Introduction

In March 2020, the Coronavirus Disease 2019 (COVID-19) pandemic began having wide-ranging public health and economic effects in the United States. The impacts of the pandemic have implications for housing, including the ability of households experiencing income disruptions to make housing payments. In response, the 116^th Congress and the Trump Administration took a variety of actions related to the COVID-19 pandemic and housing. As the 116^th Congress ended, the pandemic was continuing and the economy was in a recession. Some initial assistance measures had ended, and there have been calls for additional action. The longer-term consequences of the pandemic and associated economic turmoil on housing markets remain unclear.

Outside of pandemic-related housing issues, several other housing-related issues were active during the 116^th Congress. These included issues related to assisted housing programs, such as those administered by the Department of Housing and Urban Development (HUD), and issues related to housing finance, among other things. Specific topics of interest included issues such as the status of two government-sponsored enterprises, Fannie Mae and Freddie Mac; how to prioritize appropriations for federal housing programs in a limited funding environment; oversight of the implementation of changes to certain housing programs that were enacted in prior Congresses; administrative changes to certain affordable housing policies and programs; and certain housing-related tax provisions.

This report provides a high-level overview of the most prominent housing-related issues that were of interest during the 116^th Congress. It begins with an overview of housing and mortgage market conditions during the Congress. While this overview includes some national-level statistics from the months after the pandemic began, it is unclear how the pandemic will ultimately affect housing markets going forward. The following section discusses housing-related concerns related to the COVID-19 pandemic and federal housing responses. Finally, the report discusses other housing issues that were active during the 116^th Congress.

The discussion in this report provides a broad overview of major issues and is not intended to provide detailed information or analysis. It includes references to more in-depth CRS reports on these issues where possible.

Housing and Mortgage Market Conditions

This section provides background on housing and mortgage market conditions during the 116^th Congress to provide context for the housing policy issues discussed in the remainder of the report. This discussion of market conditions is at the national level. Local housing market conditions can vary dramatically, and national housing market trends may not reflect the conditions in a specific area. Nevertheless, national housing market indicators can provide an overall sense of general trends in housing.

In general, rising home prices, low interest rates, and rising rental costs have been prominent features of housing and mortgage markets in recent years. Although interest rates have remained low, rising house prices and rental costs that in many cases have outpaced income growth have led to increased concerns about housing affordability for both prospective homebuyers and renters.

As the COVID-19 pandemic took hold in the United States beginning in March 2020, some housing indicators showed notable changes. For example, interest rates fell, and home sales and construction activity experienced significant declines, although sales and construction indicators rebounded to varying degrees in subsequent months. Since these indicators reflect national-level conditions, conditions in specific local housing markets may differ. Going forward, the pandemic's impacts on housing market conditions are highly uncertain and will depend on a variety of factors.

Owner-Occupied Housing Markets and the Mortgage Market

Most homebuyers take out a mortgage to purchase a home. Therefore, owner-occupied housing markets and the mortgage market are closely linked, although they are not the same. The ability of prospective homebuyers to obtain mortgages, and the costs of those mortgages, impact housing demand and affordability. The following subsections show current trends in selected owner-occupied housing and mortgage market indicators.

House Prices

As shown in Figure 1, nominal house prices have increased nationally on a year-over-year basis in each quarter since the beginning of 2012, with year-over-year increases exceeding 5% for much of that time period and exceeding 6% at times. These increases followed almost five years of house price declines in the years during and surrounding the economic recession of 2007-2009 and associated housing market turmoil.

Year-over-year house price increases have continued and even accelerated since the onset of the COVID-19 pandemic.¹

Figure 1. Year-over-Year House Price Changes (Nominal) Q1 1995–Q3 2020

Source: Figure created by CRS using data from the Federal Housing Finance Agency House Price Index (Seasonally Adjusted Purchase-Only Index). Notes: Figure shows the percentage change in nominal house prices compared to the same quarter in the previous year.

House prices, and changes in house prices, vary greatly across local housing markets. Some areas of the country can experience rapid increases in house prices while other areas experience slower or stagnating house price growth. Furthermore, house price increases affect participants in the housing market differently. Rising prices reduce affordability for prospective homebuyers, but they are generally beneficial for current homeowners due to the increased home equity that accompanies them (although rising house prices also have the potential to negatively impact affordability for current homeowners through increased property taxes).

Interest Rates

For several years, mortgage interest rates have been low by historical standards. Lower interest rates increase mortgage affordability and make it easier for some households to purchase homes or refinance their existing mortgages.

As shown in Figure 2, average mortgage interest rates have been consistently below 5% since May 2010 and have been below 4% for several stretches during that time. After starting to increase somewhat in late 2017 and much of 2018, mortgage interest rates have been generally declining since late 2018.

Since the COVID-19 pandemic began, mortgage interest rates have fallen even further, in part due to federal monetary policy responses to the pandemic. Since August 2020, average interest rates have been below 3%, their lowest levels since at least 1971.² The average mortgage interest rate for December 2020 was 2.68%, compared to 2.77% in the previous month and 3.72% a year earlier.

Figure 2. Mortgage Interest Rates January 1995–December 2020

Source: Figure created by CRS based on data from Freddie Mac's Primary Mortgage Market Survey, 30-Year Fixed Rate Historic Tables, available at http://www.freddiemac.com/pmms/. Notes: Freddie Mac surveys lenders on the interest rates they are charging for certain types of mortgage products. The actual interest rate paid by any given borrower will depend on a number of factors.

Homeownership Affordability

House prices have been rising for several years on a national basis, and mortgage interest rates, while low currently, have also risen for certain stretches. While incomes have also been rising in recent years, helping to mitigate some affordability pressures, on the whole house price increases have outpaced income increases.³ Home price-to-income ratios have been generally trending upwards since around 2012, with the national median sales price for an existing home more than 4.3 times the median household income in 2019.⁴ These trends have led to increased concerns about the affordability of owner-occupied housing.

Despite rising house prices, many metrics of housing affordability suggest that owner-occupied housing is currently relatively affordable.⁵ These metrics generally measure the share of income that a median-income family would need to qualify for a mortgage to purchase a median-priced home, subject to certain assumptions. Therefore, rising incomes and, especially, interest rates that are still low by historical standards contribute to monthly mortgage payments being considered affordable under these measures despite recent house price increases.

Some factors that affect housing affordability may not be captured by these metrics. For example, several of the metrics are based on certain assumptions (such as a borrower making a 20% down payment) that may not apply to many households. Furthermore, because they typically measure the affordability of monthly mortgage payments, they often do not take into account other affordability challenges that homebuyers may face, such as affording a down payment and other upfront costs of purchasing a home (costs that generally increase as home prices rise). Other factors—such as the ability to qualify for a mortgage, the availability of homes on the market, and regional differences in house prices and income—may also make homeownership less attainable for some households.⁶ Some of these factors may have a bigger impact on affordability for specific demographic groups, as income trends and housing preferences are not uniform across all segments of the population.⁷

It is unclear how the COVID-19 pandemic may ultimately impact the affordability of homeownership. The pandemic could have implications for a variety of interrelated factors that affect affordability, including factors related to both the supply of homes on the market and the demand for homes.

Home Sales

Annual home sales increased between 2014 and 2017, improving from their levels during the housing market turmoil of the late 2000s. The overall number of home sales declined from the previous year in 2018 and remained steady in 2019. While home sales have been improving somewhat in recent years (prior to falling in 2018), the supply of homes on the market has generally not been keeping pace with the demand for homes, thereby limiting home sales activity and contributing to house price increases.

Home sales include sales of both existing and newly built homes. Existing home sales generally number in the millions each year, while new home sales are usually in the hundreds of thousands. Figure 3 shows the annual number of existing and new home sales for each year from 1995 through 2019. Existing home sales numbered about 5.3 million in 2019, steady from the previous year and a decline from 5.5 million in 2017 (existing home sales in 2017 were the highest level since 2006). New home sales numbered about 683,000 in 2019, an increase from 617,000 in 2018 and the highest level since 2007. However, the number of new home sales remains appreciably lower than in the late 1990s and early 2000s, when they tended to be between 800,000 and 1 million per year.

Figure 3. New and Existing Home Sales Annual, 1995–2019

Source: Figure created by CRS using data from HUD's U.S. Housing Market Conditions reports, available at https://www.huduser.gov/portal/ushmc/home.html, which use data from the National Association of Realtors for existing home sales and the U.S. Census Bureau for new home sales.

While Figure 3 shows annual home sales through 2019, monthly home sales have been impacted since the pandemic began. Both new and existing home sales fell sharply in March and April 2020, though both rebounded in the months that followed.⁸

Housing Inventory and Housing Starts

The number and types of homes on the market affect home sales and home prices. On a national basis, the supply of homes on the market has been relatively low in recent years,⁹ and in general new construction has not been creating enough new homes to meet demand.¹⁰ However, as noted previously, national housing market indicators are not necessarily indicative of local conditions. While many areas of the country are experiencing low levels of housing inventory that contribute to higher home prices, other areas, particularly those experiencing population declines, face a different set of housing challenges, including surplus housing inventory and higher levels of vacant homes.¹¹

Homes come onto the market through the construction of new homes and when current homeowners decide to sell their existing homes. Existing homeowners' decisions to sell their homes can be influenced by expectations about housing inventory and affordability. For example, current homeowners may choose not to sell if they are uncertain about finding new homes that meet their needs, or if their interest rates on new mortgages would be substantially higher than the interest rates on their current mortgages. New construction activity is influenced by a variety of factors including labor, materials, and other costs as well as the expected demand for new homes.

One measure of the amount of new construction is housing starts. Housing starts are the number of new housing units on which construction is started in a given period and are typically reported monthly as a "seasonally adjusted annual rate." This means that the number of housing starts reported for a given month (1) has been adjusted to account for seasonal factors and (2) has been multiplied by 12 to reflect what the annual number of housing starts would be if the current month's pace continued for an entire year.¹²

Figure 4 shows the seasonally adjusted annual rate of starts on one-unit homes for each month from January 1995 through November 2020.¹³ Housing starts for single-family homes fell during the housing market turmoil of the late 2000s, reflecting decreased home purchase demand. In recent years, levels of new construction have remained relatively low by historical standards, reflecting a variety of considerations including labor shortages and the cost of building.¹⁴ Housing starts have generally been increasing since about 2012, but remain well below their levels from the late 1990s through the mid-2000s. For 2019, the seasonally adjusted annual rate of housing starts averaged about 893,000. In comparison, the seasonally adjusted annual rate of housing starts exceeded 1 million from the late 1990s through the mid-2000s.

Single-family housing starts showed a significant drop as the pandemic began, but have increased in the months since.¹⁵ Single-family housing starts in November 2020 were higher than a year earlier.¹⁶

Figure 4. Housing Starts By month; seasonally adjusted annual rate

Source: Figure created by CRS using data from the U.S. Census Bureau, New Residential Construction Historical Data, http://www.census.gov/construction/nrc/historical_data/. Data are through July 2020. Notes: Figure reflects starts in one-unit structures only, some of which may be built for rent rather than sale. The seasonally adjusted annual rate is the number of housing starts that would be expected if the number of homes started in that month (on a seasonally adjusted basis) were extrapolated over an entire year.

High housing construction costs have led to a greater share of new housing being built at the more expensive end of the market over the last several years. To the extent that new homes are concentrated at higher price points, supply and price pressures may be exacerbated for lower-priced homes.¹⁷

Mortgage Market Composition

Figure 5. Share of Mortgage Originations by Type 2019

Source: Figure created by CRS based on Inside Mortgage Finance data as reported in Urban Institute, Housing Finance Policy Center, Housing Finance at a Glance: A Monthly Chartbook, February 2020, p. 8. Notes: Figure shows share of first-lien mortgage originations by dollar volume.

After a mortgage is originated, it might be held in a financial institution's asset portfolio, or it might be securitized through one of several channels.¹⁸ Two government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, issue mortgage-backed securities and guarantee investors' payments on those securities. Mortgages that are insured or guaranteed by a federal agency, such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA), are eligible to be included in mortgage-backed securities guaranteed by Ginnie Mae, part of the Department of Housing and Urban Development. Private companies can also issue mortgage-backed securities without a government or GSE guarantee, known as private label securities. The shares of mortgages that are provided through each of these channels may be relevant to policymakers because of their implications for mortgage access and affordability as well as the federal government's exposure to risk.

