a lot of people that will get upset. I laughs thank you, madam chair. Im just letting you know its a big dilemma. My district 13 is hurting right now. I dont know if youve heard me talking about a pandemic has really expose a lot of the broken systems and programs during this pandemic. The neighborhoods Stabilization Initiative was created by or an agency . Correct . It was mostly created by congress but implemented by the agency. The goal is to stabilize neighborhoods that were hit hard by the housing downturn. That was the goal of the congress. Also it was to help reduce inventory about what they call real estate owned properties. Putting those homes in the hands of residents. Correct . Absolutely. Do you believe the unassigned program would be useful in stabilizing neighborhoods and retaining during the pandemic right now . I believe it could target neighborhoods, yes. One of the things, doctor, i really think we need to ensure that we dont repeat the damage this Program Actually created on the ground. As you know, did you know that since 2014 in my district, 15,000 homes were actually torn down . When you wear that . Ive heard of specific examples. Let me very much agree with you that it was a number of ways in which the response to the 2008 crisis were not well executed. I think its own point and we dont repeat those same areas. Im glad to hear you say that. There are advocates that really pleaded making sure they repair these homes and put them in the hands of actual residents. It is so critically important, because i can tell you right now it has left a lot of my neighborhoods in the spare. One of the other really important things is this is why need your partnership, its been pushing and urging a lot of things. We see the huge taxpayer bailouts during the last recession. Forcing to land to give smaller loans to give to many of those who benefit from the anna sigh. I also think its really important, and this is something that, as a really serious question to ensure families could save money on the rent and really help the working class america recover from the pain of this crisis. Still we dont even know what thats going to look like on the ground. Your agency needs to ensure that these properties are getting in the hands of a former housing how you assuring that happens . As owners and landlords, who is able to buy thousands of properties, i think they continue to hold some of those properties. What do you think warm doing to make sure to not repeat those mistakes. That is really such an important issue. As you know, before i arrived we were currently conducting a review particularly of the issue of the Vacant Properties which we know was devastating communities. We dont want to repeat those hours. One of the things im pressed upon our staff and i came to the door last year was we need to make sure that we see inside of this and that its up and running. That we dont repeat those problems. We will look into some of these. Things want to make sure that we could work with nonprofits. We want to make sure we are not leaving Vacant Properties i would like a followup by your agency buying home some fannie mae and dodging state laws and promoting the use of least own schemes with the chairwoman and i are trying to deal with now. Can you follow up with our specifics on one of those measures . I can tell you its gonna come back saying we did not do our Due Diligence to making sure this program was as it was intended by congress to help stabilize neighborhoods. Let me commit to any member of the community. I have no tolerance for the fannie and freddie anybody on this Committee Appoints mean to that we will take a look at that. We will try to deal and do the best we can. Thank you. I yield. Thank you very much. I will now recognize the judge from tennessee. Mr. Cost of for five minutes. Thank you, chairwoman. Thank you director for testifying today. Last november you spoke at the conference of state Bank Supervisors summit and you speculated that the cheek and sees could be ready to exit conservative ship. I think you said it at that time by 2022 or 2023. Obviously the world has changed. We all understand and appreciate that. Can you talk about whether that protection is still on track. If not, why . Let me first emphasize this is process and our thought calendar. When i made those statements they wont get out until they are ready to get out. If i could put a date around it in terms of delay, i think weve been delayed four to six months. Again, i want to caveat. It really depends on with the housing mike it looks like going forward. With the equities market look like going forward. Certainly a lot of unknowns. You should really take away from this is were going to make sure that theyre not going to leave until theyre ready to leave. Weve got a lot to accomplish for. Them you just talked about trying to protect with the Housing Market looks like, again, i appreciate the challenges that you have along with everybody else. What do you think about the next six to 12 months in terms of the Housing Market . I think we thought what a single house purchase market is going. Well it will continue to go over another six months. I am very concerned on the moral side anne. I do think we are closer to the my instincts probably within the next two years of this rally if you will, we need to be concerned about how the Housing Market does have a tendency to revert itself. We do need to make sure that being freddie borrowers, lenders are all prepared for potential Housing Markets at some point. As to the point, i know youve been testifying but the reserve chairman today, in fact now is talking about Interest Rates, projecting Interest Rates that are going to remain low, close to zero, at least for the next couple years. Does that affect your projections of how the market itself . We certainly take into consideration the projections. I think if you ask the chairman he would say its hard to have much certainty