Introduction

While housing in the United States is primarily a private market enterprise, regulated at the state and local levels, federal policymakers play an important role in regulating housing finance, providing affordable housing resources to state and local entities, and enforcing fair housing laws, among other functions. Congress establishes laws governing U.S. housing policy, funds housing policies and programs via the annual appropriations process and the federal tax code, and oversees policy and program implementation by various federal agencies. The House Financial Services Committee and the Senate Banking Committee, in particular, play prominent roles in many of these functions as committees of jurisdiction. Federal agencies involved in housing policy and programs include the Department of Housing and Urban Development (HUD), the Federal Housing Finance Agency (FHFA), the Department of the Treasury (Treasury), and others.

Housing policy priorities at the beginning of the 117^th Congress continued to be heavily influenced by the COVID-19 pandemic and both its public health and economic ramifications. Significant new housing-related investments were included in the American Rescue Plan Act of 2021 (P.L. 117-2), a pandemic relief and recovery law enacted early in the 117^th Congress.

Housing affordability, while a perennial policy issue, has been a prominent concern during the 117^th Congress in light of house price increases and limited housing supply affecting both homeownership and rental markets. A variety of policy proposals have been put forward to address the affordability of both rental housing and homeownership, including proposals for new housing funding that have been included in broader infrastructure proposals.

Several other housing policy considerations have also been of interest to the 117^th Congress. For example, Congress has signaled an interest in addressing racial disparities in housing. It has also focused attention on issues related to housing and climate as well as disaster resiliency. In addition, the Biden Administration has revisited certain housing-related policies that were implemented in recent years; for example, the Consumer Financial Protection Bureau (CFPB) delayed the effective date of a mortgage-related rulemaking, while HUD has taken steps to rescind certain Trump Administration fair housing rules and reinstate elements of Obama Administration-era rules.

This report begins with an overview of certain housing and mortgage market indicators. It then provides a high-level overview of housing issues of interest to the 117^th Congress and, where applicable, refers to more in-depth CRS reports on the issues discussed. The Appendix lists housing-related legislation that has received committee or floor consideration in the 117^th Congress to date.

Housing and Mortgage Market Conditions

This section provides background on housing and mortgage market conditions thus far during the 117^th Congress to provide context for the housing policy issues discussed in the remainder of the report.¹ It includes selected indicators focused on single-family housing markets, single-family housing finance,² and rental markets. The discussion of market conditions presented in this section is at the national level. Local housing market conditions can vary significantly, 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, during the 117^th Congress, both homeownership and rental markets have been characterized by low levels of supply (i.e., relatively low numbers of homes available for sale or rent) and, relatedly, significant increases in house prices and rents. These price increases have made housing affordability concerns a prominent issue. In addition, while mortgage interest rates were low for much of the first part of the 117^th Congress, they rose sharply over the course of 2022, adding to affordability concerns. A variety of factors, on both the supply side and the demand side, have contributed to low housing inventory levels. While there have been some increases in housing construction activity, challenges related to rising construction costs and the availability of labor and materials persist.

Single-Family House Prices

As shown in Figure 1, nominal house prices³ 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 period and exceeding 6% at times. These increases followed almost five years of house price declines in the years during and surrounding the financial crisis of 2007-2009 and associated housing market turmoil.

The pace of house price increases remained fairly steady for several years before noticeably accelerating during 2020. In the fourth quarter of 2020, nominal house prices increased nearly 11% from the same quarter a year earlier, fueled by strong housing demand (in part due to low mortgage interest rates at the time, among other factors) and a limited supply of homes for sale.⁴ This rapid growth continued through 2021 and 2022, with nominal house prices increasing by nearly 18% in the second quarter of 2022 over the same quarter a year earlier, although the rate of house price growth was beginning to show some signs of slowing.⁵

Figure 1. Year-over-Year House Price Changes (Nominal) Q1 1995–Q2 2022

Source: Figure created by CRS using data from the Federal Housing Finance Agency House Price Index (Seasonally Adjusted Purchase-Only Index), available at https://www.fhfa.gov/DataTools/Downloads/Pages/House-Price-Index-Datasets.aspx#qpo. Notes: Figure shows the percentage change in nominal house prices compared to the same quarter in the previous year. Gray bars indicate recessions.

Figure 2 shows the trend in real median prices on both new and existing homes since 1995. Median prices on both new and existing homes have generally trended upward over the past two decades, with a decline in prices during and after the 2007-2009 financial crisis. While the median price of new homes has been consistently above that of existing homes, the median price of existing homes has grown more than new homes—the median real price of existing homes increased about 84% from 1995 to 2021, while the median real price of new homes increased by about 65% over the same period.

Figure 2. Median Real House Prices 1995–2021

Source: CRS calculations based 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 prices, the U.S. Census Bureau for new home prices, and the Bureau of Labor Statistics for the consumer price index. Notes: Gray bars indicate recessions.

For more information on recent home price increases, see the following:

• CRS In Focus IF12048, High Home Prices: Contributing Factors and Policy Considerations

Home Mortgage Interest Rates

Most homebuyers take out a mortgage to purchase a home, especially when purchasing a primary residence.⁶ 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 as well as the costs of those mortgages impact housing demand and affordability.

For several years, mortgage interest rates have been low by historical standards, and they fell further after the start of the COVID-19 pandemic due in part to the federal monetary policy response to it. As shown in Figure 3, mortgage interest rates were consistently below 5% for about 12 years beginning in May 2010. The rates decreased further throughout 2020, averaging less than 3% in several months in 2020 and 2021. Lower interest rates increase mortgage affordability and make it easier for some households to purchase homes or refinance their existing mortgages.

Mortgage interest rates began to increase in early 2022 and rose rapidly over the course of the year. The rates averaged 3.45% in January 2022 and increased to 6.90% by October 2022, which is up from 3.07% a year earlier and is their highest level since 2002.

Figure 3. Mortgage Interest Rates January 1995–October 2022

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. Gray bars indicate recessions.

Home Sales

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. As shown in Figure 4, home sales fell for several years after 2005 and remained low through the aftermath of the housing and financial crisis of 2007-2009 before generally rising again after 2014.

Homebuyer demand has remained strong throughout the COVID-19 pandemic. In 2021, the combined number of homes sold was about 6.9 million, the highest figure since 2006 and an increase from 6.5 million in 2020. Existing home sales in 2021 numbered 6.1 million, while new home sales numbered 770,000; both of these levels were the highest since 2006 as well. Although home sales have generally been increasing in recent years, the supply of homes on the market has generally not been keeping pace with demand, contributing to house price increases.

Figure 4. New and Existing Home Sales (annual, 1995–2021)

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.

Inventory of Homes for Sale

Home sales depend in part on the number of homes available for sale. The supply of houses on the market has been low for several years and declined further in 2021. As shown in Figure 5, the annual housing inventory—that is, the number of homes on the market at a given point in time (in this case, at the end of the year)—was less than 1.3 million in 2021.⁷ The low housing inventory has been driven by several factors, including ongoing shortfalls in housing construction to meet demand⁸ and homeowners' decisions about putting their homes on the market, which may have been influenced by the pandemic. Several factors, in turn, have been contributing to construction shortfalls; these include, among other things, the availability and costs of land, labor, and materials (including lumber).⁹

Figure 5. Annual Housing Inventory 1995–2021

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 inventories and the U.S. Census Bureau for new home inventories. Notes: Annual inventory represents homes for sale as of the end of the year.

Single-Family Housing Construction

A variety of statistics measure the amount of new housing construction underway, including housing starts, housing permits, and housing completions.

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.¹⁰

Figure 6 shows the seasonally adjusted annual rate of starts on one-unit homes from January 1995 through September 2022.¹¹ Housing starts for single-family homes fell during the housing and financial crisis that began around 2007, reflecting decreased home purchase demand. Housing starts have generally been increasing since about 2012, and while they initially showed a steep drop early in the pandemic, they have since rebounded and at one point reached their highest levels since about 2006. Nevertheless, new housing construction has arguably remained below the levels necessary to meet demand.¹² Some research has suggested that this shortfall has been particularly acute for smaller, more affordable starter homes.¹³ Furthermore, single-family housing starts have begun to decrease over the course of 2022, reflecting the impact of ongoing housing construction challenges as well as higher interest rates.

Figure 6. Single-Family Housing Starts (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 September 2022. 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. Gray bars indicate recessions.