As shown in Figure 5, a little under two-thirds of the total dollar volume of mortgages originated was either backed by Fannie Mae or Freddie Mac (43%) or guaranteed by a federal agency such as FHA or VA (19%) in 2019. Over one-third of the dollar volume of mortgages originated was held in bank portfolios, while close to 2% was included in a private-label security without government backing.

The shares of mortgage originations backed by Fannie Mae and Freddie Mac and held in bank portfolios in 2019 were roughly similar to their respective shares in the early 2000s. The share of private-label securitization has been, and continues to be, small since the housing market turmoil of the late 2000s, while the FHA/VA share is higher than it was in the early and mid-2000s.¹⁹ The share of mortgages insured by FHA or guaranteed by VA was low by historical standards during that time period as many households opted for other types of mortgages, including subprime mortgages.

In 2020, during the COVID-19 pandemic, the share of new mortgage originations backed by Fannie Mae and Freddie Mac increased, reaching 62% in the third quarter of 2020. The share held in bank portfolios decreased to about 20% in the third quarter of 2020, while the FHA/VA share decreased by a smaller amount, to about 17%.²⁰

Rental Housing Markets

As has been the case in owner-occupied housing markets, affordability has been a prominent concern in rental markets in recent years. In the years since the housing market turmoil of the late 2000s, the number and share of renter households has increased, leading to lower rental vacancy rates and higher rents in many markets. The extent to which these trends in rents and vacancies will continue in light of the pandemic and related policy responses—including the imposition of various eviction moratoria discussed later in this report—is unclear.

Share of Renters

The housing and mortgage market turmoil of the late 2000s led to a substantial decrease in the homeownership rate and a corresponding increase in the share of renter households. As shown in Figure 6, the share of renters increased from about 31% in 2005 and 2006 to a high of about 36.6% in 2016, before beginning to decrease and reaching 35.4% in 2019. The homeownership rate correspondingly fell from a high of 69% in the mid-2000s to 63.4% in 2016, before rising to 64.6% in 2019.²¹

Figure 6. Rental and Homeownership Rates 1965–2019

Source: Figure prepared by CRS based on data from the U.S. Census Bureau, Annual Housing Vacancy and Homeownership Survey, Annual Statistics, Table 14, "Homeownership Rates by Area."

The overall number of occupied housing units also increased over this time period, from nearly 110 million in 2006 to 123 million in 2019; most of this increase has been in renter-occupied units.²² The number of renter-occupied units increased from about 34 million in 2006 to about 44 million in 2019. The number of owner-occupied housing units fell from about 75 million units in 2006 to about 74 million in 2014, but has since increased to about 79 million units in 2019.

In general, it is too early to know how the COVID-19 pandemic may influence the share of households who rent or own their homes, as it will take time for the effects of the pandemic on owners and renters to fully play out and be reflected in the data.²³

Rental Vacancy Rates

The higher number and share of renter households has had implications for rental vacancy rates and rental housing costs. More renter households increases competition for rental housing, which may in turn drive up rents if there is not enough new rental housing created (whether through new construction or conversion of owner-occupied units to rental units) to meet the increased demand.

As shown in Figure 7, the rental vacancy rate has generally declined in recent years and was 6.4% at the end of 2019. The potential impact of the COVID-19 pandemic on rental vacancy rates is unclear, in part because the pandemic has affected more recent data collection for this survey.²⁴

Figure 7. Rental Vacancy Rates Q1 1995–Q4 2019

Source: Figure created by CRS based on data from U.S. Census Bureau, Housing Vacancies and Homeownership Historical Tables, Table 1, "Quarterly Rental Vacancy Rates: 1956 to Present," http://www.census.gov/housing/hvs/data/histtabs.html.

Rental Housing Affordability

Rental housing affordability is impacted by a variety of factors, including the supply of rental housing units available, the characteristics of those units (e.g., age and amenities), the demand for available units, and renter incomes. New housing units have been added to the rental stock in recent years through both construction of new rental units and conversions of existing owner-occupied units to rental housing. However, the supply of rental housing has not necessarily kept pace with the demand, particularly among lower-cost rental units, and low vacancy rates have been especially pronounced in less-expensive units.²⁵

The increased demand for rental housing, as well as the concentration of new rental construction in higher-cost units, has led to increases in rents in recent years. Rents have increased faster than renter incomes, reducing rental affordability.²⁶ Rising rental costs and renter incomes that are not keeping up with rent increases over the long term can contribute to housing affordability challenges, particularly for households with lower incomes.

Under the most commonly used definition, housing is considered to be affordable if a household is paying no more than 30% of its income in housing costs. Households that pay more than 30% are considered to be cost-burdened, and those that pay more than 50% are considered to be severely cost-burdened. The overall number of cost-burdened renter households increased from 14.8 million in 2001 to 20.4 million in 2019, or about 46% of all renter households.²⁷ (Over this time period, the overall number of renter households has increased as well.) While housing cost burdens can affect households of all income levels, and have been growing among middle-income households,²⁸ they are most prevalent among the lowest-income households. In 2019, 83% of renter households with incomes below $15,000 experienced housing cost burdens, and 72% experienced severe cost burdens.²⁹ A shortage of lower-cost rental units that are both available and affordable to extremely low-income renter households (households that earn no more than 30% of area median income), in particular, contributes to these cost burdens.³⁰

The COVID-19 Pandemic and Housing

The COVID-19 pandemic that began in early 2020 is having wide-ranging effects on public health and the economy. The pandemic has led to a number of housing-related concerns, including, among other things, concerns about housing insecurity among both renters and homeowners.

Congress and federal agencies have responded to these concerns by taking a variety of actions. In general, these actions have included providing additional federal funding for several housing programs, establishing temporary protections for certain renters and homeowners, and taking actions intended to support the housing finance system more broadly.

As the economy entered recession and some temporary assistance measures began to expire, many policymakers and others called for additional federal action. Numerous bills to further address COVID-19 pandemic-related housing issues were introduced and some were considered. As the 116^th Congress drew to a close, the Consolidated Appropriations Act, 2021 (P.L. 116-260) was enacted with additional COVID-19 pandemic relief measures, including some related to housing.

This section of the report discusses the effects of the pandemic on housing and federal responses during the 116^th Congress.

The COVID-19 Pandemic and Effects on Housing

The pandemic has led to increased housing insecurity as many households experience income disruptions. Such disruptions can lead to difficulties making rent or mortgage payments. According to data from the Census Bureau's Household Pulse Survey, 19% of renters and 12% of owners reported not being current on housing payments in the survey taken between December 9 and December 21, 2020 (see Figure 8). Larger shares—35% of renters and 17% of owners—reported having no confidence or slight confidence that they would make the following month's payment, including those who expected their payments to be deferred (see Figure 9).³¹ (Not all respondents reporting no or slight confidence in making the next month's payment will actually miss their payment, however.³²) These figures have increased over time for renters in particular.

Figure 8. Renters and Owners Reporting Being Behind on Housing Payments September–December 2020

Source: Figure created by CRS based on data from the Census Bureau's Household Pulse Survey, Phases 2 and 3. Notes: Percentages are calculated as a share of individuals who reported living in renter-occupied/owner-occupied housing units with rent or mortgage payments due; that is, units that are occupied without rent or owned free and clear and units where no payment status is reported are excluded.

Figure 9. Renters and Owners Reporting Slight or No Confidence in Ability to Make Next Month's Housing Payment September–December 2020

Source: Figure created by CRS based on data from the Census Bureau's Household Pulse Survey, Phases 2 and 3. Notes: These figures include those reporting slight confidence that they will make next month's payment or no confidence that they will make next month's payment, and those that anticipate that next month's payment is or will be deferred. Percentages are calculated as a share of individuals who reported living in renter-occupied/owner-occupied housing units with rent or mortgage payments due; that is, units that are occupied without rent or owned free and clear and units where no payment status is reported are excluded.

For most of 2020, many households were protected by federal and state or local eviction or foreclosure moratoriums. It is not yet clear to what extent renters and homeowners will be able to make their rent or mortgage payments or make up missed payments when those protections expire. (The end dates for eviction and foreclosure protections depend on a variety of factors, including the specific protection in question and whether any extensions are issued.)

As described in the "Housing and Mortgage Market Conditions" section, some data are available on the trajectory of national housing market indicators during the first several months of the pandemic. However, the full effects of the COVID-19 pandemic on housing markets will not be known for some time. Such effects will depend on a variety of factors, including the duration of the public health threat and the timing and pattern of economic recovery, and involve a high degree of uncertainty. Impacts may vary across the country based on differences in local housing markets as well as geographic variation in the prevalence of COVID-19 and local responses. The impacts are likely to vary across demographic groups, due in part to existing differences in housing conditions as well as the uneven distribution of the health and economic consequences of the pandemic.³³

Federal Housing Responses to the COVID-19 Pandemic

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136), a COVID-19 pandemic response package that included, among many other things, several provisions related to housing. These included certain temporary protections for renters in properties with federal assistance or federal backing and homeowners with federally backed mortgages, as well as increased funding for several housing programs.

Both prior to and after the passage of the CARES Act, federal agencies took various administrative actions to address housing concerns related to the COVID-19 pandemic. In addition, on August 8, 2020, President Trump signed an Executive Order related to the COVID-19 pandemic and housing.³⁴ The Executive Order directed several federal agencies to examine authorities or resources that they may be able to use to further assist tenants or homeowners affected by COVID-19 to help them avoid eviction or foreclosure. It did not itself provide any new resources or implement any additional actions related to evictions and foreclosures. (For more information on this Executive Order, see CRS Legal Sidebar LSB10532, President Trump's Executive Actions on Student Loans, Wage Assistance, Payroll Taxes, and Evictions: Initial Takeaways.) The Executive Order, among other things, directed the Secretary of Health and Human Services (HHS) and the Centers for Disease Control and Prevention (CDC) to consider whether measures to temporarily pause evictions were necessary to prevent the spread of COVID-19 between states. On September 4, 2020, the CDC announced a national eviction moratorium to last until the end of the year.

In December 2020, the Consolidated Appropriations Act, 2021 (P.L. 116-260) was enacted. The law included regular FY2021 appropriations, COVID-19 pandemic relief and response provisions, and additional legislative provisions that were not specific to COVID-19. In terms of COVID-19 pandemic provisions related to housing, most notably, the law included an extension of the CDC's eviction moratorium and funding for rental assistance.

Federal Interventions Related to Rental Housing

While all types of households may be at risk of housing instability due to the COVID-19 pandemic, renters may be particularly vulnerable. This is both because more financially vulnerable populations are more likely to be renters, and because the process for evicting a household from a rental unit is generally faster than the process of foreclosing on a mortgage. As such, there have been several policy interventions aimed specifically at aiding renters.

CARES Act Rental Housing Provisions

To protect renters experiencing COVID-19 pandemic-related financial hardships, the CARES Act included a 120-day moratorium on eviction filings for tenants in rental properties with federal assistance or federally related financing, as well as a prohibition on charging late fees for nonpayment of rent for the same time period. These protections were designed to alleviate the economic and public health consequences of tenant displacement during the pandemic. They supplemented temporary eviction moratoria and rent freezes implemented in states and cities by governors and local officials using emergency powers. The CARES Act eviction moratorium expired on July 24, 2020, though the law also required that landlords provide tenants with at least 30 days' notice before requiring tenants to vacate a covered property after the moratorium expired. Therefore, tenants should not have been required to leave covered rental units until at least August 23.

Separate from the eviction moratorium, the CARES Act also included provisions related to forbearance for federally backed multifamily mortgages (discussed further below). The CARES Act provided that multifamily mortgage borrowers receiving forbearance must provide certain tenant protections during the forbearance period. Namely, owners cannot evict tenants for nonpayment of rent or charge late fees for the duration of the forbearance. Therefore, some tenants may benefit from federal protection from eviction because they live in a property with a federally backed multifamily mortgage subject to a forbearance agreement.

In addition, other temporary assistance provided in the CARES Act, such as federal unemployment insurance supplemental payments, likely helped some renters make housing payments and therefore avoid eviction. While this assistance was not specific to housing, households could use it to help maintain housing in light of income disruptions.

For more information on CARES Act protections for renters, see the following:

• CRS Insight IN11320, CARES Act Eviction Moratorium.