too far off. I certainly hope for the best. My whole role as a provincial regulators to plan for the worst. I hope it never happens. Again, there are a lot of unknown risks. I think we just need to be prepared for those. Thank you. In terms of the fannie and freddie spending mortgages that have been held on the Balance Sheet will for a year, my understanding was that the suspension was initially going to expire a couple of months ago. June 30th. The suspension is still active. I dont believe with the gses have provided any guidance regarding how long the suspension will last. Can you give guidance . Not at this point where we can give a date. Id be happy to work with you and other members of the community to give you some background. We were very concerned earlier in the crisis. We have been approached by a number very large depositories, some of the largest banks in the country who wanted to move season mortgages which were getting some stresses. Quite frankly, we were concerned about having our largest banks leveraged we could argue whether the leverage is not enough. Ten to one, wanting to pass on the risk of season looms of fannie and freddie our leverage 50 to one. We want to make sure that these mortgage institutions were not using this as an opportunity to transfer the risks. I do recognize that there is some some smaller institutions that were inadvertently impacted. Wed be happy to work with you want some modifications to try to facilitate the remediation of smaller institutions. I now recognize the gentleman from florida, mr. Lawson, for five minutes. Mr. Lawson . Can you hear me now . Yes i can. Thank you. Madam chair. Thank you for having me. Thank you for having this meeting. Mister director, ive been listening to many of my colleagues. One question that is on my mind, and i know its only weve been receiving ive been seeing on television different problems that occurred around the country which related to evictions. The fhfa extended the foreclosure and conviction to the end of the year. Im worried we will see an influence of evictions coming in january and homelessness. This is very important. Or at a new alltime high with this pandemic. We have the same concerns and is there a plan set in place to deal with potential outcomes . Congressman, i share your concerns. Let me commit to you that if the data as we approach the end of the year suggests that we need to extend our eviction foreclosure moratorium beyond we will do so. Thank you. From your perspective, and i know you heard some of my colleagues, the heroes act we sent down to the senate. And madam chair at a great deal to do with the Homeless Program that we see out in california and see on the streets highlighted all the time. Do you have any influence in this regard when you talk to a senate collie, because of this pandemic that we need to move on this. Before the end of the year . Some of my colleagues on both sides talking about it. When you think is gonna be the outcome as we approach the end of the year . This pandemic that we are facing has everyone anticipating that in the early part of july and august and everything was about destabilize and trying to go down, how do all approach that . Congressman, just a reminder for members, i am an independent regulator. Im not part of the administration. Not part of the negotiations, again, we are not privy to that conversation. We certainly share everybodys general feelings that we could have some resolution and dealing with these issues. Our agency does not have a role in that process. The question i would ask and i understand did the ever ask you for input . The responsibility that he fhfa has . The directly for recommendation . We do get inquiries on issues dealing with us. For instance, sections of 40 22 and 40 23. The cares act. That language was shared with us. We had offered some suggestions. They took some, sunday didnt. But we did have a conversation. It was not a question about the overall bill. It reach from the Senate Banking committee in terms of the issue that directly impacts our agency. Great to have you. Here. Do you know what directions we should take in terms of rentals, landlords, a lot of major cities are experiencing do you feel we are heading in the right direction . Were you referring to the heroes the economy . Could you be more specific . The heroes act that is pending, did we leave out anything . Are we getting in the right direction of what we are trying to do . We have not had the opportunity to look at that. I will get back to. Madam chairman. I yield back. Thank you very much mister lawson. Thank you madam chair. I appreciate you being with us today engaging in this process. Its been a challenging time for a lot of us across the nation. I believe america is strong. We relied on enterprises, private businesses and especially our small banks. With our support to get us through this. Our Health Care Professionals have done a phenomenal job. Were gonna make it through 2020 and through these other challenges that we have. The Housing Market. For this had like to follow up with you on the Enterprise Capital rule that some of my colleagues and i discussed. My concerns are that the rule would reduce the capital benefits another sentiments for the gses. Its a good way to reduce the risk of taxpayers. You mentioned to mr. Lieu kim are at the gsts will continue to do crtc regardless of how the final capital rule comes out. Im concerned that we have already heard evidence to the contrary because in a recent filing the sec security program, because this rule would reduce the amount of capital relief they get from crt. With that, and that case, how can you be sure see crt capital rule is implemented . We put out a conservative ship so we will be mandating that fannie continue to do crt during conservative ship and compensation of their executives i strongly believe i suspect theyll be incentivized to do so. Is the fhfa incentive i easing fannie