Single-Family Mortgage Market Composition

Most homebuyers use a mortgage to purchase a home. 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.¹⁴ Two government-sponsored enterprises, Fannie Mae and Freddie Mac, purchase mortgages and issue mortgage-backed securities, providing a guarantee that investors in those securities will receive timely principal and interest payments even if borrowers default on the underlying mortgages. 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 HUD. 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 can vary based on market conditions, policy decisions, and other factors, and may be relevant to policymakers because of the implications for mortgage access and affordability as well as the federal government's exposure to risk.

As shown in Figure 7, about 55% of mortgage originations (by dollar volume) in 2021 were securitized by Fannie Mae or Freddie Mac. About 28% were held in financial institutions' portfolios, and about 15% were securitized FHA or VA loans. About 2% of originations were included in private-label securities.

Figure 7. Share of Mortgage Originations by Type 2021

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 2022, p. 8. Notes: Figure shows share of first-lien mortgage originations by dollar volume.

The percentage of loan volume (55%) securitized by Fannie Mae or Freddie Mac in 2021 was a decrease from nearly 60% in 2020 (the highest level since 2013), but an increase from 43% in 2019. The FHA/VA share also decreased somewhat, to 15%, compared to 18% in 2020 and 19% in 2019. The bank portfolio share increased in 2021, to 28% from 22% in 2020, but was lower than the 36% share in 2019. Private label securities increased to 2% from 1%.¹⁵ The overall volume of mortgage originations also increased significantly, rising from about $2.4 trillion in 2019 to more than $4.0 trillion in 2020 and an estimated $4.7 trillion in 2021.¹⁶ Much of this increase was driven by high refinancing volumes due to low interest rates.

Homeownership and Renter Rates

After the housing and mortgage market turmoil that began around 2007, there was a substantial decrease in the homeownership rate and a corresponding increase in the share of renter households. As shown in Figure 8, the homeownership rate fell from a high of 69.0% in the mid-2000s to 63.4% in 2016, before rising again and reaching 66.6% in 2020. However, data collection for the Census Bureau survey that reports these statistics was affected by the COVID-19 pandemic; therefore, 2020 figures, in particular, may not be comparable with other years.¹⁷ In 2021, the homeownership rate was 65.5%.

As the homeownership rate decreased, the share of renters correspondingly 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 share of renters appeared to fall further, to 33.4%, in 2020, although the 2020 data were subject to the changes in data collection procedures caused by the COVID-19 pandemic. In 2021, the renter share was 34.5%.

Figure 8. Renter and Homeownership Rates 1995–2021

Source: Figure created 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." Notes: Because data collection procedures were affected by the COVID-19 pandemic during 2020, the Census Bureau urges caution in comparing 2020 estimates to previous estimates. Gray bars indicate recessions.

The overall number of occupied housing units also increased over this period, from nearly 110 million in 2006 to nearly 127 million in 2021.¹⁸ The number of renter-occupied units increased from about 34 million in 2006 to about 44 million in 2021. The number of owner-occupied housing units fell from about 75 million in 2006 to about 74 million in 2014; it has since increased to about 83 million in 2021.

Composition of the Rental Housing Stock

Rental units can be in a variety of property types, including single-family homes, small multifamily buildings, and large multifamily buildings. As shown in Figure 9, in 2021 about half of rental units were in single-family properties (defined as properties with 1-4 dwelling units: 32% of rental units were in 1-unit properties, and 17% were in 2-4 unit properties). About 31% of rental units were in buildings with 5-49 units, and 15% were in buildings with 50 or more units. Another 4% were manufactured housing.¹⁹

Figure 9. Rental Stock by Number of Units in Property 2021

Source: Figure created by CRS using American Community Survey one-year estimates.

Ownership of rental properties varies widely, from individual investors who own one or a few units to large corporate institutions. Individual investors are more likely to own single-family homes or smaller buildings than large multifamily buildings. According to HUD's 2018 Rental Housing Finance Survey, about 42% of rental properties have a mortgage.²⁰ However, the likelihood of a property being mortgaged increases with property size,²¹ suggesting that a larger share of rental units are in properties with a mortgage. In general, single-family rental properties are financed with single-family mortgages while financing for multifamily properties is obtained through the multifamily and commercial mortgage market.²²

Rental Vacancy Rates

As shown in Figure 10, the rental vacancy rate has generally been declining for several years and was 6.4% at the end of 2019. Lower vacancy rates may put upward pressure on rents as renter households compete for fewer available units.

The rental vacancy rate at the end of 2020 was essentially unchanged from the end of 2019.²³ However, like certain other measures discussed earlier, the Census Bureau reports that the data collection procedures for its survey were impacted by the COVID-19 pandemic during 2020 and urges caution in comparing 2020 quarterly estimates to previous quarters.²⁴ The rental vacancy rate in the fourth quarter of 2021 was 5.6% and, after a slight uptick in the first quarter of 2022, was again 5.6% for the second quarter of 2022. The pandemic continued to affect data collection in 2021, although by the fourth quarter of 2021, pandemic-related restrictions on data collection for this survey had ended. However, the Census Bureau continues to urge caution in comparing data to previous affected quarters.²⁵

Figure 10. Rental Vacancy Rates Q1 1995–Q2 2022

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. Notes: Because data collection procedures were affected by the COVID-19 pandemic during some quarters in 2020 and 2021, the Census Bureau urges caution in interpreting estimates from affected quarters and in comparing those estimates to previous or subsequent quarterly estimates. Gray bars indicate recessions.

Renter Cost Burdens

A variety of factors impact rental housing affordability, including the supply of rental housing units available, the characteristics of those units (e.g., age, amenities), the demand for available units, and renter 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.

Cost burdens can affect both renter and owner households as well as households of all income levels, but they are highest among lower-income renter households. As shown in Figure 11, about 46% of all renter households were cost-burdened in 2019 (about 22% had moderate cost burdens and 24% had severe cost burdens). Cost burdens, and especially severe cost burdens, were most prevalent among renters with the lowest incomes. About 80% of renter households with annual incomes below $30,000 were cost-burdened, with most being severely cost-burdened. Nearly 60% of renter households with incomes of at least $30,000 but less than $45,000 were cost-burdened, with most being moderately cost-burdened. Renter cost burdens appear to have worsened during the pandemic, although updated data were not fully available as of the cover date of this report.²⁶

Figure 11. Renter Cost Burdens 2019

Source: Figure created by CRS using data from Joint Center for Housing Studies, State of the Nation's Housing 2021, Appendix Tables, https://www.jchs.harvard.edu/state-nations-housing-2021, showing Joint Center for Housing Studies tabulations of American Community Survey data.

Housing and the Broader Economy

The housing market plays an important role in the larger economy, as it accounts for a significant portion of economic activity. Housing contributes to GDP in two direct ways: residential fixed investment and spending on housing services. Residential fixed investment includes all spending on the construction of new single- and multi-family structures, residential remodeling, and brokers' fees. Housing services includes all spending on renters' utilities and rent and homeowners' imputed rent²⁷ and utility payments.

Residential investment was $1.1 trillion in 2021 and, as shown in Figure 12, accounted for roughly 5% of GDP. Housing services were $2.8 trillion and accounted for roughly 12% of GDP. Despite the pandemic, spending on both residential investment and housing services were up in 2020, accounting for 16.9% of GDP as compared to 15.8% in 2019. Spending began to slow as a percentage of GDP in 2021 however, with residential investment and housing services accounting for 16.7% of GDP. Spending in the housing market has fluctuated over time, and over the last few decades there has not been a consistent, long-term trend in housing spending as a share of GDP. Housing's share of economic output rose in the lead up to the housing market crash and financial crisis of 2007-2009, and fell rapidly during it. Since the crisis, housing's share of output has risen more gradually and is now in line with pre-crisis numbers.

Figure 12. Total Housing Spending as a Share of GDP 1995-2021

Source: CRS calculations based on Bureau of Economic Analysis (BEA), National Income and Product Accounts, Table 1.1.5 and Table 2.3.5. Notes: "Residential Investment" (often referred to as residential fixed investment) includes spending on the construction of new single- and multifamily structures, residential remodeling, and brokers' fees. "Housing Services" includes spending on renters' utilities and rent, and homeowners' imputed rent and utility payments. For more detailed information on BEA's measurement of residential investment and housing services, see the National Income and Product Accounts (NIPA) Handbook at https://www.bea.gov/resources/methodologies/nipa-handbook.