CDC's National Eviction Moratorium

On September 4, the Centers for Disease Control and Prevention published an order in the Federal Register implementing a national eviction moratorium through December 31, 2020.³⁵ (In December 2020, P.L. 116-260 extended the moratorium through January 31, 2021.) The moratorium protects certain tenants from eviction for non-payment of rent. The CDC relied on broad authority that it has to take actions to prevent the spread of communicable diseases between states to implement this moratorium.³⁶ In the Federal Register notice announcing it, the CDC described the public health risks posed by evictions and their effects during a pandemic.

Unlike the CARES Act eviction moratorium, the CDC's eviction moratorium potentially applies to renters in any rental property, not just those with federal financing or federal assistance. While the CARES Act moratorium applied automatically to renters in covered properties, the CDC moratorium requires eligible renters to provide landlords a document that attests to their eligibility. Eligible renters must attest that they

• meet income eligibility criteria; namely, that they either 1) expect to have incomes no higher than $99,000 ($198,000 if filing a joint tax return) in 2020, 2) were not required to report income to the Internal Revenue Service in 2019, or 3) received an Economic Impact Payment under Section 2201 of the CARES Act;
• have made "best efforts to obtain all available government assistance" to pay rent;
• are unable to pay full rent due to certain specified hardships;
• are making "best efforts" to make partial payments as close as possible to the full payment as circumstances permit; and
• would likely become homeless, move to a homeless shelter, or move into housing with others in close quarters if evicted due to a lack of available housing options.

Renters must also attest that they understand that the order does not relieve them of the obligation to pay rent, and does not prohibit landlords from charging fees, penalties, or interest in accordance with applicable contracts. (In contrast, the CARES Act prohibited landlords from charging fees, penalties, or interest during the eviction moratorium.) The CDC moratorium does not supersede state or local eviction moratoria that provide greater protections.

While the CARES Act did not explicitly include any penalties for noncompliance, the CDC's order specifies potential penalties (fines and/or jail time) for landlords who do not comply. Renters who are not truthful in their attestations could be found guilty of perjury and be subject to associated penalties.

The CDC's national eviction moratorium order raised a variety of questions and has been the subject of legal challenges.³⁷ In addition to questions surrounding the CDC's authority to issue such a moratorium, there have been questions around issues such as how enforcement is being carried out and how many renters may seek protection. Industry groups representing property owners have raised concerns about the impact of the eviction moratorium on owners, who may have difficulty covering the costs of the property if tenants are unable to pay rent.³⁸ Tenant advocates, while generally welcoming the moratorium, also noted that it does not help tenants pay rent and have raised concerns about what happens to renters when the moratorium ends.³⁹ Both owner and tenant advocates called for federal rental assistance to help tenants make rent payments.⁴⁰ (The COVID-19 pandemic relief package enacted in December 2020 included funding for rental assistance.)

For more information on the CDC's eviction moratorium, see CRS Insight IN11516, Federal Eviction Moratoriums in Response to the COVID-19 Pandemic.

COVID-19 Pandemic Relief Provisions in the Consolidated Appropriations Act, 2021

In December 2020, Congress passed and President Trump signed the Consolidated Appropriations Act, 2021, which, among other things, included additional COVID-19 pandemic relief provisions. In relation to housing, the law extended the expiration date of the CDC's eviction moratorium until January 31, 2021. It also provided $25 billion for rental assistance funding for states and localities through the Coronavirus Relief Fund administered by the Department of the Treasury.

The law also included additional COVID-19 pandemic-related assistance, such as relief payments for certain households and provisions related to unemployment insurance, that were not specific to housing but may help some households pay rent.

Federal Interventions Related to Mortgages

The CARES Act requires mortgage servicers to grant forbearance requests for borrowers with federally backed mortgages who are experiencing a financial hardship related to the COVID-19 pandemic.⁴¹ Mortgage forbearance allows a household to reduce or suspend mortgage payments for an agreed-upon period of time, but it does not forgive the amounts owed; borrowers and mortgage servicers must negotiate an agreement for the repayment of the missed amounts.

Under the CARES Act, forbearance for federally backed single-family mortgages can be for up to 360 days (an initial period of up to 180 days, with an extension of up to an additional 180 days). For federally backed multifamily mortgages, the forbearance could be for up to 90 days (an initial period of up to 30 days, with two possible 30-day extensions).⁴² Federally backed mortgages include those insured, guaranteed, or originated by a federal agency, such as HUD, USDA, or VA, or purchased or securitized by two government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. They are estimated to constitute approximately 70% of outstanding single-family mortgages.⁴³

The CARES Act also temporarily suspended foreclosures on federally backed single-family mortgages. The CARES Act foreclosure moratorium was in effect for 60 days from March 18, 2020; however, the federal agencies that back mortgages and Fannie Mae and Freddie Mac have announced multiple subsequent extensions. As of the end of the 116^th Congress, all of these entities had extended the foreclosure moratorium for mortgages they back into 2021.⁴⁴

Federal agencies that back mortgages, such as the Federal Housing Administration, and GSEs such as Fannie Mae and Freddie Mac (along with their regulator, the Federal Housing Finance Agency, or FHFA⁴⁵) also took additional steps to assist borrowers and other mortgage market participants.⁴⁶ These steps included the following:

• Assistance for Mortgage Borrowers: One question following mortgage forbearance is how the borrower will be required to repay missed payments. The CARES Act was silent on this question. Several of the federal entities involved in mortgages stated that borrowers with mortgages they back who are not able to repay the missed amounts in a lump sum at the end of the forbearance will be offered other repayment options,⁴⁷ and announced specific options for deferring the missed amounts to the end of the loan term.⁴⁸
• Temporary Mortgage Origination Flexibilities: Certain aspects of the mortgage origination process present challenges during the pandemic. In response, federal entities made temporary changes to certain requirements for mortgages that they back in order to minimize the effects on mortgage origination and home buying. These changes include allowing for alternatives to interior home appraisals in some circumstances and providing flexibilities related to the process for re-verifying a borrower's employment before closing.⁴⁹ FHA and Fannie Mae and Freddie Mac each also announced temporary policies that allow them to insure or purchase, respectively, mortgages that otherwise meet their requirements but are in forbearance.⁵⁰ (Usually, mortgages that are already in forbearance are not eligible for FHA insurance or purchase by Fannie Mae or Freddie Mac.) To help balance the increased risk that these mortgages pose to these entities, their acceptance of these mortgages is subject to certain conditions.⁵¹ Some lawmakers have raised concerns about these conditions, however, and their potential impact on mortgage credit access.⁵²
• Support for Mortgage Servicers: Mortgage servicers are often required to advance payments to investors in mortgage-backed securities even if the borrower has not made their payments on time, including in the case of forbearance. Large volumes of delinquent payments or mortgage forbearances can therefore cause liquidity issues for some servicers.⁵³ In response, Ginnie Mae and Fannie Mae and Freddie Mac each took certain steps to address potential servicer liquidity issues for mortgages that they back.⁵⁴

In addition, the Federal Reserve agreed to purchase mortgage-backed securities to help provide liquidity and stability in the mortgage market.⁵⁵ These purchases can facilitate the funding of mortgages, even if investors' demand for mortgage-backed securities declines during the pandemic.

For more information, see the following:

• CRS Insight IN11334, Mortgage Provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
• CRS Insight IN11316, COVID-19: Support for Mortgage Lenders and Servicers.
• CRS Insight IN11385, The Impact of COVID-19-Related Forbearances on the Federal Mortgage Finance System.

With a few limited exceptions, the COVID-19 pandemic relief provisions included in the Consolidated Appropriations Act, 2021, in December 2020 did not address mortgages. Title X of Division FF temporarily amended certain provisions of the federal Bankruptcy Code in ways that may affect the treatment of mortgages in bankruptcy. Among other things, these temporary amendments allow certain debtors who have defaulted on their mortgage payments due to the COVID-19 pandemic to obtain a discharge of their debts in bankruptcy even if they have failed to make certain payments required by their bankruptcy plan. They also prohibit mortgage servicers from denying mortgage forbearance under the CARES Act to a borrower solely because he or she has filed for bankruptcy. In addition, Section 542 of Division N provides temporary authority for FHA to insure operating loss loans for hospitals and residential care facilities that are experiencing COVID-19 pandemic-related losses and have a primary mortgage insured by FHA.

Increased Funding for Housing Programs

The CARES Act appropriated an additional $12.4 billion for HUD housing programs in FY2020. These funds were directed to several HUD programs to provide additional resources to address emerging housing needs caused by the COVID-19 pandemic, to help cover increased costs in rental assistance programs, and for administrative capacity and oversight. The CARES Act also provides the HUD Secretary broad waiver authority in most accounts to expedite or facilitate the use of these funds to respond to the coronavirus.

The majority of the funds—about $9.4 billion—were for several HUD grant programs, many of which provide relatively flexible funding to state and local governments or other entities for eligible affordable housing, community development, or related activities. Because these programs generally fund a range of allowable activities, they can be used to address a variety of emerging needs related to the pandemic. The largest amounts were for the Community Development Fund, the account that funds Community Development Block Grants (CDBG) ($5 billion), and Emergency Solutions Grants (ESG) ($4 billion). States and local governments can use CDBG funds for a range of housing and community development activities, while ESG, one of the Homeless Assistance Grants, can be used for a range of services for those who are homeless or at risk of homelessness. The law also provided funds to grant programs that assist tribes, fair housing programs, and the Housing Opportunities for Persons with AIDS (HOPWA) program.

The CARES Act also provided about $3 billion to maintain existing rental assistance in several HUD programs. HUD rental assistance programs subsidize the difference between tenant contributions toward rent and a unit's rent (or operating expenses). When tenants' incomes are reduced—such as by rising unemployment triggered by the pandemic—their rent contributions decrease, which increases federal subsidy costs. The CARES Act provided supplemental funding to help cover those anticipated increased costs in several HUD programs, including the public housing, Housing Choice Voucher, and project-based Section 8 programs.

The CARES Act also provided $50 million for HUD administrative offices and $5 million for the HUD Office of the Inspector General for oversight of activities funded under the CARES Act.

For more information, see the following:

• CRS Insight IN11319, Funding for HUD in the CARES Act.
• CRS Insight IN11315, Community Development Block Grants and the CARES Act.
• CRS Insight IN11277, Responding to the COVID-19 Pandemic with Community Development Block Grant (CDBG) Authorities.

Other Housing-Related COVID-19 Pandemic Bills in the 116^th Congress

A variety of additional bills were introduced during the 116^th Congress to address pandemic-related housing issues. For example, some bills would have provided funding for rental or mortgage assistance; some would have made changes to the eviction, foreclosure, and forbearance provisions of the CARES Act; and some would have addressed assistance for landlords or mortgage servicers who are affected by missed rental or mortgage payments. Some of these additional bills were considered by Congress but ultimately not enacted.

The Heroes Act (H.R. 6800), which the House passed in May, included several housing-related provisions in Division K. These included additional funding for some existing housing programs as well as for certain new programs to respond to pandemic-related housing needs; extensions, expansions, and changes to the CARES Act eviction moratorium, foreclosure moratorium, and mortgage forbearance provisions; and access to financial support for landlords and mortgage servicers.⁵⁶ These provisions were also included in a standalone bill, the Emergency Housing Protections and Relief Act of 2020 (H.R. 7301), that also passed the House. The House passed a revised version of the Heroes Act (H.R. 925) on October 1; the broad contours of the housing-related provisions in H.R. 925 were largely similar to those in H.R. 6800, though there were some differences in the details and in the specific provisions that were included. No version of the Heroes Act was enacted before the end of the 116^th Congress.

For more information, see the following:

• CRS Report R46434, HEROES Act, Division K—COVID-19 Housing, Economic Relief, and Oversight Act.

Other Housing Issues in the 116^th Congress

Outside of the pandemic, a variety of other housing-related issues were of interest during the 116^th Congress, including issues related to housing finance, housing assistance programs, administrative actions related to affordable housing, housing and disaster relief, and housing-related tax provisions.

Housing Finance

Status of Fannie Mae and Freddie Mac

Fannie Mae and Freddie Mac are two government-sponsored enterprises (GSEs) chartered by Congress to provide liquidity to the secondary markets for single-family and multifamily residential mortgages. The GSEs purchase mortgages from loan originators, retain the credit (default) risk from the mortgages they purchase, and subsequently issue mortgage-backed securities (MBS). Investors who purchase the MBS are guaranteed to get their initial principal investment returned, but they assume the risk that borrowers may choose to repay their mortgages ahead of schedule (e.g., by refinancing or selling the home), known as prepayment risk.⁵⁷ In short, the GSEs' securitization process detaches two mortgage risks into separate components.⁵⁸ The GSEs retain the default risk component for a fee and transfer the prepayment risk component to MBS investors.