through the financial crisis we are trying to deal to to make sure they dont go back to the precrisis behavior. As ive emphasized in other conversations today, i believe that the model of privatized gains and socialize losses that represents the Government Sponsored Enterprises a deep structural flaw that are outside of my authorities to fix. I would certainly encourage encourage congress to address those issues but i believe having these capitalized. Lastly, i would also add that this is a little less visible, but i would emphasize and such the such a big part of this, fannie and freddie are some of the worst Corporate Cultures ive ever seen in corporate america. And fixing that is a fundamental prerequisite to get these Companies Must be good corporate citizens. We have a lot of work to do on that front. I appreciate that. Im happy to hear you say. That i share the same concerns. Another concern is that the capitol rule will require the gfs sees compared to the single home family. Not consistent with the Historical Rate of lots and multi family which has been much lower than that of the Single Family following up on your conversation with can you confirm if you have an Economic Analysis to study the impact of multi Family Capital we will see what we could share and i will be happy to share with the committee. Okay, appreciate that. I will yield back, madam chair for the reminder of my time. Thank you very much. I know call on miss porter for five minutes. Mr. Mark calabria, you are here today before this committee to explain why the agency that you are in charge of fhfa needs to charge an additional fee to homeowners who want to refinance their mortgage during the pandemic. Its interesting you said you need to do this because the coronavirus pandemic is costing your agency money. He said there is money that will come from loan losses, foreclosure moratorium losses, compensation. My question for you as homeowners would actually save money by refinancing their mortgages, yes . Let me clarify. Its costing fannie and freddie. There are two distinct things. Fannie and freddie requested these fees. They said they would be distressed if they wouldnt. Obviously refinancing improves situations, but i want to emphasize nobodies payment goes up because of this. Correct, we have this adverse market fee that we are dealing with here. Without this adverse market fee, this creates an additional fee on homeowners when they refinanced. That would not exist if you had not put for the adverse market free. Without this fee i am not paying to keep people who have lost their jobs and their home. Without this feed, families are on the streets. Without this fee families mr. Mark calabria, you are wasting my time. Home owners can refinance with or without the stuffy by adding the adverse market feet into the refinance process. You are increasing the cost of refinancing for homeowners. There are overall mortgage payment will go down by refinancing. I understand how that works. To no adverse market fee, compared to your proposal, the adverse market fee, homeowners homeowners are being asked to pay more. I would certainly welcome you in finding a way for us to keep people in their homes, which is my First Priority here. Okay. I have an idea for you. Did you go to congress . Instead of creating fees on families, the total, five or 6 million dollars, why dont you simply sorry, five or six billion dollars. Why dont you go to congress and ask them . Why didnt congress pay for these things . Have you asked us . Once they are not understood that if you impose mandates on private Companies Via legislation it was widely understood when the cares act was passed that on the Mortgage Market. I naively assumed for those who voted for the cares act perhaps didnt know there would be costs. This is why its been delayed to give congress the opportunity. If Congress Wants to come in and provide the funding, the feet goes away. It is really quite that simple. Mr. Mark calabria, you are in charge of the agency. It is your job to come to us and say we need a Additional Resources and one way we could do can get it is by increasing the cost on home owners to stay in their homes to add cost to a refinance that is in fact designed to benefit homeowners. It is not our job. We are here today you have to come to us today to ask us for the six billion dollars so that we avoid putting these costs on the homeowners, and yet you are not. Weve delayed the fee so that congress can come up with the solution. The fee has not been implemented. Okay, have you asked congress for this money . I have not. If we could find a way to page for it the charters require expenses to be curbing the income. I assume that in Congress Passing the cares act that congress very clearly intended for me to recoup expenses via income because thats the statue terror statutory you write the budget, you know how much money you need. Congresswoman, we have cbo. If the cares act had been i want to emphasize we dont determine the ultimate cost. The lender determines the cost. This is a feat charge to lenders not to borrowers. You dont think lenders will pass this feet on to borrowers . Have you had any conversations with lenders that suggests they would not absorb this fee . Some of them said they would absorb it. Really . Would you provide to the committee a reinstatement . I would. Id be happy to connect you with thank you. The ladys time has expired. Thank you very much mister porter. I will now call on the gentleman for five minutes. I appreciate you being here in the time even vested to talk about some of these important issues. A lot of languages have been thrown at you today. A lot of adversary conversations had been had. I want to maybe step back from some of those conversations to get at the underlying construct by which we put this fee in the place. There are six to ten billion dollars in real cost that being Enterprises Expect to incur on account of covid19. Thats