As evidenced by the housing crash and the role it played in the 2007-2009 financial crisis, the housing market can play a critical role in the health of the broader economy. However, fluctuations in the housing market do not necessarily line up perfectly with the business cycle. Spending on housing can increase even as economic output falls, as witnessed during the height of the COVID-19 pandemic in 2020.

Nevertheless, house price movements can influence residential investment, and therefore, affect macroeconomic activity, all else being equal. Rising home prices likely encourage greater construction (in order to take advantage of the higher sale prices on the completed new homes), possibly resulting in more jobs for construction workers. A decline in housing prices is likely to depress construction spending, leading to more anemic economic growth. Fluctuations in house prices can also have effects on the economy through so-called wealth effects. In this case, if the value of homeowners' assets (and therefore net wealth) increases, they may be inclined to increase their consumption, which can stimulate the economy. In the United States, consumer spending makes up roughly 70% of the economy; therefore, changes in housing wealth can result in significant changes in GDP. While rising home prices may generally result in increasing residential investment and potentially GDP, rising home prices may also result in decreased housing affordability, which could offset some of the positive effects on the economy.

For more information on housing's contribution to the overall economy, see CRS In Focus IF11327, Introduction to U.S. Economy: Housing Market.

Housing Issues in the 117^th Congress

This section provides a high-level overview of some broad issues that have been of interest to the 117^th Congress.

Housing Policy Responses to the COVID-19 Pandemic

The COVID-19 pandemic and its economic impacts raised concerns about the ability of individuals and families to afford their housing, as well as spillover effects for housing markets. Both the 116^th and 117^th Congresses, and the Trump and Biden Administrations, have taken actions related to housing policy and the pandemic (discussed below). Some temporary protections—including eviction and foreclosure moratoriums—have ended during the 117^th Congress, raising concerns about the number of households that may be in danger of losing their homes through eviction or foreclosure.

116^th Congress

During the 116^th Congress, there were a number of federal actions related to housing and the pandemic, including the following:

• The Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136), enacted in March 2020, contained certain housing-related pandemic response provisions. These included additional funding for certain federal housing programs, temporary mortgage forbearance for federally backed mortgages, and temporary eviction and foreclosure moratoriums that applied to certain federally related rental units and mortgages, respectively.
• Federal agencies took a variety of administrative actions in response to the pandemic. Among other things, federal agencies and Fannie Mae and Freddie Mac administratively extended their foreclosure moratoriums after the CARES Act foreclosure moratorium expired, and the Centers for Disease Control and Prevention (CDC) implemented a separate and broader eviction moratorium after the CARES Act eviction moratorium expired.
• The Consolidated Appropriations Act, 2021 (P.L. 116-260), enacted in December 2020, contained additional housing-related pandemic response provisions, most notably an extension of the CDC's eviction moratorium and funding for rental assistance.

For a full discussion of actions that Congress and federal agencies took to address the housing impacts of the pandemic during the 116^th Congress and links to related CRS reports, see the "The COVID-19 Pandemic and Housing" section in CRS Report R45710, Housing Issues in the 116th Congress.

117^th Congress

During the 117^th Congress, both Congress and federal agencies have taken various actions to continue to address the housing-related impacts of the pandemic. At the same time, some of the temporary protections that had been put in place to assist renters and homeowners affected by the pandemic—namely, federal foreclosure and eviction moratoriums—have ended during this Congress. Major actions related to COVID-19 and housing during the 117^th Congress are summarized below.

Housing Funding in the American Rescue Plan Act

In March 2021, the 117^th Congress passed and President Biden signed the American Rescue Plan Act of 2021 (ARPA, P.L. 117-2) to provide additional pandemic relief funding. The enacted law included funding for several new and existing housing programs, including additional funding for emergency rental assistance, a new Homeowner Assistance Fund, homelessness assistance, housing counseling, Native American housing programs, and fair housing activities.

For more information, see the following:

• CRS Insight IN11641, Housing Funding in the American Rescue Plan Act of 2021

Federal Eviction Moratorium and Emergency Rental Assistance

The 117^th Congress has seen the continuation of efforts begun in the 116^th Congress to forestall evictions, and the resulting residential displacement, of renters triggered by the economic fallout of the COVID-19 pandemic.

At the beginning of the 117^th Congress, a nationwide temporary federal eviction moratorium was in effect. The eviction moratorium had been ordered by the CDC—pursuant to its public health authorities—in September 2020 and was slated to expire at the end of the year (December 31, 2020). However, prior to its expiration, the 116^th Congress extended it legislatively, through January 31, 2021. The CDC subsequently administratively updated/extended the order several times, the last time through October 3, 2021. However, the national eviction moratorium was effectively ended on August 26, 2021, when the Supreme Court blocked its enforcement of the order, following a series of legal challenges. (Some state and local eviction moratoriums remained in place beyond the end of the federal moratorium.)

At the same time that the federal eviction moratorium was in place, Congress—first the 116^th and then the 117^th—funded a new federal Emergency Rental Assistance (ERA) program at the Treasury Department. The first tranche of ERA funding—$25 billion—was provided by the FY2021 Consolidated Appropriations Act in December 2020. The second tranche of ERA funding—$21.55 billion—was appropriated by ARPA. While there are some differences between ERA-1 and ERA-2, generally, both rounds of funding were awarded via formula to states and localities to be used to fund rental and utility payments and arrearages for low-income renters.

Some policymakers and other stakeholders expressed concern about the slow award of ERA funds to at-risk renters, particularly in light of the end of eviction moratoriums. Treasury published multiple revisions to program guidance, as well as best practices, to attempt to speed dispersal. In June 2021, the White House announced implementation of "a whole-of-government effort to raise awareness about emergency rental assistance."²⁸ This included a letter to state and local courts from the Deputy Attorney General encouraging the adoption of eviction diversion efforts and guidance on how ERA funds can be used to support such efforts, and the convening of a White House summit to plan for eviction prevention. In January 2022, Treasury implemented the first round of statutorily directed recapture of ERA-1 funding from states and localities that did not meet spending targets, reallocating funds to communities that demonstrated they could use additional funding. Treasury has continued to recapture and reallocate unused ERA-1 and ERA-2 funding, as directed by the ERA statutes.

For more information, see the following:

• CRS Insight IN11673, The CDC's Federal Eviction Moratorium
• CRS Legal Sidebar LSB10632, Litigation of the CDC's Eviction Moratorium
• CRS Legal Sidebar LSB10638, Supreme Court Blocks Enforcement of the CDC's Eviction Moratorium
• CRS Report R46688, Pandemic Relief: The Emergency Rental Assistance Program

Actions Related to COVID-19 and Mortgages

The 117^th Congress has also seen the continuation of efforts begun in the 116^th Congress to assist homeowners who may be having difficulty paying their mortgages due to COVID-19-related financial hardships. At the beginning of the 117^th Congress, foreclosure moratoriums were in effect for mortgages backed by federal agencies (HUD, VA, and USDA) and Fannie Mae and Freddie Mac. The federal agencies and Fannie Mae and Freddie Mac extended these existing moratoriums through July 31, 2021, at which point they expired.²⁹

Although the foreclosure moratoriums for federally backed mortgages have expired, borrowers with mortgages backed by federal agencies or Fannie Mae or Freddie Mac continue to be eligible to request a COVID-19-related forbearance if they are experiencing a financial hardship as a result of the pandemic. In September 2021, FHA, VA, and USDA all extended their deadlines for requesting COVID-19-related forbearance through the end of the COVID-19 national emergency.³⁰ (Fannie Mae and Freddie Mac have not set a deadline for requesting COVID-19-related forbearance.) In addition, all of these entities announced that mortgage forbearance periods for mortgages they back could be extended under certain circumstances.³¹ Each has also implemented certain loss mitigation options to assist borrowers who are exiting COVID-19-related forbearance plans.³² (Loss mitigation refers to options to avoid foreclosure, such as repayments plans, loan modifications, or other foreclosure alternatives.)

In June 2021, the CFPB promulgated a final rule temporarily amending certain mortgage servicing procedures under Regulation X³³ in response to the pandemic and the concern that a large number of borrowers might exit forbearance around the same time without receiving a meaningful opportunity to be reviewed for loss mitigation.³⁴ Under the final rule, which became effective on August 31, 2021, servicers may offer certain types of loan modifications to borrowers with pandemic-related hardships even if they have not received a completed loss mitigation application from the borrower. In addition, until January 1, 2022, the rule required servicers to ensure that at least one of several procedural safeguards (described in the final rule) were met before initiating foreclosure on mortgages that were at least 120 days past due.