The Federal Housing Finance Agency (FHFA), an independent federal government agency created by the Housing and Economic Recovery Act of 2008 (HERA; P.L. 110-289), regulates the GSEs for prudential safety and soundness and ensures they meet their affordable housing mission goals. In September 2008, the GSEs experienced losses that exceeded their statutory minimum capital requirement levels due to the high rate of mortgage defaults. The GSEs also experienced losses following spikes in short-term borrowing rates that occurred while they were funding long-term assets held in their portfolios. The GSEs subsequently agreed to be placed under conservatorship by FHFA, which now has the powers of management, boards, and shareholders.⁵⁹

Since Fannie Mae and Freddie Mac entered conservatorship in 2008, policymakers have expressed interest in comprehensive housing finance reform legislation that would resolve the conservatorships of these GSEs and address the underlying issues that are perceived to have led to their financial trouble and conservatorships. Previous Congresses have considered housing finance reform legislation to varying degrees, but none has been enacted. Early in the 116^th Congress, Senate Committee on Banking, Housing, and Urban Affairs Chairman Mike Crapo released an outline for potential housing finance reform legislation.⁶⁰ The committee held hearings on it shortly thereafter.⁶¹

In March 2019, President Trump issued a Memorandum on Federal Housing Finance Reform directing the Treasury and HUD secretaries to develop plans to achieve certain housing finance reform goals, including both legislative and administrative reforms.⁶² Treasury and HUD released these plans on September 5, 2019.⁶³ Both plans included a variety of legislative recommendations, as well as recommendations for steps that the agencies could take administratively in the absence of legislation. The Senate Banking Committee and the House Financial Services Committee each held a hearing on the plans.⁶⁴

Outside of any legislative efforts related to housing finance reform, FHFA has taken a variety of administrative and regulatory actions related to Fannie Mae and Freddie Mac in its dual roles as their regulator and conservator.

Status of FHFA Administrative Requirements for GSEs While Under Conservatorship

Since conservatorship, the FHFA has focused on initiatives to standardize many aspects of the GSEs' operations, which include their mortgage data collection processes, securitization processes, mortgage servicing policies (e.g., resolving delinquencies), and MBS issuances. Such standardization arguably increases transparency, reduces the length of the single-family mortgage origination and securitization processes, and ultimately increases the liquidity and uniform pricing of the GSEs' issued securities.⁶⁵ These efforts have resulted in the GSEs issuing two types of securities to facilitate lending in the single-family mortgage market. The GSEs continue to transfer prepayment risks but via a new financial instrument (the uniform mortgage-backed security); and they now transfer default risks (credit risk transfers, CRT) to private investors.

Uniform Mortgage-Backed Security

The FHFA, under the single security initiative, directed the GSEs to align their key contractual and business practices by acquiring mortgages with similar prepayment speeds along with other features.⁶⁶ Each GSE continues to separately purchase conforming mortgages and guarantee the credit risks linked to the MBS trusts it creates. The prepayment speeds, however, are now required to align such that they do not diverge by more than 2% over a three-month interval.⁶⁷ With similar prepayment characteristics, Fannie Mae's and Freddie Mac's MBS trusts would generate similar cash-flow predictability and prepayment speeds and, therefore, facilitate the creation of uniform securities. Rather than separate MBS issuances, the FHFA directed the GSEs to issue one common security—the uniform mortgage-backed security (UMBS). However, the GSEs would continue to separately issue and guarantee MBS that do not meet the standardization requirements for UMBS.

The issuance of UMBS began on June 3, 2019.⁶⁸ The combined market for the GSEs' MBS issuances is expected to be more liquid because the UMBSs trade at a single price (rather than at two different prices).⁶⁹ FHFA monitors the GSEs to ensure that their underwriting policies remain intact to avoid material misalignment that compromises interchangeability of the underlying mortgages used to create UMBS.⁷⁰

Credit Risk Transfer

In July 2013, the GSEs initiated new CRT programs to share with the private sector a portion of the default risk linked to their guaranteed single-family mortgages held in the MBS trusts.⁷¹ Investors preferring exposure only to mortgage prepayment risk may continue to purchase MBSs; however, the private sector may now purchase CRT issuances, which function similarly to MBSs, to earn revenue in exchange for assuming exposure to the credit risk.⁷² The GSEs typically transfer to CRT investors some of the credit risk linked to mortgages with loan-to-values (LTVs) greater than 60% (or borrowers with 40% or less in accumulated home equity, meaning that they are more vulnerable to the possibility of owing more than the value of their homes if housing prices were to fall).⁷³ When defaults occur, the GSEs reduce the returns paid to CRT investors (similar to reducing the returns to MBSs investors after prepayments occur). Conversely, the GSEs retain the credit risk for mortgages with lower LTVs (or borrowers with 41% or more in accumulated home equity such that their outstanding balances are significantly below the value of their residential properties), which are less likely to default.⁷⁴ From 2013 to 2019, the GSEs transferred a total of $3.479 trillion of credit risk to private investors.⁷⁵

Final Capital Rule

Although the exact definition of capital for financial firms is determined by law and regulation, it generally refers to common or preferred equity (as a percentage of assets), which can absorb financial losses. The FHFA suspended the GSEs' capital requirements during conservatorship, and they must pay dividends only to Treasury (as opposed to private shareholders) while they are under conservatorship. As a prerequisite for exiting conservatorship, the GSEs must increase their holdings of capital reserves.⁷⁶ Given that pre-conservatorship capital levels for the GSEs were not sufficient to avoid conservatorship, HERA gave FHFA the authority to increase capital standards above the statutory minimum as necessary.⁷⁷

In December 2020, FHFA finalized a rule that establishes risk-based and leverage capital requirements for Fannie Mae and Freddie Mac, which would be effective on February 16, 2021.⁷⁸ The proposed framework borrows concepts from the capital regulatory framework for large banks such as the definition of capital, various capital buffers, and a risk weight capital floor that would be applied for any CRT exposures retained in portfolio.⁷⁹

Multifamily Housing Financing Activities

Multifamily properties are generally defined as properties that include five or more housing units. FHFA has placed various directives on the GSEs' multifamily programs since conservatorship.⁸⁰ Namely, in 2014, it placed annual caps on the overall dollar volume of multifamily mortgages that each GSE can purchase to shrink their multifamily operations and resulting risks to taxpayers.⁸¹ It excluded mission-driven purchases from counting toward the cap to encourage GSE support in the affordable housing and underserved market segments.⁸² Beginning in 2016, FHFA also excluded loans that would finance certain energy and water efficiency improvements (i.e., green loans) from the multifamily purchase caps to retain focus on mission goals.

On September 13, 2019, FHFA revised its directive regarding the multifamily purchase caps, increasing them from the previous caps of $35 billion each to $100 billion each for Fannie Mae and Freddie Mac. All multifamily mortgage purchases will now count toward the cap—no exemptions or exclusions for mission-driven or green loans. ⁸³ However, 37.5% of the GSEs' loan purchases must be mission driven. The FHFA Director stated that this revision narrows the scope of the GSEs' multifamily programs to maintain the focus on affordable rental units for low- and moderate-income households and other historically underserved renters.⁸⁴

CFPB's Changes to the Qualified Mortgage Rule

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act; P.L. 111-203) requires lenders to make a good faith effort to ensure that residential borrowers have the ability to repay their mortgage loans. If a borrower brings a lawsuit claiming that a lender did not follow this requirement, the lender could be required to pay monetary damages if it is found to have violated the requirements.⁸⁵ On January 10, 2013, the Consumer Financial Protection Bureau (CFPB) released a final rule implementing these ability-to-repay (ATR) requirements; the rule took effect on January 10, 2014.⁸⁶

The final rule provides multiple ways for a loan originator to comply with the ATR requirements,⁸⁷ one of which is by originating a Qualified Mortgage (QM). A General QM is a mortgage that meets certain underwriting standards and lacks various risky loan product features. When a lender issues a General QM, it creates a presumption that the lender has complied with its ATR responsibilities, reducing the lender's legal exposure. The level of protection afforded a lender varies according to the loan's pricing.⁸⁸ General QMs with annual percentage rates (APRs) not exceeding the Average Prime Offer Rate (APOR) by more than 1.5 percentage points qualify for safe harbor status. General QMs with APRs exceeding the APOR by more than that amount are considered higher-priced QMs and benefit from a rebuttable presumption of compliance. The CFPB has explained these legal protections in this way:

Under a safe harbor, if a court finds that a mortgage you originated was a QM, then that finding conclusively establishes that you complied with the ATR requirements when you originated the mortgage. ... Under a rebuttable presumption, if a court finds that a mortgage you originated was a higher-priced QM, a consumer can argue that you violated the ATR rule. However, to prevail on that argument, the consumer must show that based on the information available to you at the time the mortgage was made, the consumer did not have enough residual income left to meet living expenses after paying their mortgage and other debts.⁸⁹

Lenders may be less likely to originate non-QM loans due to the increased legal exposure.

Limiting the borrower's debt-to-income (DTI) ratio to 43% was originally one of the underwriting requirements for a loan to receive General QM status. Mortgages with DTIs exceeding 43% would still qualify as QMs if they meet the eligibility requirements to be insured or guaranteed by FHA, USDA, or VA and meet permanent QM standards established by each of those agencies.⁹⁰ Mortgages with DTIs exceeding 43% could also qualify under another QM category, the Temporary GSE QM (or QM patch). The Temporary GSE QM granted QM status to mortgages eligible for purchase by two government sponsored enterprises (GSEs), Fannie Mae or Freddie Mac, until January 10, 2021 or when they would exit conservatorship, whichever would occur first.⁹¹ On October 20, 2020, the sunset date for the Temporary GSE QM definition was replaced with a provision stating that it would be extended until the mandatory compliance date of a final rule that amends the General QM definition.⁹²

In a January 2019 assessment report of the ATR, the CFPB found that the DTI cap of 43% may be restricting credit access.⁹³ For example, borrowers with mortgages who had demonstrated the ability to repay their loans—but with DTIs exceeding 43%—experienced reductions in credit access when attempting to refinance, suggesting that lenders opted to avoid the legal risk linked to non-compliance with the QM rule. For this and other reasons, the CFPB revisited the QM definitions to possibly obtain a better balance between ensuring a consumer's ability to repay and access to affordable mortgage credit.

On December 10, 2020, the CFPB released a final rule amending the definitions of the General QM.⁹⁴ The final rule is effective on March 1, 2021, meaning that prepared creditors may opt to comply with the revised General QM definition for applications received on or after that date. The mandatory compliance date is July 1, 2021, and applies to all applications received on or after that date. Consequently, the Temporary GSE QM definition sunsets on July 1, 2021. Some of the revisions include the following:⁹⁵

• For the General QM definition, the final rule retains existing product features, underwriting requirements, and limits on points and fees. The 43% DTI ratio requirement, however, is removed and replaced with requirements that are based on the mortgage pricing, which reflects the credit quality of borrowers. The rule would grant safe harbor QM status to a first-lien (primary) mortgage in which the difference between its APR and the APOR does not exceed 1.5 percentage points (or 3.5 percentage points or more for subordinate-lien mortgages).⁹⁶ To qualify as a QM with rebuttable presumption, the final rule limits the difference between the APR and APOR for first-lien mortgages to no more than 2.25 percentage points.
• The final rule removes Appendix Q, which creditors were required to use to verify the borrower's income and debt to satisfy General QM requirements. Instead, the final rule grants safe harbor to creditors that use verification standards specified by the CFPB, which include relevant provisions from the following: Fannie Mae's Single Family Selling Guide, Freddie Mac's Single-Family Seller/Servicer Guide, FHA's Single Family Housing Policy Handbook, the Veteran Administrations Lenders Handbook, and the Field Office Handbook for the Direct Single Family Housing Program and Handbook for the Single Family Guaranteed Loan Program of the U.S. Department of Agriculture (USDA).
• The final rule provides an increase in the loan amount thresholds for first-lien loans with smaller balances and subordinate-liens, which tend to have higher APRs, for QM status. A first-lien secured by a manufactured home (as defined under HUD regulations that establish construction and safety standards) may also be eligible for QM status. The final rule provides the relevant thresholds that the APRs would be allowed to be above the APOR under certain circumstances.