correct, right . Correct. I imagine if we just close our eyes and put our heads in the sense that those costs will not go to zero under any circumstances. Those are real and tangible costs that we can expect, right . Correct. The question before us, and i think the question that you very thoughtfully and artfully answered several times now is are we going to have ratepayers at the end of the day, pay the full cost of originating, servicing and securities in those mortgages or are we going to ask taxpayers to pay part of those costs of originatings those mortgages . I think philosophically that you and i can align that ultimately it should be ratepayers that pay the full cost of that. The cost overtime. Is that correct . Correct. If i can add a little more detail. The immediate income of households refinanced in the Second Quarter is 110,000 dollars. Again, as you are getting we are essentially asking lower income tax payers to help subsidize higher income people refinance is with the argument ive heard today. It does not sound terribly progressive to me. I think that as well put. I continue to hear from many constituents that are deeply concerned about where the deficit is today, that taxpayers generally are being asked to fund more and more of that which should be borne ultimately by rate payers. I continue to believe that ultimately and setting forth a fee to compensate for those costs, that you have appropriately placed, the cost on rate payers instead of bearing the payers on taxpayers instead recouping it as you said through income. I wanted to ask very specifically, you set forth a 50 basis point market adverse figure. You said were going to start that in september. We are going through an epic refinancing boom right. Now some of that boom is going to be behind us by december when it goes into effect, which i think because the six to ten billion dollars is not going away. It means youre going to have to have a larger fee. Perhaps you had to be in place even longer because he had less volume on what you could recoup those costs. Could you speak to the delay and how it might actually lead to higher costs or longer terms this cost being in place, because there will be less volume . Let me clarify, nobody is going to pay 3 50 instead of i get that. I understand that. I understand that is not going to translate directly sorry, its on the purchase. Im sorry for misleading on that, but i think you got it right. I was clarifying that but you are absolutely right. If weve missed the refinance wave we ultimately may have to have a higher fee for longer because we will be forced to spread this over the direction my being able to capture the refinance wave. The reality of where we stand today with where Mortgage Rates are at historic lows, and i think as you will articulated this 50 point based female translate into five base points. Is that the ultimate mortgage cost of the consumer if we missed the supper tune in haiti for this huge refinancing boom, that that cost may be higher later on on those that are trying to refinance also well rates may be going up, a double whammy for the Housing Market while we miss this epic refinance boom today. Is that something you think is one . That is absolutely the tradeoff. We have tried to do is trying to pick the least bad that minimize the impact finding the benefits for those most in need. Ratepayers should pick up that full cost versus taxpayers subsidizing the cost. I think thats the basic principle we need to stick with. I yield back my time. Thank, you congressman. Thank you very much. I know recognize the gentlelady from iowa. Thank you, chairwoman, and thank you director for being here. I very much appreciated. I want to talk about how renters have been protected during this pandemic. As youre fully aware, we have a new Eviction Moratorium from the cdc that is intended to protect eligible renters and basically all properties. I think we all know that that is a temporary measure that unfortunately will still leave people owing money, rent money on january 1st with no ability to pay for that. What im going to continue to support rental assistance to provide a long Term Solution to this problem. For now, i want to take a look at how things have gone so far. We are already seeing reports of legal challenges to the cdc moratorium, as well as landlords illegally refusing to accept declarations from renters. Obviously that is a major problem. When we are going to have to look at moving forward. But it brings me to some issues we are seeing with the moratorium under the cares act. Hundreds of iowa families have been kicked out of their homes, unfortunately, and 10 of these were done illegally. Violation of the state federal states or federal moratorium. The cares act created 120day moratorium on evictions for federally backed properties. Director, can you outline what properties that protection covered . Thank you congresswoman. Let me say before, i very much share your concern. Landlords facing stress, with the fannie and freddie loan, they should reach out to us. In terms of authorities we have to provide a moratorium on eviction, we can only stop eviction on foreclosures and properties that we actually own, essentially the fannie and freddie thank you so much first and foremost for that offer. We will be getting a hold of your office, because ive heard from iowa legal aid who found most of these illegal evictions. They worry that their list is incomplete because of that data. We have seen circumstances where this is happening. They can pretty much find everything that has been backed by the fha, but they are struggling with the tools from fannie mae and freddie mac. It is just not giving them what they need. Those are not only difficult to use but they are very incomplete which is the biggest part of the problem. Missing properties that should have been covered. Instead of being able to quickly checked the property for renters now theyre spending