Finally, as noted above, ARPA included funding for a new Homeowner Assistance Fund (HAF). Through the HAF, Treasury provides funding to states, territories, and tribes to use to provide mortgage payment assistance or other related assistance to eligible homeowners who are in danger of default, foreclosure, or displacement due to COVID-19-related hardships.³⁵

For more information, see the following:

• CRS Report R46830, The Homeowner Assistance Fund in the American Rescue Plan Act: In Brief

Housing Affordability

While housing affordability is a perennial policy issue for Congress, the house price increases and supply constraints described earlier in the "Housing and Mortgage Market Conditions" section have exacerbated concerns about housing affordability. Affordability challenges can affect both owners and renters at varying levels of income; however, lower-income renter households are the most likely to face severe housing cost burdens,³⁶ placing them at greatest risk for housing insecurity. Estimates vary, but they generally show that the primary federal rental assistance programs reach roughly one in four eligible households.

Proposals to address housing affordability in general, and for low-income renter households in particular, can take many forms.³⁷ One approach is to provide additional funding for new or existing programs that support the development of affordable housing in an attempt to increase the supply of such housing. Another is to pursue demand-side interventions that help individuals with their housing costs, such as by expanding rental assistance through the Section 8 Housing Choice Voucher program or creating new tax credits for renters or homebuyers. A third approach is to take steps to encourage or incentivize state and local governments to review or address existing policies that may negatively affect housing development and affordability in their communities, such as land use regulations or other regulatory requirements that could make building housing more difficult or costly.

The 117^th Congress has seen a variety of proposals related to housing affordability, including some related to all of the above approaches.

• There have been proposals to provide significant additional federal funding for constructing new affordable housing, including several that have been included in various infrastructure proposals and, ultimately, in the version of the Build Back Better Act reconciliation legislation (H.R. 5376) that was passed by the House on November 19, 2021 (discussed further in the "Housing in the Build Back Better Act and Other Infrastructure Proposals" section of this report).
• There have been proposals to expand existing rental assistance programs to serve more families,³⁸ including a proposal to create a Housing Choice Voucher entitlement, which would allow the program to serve all eligible households. This draft proposal was the subject of a hearing by the House Financial Services Committee,³⁹ and in July 2021 it was introduced as H.R. 4496, the Ending Homelessness Act of 2021, as part of a legislative housing package announced by House Financial Services Committee Chairwoman Maxine Waters.⁴⁰
  
  Additionally, the Consolidated Appropriations Act, FY2022 (P.L. 117-103) funded the largest increase in new vouchers in approximately two decades.⁴¹
• Proposals to encourage local governments to examine land use and other regulatory requirements or to support related activities have included, among others, provisions in the Build Back Better Act⁴² and the Yes in My Backyard Act (H.R. 3198/S. 1614). The latter was one of several bills included in a June 2021 Senate Banking Committee hearing on selected bills related to affordable housing.⁴³

In addition, the President's FY2023 budget request proposed $35 billion in new mandatory funding for a Housing Supply Fund at HUD to support new housing production, housing-related infrastructure improvements, and efforts to reduce local barriers to housing development.⁴⁴ The budget request also proposed expansions to the Low-Income Housing Tax Credit⁴⁵ and $5 billion in new mandatory funding for Treasury's Community Development Financial Institutions (CDFI) Fund to support financing for affordable housing development.⁴⁶

Homelessness

Housing affordability challenges and housing instability arising from the COVID-19 pandemic have increased concerns that more people may be at risk of homelessness.⁴⁷ Data collection during the pandemic has been limited, and pandemic-related interventions may have prevented homelessness in some cases, so there is not yet a full picture of changes in the number of people experiencing homelessness. HUD directs a point-in-time (PIT) count of the number of people experiencing homelessness on one day during the last week of January each year. However, the 2021 PIT count included only people living in shelter (emergency shelter and transitional housing) and not those who were unsheltered (living on the street or other places not meant for human habitation); the number of people living in shelter declined by 8% from January 2020 to January 2021.⁴⁸

Between the CARES Act and ARPA, Congress appropriated nearly $15 billion for HUD programs to assist people experiencing homelessness. The CARES Act provided $4 billion for the Emergency Solutions Grants program to provide emergency and non-congregate shelter accommodations as well as short-term rental assistance to assist people immediately at risk of losing their housing. ARPA provided $5 billion to fund emergency housing vouchers through the Section 8 program to assist people experiencing homelessness.⁴⁹ In May 2021, HUD announced it was using the $5 billion in ARPA funding to award 70,000 emergency housing vouchers.⁵⁰ Further, ARPA appropriated an additional $5 billion for the HOME program, which communities are to use for various activities that primarily assist people who are homeless or at risk of homelessness, including development of affordable housing, rental assistance, and supportive services.⁵¹

In the 117^th Congress, the House Financial Services Committee's Subcommittee on Housing, Community Development, and Insurance held a hearing in February 2022, "Housing America: Addressing Challenges in Serving People Experiencing Homelessness," and the Senate Banking Committee's Subcommittee on Housing, Transportation, and Community Development held a hearing in July 2022, "Opportunities and Challenges in Addressing Homelessness."⁵² During each hearing, Members cited related bills that have been proposed in the 117^th Congress. Further, on June 24, 2021, the Senate Banking Committee held a hearing on bills that would address affordable housing, including S. 1991, the Family Stability and Opportunity Vouchers Act of 2021, which would provide Section 8 vouchers for families with children who are homeless or unstably housed.⁵³

Housing in the Build Back Better Act and Other Infrastructure Proposals

The topic of infrastructure investments has been prominent during the 117^th Congress. In Spring 2021, the Biden Administration released its infrastructure proposal, the American Jobs Plan, which contained a number of proposals to invest additional resources in housing.⁵⁴

Two legislative initiatives were developed in response to President Biden's American Jobs Plan infrastructure investment proposal. The first package—the Infrastructure Investment and Jobs Act (IIJA, P.L. 117-58)—was enacted in November 2021. It included new spending for a variety of transportation, energy, and water programs, among others, including funding to replace lead water service lines and funding for hazard mitigation (the latter of which is discussed further in the "Housing and Climate Impacts" section of this report). It did not include funding specifically for affordable housing programs or initiatives, however.

The second legislative package—often referred to as the Build Back Better Act (H.R. 5376)—was developed pursuant to reconciliation directives included in S.Con.Res. 14, the Concurrent Budget Resolution for FY2022.⁵⁵ As passed by the House in November 2021, the Financial Services Committee title of the bill (Title IV) included about $157 billion in new mandatory spending over 10 years for programs and activities within the committee's jurisdiction, primarily a range of new and existing affordable housing programs.⁵⁶ Most of the housing investments that were proposed in the Administration's American Jobs Plan were included in the bill in some form, as were other housing-related investments. Among other things, Title IV of the House-passed bill would have provided funding to

• produce, preserve, or rehabilitate affordable housing, including funding for programs such as the Housing Trust Fund, Section 202, and Section 811 programs;
• increase funding for existing federally assisted affordable housing, including public housing, project-based Section 8 multifamily housing, and rural rental housing programs;
• provide additional rental assistance through funding for new Section 8 vouchers;
• assist local communities with planning and implementing local housing and community development strategies; and
• provide assistance for homebuyers, including funding for a new down payment assistance program for first-time, first generation homebuyers.

In addition, the Ways and Means Committee title of the bill (Title XIII) included certain additional tax-related housing provisions; namely, changes to the Low-Income Housing Tax Credit and the inclusion of the Neighborhood Homes Investment Act (NHIA). The NHIA would provide tax credits to support the development or rehabilitation of single-family homes in certain distressed neighborhoods. (For more information on the NHIA, see CRS In Focus IF11884, Neighborhood Homes Investment Act: Overview and Policy Considerations.)

In August 2022, a revised version of the FY2022 reconciliation legislation was signed into law as the Inflation Reduction Act (IRA, P.L. 117-169), which replaced the text of what is often referred to as the Build Back Better Act. While most of the affordable housing provisions of the Build Back Better Act were not included in the IRA, Section 30002 appropriated $1 billion in mandatory funding for loans, loan modifications, and grants to finance projects in existing HUD-assisted multifamily housing developments that improve energy or water efficiency, enhance indoor air quality or sustainability, implement the use of certain technologies, or address climate resilience. In addition, the IRA included multiple provisions related to rebates, tax incentives, or other assistance for certain home energy efficiency and electrification purposes.⁵⁷ It also included funding to assist states with contractor training and to assist states and local governments in adopting and implementing the latest building energy codes for residential and other buildings, including zero energy stretch codes.⁵⁸ For more information on these provisions, see CRS Report R47262, Inflation Reduction Act of 2022 (IRA): Provisions Related to Climate Change.