On December 10, 2020, in a separate proposed rule, the CFPB also finalized the seasoned QM loan definition.⁹⁷ A seasoned QM is defined as a first-lien, fixed-rate loan that has met certain performance standards after being held in the portfolio of the originating lender for at least 36 months, referred to as a seasoning period. Over the seasoning period, the loan can have no more than two delinquencies of 30 days or more days and no delinquencies of 60 days. In addition, a seasoned QM must still comply with general restrictions on product features, points, and fees, and meet certain underwriting requirements. A rebuttable presumption QM, therefore, can be seasoned into a safe harbor QM and possibly encourage lending, such as manufactured housing originations, that typically may not be eligible for safe harbor legal protections. The effective and compliance dates for the seasoned QM align with those for the General QM final rule.

Department of Veterans Affairs Loan Guaranty and Maximum Loan Amounts

The Department of Veterans Affairs (VA) insures home loans to veterans as part of the VA Loan Guaranty program. To date, the maximum amount a veteran can borrow has been limited by the Freddie Mac conforming loan limit.⁹⁸ While veterans can enter into loans that exceed the conforming loan limit, they cannot do so without making a down payment. The fact that VA loans do not ordinarily require a down payment is a popular feature of the program—in FY2018, nearly 80% of loans did not have a down payment.⁹⁹

Congress removed the conforming loan limit for VA loans entered into on or after January 1, 2020, as part of the Blue Water Navy Vietnam Veterans Act of 2019 (P.L. 116-23). After the change took effect, most veterans are able to enter into loans of any amount, subject to eligibility, without the need for a down payment. An exception exists for veterans who have outstanding VA loans; they will still be subject to Freddie Mac conforming loan limits.

Housing Assistance

Appropriations for Housing Programs

For several years, concern in Congress about federal budget deficits led to increased interest in reducing the amount of discretionary funding provided each year through the annual appropriations process. This interest manifested most prominently in the enactment of the Budget Control Act of 2011 (P.L. 112-25), which set enforceable limits for both mandatory and discretionary spending.¹⁰⁰ The limits on discretionary spending, which were amended and adjusted since they were first enacted,¹⁰¹ had implications for HUD's budget, the largest source of funding for direct housing assistance, because it is made up almost entirely of discretionary appropriations.¹⁰² In FY2020, the discretionary spending limits were slated to decrease, after having been increased in FY2018 and FY2019 by the Bipartisan Budget Act of FY2018 (BBA; P.L. 115-123), but they were raised again for FY2020 and FY2021 by the Bipartisan Budget Act of 2019 (P.L. 116-37).¹⁰³

More than three-quarters of HUD's appropriations are devoted to three rental assistance programs serving more than 4 million families: the Section 8 Housing Choice Voucher (HCV) program, Section 8 project-based rental assistance, and the public housing program. Funding for the HCV program and project-based rental assistance has been increasing in recent years, largely because of the increased costs of maintaining assistance for households that are currently served by the programs.¹⁰⁴ Public housing has, arguably, been underfunded (based on studies undertaken by HUD of what it should cost to operate and maintain it) for many years.¹⁰⁵ Despite the large share of total HUD funding these rental assistance programs command, their combined funding levels only permit them to serve an estimated one in four eligible families, which creates long waiting lists for assistance in most communities.¹⁰⁶ A similar dynamic plays out in the U.S. Department of Agriculture's Rural Housing Service budget. Demand for housing assistance exceeds the supply of subsidies, yet the vast majority of the RHS budget is devoted to maintaining assistance for current residents.¹⁰⁷

In a budget environment with limits on discretionary spending, pressure to provide increased funding to maintain current services for existing rental assistance programs competes with pressure from states, localities, and advocates to maintain or increase funding for other popular programs, such as HUD's Community Development Block Grant (CDBG) program, grants for homelessness assistance, and funding for Native American housing.

FY2021 Budget

The Trump Administration's budget request for FY2021 proposed a 15% decrease in new appropriations for HUD's programs and activities as compared to the prior year.¹⁰⁸ As in prior budget requests, it proposed to eliminate funding for several programs, including multiple HUD grant programs (CDBG, the HOME Investment Partnerships Program, the Self-Help and Assisted Homeownership Opportunity Program (SHOP), and the public housing Capital Fund), and to decrease funding for most other HUD programs. In proposing to eliminate the grant programs, the Administration cited budget constraints and proposed that state and local governments take on more of a role in the housing and community development activities funded by these programs. Additionally, the budget referenced policy changes designed to reduce the cost of federal rental assistance programs, including the Making Affordable Housing Work Act of 2018 (MAHWA) legislative proposal, released by HUD in April 2018.¹⁰⁹ The proposal would have made a number of changes to the way tenant rents are calculated in HUD rental assistance programs, resulting in rent increases for assisted housing recipients, and corresponding decreases in the cost of federal subsidies. Further, it proposed allowing local program administrators or property owners to institute work requirements for recipients. In announcing the proposal, HUD described it as setting the programs on "a more fiscally sustainable path," creating administrative efficiency, and promoting self-sufficiency.¹¹⁰ Low-income housing advocates were critical of it, particularly the effect increased rent payments may have on families.¹¹¹ It was not introduced or enacted during the 116^th Congress.

Beyond HUD, the Administration's FY2021 budget request for USDA's Rural Housing Service proposed to eliminate funding for most rural housing programs, except for several loan guarantee programs. It would have continued to provide funding to renew existing rental assistance, but also proposed a new minimum rent policy for tenants designed to help reduce federal subsidy costs.

The funding cuts proposed in the President's FY2021 budget requests were included in prior Trump Administration budget requests, but were not adopted in previous appropriations laws, nor in the Consolidated Appropriations Act, 2021.

For more on HUD appropriations trends in general, see CRS Report R42542, Department of Housing and Urban Development (HUD): Funding Trends Since FY2002. For more on the FY2021 process, see CRS Report R46465, Transportation, Housing and Urban Development, and Related Agencies (THUD) Appropriations for FY2021: In Brief.

Housing Vouchers for Foster Youth

Policymakers have raised concerns that youth aging out of foster care lack adequate and affordable housing as they transition to adulthood. A recent national study of young people experiencing homelessness found that one-quarter to one-third had a history of having been in foster care.¹¹² In light of this, both the Administration and Congress have either made or proposed changes to increase access to housing assistance for foster youth.

Under current law, HUD's Family Unification Program (FUP) offers a limited number of vouchers plus services to (1) child welfare involved families for whom lack of stable housing is a risk for family separation or a primary barrier to reunification and (2) youth aging out of foster care and at risk of homelessness. FUP vouchers for youth are unique, in that they are limited to up to 36 months, unlike other vouchers that are not subject to a time limit. Although foster youth are one of the target populations for FUP, according to HUD, only 5% of FUP vouchers are used for youth.¹¹³

In July 2019, HUD announced a new Administration initiative called Foster Youth to Independence (FYI). Under FYI, HUD makes additional vouchers, through the tenant protection set-aside in the Housing Choice Voucher Program, available to serve youth in a program modeled after FUP. In October 2020, HUD announced a new, revised version of FYI.¹¹⁴ This new version is funded from a set-aside of FUP funding included in the FY2020 appropriations law and includes several changes to the original FYI, making it function even more like FUP.¹¹⁵

At the end of the 116^th Congress, legislation was enacted to make a number of changes to the FUP for youth. ¹¹⁶ The law codified many elements of FYI and made a number of other changes designed to increase and improve the use of FUP for youth. Versions of this legislation—Fostering Stable Housing Opportunities—had been introduced across several Congresses,¹¹⁷ had passed the House¹¹⁸ and were the subject of a Senate Banking Committee hearing in the 116^th Congress,¹¹⁹ and predates the creation of HUD's FYI initiative.

Implementation of Housing Assistance Legislation

Several pieces of assisted housing legislation that were enacted in prior Congresses were in the process of being implemented during the 116^th Congress.

Moving to Work (MTW) Expansion

In the FY2016 HUD appropriations law, Congress mandated that HUD expand the Moving to Work (MTW) demonstration by 100 public housing authorities (PHAs).¹²⁰ MTW is a waiver program that allows a limited number of participating PHAs to receive exceptions from HUD for most of the rules and regulations governing the public housing and voucher programs. MTW has been controversial for many years, with PHAs supporting the flexibility it provides (e.g., allowing PHAs to move funding between programs), and low-income housing advocates criticizing some of the policies being adopted by PHAs (e.g., work requirements and time limits). Most recently, the Government Accountability Office (GAO) issued a report raising concerns about HUD's oversight of MTW, including the lack of monitoring of the effects of policy changes under MTW on tenants.¹²¹

HUD was required to phase in the FY2016 expansion and evaluate any new policies adopted by participating PHAs. Following a series of listening sessions and advisory committee meetings, and several solicitations for comment, HUD issued a solicitation of interest for the first two expansion cohorts in December 2018. As of the end of the 116^th Congress, final selections had not yet been made for those cohorts.¹²²

Rental Assistance Demonstration Expansion

The Rental Assistance Demonstration (RAD) was an Obama Administration initiative initially designed to test the feasibility of addressing the estimated $25.6 billion backlog in unmet capital needs in the public housing program¹²³ by allowing local PHAs to convert their public housing properties to either Section 8 Housing Choice Vouchers or Section 8 project-based rental assistance.¹²⁴ PHAs are limited in their ability to mortgage, and thus raise private capital for, their public housing properties because of a federal deed restriction placed on the properties as a condition of federal assistance. When public housing properties are converted under RAD, that deed restriction is removed.¹²⁵ As currently authorized, RAD conversions must be cost-neutral, meaning that the Section 8 rents the converted properties may receive must not result in higher subsidies than would have been received under the public housing program. Given this restriction, and without additional subsidy, not all public housing properties can use a conversion to raise private capital, potentially limiting the usefulness of a conversion for some properties.¹²⁶ While RAD conversions have been popular with PHAs,¹²⁷ and HUD's initial evaluations of the program have been favorable,¹²⁸ a recent GAO study has raised questions about HUD's oversight of RAD, and about how much private funding is actually being raised for public housing through the conversions.¹²⁹

RAD, as first authorized by Congress in the FY2012 HUD appropriations law, was originally limited to 60,000 units of public housing (out of roughly 1 million units).¹³⁰ However, Congress has since expanded the demonstration. Most recently, in FY2018, Congress raised the cap so that up to 455,000 units of public housing will be permitted to convert to Section 8 under RAD, and it further expanded the program so that Section 202 Housing for the Elderly units can also convert. Not only is HUD currently implementing the FY2018 expansion, but the President's FY2021 budget request to Congress—and past several budget requests to Congress—proposed that the cap on public housing RAD conversions be eliminated completely.¹³¹ The cap was not eliminated during the 116^th Congress.

Quality of Federally Assisted Housing

The Housing Act of 1949 set as U.S. policy the promotion of "safe" and "decent" housing. In light of this, federally assisted housing is generally subject to minimum physical quality standards as a condition of receiving assistance, and to periodic inspection to ensure that quality is maintained. Those inspection protocols, including the exact standards the property must meet, the frequency of inspection, and the entity that conducts the inspections, can all vary by program. In recent years, news articles highlighting poor conditions at federally assisted properties and concerns raised by tenants and other stakeholders have focused policymakers' attention on the physical condition of the federally assisted housing stock generally, and of HUD-assisted properties in particular. This has led to calls for changes to various elements of the existing protocols. For example, see the following:

• Beginning in FY2014 and continuing each year since, Congress has included language in the annual HUD appropriations laws directing HUD to take specific actions when a Section 8 project-based rental assistance property scores below a certain threshold. These laws have also provided a suite of enforcement tools from which the Secretary can choose. The exact provisions and tools have changed over the years, and legislation has been introduced to codify some or all of them in the law governing the Section 8 PBRA program (including H.R. 3745, the HUD Inspection Oversight Act of 2019).
• Congress has directed the Government Accountability Office to investigate various elements of HUD's inspection process, including the presence of lead-based paint in assisted housing. GAO has issued several reports and a series of recommendations, and has more underway.¹³²
• Beginning in early 2019, HUD launched the National Standards for the Physical Inspection of Real Estate (NSPIRE) initiative, which HUD has characterized as a "wholesale reexamination" of the agency's inspection process. It involves a number of administrative changes to the current process (including shortening notice to owners before inspections) as well as a demonstration to test new standards for inspection and collecting information about HUD-assisted properties that launched in August 2019.¹³³
• On November 20, 2019, the Subcommittee on Housing, Community Development, and Insurance of the House Financial Services Committee held a hearing entitled "Safe and Decent? Examining the Current State of Residents' Health and Safety in HUD Housing." The hearing featured witnesses from various housing providers and tenant groups and also discussed various draft and introduced bills related to reforms to HUD's inspection and oversight protocols, including H.R. 3745.
• A number of bills were introduced in the 116^th Congress designed to address specific hazards in federally assisted housing, including lead-based paint hazards, lead hazards in drinking water, and carbon monoxide poisoning.¹³⁴ New carbon monoxide detector requirements were enacted as a part of the Consolidated Appropriations Act, 2021 (Section 101 of Title I of Division Q of P.L. 116-260).