their time searching these records which means they cannot help people as quickly as they need to end it very difficult time. This allows landlords to go ahead and file illegal evictions because it makes it easier for them to get away with its sole director i am hoping that you can commit to making sure that fannie mae get these tools working properly so that we could get the transparency that america renters need . We are. When that will be impactful, if we revamp the search engines, unlike the Single Family program, if you are an owner, you enter your Social Security number so they could find a mortgage, unfortunately if you think about it, if the renter lives and property that is called gardens manner and they searched gardens apartment, they may not find it. Weve set it up so the renter can now search by zip code and get a list of all the fanny freddy rentals inism code. I would emphasize we set for the first time in the crisis. I would be the first to say when it went out it wasnt perfect but it was better to have something that was 80 correct then have nothing at all. We continue to have updates on that. We continue to try to make sure we can get it to 100 percent. Please let me know. What you are looking at for 100 . What kind of timeline that. Is we literally have people being kicked out on the street because of it here because of the inaccuracy of the tools and inability for people to get that information. I have many examples that i could go into, but they are long stories, unfortunately. Sad, long stories. I did want to mention as well, and i appreciate you working on. That thank you so much. I am a little disappointed that making sure renters knew if they were protected was not the biggest the focus of your organization and instead there was a lot of effort put into the capital proposal that was put out in may in the middle of this crisis as weve been trying to focus everything on helping people during this crisis. Weve talked a little bit about that today. The standards you put out in may would be questionable even in good times, but during a crisis like this, it seems almost disconnected with the reality is that people on the economy need, breezing the cost of the average mortgage by 350 dollars a year which is fannie and freddie say its basically going to happen. Its not what we need during this crisis. I urge you to reconsider the proposal. Ive heard the conversation today. Given the impact that this can have on our economy, our families ability to pay their bills and own their home, i hope you reconsider. Thank you so much. My time is out. I yield back. Thank you very much. I now recognize mr. Gonzalez of ohio for five minutes. Thank you. Thank you, chairwoman and others for holding todays hearing. Thank you director calabria for being with us. I want to start by thanking you overall, director, for your work throughout the pandemic. There have been multiple times where myself or members for my community have wanted to connect with you and your office to get guidance and help and figuring out the direction he fhfa has been going. Euro youve always been very receptive. I want you to know on behalf of myself and my community, i thank you for that. It is not normal. I think you know that. It is appreciate it. First on, i will start with a question. And your testimony you referenced year earlier recommendation to congress that fhfa given additional regulatory and supervised roll authority, looking at the june annual report to congress, those recommendations include a primary market, specifically Non Bank Mortgage lenders. Can you explain further the kind of authority that you are seeking over the segment of the market . Thank, you congressman. Sounds like somebody is im not looking to regulate anybody that i am not already regulating. Ive got my hands full with the companies already. Im looking to have exams ability where we can go into those who provide services or counterpart of the gses it would allow us to go in, take a look at the financials. Know what kind of shape they are in financially. Whether they are a strong Counter Party. But it would not put us in a place of being the regulator for that. Just to clarify, exam authority, but not regulatory are you worried about any overlap from an exam standpoint . That is sort of the comment that i hear most often . That is one of the reasons that i raise this, that we are not looking for regulatory as you know, most non Bank Services are regulating the state level. I think that is certainly appropriate. We work well with the state regulators. We want to keep it that way. We certainly just want to make sure that we continue to make sure that fannie and freddie are only doing business with strong institutions with good corporate citizens. Shifting to something that has been covered at nauseam. The adverse market fee. I was pleased to see that you put in place a threshold of 125,000. In order to help low income homeowners. Im just curious because i know you are data driven guy. What information 1 25, its that the right number . Who are we expecting to avoid having to pay . It lets say that, by putting 1 25 or 250 or Something Like that . I want to emphasize that we also excluded fannie from affordable products and so a, there is a much less liquid market for small dollar loans, and of course given that income is related to the size of the loan, what we end up doing is cutting off, making sure the feet does not apply to predominantly households that are under 80 of the medium what about, i know this is always hard to do, but expanding it depending on market. New york city would have different Mortgage Market then there is certainly two issues with that. Obviously, the more we cut out, the more the few will have to be. Weve got a fix ultimately we have to recover. We cut out purchases because we did not want to have an adverse impact on the purchase market. As we shrink that, iffy may be higher, but secondarily, its not clear to me