Earlier in the 117^th Congress, both the House Financial Services Committee and the Senate Banking Committee held hearings related to housing as infrastructure.⁵⁹ In July 2021, House Financial Services Committee Chairwoman Maxine Waters introduced the Housing is Infrastructure Act of 2021 (H.R. 4497) as part of her legislative housing package.⁶⁰ The Housing is Infrastructure Act would authorize hundreds of billions of dollars in new funding for various affordable housing programs and activities. Many of the activities included in that bill, as well as certain other parts of the Chairwoman's legislative housing package, were included in the House-passed version of the Build Back Better Act in some form.

For more information, see the following:

• CRS Report R46916, FY2022 Reconciliation: Title IV, House Financial Services Committee Provisions
• CRS Report R46960, Tax Provisions in the Build Back Better Act: Rules Committee Print 117-18

Performance-Based Contract Administrator Contract Solicitation

In 2022, HUD published a draft contract solicitation for comment that has generated a lot of interest. It involves oversight of the second largest federal rental assistance program—the Section 8 project-based rental assistance (PBRA) program. The PBRA program involves approximately 17,000 contracts between HUD and private property owners to subsidize the rents of over 1 million low-income tenants. Those contracts govern the terms of the rental assistance HUD provides to owners on behalf of eligible low-income tenants, and the conditions the property owners must meet to receive that funding. Since the early 2000s, HUD has contracted with Public Housing Authorities (PHAs) and State Housing Finance Agencies (SHFAs) to manage the contracts on a state-by-state basis via the Performance Based Contract Administrator (PBCA) initiative. In FY2022, Congress provided HUD with $355 million for PBCAs, to oversee approximately $13.6 billion in PBRA assistance.

In response to several HUD Office of Inspector General (OIG) audit reports issued in 2009 raising questions about the cost effectiveness and oversight of the existing PBCA contracts,⁶¹ in 2011 HUD issued an invitation for applications from PHAs and SHFAs to enter into new and revised PBCA contracts.⁶² HUD's initial solicitation and award of contracts was protested to the Government Accountability Office (GAO) by unsuccessful bidders. HUD decided to enter into new contracts in only 11 states where no protests were filed, and chose to withdraw the solicitation for those states that were protested.⁶³ The agency issued a revised solicitation in 2012; the selections from that solicitation were also protested to GAO.⁶⁴ GAO ultimately sustained the protests, finding that HUD is seeking services that should be obtained via a procurement instrument rather than a Notice of Funding Availability (NOFA).⁶⁵ HUD disputed GAO's finding and decided to proceed with the solicitation, which led to a legal dispute that was ended in 2015. The courts ultimately ruled that HUD could not pursue its plan to award these contracts to PHAs and SHFAs via NOFA (using the same cooperative agreement process the agency had used in the past), and instead, the agency needed to follow federal procurement law to solicit bidders via a free and open competitive process.⁶⁶

In 2022, HUD published a draft solicitation for comment that would replace the existing state-by-state PBCA contracts (slated to expire in 2023) with new regional contracts (for up to 15 subregions, generally made up of several states) for what HUD is terming Housing Assistance Payments Support Service (HAPSS) contracts.⁶⁷ Not only would there be fewer HAPSS contracts than the current PBCA contracts, but the HAPSS contracts would be narrower in the scope than the current PBCA contracts, as HUD is seeking to bring some contract oversight functions back in-house to the agency.

This new solicitation has raised concerns from existing PBCAs, including about the implications of losing their existing contracts.⁶⁸ The comment period for the draft solicitation was initially slated to close in August 2022, but, in response to stakeholder feedback, was extended through September 28, 2022. It is uncertain when HUD will publish a final solicitation for these contracts.

Native American Housing Assistance and Self-Determination Act Reauthorization

The 117^th Congress has been considering legislation to reauthorize the Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA, P.L. 104-330). NAHASDA authorizes the Indian Housing Block Grant (IHBG), through which HUD provides formula funding to federally recognized tribes and Alaska Native villages that can be used for a range of affordable housing activities.⁶⁹ As amended, it also authorizes the Native Hawaiian Housing Block Grant (NHHBG), which provides funding for affordable housing activities that benefit Native Hawaiians eligible to reside on the Hawaiian Home Lands.

The most recent authorization for most NAHASDA programs expired at the end of FY2013, although Congress has continued to fund NAHASDA programs in annual appropriations laws.⁷⁰ NAHASDA reauthorization legislation has been introduced and considered to varying degrees in every Congress since the 113^th, but none has ultimately been enacted. While both tribes and Congress have been generally supportive of NAHASDA, there is sometimes disagreement over specific provisions or policy proposals that have been included in reauthorization bills.

In the 117^th Congress, different NAHASDA reauthorization bills have been introduced in the House and the Senate. In September 2021, the House Financial Services Committee ordered to be reported H.R. 5195, which would reauthorize the IHBG, the NHHBG, and certain other Native American housing programs (namely, HUD's Section 184 Indian Home Loan Guarantee Program and Section 184A Native Hawaiian Housing Loan Guarantee Program) through FY2026.⁷¹ In February 2022, the Senate Committee on Indian Affairs ordered to be reported S. 2264, which would reauthorize the IHBG, the NHHBG, and the Section 184 and Section 184A programs through FY2032.⁷² Both bills also contain a range of other provisions that would make changes to NAHASDA and otherwise address housing assistance for Indian tribes in various ways.

Fair Housing

The evolving administrative and judicial interpretations of certain requirements of the Fair Housing Act have been of ongoing interest to Congress.⁷³ Congress enacted the Fair Housing Act "to provide, within constitutional limitations, for fair housing throughout the United States."⁷⁴ Congress passed the act in 1968 after years of private and government-sanctioned housing discrimination that resulted in racially segregated neighborhoods and unequal access to housing.⁷⁵ As amended, the act prohibits discrimination in the sale, rental, or financing of housing based on race, color, religion, national origin, sex, familial status, and disability.⁷⁶

The Fair Housing Act bars intentional discrimination, through which plaintiffs allege that a defendant made a housing decision based on "a discriminatory intent or motive."⁷⁷ In addition, prior to 2005, HUD and courts had historically recognized that the act also bars disparate impact (also referred to as discriminatory effects) discrimination—"facially neutral [housing] decision[s]" that have "a disproportionately adverse effect on [a protected class] and [are] otherwise unjustified by a legitimate rationale."⁷⁸ However, the Supreme Court, in the 2005 decision Smith v. City of Jackson, Mississippi⁷⁹ (a case involving the federal Age Discrimination in Employment Act of 1967 [ADEA]), indirectly called into question past decisions that had held that disparate impact claims are cognizable (i.e., viable) under the Fair Housing Act.

In Smith, the Court held that the ADEA supports disparate impact claims in part because the law expressly prohibits actions that "adversely affect" a protected class.⁸⁰ Due to the absence of similar statutory language in the Fair Housing Act, various court decisions following Smith raised questions about whether the act supports disparate impact claims, and if it does, the test courts should apply to evaluate them.⁸¹

The Supreme Court settled some of this uncertainty in a 2015 opinion, holding that disparate impact claims are cognizable under the Fair Housing Act, while providing guidance to HUD and lower courts regarding how claims should be assessed.⁸² During the Obama, Trump, and Biden Administrations, HUD issued differing regulations to implement disparate impact liability post-Smith, which sparked litigation.⁸³

In addition to prohibiting discrimination, the Fair Housing Act imposes a broad mandate on HUD and all other federal "executive departments and agencies [to] administer their programs and activities relating to housing and urban development ... in a manner affirmatively to further the purposes of [the Fair Housing Act]."⁸⁴ This mandate, known as the "affirmatively furthering fair housing" mandate (AFFH), is not further delineated in the statute, and the Obama, Trump, and Biden Administrations have implemented the mandate differently.