Native American Housing Programs

Native Americans living in tribal areas experience a variety of housing challenges. Housing conditions in tribal areas are generally worse than those for the United States as a whole, and factors such as the legal status of trust lands present additional complications for housing.¹³⁵ In light of these challenges, and the federal government's long-standing trust relationship with tribes, certain federal housing programs provide funding specifically for housing in tribal areas.

Tribal HUD-VASH

The Tribal HUD-Veterans Affairs Supportive Housing (Tribal HUD-VASH) program provides rental assistance and supportive services to Native American veterans who are homeless or at risk of homelessness. Tribal HUD-VASH is modeled on the broader HUD-Veterans Affairs Supportive Housing (HUD-VASH) program, which provides rental assistance and supportive services for homeless veterans. Tribal HUD-VASH was initially created and funded through the FY2015 HUD appropriations act (P.L. 113-235), and funds to renew rental assistance have been provided in subsequent appropriations acts. No separate authorizing legislation for Tribal HUD-VASH currently exists.

In the 116^th Congress, a bill to codify the Tribal HUD-VASH program (S. 257) was ordered to be reported favorably by the Senate Committee on Indian Affairs in February 2019 and passed the full Senate in June 2019. An identical bill (H.R. 2999) was introduced in the House and referred to the Committee on Financial Services. Neither bill was ultimately enacted. A substantively identical bill had also passed the Senate during the 115^th Congress (S. 1333); it was not considered by the House.

For more information on HUD-VASH and Tribal HUD-VASH, see CRS Report RL34024, Veterans and Homelessness.

NAHASDA Reauthorization

The main federal program that provides housing assistance to Native American tribes and Alaska Native villages is the Native American Housing Block Grant (NAHBG), which was authorized by the Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA, P.L. 104-330). NAHASDA reorganized the federal system of housing assistance for tribes while recognizing the rights of tribal self-governance and self-determination. The NAHBG provides formula funding to tribes that can be used for a range of affordable housing activities that benefit primarily low-income Native Americans or Alaska Natives living in tribal areas. A separate block grant program authorized by NAHASDA, the Native Hawaiian Housing Block Grant (NHHBG), provides funding for affordable housing activities that benefit Native Hawaiians eligible to reside on the Hawaiian Home Lands.¹³⁶ NAHASDA also authorizes a loan guarantee program, the Title VI Loan Guarantee, for tribes to carry out eligible affordable housing activities.

The most recent authorization for most NAHASDA programs expired at the end of FY2013, although NAHASDA programs have generally continued to be funded in annual appropriations laws. (The NHHBG has not been reauthorized since its original authorization expired in FY2005, though it has continued to receive funding in most years.¹³⁷) NAHASDA reauthorization legislation was considered in varying degrees in the 113^th, 114^th, and 115^th Congresses but none was ultimately enacted.¹³⁸ In general, tribes and Congress have been supportive of NAHASDA, though there has been some disagreement over specific provisions or policy proposals that have been included in reauthorization bills. Some of these disagreements involve debates over specific program changes that have been proposed. Others involve debate over broader issues, such as the appropriateness of providing federal funding for programs specifically for Native Hawaiians and whether such funding could be construed to provide benefits based on race.¹³⁹

In the 116^th Congress, a NAHASDA reauthorization bill (H.R. 5319) was introduced in the House in December 2019. A Senate NAHASDA reauthorization bill (S. 4090) was introduced in June 2020 by Senator Hoeven and Senator Udall, Chairman and Vice Chairman, respectively, of the Senate Committee on Indian Affairs. The bills contained many similar provisions but also differed in a number of ways. The bills were not considered prior to the end of the Congress.

For more information on NAHASDA, see CRS Report R43307, The Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA): Background and Funding.

Native American Housing Provisions in the Consolidated Appropriations Act, 2021

In addition to providing regular FY2021 appropriations and additional COVID-19 pandemic relief measures, the Consolidated Appropriations Act, 2021 included additional legislative provisions. Two of these provisions were related to Native American housing. First, Section 102 of Division Q makes tribes eligible to apply for and receive funds through HUD's Continuum of Care program. Second, Section 105 of Division Q allows HUD to issue guarantees of Section 184 loans prior to receiving required trailing documents from the Bureau of Indian Affairs (BIA)—namely, the final title status report (TSR)—if the lender agrees to indemnify HUD for any losses that occur before those documents are received.

Proposed New Investments in Affordable Housing

The 116^th Congress saw proposals to expand federal resources for affordable housing in a manner that was largely unprecedented in scope and scale. Some of these proposals were included in the platforms of various 2020 Democratic Presidential candidates,¹⁴⁰ including the nominee and eventual President-elect, Joe Biden.¹⁴¹ Some of these proposals were introduced in Congress and at least two passed the House.

These sweeping new affordable housing proposals—some of which are briefly summarized below—can be considered to include one or both of two main approaches: significant new federal funding for the development or rehabilitation of affordable housing; and significant expansions of direct federal assistance for renters. The first approach, a supply-side approach, is meant to address concerns about the rate of growth in renter households outpacing the supply of rental units affordable to them. A recent report from GAO cited the supply of low-cost rental units not keeping up with demand as a key driver of recent affordability challenges.¹⁴² HUD estimates that only 59 affordable units were available per 100 very low-income renters in 2017, noting that total additions to the nation's rental supply have been inadequate to meet growing demand.¹⁴³ The second approach, a demand side approach, recognizes that the vast majority of persons facing affordability challenges are housed, but that their housing costs are too high to be considered affordable. A recent report from HUD found a 7% reduction in very low-income renters with severe housing problems from 2015 to 2017, and attributed that decline almost solely to income increases (rather than supply additions).¹⁴⁴

Funding for New Housing Development

There were a number of proposals in the 116^th Congress to significantly increase funding for the development of new units of affordable housing and/or the rehabilitation of the existing stock of affordable housing. For example, see the following:

• The Housing is Infrastructure Act of 2019 (H.R. 5187/S. 2951) would have authorized over $100 billion for various housing grant programs for the development of affordable housing. For purposes of comparison, the accounts for which these funds would have been authorized received less than half that amount in regular appropriations in FY2020. The bill was ordered reported by the House Financial Services Committee in February 2020 and was incorporated into the Moving Forward Act of 2020 (H.R. 2), which passed the House in July.
• The FY2021 HUD appropriations bill reported by the House Appropriations Committee (H.R. 7616) and passed by the House (as a part of a multi-bill appropriations package, H.R. 7617) included a new title appropriating an additional $49 billion in emergency funding for HUD accounts to fund affordable housing-related infrastructure investments. It was not included in the Consolidated Appropriations Act, 2021.
• Other legislation that proposed notable increases in funding for affordable housing development included the American Housing and Economic Mobility Act of 2019 (H.R. 1737/S. 787), which proposed authorizing $44.5 billion per year for 10 years for the Housing Trust Fund (which to date has never received annual funding above $330 million), among other provisions; the Green New Deal for Public Housing (H.R. 5185/S. 2876), which would have appropriated "such sums as may be necessary" for 10 years to provide grants for the rehabilitation and energy retrofit needs of public housing, among other provisions; and the Homes for All Act of 2019 (H.R. 5244), which would have appropriated $80 billion per year for 10 years to build new public housing units and would have authorized appropriations of $20 billion per year for 10 years to fund privately owned affordable housing units, among other provisions.

Aid to Renters

Federal rental assistance programs are funded to serve roughly one in four eligible households currently, meaning there are long waiting lists for assistance in most communities. Some proposals have included significant expansions of existing rental assistance (i.e., Housing Choice Vouchers); others the creation of new direct subsidies for renters (i.e., refundable tax credits). For example, see the following:

• The Pathway to Stable and Affordable Housing for All Act (H.R. 5813/S. 2946) proposed new mandatory appropriations intended to fund Housing Choice Vouchers for all eligible households. The program currently receives a fixed amount of discretionary appropriations each year, primarily to continue assistance to currently assisted families. (Additionally, it proposed appropriating $40 billion per year for 10 years for the Housing Trust Fund, in addition to providing other mandatory appropriations for homeless assistance.)
• The Rent Relief Act of 2019 (H.R. 2169/S. 1106) would have created a new refundable tax credit for renters paying more than 30% of their gross income towards rent, which phases out for renters with higher incomes.

Nearly all of these proposals were released before the onset of the global pandemic and its related housing challenges. Depending on how the economic crisis triggered by the pandemic unfolds, interest in these sweeping approaches to address affordable housing challenges may increase; or, given their cost and the state of national budget deficits, interest may wane.

Selected Administrative Actions Related to Affordable Housing

HUD Noncitizen Eligibility and Documentation Proposed Rule

On May 10, 2019, HUD released a proposed rule to end eligibility for "mixed status" families in its major rental assistance programs (public housing, Section 8 Housing Choice Vouchers, Section 8 project-based rental assistance).¹⁴⁵ Mixed status families comprise both citizens (or eligible noncitizens) and ineligible noncitizens. Under current HUD regulations, mixed status families are eligible to receive prorated assistance, meaning that the household can receive federal housing assistance but their benefit must be reduced proportionally to avoid assisting ineligible noncitizens (generally, nonimmigrants such as those in the country illegally as well as those with temporary status, such as tourists and students). Additionally, the proposed rule would establish new requirements that citizens provide documentation of their citizenship status.¹⁴⁶ (For more information, see CRS Insight IN11121, HUD's Proposal to End Assistance to Mixed Status Families.)

Low-income housing advocates¹⁴⁷ and stakeholder groups representing program administrators¹⁴⁸ have publicly opposed the proposed rule change, citing its potential disruptive effect on the roughly 25,000 currently assisted mixed status families, as well as the increases in both subsidy costs (estimated at $200 million per year by HUD) and administrative costs it would cause. Legislative language to block implementation of the rule was included in the House-passed FY2021 HUD appropriations bill (H.R. 7616, as incorporated into H.R. 7617); H.R. 2763, as ordered reported by the House Financial Services Committee; and S. 1904, as introduced in the Senate. (Identical appropriations language was included in the House-passed FY2020 HUD appropriations bill, but was not included in the final FY2020 HUD appropriations law, P.L. 116-94.) As of the end of the 116^th Congress, HUD had not promulgated a final rule.

Equal Access to Housing

On July 24, 2020, HUD released a proposed rule that would make changes to its Equal Access to Housing rule.¹⁴⁹ HUD initially published an Equal Access to Housing rule in 2012, stating that housing provided through HUD programs must be made available regardless of a person's sexual orientation, gender identity, or marital status.¹⁵⁰ Another Equal Access to Housing rule—specifically targeted to HUD Community Planning and Development (CPD) programs, where funding can be used to fund shelters for people experiencing homelessness—was published in 2016.¹⁵¹ The 2016 Equal Access to Housing rule requires that placement in facilities with shared sleeping and/or bath accommodations occur in conformance with a person's gender identity.