that fannie and freddie have the i. T. Capacity to come up with a price differential for each market. We can look into this. We did go back and forth with a number of different parameters in again, and surprisingly, sometimes fannie and freddie do things differently. This is again one of the mechanics in the administrative process that needs to thank you, i have more questions. My time is almost a. Again, thank you, director for being accessible and from your. Thank you, i yield back. Thank you very much. Mr. Casten, you are now recognized for five. Minutes thank you, madam chair. Thank you, director calabria for being here and being patient. Its been a long day. Especially when with all the sort of horrific wildfires raging out west, have you done any modeling it to assess what the impact is of those fires, or is that premature to start on . Anything has got to be preliminary. We have internalizes. We think that in terms of Financial Impact on fannie and freddie that it will be small, but as we know, the fires are still raging in many areas, so the ultimate impact if i could thats helpful. Have you done any preliminary modeling of with this hurricane will do the season . Were putting numbers together. Let me overall say, the overall impact, because its mostly been the winds rather than a flood event, it doesnt look like its going to be very large numbers for fannie and freddie. We are happy to share our preliminary numbers with you. I would say the broader point that covers we really do need essentially a broader look at this in terms of what the future impacts are going to be, particularly for climate, but to make sure as well that lenders are not necessarily transferring risk that we are not aware of. Im glad you asked that question. Id like unanimous consent to enter it into the record. In the new york times, call climate risk crisis from 2019. Without objection. Such as the order. This article notes that starting in 2004, every time we have a hurricane it cost a least a billion dollars in damages. Lenders increased by more than 10 the share mortgages they sold. Sounds like the private sector figured out this was an issue and started off limiting on the taxpayer. After that study was released, what analysis did fhfa do to understand that exposure . This is what you just described. Having read the article as well and the Underlying Research, i might take an issue with some of the methodology, but a qualitative conclusion of the article and Underlying Research i came on board last year with a number of issues to deal with. We are expanding our capacity. We will be hiring and environmental economists to check the modeling of that area. Im concerned this risk has been passed from lenders on two fannie and freddie. We dont have the Research Capacity to look at this issue thoroughly. Weve been looking at. That have you done any modeling of more systemic risks throughout your portfolio . Theres been estimates as such as 900 billion dollars of property and increased flooding. Have you looked at the systemic risks for any of those losses and what it could do to the chia seas . Freddy particularly has done some work in this area. I could share with you. The broader overall issue, i would certainly agree that fannie and freddie are not prepared for a systemic climate event. Fhfa has proposed a Capital Requirement rule. You acknowledge that Climate Change is a potential but the final rule says there is no risk based Capital Requirement for the risks that Climate Change could pose to Property Values and some localities. You said youre doing this research right now. How did you come to such a dogmatic conclusion . Congressman, what issue how is this dogmatic . There is no risk based Capital Requirement for the risk that Climate Change could pose. The research fhfa has conducted to make that conclusion when the private sector has apparently decided that its not worth them holding that risk. To clarify, congressman, the rule doesnt say we do not believe that there is no risk. With the rule of saying is that we have included this within the buffers. We are not at the point where we have the data to be able to come out with precise estimates, so the credit part of the capital and we have for credit loss is we dont have that quality level of data. I do want to be clear. I apologize if it has been misunderstood from what the rule said. My time is expired. I would just point out, there is a significant systemic risk. Im disappointed that speaking with you and secretary mnuchin, there seems to be a lot of non climate people cohen are yield back. Thank you. I know recognize mr. Garcia of illinois for five minutes. Thank you madam chair and Ranking Member. Thank you director calabria. I represent a working class immigrant district that has been hit particularly hard by both covid and our economic crisis. Most of my constituents are renters. Our states Eviction Moratorium expires in three days. The cdcs eviction protections are an important step, but we dont know how they will play out in the eviction courts across the country. None of the measures that are in place so far helped tenants or landlords deal with the overdue rent payments that have piled up for months. Director calabria, the heroes act included 100 billion in rental assistance front to help tenants who cannot pay their rent, the landlords in my district of feeling the strain of so many missed rents and payments, even with mortgage forbearance. What is the projected risk to fannie and freddie if so many borrowers who entered into the fault because they cannot collect rent payments. Secondly, with rental assistance payments minimize that risk . I think as you know we are offering forbearance to landlords for fannie and freddie loans that are experiencing difficulty collecting rents. We are trying to deal with that in terms of the fannie and freddie portfolio. We dont have the exact numbers. That is within the overall four billion weve calculated