For more information on the Fair Housing Act in general, see the following:

• CRS Report 95-710, The Fair Housing Act (FHA): A Legal Overview

Affirmatively Furthering Fair Housing (AFFH)

What AFFH means is not defined in statute, and various court decisions regarding HUD's obligations under the mandate have concluded that it means more than refraining from discrimination.⁸⁵ A 1987 federal appellate court decision examined the Fair Housing Act's legislative history and concluded that the "law's supporters saw the ending of discrimination as a means toward truly opening the nation's housing stock to persons of every race and creed."⁸⁶ With that goal in mind, the court stated

This broader goal suggests an intent that HUD do more than simply not discriminate itself; it reflects the desire to have HUD use its grant programs to assist in ending discrimination and segregation, to the point where the supply of genuinely open housing increases.⁸⁷

Over the years, HUD has enforced the AFFH requirement first through guidance and then through regulations. HUD's AFFH regulations have changed several times in recent years over the span of three presidential administrations. The first AFFH regulations, issued by the Obama Administration in 2015, were replaced by Trump Administration regulations that became effective on September 8, 2020. Most recently, the Biden Administration announced an interim final AFFH rule that replaced the Trump Administration rule as of July 31, 2021.

During the Obama Administration, HUD's 2015 regulations defined AFFH as "taking meaningful actions that, taken together, address significant disparities in housing needs and in access to opportunity, replacing segregated living patterns with truly integrated and balanced living patterns, transforming racially and ethnically concentrated areas of poverty into areas of opportunity, and fostering and maintaining compliance with civil rights and fair housing laws."⁸⁸ States and localities receiving HUD formula grant funding, as well as Public Housing Authorities (PHAs), were required to assess the needs of their communities and ways in which they could improve access to housing. They were also required to submit a report to HUD, called an Assessment of Fair Housing (AFH).

During the Trump Administration, HUD suspended implementation of the 2015 AFFH regulations in May 2018. On August 7, 2020, HUD issued a new final rule, entitled "Preserving Community and Neighborhood Choice," that repealed and replaced the 2015 regulations.⁸⁹ The final rule stated 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 means "to take any action rationally related to promoting any attribute or attributes of fair housing."⁹⁰ States and localities were to certify that they satisfied the AFFH requirement as part of their consolidated plans.⁹¹ The rule did not apply to PHAs and took effect on September 8, 2020.

On January 26, 2021, President Biden issued a Presidential Memorandum to HUD, directing the agency to "take all steps necessary to examine the effects of the August 7, 2020, rule entitled 'Preserving Community and Neighborhood Choice' … including the effect that repealing the July 16, 2015, rule entitled 'Affirmatively Furthering Fair Housing' has had on HUD's statutory duty to affirmatively further fair housing."⁹²

On June 10, 2021, HUD published an interim final rule that repealed the Trump Administration rule and reinstated certain aspects of the 2015 AFFH rule, including the definition of AFFH as well as grantee certification requirements.⁹³ It does not require submission of an AFH, and HUD states that it anticipates releasing a proposed rule, subject to notice and comment procedures, to address other aspects of the 2015 AFFH rule.⁹⁴ The interim final rule became effective on July 31, 2021.

For more information, see the following:

• CRS Report R44557, The Fair Housing Act: HUD Oversight, Programs, and Activities

Disparate Impact Discrimination

Amidst the growing uncertainty regarding disparate impact discrimination under the Fair Housing Act following the Supreme Court's Smith opinion discussed above,⁹⁵ HUD, for the first time in February 2013 during the Obama Administration, issued regulations to "formalize HUD's long-held interpretation of the availability of 'discriminatory effects' liability under the Fair Housing Act and to provide nationwide consistency in the application of that form of liability."⁹⁶ In 2014, a federal district court briefly vacated the 2013 disparate impact rule after holding that disparate impact claims are not cognizable under the Fair Housing Act and that HUD had exceeded its statutory authority in issuing the rule.⁹⁷ About a year later, a federal appellate court vacated the district court's decision and remanded proceedings for reconsideration in accordance with the Supreme Court's 2015 decision, Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc.⁹⁸ In Inclusive Communities, the Supreme Court held that disparate impact claims are cognizable under the Fair Housing Act.⁹⁹ The Court's decision did not expressly adopt the disparate impact test implemented by HUD's 2013 rule; rather, the Court adopted a three-step burden-shifting test using language similar, but not identical, to the 2013 rule and outlined a number of limiting factors that lower courts and HUD should apply when assessing disparate impact claims.¹⁰⁰

In September 2020, near the end of the Trump Administration, HUD issued a final rule intended "to better reflect the Supreme Court's 2015 [Inclusive Communities] ruling."¹⁰¹ The 2020 rule would have significantly altered the 2013 rule by, among other things, imposing new pleading requirements on plaintiffs to maintain a prima facie disparate impact claim and establishing new defenses that a defendant could use to rebut disparate impact claims. Shortly after the rule's issuance, housing advocates filed a lawsuit in federal district court alleging that the 2020 rule should be set aside because it was an arbitrary and capricious interpretation of the law in violation of the Administrative Procedure Act (APA).¹⁰² Before the 2020 rule went into effect, the district court issued a preliminary injunction enjoining HUD from implementing and enforcing the 2020 rule, which had the effect of keeping the 2013 rule in place.¹⁰³

The court explained that the 2020 rule constituted a "massive overhaul" of the 2013 rule by "introducing new, onerous pleading requirements," "easing the burden on defendants of justifying a policy with discriminatory effect while at the same time rendering it more difficult for plaintiffs to rebut that justification," and "arm[ing] defendants with broad new defenses."¹⁰⁴ In the court's view, these alterations "weaken[ed], for housing discrimination victims and fair housing organizations, disparate impact liability under the Fair Housing Act."¹⁰⁵ HUD argued that these changes were justified because they brought the rule into alignment with Inclusive Communities and "provide[d] better clarity to the public."¹⁰⁶ The court concluded that these major changes, "which r[a]n the risk of neutering disparate impact liability under the Fair Housing Act, appear[ed] inadequately justified" and "accomplish[ed] the opposite of clarity."¹⁰⁷ Consequently, the court held that the plaintiffs demonstrated "a substantial likelihood of success on the merits as to their claim that the 2020 Rule [wa]s arbitrary and capricious under the APA."¹⁰⁸

On January 26, 2021, President Biden issued a memorandum directing HUD to "take all steps necessary to examine the effects of the [2020 rule]."¹⁰⁹ HUD responded to this presidential directive by voluntarily dismissing its appeal of the federal district court's injunction¹¹⁰ and proposing a regulation that would recodify the 2013 rule and effectively rescind the 2020 rule.¹¹¹ In the proposed rule issued on June 25, 2021, HUD expressed its belief "that the practical effect of the 2020 Rule's amendments [wa]s to severely limit HUD's and plaintiffs' use of the discriminatory effects framework in ways that substantially diminish that frameworks' effectiveness in accomplishing the purposes that Inclusive Communities articulated."¹¹² HUD further explained that "the 2013 Rule has provided a workable and balanced framework for investigating and litigating discriminatory effects claims that is consistent with the Act, HUD's own guidance, Inclusive Communities, and other jurisprudence."¹¹³ As a consequence, parties who previously filed suits challenging the 2013 rule as inconsistent with Inclusive Communities could continue the lawsuits because the 2013 rule has been reinstated.¹¹⁴

For more information, see the following:

• CRS Report R44203, Disparate Impact Claims Under the Fair Housing Act

Racial Disparities in Housing

Despite the Fair Housing Act and other efforts, long-standing racial disparities in housing outcomes persist. For many housing indicators, the discrepancy is especially pronounced between Black individuals and White individuals, including in homeownership rates,¹¹⁵ renter cost burdens,¹¹⁶ and, most recently, the housing-related impacts of the COVID-19 pandemic.¹¹⁷

While housing-related legislative proposals in general can have implications for racial disparities in housing, the 117^th Congress has signaled a particular interest in considering ways to directly address such disparities. For example, the House Financial Services Committee held a hearing in March 2021 entitled "Justice for All: Achieving Racial Equity Through Fair Access to Housing and Financial Services."¹¹⁸ The committee's hearing memorandum included descriptions of several introduced or draft bills that would address specific issues related to housing and race, and some of these bills have since received additional consideration. Similarly, the Senate Banking Committee held a hearing in April 2021 entitled "Separate and Unequal: The Legacy of Racial Discrimination in Housing," which examined related issues.¹¹⁹ The Biden Administration, including HUD, has also focused attention on promoting equity in federal programs.¹²⁰