The 2020 proposed rule would allow CPD program grant recipients that operate single-sex facilities to consider biological sex in admissions determinations, as long as each recipient's policy is applied consistently. For example, a single-sex shelter for women could not "decline to accommodate a person who identifies as male but who is a biological female."¹⁵² Where a shelter provider "has a good faith basis to doubt the consistency of the sex asserted with the sex served by the shelter," then the proposed rule would allow the provider to ask for such documents as birth certificates or other identification and medical records.¹⁵³ If a shelter provider were to deny admission to a client based on its single-sex policy, the proposed rule would require that the provider provide a recommendation for another shelter.¹⁵⁴ Providers could also choose to continue admissions based on a client's gender identity.¹⁵⁵

Legislation to prohibit HUD from implementing a rule making changes to admissions at single-sex shelters was approved by the House Financial Services Committee on June 11, 2019.¹⁵⁶ (See the Ensuring Equal Access to Shelter Act of 2019, H.R. 3018.) In addition, the FY2020 House-passed HUD appropriations bill (Section 236 of Division E of H.R. 3055) would have prevented HUD from making changes to either the 2012 or 2016 Equal Access to Housing rules. (The language from H.R. 3055 was not included in the final FY2020 HUD appropriations law, P.L. 116-94.) The FY2021 House-passed appropriations bill for multiple agencies, including HUD, would not have allowed funds to be used to implement, administer, or enforce the proposed rule (Section 235 of HUD General Provisions in H.R. 7617). No such provision was included in the Consolidated Appropriations Act, 2021.

For more information about the Equal Access to Housing rules, see CRS Report R44557, The Fair Housing Act: HUD Oversight, Programs, and Activities.

Regulatory Barriers Council

On June 25, 2019, President Trump signed an Executive Order establishing a White House Council on Eliminating Regulatory Barriers to Affordable Housing.¹⁵⁷ The council is to be chaired by the HUD Secretary, but will include members from eight federal agencies. The council is charged with assessing federal, state, and local regulations and the effect they are having on developing new affordable housing; taking action to reduce federal regulatory barriers; and supporting state and local efforts to reduce regulatory barriers.

On November 22, 2019, HUD published a Request for Information in the Federal Register seeking input from the public on "Federal, State, local and Tribal laws, regulations, land use requirements, and administrative practices that artificially raise the costs of affordable housing development and contribute to shortages in housing supply."¹⁵⁸

Unless extended by the President, the Council is slated to terminate on January 21, 2021.¹⁵⁹

Affirmatively Furthering Fair Housing

The Fair Housing Act requires HUD to administer its programs in a way that affirmatively furthers fair housing.¹⁶⁰ In addition, statutes or regulations governing specific HUD programs require that funding recipients affirmatively further fair housing (AFFH). On July 16, 2015, HUD published a final rule that more specifically defined what it means to affirmatively further fair housing, and required that local communities and Public Housing Authorities (PHAs) receiving HUD funding assess the needs of their communities and ways in which they could improve access to housing, and submit reports, called Assessments of Fair Housing, to HUD.

After the AFFH rule began to be implemented, on May 23, 2018, HUD effectively suspended its implementation. Several months later, on August 13, 2018, HUD announced an Advance Notice of Proposed Rulemaking stating that it "has determined that a new approach towards AFFH is required" and requesting public comments on potential changes to the AFFH regulations.¹⁶¹ On January 14, 2020 HUD released a new proposed AFFH rule;¹⁶² the comment period for the proposed rule closed on March 16, 2020. The proposed rule would have instituted a new definition of what it means to affirmatively further fair housing and allowed communities to certify their adherence to requirements through the consolidated planning process. The process would not have applied to PHAs.

Before the January 14, 2020 proposed rule could be finalized, HUD issued a different final rule on August 7, 2020, "Preserving Community and Neighborhood Choice."¹⁶³ The final rule states that HUD need not go through the notice and comment process normally required of rulemaking under the Administrative Procedure Act (APA) due to an APA exception for matters "relating to agency management or personnel or to public property, loans, grants, benefits, or contracts."¹⁶⁴ The final rule states that fair housing "means housing that, among other attributes, is affordable, safe, decent, free of unlawful discrimination, and accessible as required under civil rights laws," and that AFFH is "to take any action rationally related to promoting any attribute or attributes of fair housing ... "¹⁶⁵ Communities are to certify that they have satisfied the requirement to affirmatively further fair housing as part of their consolidated plans; the rule does not apply to PHAs. The rule is to take effect 30 days from its publication in the federal register.

The FY2021 House-passed appropriations bill for multiple agencies, including HUD, would not have allowed funds to be used to implement, administer, or enforce the final rule (Section 506 of the General Provisions for Additional Infrastructure Investments in H.R. 7617). No such provision was included in the Consolidated Appropriations Act, 2021.

For more information about the AFFH rule, see CRS Report R44557, The Fair Housing Act: HUD Oversight, Programs, and Activities.

Housing and Disaster Response and Recovery

When disasters occur, the President may authorize an emergency or major disaster declaration¹⁶⁶ under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act; P.L. 93-288, as amended). The presidential declaration may authorize the Federal Emergency Management Agency (FEMA) to provide various short-term and interim housing assistance programs.¹⁶⁷

Emergency sheltering may be authorized under Stafford Act Section 502¹⁶⁸ following an emergency declaration, and Stafford Act Section 403¹⁶⁹ following a major disaster declaration or Fire Management Assistance Grant declaration (FMAG).¹⁷⁰ This assistance is commonly referred to as Public Assistance (PA) Category B—Emergency Protective Measures. When PA is authorized, FEMA is to reimburse state, tribal, territorial, and local governments, as well as eligible nonprofits (PA Applicants) for at least 75% of eligible costs incurred while performing eligible work.¹⁷¹ FEMA's regulations on emergency sheltering are limited, though program guidance may be issued for a specific incident. Short-term, emergency sheltering accommodations¹⁷² can include congregate and non-congregate sheltering solutions. Although congregate solutions (i.e., sheltering in facilities with large, open spaces, such as schools and community centers) are typically provided, during the ongoing COVID-19 pandemic, non-congregate solutions (i.e., sheltering that affords privacy, such as dormitories, hotels, and motels) may be provided, per FEMA policy.¹⁷³ For example, the Transitional Sheltering Assistance (TSA) program may be used to provide short-term hotel/motel accommodations to eligible disaster survivors transitioning from congregate or non-congregate shelters to temporary or permanent housing solutions.¹⁷⁴

Interim housing needs may be met through the Individuals and Households Program (IHP), which may be authorized under Stafford Act Section 408 following an emergency or major disaster declaration.¹⁷⁵ The federal share of eligible costs associated with IHP housing assistance is 100%.¹⁷⁶ IHP housing assistance may include financial assistance (e.g., assistance to rent alternate housing accommodations or repair a homeowner's primary residence) and/or direct assistance (e.g., a FEMA-provided Manufactured Housing Unit (MHU)) to eligible individuals and households who, as a result of an emergency or disaster, have uninsured or under-insured necessary expenses and serious needs that cannot be met through other means or forms of assistance.¹⁷⁷ IHP assistance is intended to be temporary and is generally limited to a period of 18 months following the date of the declaration, but it may be extended by FEMA.¹⁷⁸

In addition to FEMA assistance, following a disaster, Congress may appropriate funds through HUD's Community Development Block Grant for disaster recovery (CDBG-DR) to assist communities in long-term rebuilding (see the "Community Development Block Grants-Disaster Recovery (CDBG-DR)" section for more information).

Emergency Sheltering Options During the COVID-19 Pandemic

According to FEMA, state, local, tribal, and territorial governments (SLTTs) are responsible for coordinating emergency sheltering support after a Stafford Act emergency or major disaster declaration.¹⁷⁹ However, the ongoing COVID-19 pandemic may complicate efforts to provide sheltering in typical congregate settings due to the need to ensure appropriate social distancing. To that end, FEMA issued an interim policy for non-congregate sheltering in the event of a Stafford Act declaration through the end of 2020 (this guidance may apply to presidential declarations for hurricanes, wildfires, or other incidents).¹⁸⁰

FEMA may authorize non-congregate sheltering as an eligible emergency protective measure when needed, if it is the legal responsibility of the PA Applicant (generally, FEMA considers SLTTs responsible for protecting public health and safety).¹⁸¹ The interim policy makes it so that pre-approval of non-congregate sheltering is not required for the Stafford Act declarations to which this policy applies, which are all Stafford Act declared incidents between June 1 and December 31, 2020. Per the interim policy, FEMA will reimburse costs associated with non-congregate sheltering activities incurred beginning six days prior to and up to 30 days following an incident period (unless FEMA approves an extension).¹⁸² Due to the ongoing nature of the COVID-19 pandemic, however, PA Applicants are no longer required to seek time extensions for non-congregate sheltering operations every 30 days, as clarified by FEMA in a memorandum issued on December 16, 2020.¹⁸³ This is to remain in effect until the FEMA Regional Administrator for an incident operating under this policy ends or modifies the non-congregate sheltering authorization, for which a minimum of 30-days advance notice must be provided.¹⁸⁴ Under the interim policy and December memorandum, PA Applicants requesting reimbursement must provide sufficient documentation and must follow FEMA's procurement policies when contracting to carry out emergency protective measures, including the provision of non-congregate sheltering.¹⁸⁵ Additionally, PA Applicants may not receive assistance that duplicates assistance from other sources or federal agencies.¹⁸⁶ The interim policy stated that FEMA would review it by December 31, 2020. As of January 7, 2021, it is unclear if the interim policy has been reviewed, reissued, revised, and/or rescinded.¹⁸⁷

For more information, see CRS Insight IN11440, Potential FEMA Emergency Sheltering Options During the COVID-19 Pandemic; and CRS Report R46326, Stafford Act Declarations for COVID-19 FAQ.

Implementation of Housing-Related Provisions of the Disaster Recovery Reform Act (DRRA)

The Disaster Recovery Reform Act of 2018 (DRRA, Division D of P.L. 115-254), which was enacted on October 5, 2018, near the end of the 115^th Congress, is the most comprehensive reform of FEMA's disaster assistance programs since the passage of the Sandy Recovery Improvement Act of 2013 (SRIA, Division B of P.L. 113-2) and the Post-Katrina Emergency Management Reform Act of 2006 (PKEMRA, P.L. 109-295). The DRRA legislation focuses on improving pre-disaster planning and mitigation, response, and recovery, and increasing FEMA accountability. As such, it amends many sections of the Stafford Act and includes new standalone authorities. In addition, DRRA requires reports to Congress, rulemaking, and other actions.

The 116^th Congress expressed interest in the oversight of DRRA's implementation, including sections that amend FEMA's temporary housing assistance programs under Stafford Act Section 408, the Individuals and Households Program. These sections include the following:

• DRRA Section 1211—State Administration of Assistance for Direct Temporary Housing and Permanent Housing Construction—amended Stafford Act Section 408(f)—Federal Assistance to Individuals and Households, State Role—to allow state, territorial, or tribal governments to administer Direct Temporary Housing Assistance and Permanent Housing Construction, in addition to Other Needs Assistance (ONA).¹⁸⁸ It also provides a mechanism for state and local units of government to be reimbursed for locally implemented housing solutions.¹⁸⁹ This provision may allow states to customize disaster housing solutions and expedite disaster recovery. On July 28, 2020, FEMA announced the publication of the State-Administered Direct Housing Grant Guide, making "[s]tate, local, tribal and territorial governments ... eligible to receive grants in order to provide disaster housing missions to disaster survivors [for a limited period of time]."¹⁹⁰ The pilot program, under which FEMA offered grants allowing states, territories, and Indian tribal governments to administer Direct Temporary Housing Assistance and Permanent Housing Construction, concluded on October 5, 2020.¹⁹¹ According to FEMA, the agency is assessing its 2021 regulatory priorities, including developing regulations under this authority.¹⁹²
• DRRA Section 1212—Assistance to Individuals and Households—amended Stafford Act Section 408(h)—Federal Assistance to Individuals and Households, Maximum Amount of Assistance—to separate the cap on the maximum amount of financial assistance eligible individuals and households may receive for housing assistance and ONA.¹⁹³ Prior to the enactment of DRRA, there was a cap on the maximum amount of financial assistance an individual or household could receive. Financial assistance for both the financial forms of housing assistance and Other Needs Assistance (ONA) combined to count towards the "cap"—or maximum amount of financial assistance. Post-DRRA, financial assistance for housing-related needs may not exceed $36,000 (FY2021; adjusted annually), and separate from that, financial assistance for ONA may not exceed $36,000 (FY2021; adjusted annually).¹⁹⁴ DRRA Section 1212 also removed financial assistance to rent alternate housing accommodations from the cap, and created an exception for accessibility-related costs.¹⁹⁵ This may better enable FEMA's disaster assistance programs to meet the recovery-related needs of individuals, including those with disabilities and others with access and functional needs, and households who experience significant damage to their primary residence and personal property as a result of an emergency or major disaster.
• DRRA Section 1213—Multifamily Lease and Repair Assistance—amended Stafford Act Section 408(c)(1)(B)—Federal Assistance to Individuals and Households, Direct Assistance—to expand the eligible areas for multifamily lease and repair, and remove the requirement that the value of the improvements or repairs not exceed the value of the lease agreement.¹⁹⁶ This may increase housing options for disaster survivors. The Inspector General of the Department of Homeland Security must assess the use of FEMA's direct assistance authority to justify this alternative to other temporary housing options, and submit a report to Congress.¹⁹⁷

Congress may continue tracking the implementation of DRRA, and Congress may review the effectiveness and impacts of FEMA's DRRA-related regulations and policy guidance, including assessing the effects of DRRA-related changes to federal disaster housing assistance for past and future disasters. For more information on DRRA, including a more detailed analysis of the changes to the Individuals and Households Program and tables of deadlines associated with the implementation actions and requirements of DRRA, see CRS Report R45819, The Disaster Recovery Reform Act of 2018 (DRRA): A Summary of Selected Statutory Provisions.