for credit losses from covid, that is part of the reason for the adverse market fees. We recoup those losses. We certainly share your overall concern about problems in the rental market. Would rental assistant payments help . Yes. Are you asking the senate to possibly take action on that . Are you encouraging that . Ive had conversations. Weve provided numbers. I do i am an independent regulator. Im not part of the administration. I have north already and no ability to negotiate on behalf of the administration. I think coming out with something is certainly that makes sense and good policy. The committee overall, im very sympathetic that the senate does not always do what i want them to do either. The skies and chicago have been great for two days because of the fires out west. The smoke reached us here in washington yesterday. It is not take a scientist to see that fires, floods, hurricanes and droughts are becoming a bigger part of life in our country. Black and brown communities in new orleans, houston, new york, chicago have suffered some of the worst destruction from these events. Homeowners and communities like mine are the least able to bear the financial burden of Climate Change. Realtors, and Insurance Companies are factoring climate risk into their business decisions. How about the fhfa . What data is the fhfa putting together about individual properties and their climate risk, and do you have an estimate of the exposure of gsp to climate risk . Congressman when i came on last year we did not have the analytical capacity in the process of hiring and bringing on that staff and. What i would say too is a share those concerns. I dont think fannie and freddie are prepared for a systemic climate event. One of the reasons i think we need Strong Capital is to be able to prepare for that unknown. I certainly want to commit to you today the very questions that you have raised are questions that i want to get to the bottom twos. Lee are in the process of staffing up so we could try to figure out what the answers are. Thank you, doctor calabria. Madam chair, i yield back. I now recognize miss adams from north carolina. In asylums . You are muted. Thank you, madam chair. The thank you to our guest for being here today. Mister director elaborate, i am glad to hear that you are continuing in your efforts to diversify the agent sense staff by recruiting at hbcus, building a pipeline of Diverse Talent into the Financial Sector is critical to providing all americans more equitable access. Please continue to these polars of Education System as you move forward. The fhfa announced a pandemic relief measure that would permit the gfs used to purchase loans that have gone into forbearance between the lip before delivery but at a significant fee. I am concerned that this will change and it will impact creditors lending decisions and end up disproportionately limiting access to credit for communities of color and other underserved communities. What are you doing actively to prevent this . Thank you for that question. Let me first say that we thought we were required i think we are no longer at a point where lenders are going to be surprised by covid. Certainly in the underwriting decisions ive certainly heard from a number of people theyve had to maybe sign a form to save their jobs. I think what weve seen is some better underwriting and response to covid we are carefully monitoring incoming credit quality. We have not seen big changes in the quality cohen the democrat the demographics. Were able to have an inside looking at the what the coming pipeline. As we are monitoring that. If we see evidence of problems in the marketplace we will take action. You will reduce the fee if you see it happening . We will come up with some alternative, because again, i should certainly its not as much iffy as it is a reflection of the climate value of the price. We are paying for the value of the lawns for what they are. We just want to make sure at this point that lenders are not putting borrowers into loans that cant afford. As you recall even today lenders have to make sure that when a bore is put into a loan they have the ability to repay. That rule in itself cohen has a cyclical effect that we are in a time of economic stress. Or making sure that it will not have an adverse impact. I want to touch on their preproposed Capital Requirements for the gses. My concerns have to do with the strength of this rule. It will require the gst ease to raise a significant amount of capital which could raise fees for corporate consumers so the adverse market fee could negatively impact when it takes effect in december. What are you repurposing or why are you doing it now at a time of economic stress when consumers need as much relief as they can get . I think i will separate capital rule from the adverse market for. They are two separate issues. First off, we remind the committee that Congress Told us to do a risk based capital in 2008. I would say given as an agency we are 12 years behind schedule. We have not been moving too quickly. This was a real proposal that we put together we delayed for a couple of months. It was supposed to come out in march. Its important to recognize first there was nothing in the capital rule that requires but more is importantly, it will be implemented overtime. There will be an immediate impact. In terms of the adverse market fee, because we were providing no funding to offset the impact of the cares act, we were forced by charter and statutes to be able to recoup that to be a income, so again, we would have preferred to delay this indefinitely, but the result in sea of fannie and freddie is at risk. Let me wrap up by saying wes are simply following the law. If congressman wants to write a different law we will follow. That thank you. I yield back. Yeah thank you very much. I will now recognize the gentlelady from pennsylvania for five minutes. Please take the mute off. Here we go. Can you