One issue that has received particular attention is possible racial disparities in home appraisals. In April 2021, the House Financial Services Committee ordered to be reported the Real Estate Valuation Fairness and Improvement Act of 2021 (H.R. 2553), one of the bills included in the committee's March 2021 hearing, which would establish an interagency task force to examine real estate valuation standards and would take actions to promote diversity in the appraisal profession. In June 2021, the Biden Administration released a fact sheet highlighting a number of actions it has taken or proposed that it states will help address racial disparities in housing, including announcing an interagency task force to address inequities in home appraisals led by HUD Secretary Marcia Fudge. ¹²¹ That task force, known as the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE), released a report in March 2022 outlining steps that agencies would take to address appraisal bias.¹²² The Senate Banking Committee and House Financial Services Committee held hearings on the topic shortly thereafter.¹²³ Additionally, in February 2022, House Financial Services Committee Chairwoman Maxine Waters sent a letter to HUD, regulatory agencies, and appraiser professional organizations indicating that her committee would be taking actions, including legislation, to address racial discrimination in appraisals.¹²⁴

Housing and Climate Impacts

Many communities across the country are experiencing the impacts of climate change, with extreme weather and climate-related events expected to become more frequent and more intense in a warmer world.¹²⁵ Climate-related risks to the housing stock include the impacts of flooding and coastal erosion,¹²⁶ sea level rise,¹²⁷ high-intensity rainfall events,¹²⁸ higher urban temperatures,¹²⁹ more intense hurricanes with higher winds and storm surge,¹³⁰ and increased wildfire activity from extreme heat events combined with drought.¹³¹ A recent study found that more than 1.45 million homes in the United States–about 1 in every 10 homes–were affected by the largest natural catastrophe events of 2021 (wildfire, severe weather, hurricanes, and winter storms), with an estimated $56.92 billion in damage.¹³² This vulnerability to the effects of climate change has highlighted the importance of improving the resilience of the nation's housing stock and mitigating housing's climate-related impacts through increased energy efficiency or other measures.¹³³

Climate impacts may also have implications for housing markets and housing finance. A number of studies suggest that risks associated with sea level rise are not fully reflected in home prices,¹³⁴ though there are already indications of reductions in property prices in homes subject to recurring flooding.¹³⁵ For example, a nationwide evaluation of the effect of floodplain location on property prices by the National Bureau of Economic Research (NBER) found that for single-family homes, being zoned into the floodplain reduces property values by 2% to 10%, with the strongest discount in states with strict real estate disclosure laws. The NBER estimates that there are at least 3.8 million floodplain homes in the United States that are overvalued by a total of $34 billion.¹³⁶ A recent report found that nearly 650,000 properties will be at least partially submerged by 2050 due to rising sea levels, reducing the tax base of coastal counties in the United States.¹³⁷

The Mortgage Bankers Association's Research Institute for Housing America published a report on the impact of climate change on housing and housing finance in which it noted that, in addition to increasing residential property damage, climate change may increase mortgage default and mortgage prepayment risk, trigger adverse selection in the types of loans that are sold to the government-sponsored enterprises, and increase the volatility of house prices.¹³⁸ FHFA, Fannie Mae, and Freddie Mac have noted that Fannie Mae and Freddie Mac may be exposed to the risk of future losses from natural disasters on mortgages that they own or guarantee, particularly as the magnitude and frequency of these disasters increases with climate change.¹³⁹ As climate impacts grow over time, the mortgages on such properties may become riskier.¹⁴⁰ In January 2021, FHFA issued a request for input on climate change and natural disaster risk to the housing finance system.¹⁴¹ FHFA released a statement in December 2021 acknowledging that climate change poses a serious threat to the U.S. housing finance system, and announced that it is also enhancing its agency-wide monitoring and supervision of climate change issues.¹⁴² The FHFA Strategic Plan for Fiscal Years 2022-2026 included an objective to identify options for incorporating climate change into regulated entity governance.¹⁴³

The Financial Stability Oversight Council (of which the FHFA Director is a member) identified climate change as an emerging and increasing threat to U.S. financial stability, noting that the primary exposure of the government-sponsored enterprises to risk from climate change arises from credit losses in the mortgage market. However, they may be subject to additional exposures, and FHFA is in the process of identifying and measuring climate-related risks to its regulated entities. FHFA is in the early stages of planning for this work,¹⁴⁴ beginning with flood risk, but plans to also examine the impacts of other perils, such as wind damage, wildfires, and droughts.¹⁴⁵

Both Congress and the White House have introduced initiatives to address climate risks to housing. For example, 23 agencies developed Climate Adaptation and Resilience Plans in October 2021¹⁴⁶ and in October 2022 these agencies released Climate Adaptation and Resilience Progress Reports.¹⁴⁷ These were developed in response to Executive Order (E.O.) 14008, which directed the head of each government agency to submit a draft action plan within 120 days of the E.O. that describes steps the agency can take with regard to its facilities and operations to bolster adaptation and increase resilience to the impacts of climate change.¹⁴⁸ In May 2021, E.O. 14030 directed federal agencies to develop, within 120 days, a comprehensive government-wide climate-risk strategy to identify and disclose climate-related financial risk to government programs, assets, and liabilities.¹⁴⁹ In response, HUD published its Climate Adaptation and Resilience Plan in November 2021, in which it identified the potential vulnerability of the FHA Mutual Mortgage Insurance Fund and General Insurance and Special Risk Insurance Fund to increased defaults and losses as a specific threat to HUD programs.¹⁵⁰

The Infrastructure Investment and Jobs Act (IIJA; P.L. 117-58), enacted in November 2021, appropriated significant new funding for hazard mitigation, which could be used by communities to reduce risks associated with climate change. This includes $500 million for the STORM Act State Revolving Loan Program, $1 billion for the Building Resilient Communities and Infrastructure grant program, and $3.5 billion for the Flood Mitigation Assistance grant program.¹⁵¹ In addition to the funding appropriated for housing by the IRA, which was discussed earlier in this report, Section 70006 of the IRA allows FEMA to provide financial assistance for hazard mitigation to cover costs associated with low-carbon materials and incentives that encourage low-carbon and net-zero energy projects.

In addition, a number of committees have held hearings on housing and climate change during the 117^th Congress, including the House Financial Services Committee,¹⁵² the House Select Committee on the Climate Crisis,¹⁵³ and the Senate Committee on Banking, Housing and Urban Affairs.¹⁵⁴

Housing and Disaster Response and Recovery

The extent to which federal policies adequately and effectively address the housing needs of disaster survivors following the range of disasters that may occur is of ongoing interest to policymakers. When disasters occur, the President may authorize an emergency or major disaster declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act; P.L. 93-288, as amended). The declaration may authorize the Federal Emergency Management Agency (FEMA) to provide housing assistance, including through the Individuals and Households Program (IHP).¹⁵⁵ Additionally, Congress may appropriate further relief and recovery funding for the Community Development Block Grant Disaster Recovery (CDBG-DR) program.

FEMA IHP Housing Assistance

IHP Housing Assistance for Economically Destructive Disasters

Stafford Act declarations tend to support response and recovery following natural disasters that result in physical damages (e.g., hurricanes). Although uncommon, Presidents have issued declarations for incidents that do not result in physical damages, such as public health incidents (e.g., the COVID-19 pandemic).

Disasters can have economic consequences. During the early response to the COVID-19 pandemic, Congress considered the federal government's options for providing rental assistance payments to individuals experiencing financial hardship due to the pandemic. Although Rental Assistance is a form of IHP assistance,¹⁵⁶ it is premised on an individual being displaced from their primary residence because it is uninhabitable, inaccessible, unavailable due to forced relocation, or nonfunctional due to utility outages.¹⁵⁷ FEMA does not have the statutory authority to provide temporary rental or mortgage payments when people experience disaster-caused financial hardship. However, this has not always been the case. Prior to May 2002, the Stafford Act authorized the President to provide temporary mortgage or rental payments to or on behalf of individuals and families meeting certain criteria.¹⁵⁸ Section 206 of the Disaster Mitigation Act of 2000 (DMA2K; P.L. 106-390) amended the Stafford Act to remove temporary mortgage and rental payments, and add the language predicating assistance on displacement.¹⁵⁹

Congress intended DMA2K to control the federal cost of disaster assistance; however, the specific justification for removing the provision of mortgage and rental payments from the amended version of the Stafford Act is not specified in the committee reports on the bill.¹⁶⁰ During a Senate hearing in 2003, the Department of Homeland Security Office of Inspector General (DHS OIG) attributed Congress's elimination of mortgage and rental payments to lack of program use and implementation challenges.¹⁶¹ Despite these challenges, the DHS OIG stated that the "effects of the 9/11 terrorist attack ... demonstrated genuine need for programs such as this. Therefore, we have recommended ... that Congress consider reinstating the program under the Stafford Act."¹⁶² Congress may continue to evaluate whether FEMA's housing assistance programs are adequate and appropriate to meet the needs of survivors following disasters that result in economic, rather than physical, damages—as this was a gap that was revealed by the economic effects of the COVID-19 pandemic.