FEMA Short-Term, Emergency Housing Program Change

FEMA changed the available assistance options that may be provided under Stafford Act Section 403—Essential Assistance—to meet short-term, emergency sheltering needs. In October 2019, FEMA announced that it was ending the Sheltering and Temporary Essential Power (STEP) pilot program.¹⁹⁸ The STEP pilot program provided an alternative emergency sheltering option that allowed disaster survivors to shelter at home. STEP-funded work allowed FEMA to fund "minimal, temporary protective repairs ... to private homes," the intent being to "quickly make damaged homes habitable in the short term until homeowners could complete more permanent repairs independently through other FEMA programs or using private insurance payments."¹⁹⁹

The justification provided by FEMA for ending the STEP program was that it "was not meeting its established objectives" based on FEMA's analysis of the program, which was used following several disasters.²⁰⁰ Specifically, "FEMA found that repairs under the STEP pilot program generally could not be made quickly enough to effectively serve as shelter under section 403 of the Stafford Act."²⁰¹ For example, in the U.S. Virgin Islands, although the program was authorized in October 2017, initial repairs did not begin until March 2018, and eligible work was not completed until April 2019. So although the program was intended to run for the three to four months following the disaster, the STEP pilot program operated for 18 months.²⁰² An additional challenge identified related to limiting the scope of the program to performing minimal, emergency repairs.²⁰³ As an example of how the program's scope shifted, FEMA expanded the STEP pilot program it conducted in the U.S. Virgin Islands to also allow for permanent repair or replacement of damaged roofs.²⁰⁴

Despite the challenges FEMA faced with implementing the STEP pilot program, there may still be a need for a short-term disaster housing program that can serve as an alternative to existing emergency sheltering solutions such as congregate care shelters or the TSA program. In November 2019, the GAO published a report noting that "FEMA used the STEP pilot program to supplement other FEMA sheltering programs and provide necessary additional capacity to help address the emergency sheltering needs of disaster-affected communities."²⁰⁵ The report also noted that "conducting a broad evaluation of FEMA's emergency sheltering programs and the agency's options for addressing emergency sheltering needs ... would help FEMA understand its ability to provide sheltering options and to properly plan for the provision of effective emergency sheltering assistance to disaster-affected communities."²⁰⁶ The Department of Homeland Security concurred with the GAO's recommendation that the FEMA Administrator evaluate FEMA's options for providing future emergency sheltering assistance,²⁰⁷ and as of August 2020, FEMA has fully implemented the GAO's suggestion and the GAO considers the recommendation "closed as implemented."²⁰⁸ Specifically, FEMA determined that it could provide emergency sheltering to disaster survivors by "using a combination of existing capabilities and building capacity for specialized teams tasked with coordinating with state, local, tribal, and territorial governments to identify viable sheltering options."²⁰⁹ Congress may still monitor FEMA's efforts to implement emergency sheltering assistance programs to meet the short-term emergency housing needs of disaster survivors—particularly those disaster survivors who reside in areas with limited housing stock.

Community Development Block Grants-Disaster Recovery (CDBG-DR)

Following a disaster, Congress may enact supplemental disaster appropriations that include HUD-administered grants to assist impacted states and localities in their recovery efforts utilizing CDBG authorities, or CDBG-DR (disaster recovery). Generally, grantees must use at least 70% of these funds for activities that principally benefit low- and moderate-income persons or areas. The program is designed to help communities and neighborhoods that otherwise might not recover due to limited resources.²¹⁰

In the 116^th Congress, HUD was provided $2.4 billion in CDBG-DR funding to aid disaster-affected communities with long-term recovery, including the restoration of housing, infrastructure, and economic activity.²¹¹ (As noted earlier in the "Increased Funding for Housing Programs" section, Congress also provided $5 billion to the CDBG account in the CARES Act for COVID-19 pandemic relief and response.) This followed the provision of $37 billion for CDBG-DR in the 115^th Congress.²¹²

While CDBG-DR has had a significant role in funding recovery efforts from past disasters, and continues to play a major role in the recovery from the 2017 hurricanes, it is not a formally authorized program, meaning the rules that govern the funding use and oversight vary with HUD guidance accompanying each allocation. Some Members of Congress have expressed interest in formally authorizing CDBG-DR, in part in response to concerns about HUD's oversight of CDBG-DR funding. In July 2019, for example, the House Financial Services Committee ordered to be reported H.R. 3702, the Reforming Disaster Recovery Act of 2019, which would have authorized CDBG-DR and included a number of provisions to codify financial controls over program funds. The House passed the bill in November 2019; no further action was taken during the 116^th Congress.

For more information on CDBG-DR, see CRS Report R46475, The Community Development Block Grant's Disaster Recovery (CDBG-DR) Component: Background and Issues.

Housing-Related Tax Provisions

In the past, Congress has regularly extended a number of temporary tax provisions that address a variety of policy issues, including certain provisions related to housing. This set of temporary provisions is commonly referred to as "tax extenders." Two housing-related provisions that have been included in tax extenders packages recently are (1) the exclusion for canceled mortgage debt, and (2) the deduction for mortgage insurance premiums, each of which is discussed further below. The most recently enacted tax extenders legislation was included in the Consolidated Appropriations Act, 2021, and included each of these provisions.

Separately from the tax extenders provisions, the Consolidated Appropriations Act, 2021 also enacted a minimum 4% low-income housing tax credit (LIHTC) and included increased LIHTC allocation authority for buildings in qualified disaster zones.

Earlier in the 116^th Congress, the Further Consolidated Appropriations Act, 2020 (P.L. 116-94) included increased LIHTC allocation authority to assist certain areas of California that were affected by natural disasters in 2017 and 2018.

All of these changes are discussed below.

Housing Tax Extenders

The Consolidated Appropriations Act, 2021, extended the exclusion for canceled mortgage debt through the end of 2025. The law also reduced the maximum amount of debt that qualifies for the exclusion from $2 million for joint filers ($1 million for single filers) to $750,000 for joint filers ($375,000 single filers). The Joint Committee on Taxation (JCT) estimated this extension and modification will reduce federal tax revenues by $2.8 billion between 2021 and 2030.²¹³

The law also extended the ability to deduct mortgage insurance premiums through the end of 2021. The JCT estimated this will reduce federal tax revenues by $207 million between 2021 and 2030.²¹⁴

Exclusion for Canceled Mortgage Debt

Historically, when all or part of a taxpayer's mortgage debt has been forgiven, the forgiven amount has been included in the taxpayer's gross income for tax purposes.²¹⁵ This income is typically referred to as canceled mortgage debt income.

During the housing market turmoil of the late 2000s, some efforts to help troubled borrowers avoid foreclosure resulted in canceled mortgage debt.²¹⁶ The Mortgage Forgiveness Debt Relief Act of 2007 (P.L. 110-142), signed into law in December 2007, temporarily excluded qualified canceled mortgage debt income associated with a primary residence from taxation. The provision was originally effective for debt discharged before January 1, 2010, and was subsequently extended several times.

Rationales put forth when the provision was originally enacted included minimizing hardship for distressed households, lessening the risk that nontax homeownership retention efforts would be thwarted by tax policy, and assisting in the recoveries of the housing market and overall economy. Arguments against the exclusion at the time included concerns that it makes debt forgiveness more attractive for homeowners, which could encourage homeowners to be less responsible about fulfilling debt obligations, and concerns about fairness given that the ability to realize the benefits depends on a variety of factors.²¹⁷

For more information on the exclusion for canceled mortgage debt, see CRS Report RL34212, Analysis of the Tax Exclusion for Canceled Mortgage Debt Income.

Deductibility of Mortgage Insurance Premiums

Traditionally, homeowners have been able to deduct the interest paid on their mortgage, as well as property taxes they pay, as long as they itemize their tax deductions.²¹⁸ Beginning in 2007, homeowners could also deduct qualifying mortgage insurance premiums as a result of the Tax Relief and Health Care Act of 2006 (P.L. 109-432).²¹⁹ Specifically, homeowners could effectively treat qualifying mortgage insurance premiums as mortgage interest, thus making the premiums deductible if homeowners itemized and their adjusted gross incomes were below a specified threshold ($55,000 for single, $110,000 for married filing jointly). Originally, the deduction was to be available only for 2007, but it was subsequently extended several times.

Two possible rationales for allowing the deduction of mortgage insurance premiums are that it assisted in the recovery of the housing market, and that it promotes homeownership. The housing market, however, has largely recovered from the market turmoil of the late 2000s, and it is not clear that the deduction has an effect on the homeownership rate. To the degree that owner-occupied housing is over subsidized, extending the deduction could lead to a greater misallocation of the resources that are directed toward the housing industry.

Minimum 4% LIHTC

The LIHTC program is the federal government's primary policy tool for the development of affordable rental housing. The program awards developers federal tax credits to offset the cost of producing affordable rental housing for low-income tenants. There are two types of LIHTCs available to developers. The so-called 9% credit is generally reserved for new construction and is intended to deliver up to a 70% subsidy. The so-called 4% credit is typically used for rehabilitation projects utilizing at least 50% in federally tax-exempt bond financing and is designed to deliver up to a 30% subsidy. Historically, the 4% and 9% credits rates have actually been below these nominal targets due to interest rates and the formula the U.S. Department of the Treasury uses to ensure the 30% and 70% subsidy levels are achieved.

The Housing and Economic Recovery Act of 2008 (HERA; P.L. 110-289) set a temporary minimum credit of 9% for the new construction credit, which was subsequently made permanent in 2015 by the Protecting Americans from Tax Hikes (PATH) Act (Division Q of P.L. 114-113). At the end of the 116^th Congress the Consolidated Appropriations Act, 2021, set a minimum credit of 4% for the housing tax credit typically used for the rehabilitation of affordable housing. This change is permanent. The JCT estimates this change will reduce federal revenues by $5.8 billion between 2021 and 2030.²²⁰

For more information on the low-income housing tax credit, see CRS Report RS22389, An Introduction to the Low-Income Housing Tax Credit.

Disaster-Related LIHTC Provisions

To assist certain areas of California that were affected by natural disasters in 2017 and 2018, the Further Consolidated Appropriations Act, 2020 (P.L. 116-94) increased California's 2020 LIHTC allocation by the lesser of the state's 2020 LIHTC allocations to buildings located in qualified 2017 and 2018 California disaster areas, or 50% of the state's combined 2017 and 2018 total LIHTC allocations. The JCT estimates this change will reduce federal revenues by $778 million between FY2020 and FY2029.²²¹

The Consolidated Appropriations Act, 2021, increased, for calendar years 2021 and 2022, the credit allocation authority for buildings located in any qualified disaster zone, defined as that portion of any qualified disaster area that was determined by the President during the period beginning on January 1, 2020, and ending on the date which is 60 days from enactment of P.L. 116-260. For 2021, the increase is equal to the lesser of $3.50 multiplied by the population residing in a qualified disaster zone, and 65% of the state's overall credit allocation authority for calendar year 2020. For 2022, the increase is equal to any unused increased credit allocation authority from 2021 (i.e., 2021 increased credit allocation authority may be carried over to 2022). Buildings impacted by this provision will also be granted a one-year extension of the placed-in-service deadline and the so-called 10% test. The JCT estimates these changes will reduce federal revenues by $887 million between FY2021 and FY2030.²²²