hear me . Now we can hear you. Thank you. Thank you and forgive me for my technological struck struggle there. Thank you, madam chairwoman. Doctor collaborator, i thank you for your testimony today. As everybody has indicated and as you well know, we are in unprecedented times that requires extraordinary response from congress and the administration. A pandemic has up ended peoples Financial Security and wellbeing. Many people cant pay their mortgage, their rent, their utility bills. That is why my colleagues and i are so puzzled by the fact that you have put forth a new refinance fee which would further burden and will further burden American Families as they navigate this pandemic. In particular, in my district which is montgomery and berks county, pennsylvania, ive heard from my constituents about their concerns for housing relief. Ive talked with homeowners. With tenants as well as landlords. My first question is considering that as 30 million americans could face evictions, what additional relief and resources do you think congress, should provide, to both tenants and landlords to navigate this pandemic i want to emphasize that the adverse market feed that has been proposed by fannie and freddie is to help keep people in their homes. We have 200,000 families facing evictions in march when covid hit. We paid their property taxes for six months. We paid their housing costs. I do want to emphasize that without the assistance just i do appreciate that explanation. Does that mean in, and followup to miss porters question, you would recommend that Congress Passed relief so that you do not have to add on an adversary . I am neither asking him are telling. Yes or no . Im not asking ok. Would you be asking us to move forward with a very important bill that was part of the heroes act, which was 100 billion dollars in rental relief, that would get the small landlord assurance that his and her rent is being paid . Again, when i emphasize, im not part of the administration or negotiations. Im not in this position. What i would say is i certainly think assistance could be helpful and appropriate, but we certainly are not part of the negotiations and have not done any enough analysis to know what the right number is. I would think you might want to do that analysis so you could be better informed and better inform us as well. I am in support of that bill. And those dollars. Another issue i would like to highlight is transparency and consumer notification. Its critical we provide tenants and borrowers with notice of their rights, particularly to our most vulnerable. I check in the bill along with our chairwoman to know your housing rights act of 2020 which would ensure federal agencies develop resources and provide notice to tenants of their housing rights, relief and assistance during covid. There are other bills for homeowners as well. Doctor calabria, can you clarify what fhfa is doing to notify all tenants of their rights under the cares and options at this time . Absolutely. For those of us listening, id like to encourage any home ors homeowners, winters to go to the website that we developed to see our partnership with fhfa. Weve also worked with fannie and freddie to create videos, fact sheets, flyers. Whose obligations it to notify tenants of the rights . It is a landlords obligation. So you actually believe that you tell the landlord that they should tell their tenants of their rights as a result of covid . You dont think that is what your responsibility is . I dont have the statutory will authority to do that. We have no actual relationship with the tenant. Again, there are other agencies. We tried to make sure we provide this information. As you may be aware, we provide the tenant the protections for multi property under forbearance, we dont have a way to reach the ten what tools do you have to make sure that they are we work with community groups. When we hear complaints, we investigated. Ultimately, all we can do is declare. Thank you very much. And i would like to thank the doctor for his testimony today. Without objection, all members will have five legislative days within which to submit additional written questions for the doctor to the chair, which will be brought to the witnesses for their response. I ask you to please respond as properly as you are able. Without objection, all members will have five legislative days within which to submit extraneous materials to the chair for inclusion in the record. This hearing is adjourned. You are watching cspan 3, your unfiltered view of government, created by americas Cable Television companies as a Public Service and brought to you today by your television provider. You are watching American History tv. Every weekend on cspan 3, explore our nations past. Cspan 3, created by americas Cable Television companies as a Public Service and brought to you today by your television provider. I believe we should be stronger than we now are. I believe we should have the strongest electoral forest. I believe we should increase our strength all over the world. I dont confuse words with strength. But when the president of the United States is doing something thats right, something that is for the purpose of defending the security of this country against surprise attacks, he can never expressly apologize to anyone. 60 years ago, americans watch the first ever televised president ial debate between massachusetts senator john f. Kennedy and Vice President richard nixon. Sunday morning at 9 am eastern, we will look back at the event with the university of Virginia Miller centers barbara perry, with a live discussion on how the debates came to be, the issues, the candidates, and how the debates set the tone for a president ial campaigns. The 1960 Nixon Kennedy president ial debates live at 9 am eastern on American History tv on cspan three. In 1848, a convention was held in seneca falls, new york to discuss the state of womens rights in the country. The ger