IHP Housing Assistance and Hazard Mitigation

IHP housing assistance may take various forms, including temporary assistance to rent alternate accommodations and assistance for repair and reconstruction, such as through Home Repair Assistance. The objective of Home Repair Assistance is to make the disaster survivors' home "safe, sanitary, or functional," not to return the home to its pre-disaster condition or to improve it.¹⁶³ Still, repairs may include hazard mitigation measures to make the housing more resilient.¹⁶⁴ On June 10, 2021, FEMA announced an expansion of the mitigation assistance provided for IHP Home Repair Assistance for disasters declared on or after May 26, 2021, to "allow eligible homeowners ... [to] repair or rebuild stronger, more durable homes."¹⁶⁵

FEMA's guidance details the types of mitigation measures that are available under the IHP.¹⁶⁶ Its regulations and guidance impose limitations on the mitigation assistance that may be provided, including that it may only be awarded for disaster-damaged real property components that existed and were functional prior to the declared disaster,¹⁶⁷ and the amount of financial assistance for housing is capped in statute.¹⁶⁸ Additionally, although hazard mitigation measures are intended to "reduce the likelihood of future damage," this assistance is not available until after a disaster has occurred and received a presidential Stafford Act declaration.¹⁶⁹

Congress may consider whether the funding for mitigation measures provided for Home Repair Assistance is sufficient, and could also consider whether there is a need to expand eligibility for pre-disaster mitigation or expand the programs that support pre-disaster mitigation.

IHP Policy Change to Ownership Documentation Requirements to Advance Equity

On September 2, 2021, FEMA released a memorandum amending FEMA's Individual Assistance program guidance in accordance with the Biden Administration and FEMA's equity initiatives.¹⁷⁰ One significant policy change to the IHP is that FEMA now accepts expanded forms of documentation to verify an applicant's occupancy and ownership, which is required before FEMA can provide certain types of IHP assistance.¹⁷¹ To that end, FEMA will accept a "written self-declarative statement ... from applicants whose pre-disaster residence was passed down via heirship."¹⁷² In this context, FEMA defines heirship as "the legal right to receive real and personal property under state law upon the death of an ancestor or next of kin."¹⁷³

Prior to this policy change, there were reports that some African American families in the Southern United States were prevented from receiving assistance for which they may have otherwise been eligible because they own property passed down by heirship and lack the formal or traditional documentation FEMA previously would accept to prove ownership (e.g., deed or deed of trust to the property).¹⁷⁴ Although other property-related challenges may persist for some people who own property passed down by heirship (without formal or traditional documentation of ownership),¹⁷⁵ such individuals may now be able to receive disaster assistance from FEMA.¹⁷⁶ Upon issuing the updated guidance, FEMA stated that the change was made to "reduce barriers to access experienced by underserved populations."¹⁷⁷

CDBG-DR

Following some disasters, Congress has provided Community Development Block Grant (CDBG) funding in supplemental appropriations for disaster recovery purposes, which has come to be known as CDBG-DR. These HUD-administered grants assist impacted states and localities in their recovery efforts under CDBG statutory authorities. CDBG-DR is not a formally authorized program, meaning the rules that govern the funding use and oversight vary with HUD guidance accompanying each allocation.

The Reforming Disaster Recovery Act of 2021 (H.R. 4707/S. 2471), introduced in the 117^th Congress, would authorize CDBG-DR as a standing program and codify a CDBG-DR program structure. (In the 116^th Congress, a substantially similar bill, H.R. 3702, was passed by the House.) On December 15, 2021, the U.S. Senate Committee on Banking, Housing, and Urban Affairs conducted a hearing to consider authorization of CDBG-DR as a standing program.¹⁷⁸ Another bill introduced in the 117^th Congress, H.R. 2809, the Natural Disaster Recovery Program Act of 2021, would establish a separate program to address unmet needs of states and tribal entities in disaster recovery.

In addition to the hearing on CDBG-DR authorization, the U.S. House Committee on Financial Services has conducted hearings on various aspects of CDBG-DR grant administration, in its oversight role, during the 117^th Congress. On January 19, 2022, the House Financial Services Subcommittee on Oversight and Investigations, held a hearing to examine findings by the U.S. Government Accountability Office¹⁷⁹ regarding the distribution of CDBG-DR funds for vulnerable populations.¹⁸⁰ On July 15, 2021, the Subcommittee on Oversight and Investigations of the House Committee on Financial Services held a hearing to examine the management and distribution of CDBG-DR and CDBG Mitigation (CDBG-MIT) funds in Texas, as well as broader issues related to targeting of funds and HUD's monitoring of such activities.¹⁸¹

For more information on CDBG-DR, see the following:

• CRS Report R46475, The Community Development Block Grant's Disaster Recovery (CDBG-DR) Component: Background and Issues

CFPB Revisions to the Qualified Mortgage Rule

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act; P.L. 111-203) was enacted in 2010 to address conditions that were perceived to have led to the 2007-2009 housing and financial crisis. Among other provisions, it required 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 be in violation.¹⁸² The CFPB released a final rule implementing these ability-to-repay (ATR) requirements in January 2013; the rule took effect in January 2014.¹⁸³

One of several ways that a mortgage originator can comply with the ATR requirements is by originating a qualified mortgage (QM), a mortgage that meets certain specified underwriting and product feature requirements. A QM reduces an originator's legal liability by providing either a rebuttable presumption of compliance with the ATR requirements or safe harbor protection, depending on the loan's pricing. The QM rule has been amended several times since being finalized in 2013.¹⁸⁴ In December 2020, near the end of the Trump Administration, the CFPB issued a final rule making certain changes to the definition of a General QM.¹⁸⁵ Among other things, it replaced a limit on the allowable debt-to-income ratio for a General QM with a measure of the loan's pricing with the aim of increasing credit access to households that have demonstrated the ability to repay loans despite having lower income.¹⁸⁶ The CFPB also issued a new "seasoned QM" rule.¹⁸⁷ Under this rule, certain non-QM mortgages could become QMs or certain rebuttable presumption QMs could become safe harbor QMs after a lender has held them in its own portfolio for a certain amount of time.

The CFPB issued a final rule on April 30, 2021, to delay the adoption of the mandatory compliance date of the revised General QM rule by over a year, from July 1, 2021, to October 1, 2022.¹⁸⁸ The delay allowed the incoming CFPB leadership time to review the revisions.

The CFPB has also indicated that it may reconsider the seasoned QM rule, as well as aspects of the General QM rule, in the future.¹⁸⁹

For more information, see the following:

• CRS In Focus IF11761, The Qualified Mortgage (QM) Rule and Recent Revisions

Status of Fannie Mae and Freddie Mac

In 2008, Fannie Mae and Freddie Mac, two GSEs that guarantee mortgage-backed securities and together back about half of the U.S. mortgage market, were experiencing financial difficulties stemming from the housing and mortgage market turmoil that was taking place during the financial crisis at the time. They consented to enter conservatorship overseen by the FHFA, their new regulator established by the Housing and Economic Recovery Act of 2008 (P.L. 110-289). Treasury agreed to provide financial support in exchange for senior preferred stock in each GSE and the option to purchase up to 79.9% of common stock at a nominal cost in the future. Fannie Mae and Freddie Mac have remained in conservatorship since that time. They could ultimately leave conservatorship through legislative action,¹⁹⁰ or, potentially, through administrative actions taken by the FHFA and Treasury. Whether or not it pursues a legislative resolution to the conservatorship, Congress may take an interest in any actions by the FHFA that could affect the eventual release of Fannie Mae and Freddie Mac from conservatorship, or in how actions the FHFA takes affect homebuyers and the mortgage market.

In June 2021, the Supreme Court, in Collins v. Yellen, struck down as unconstitutional a statutory provision that had limited the ability of the President to remove an FHFA Director during a director's five-year term.¹⁹¹ The decision allows the President to remove the director at will, rather than only for cause. Following that decision, President Biden removed FHFA Director Mark Calabria and designated as Acting FHFA Director Sandra L. Thompson, who had been serving as the FHFA's Deputy Director of the Division of Housing Mission and Goals.¹⁹² In December 2021, President Biden announced that he would nominate Acting Director Thompson to be the permanent FHFA Director.¹⁹³ On May 25, 2022, the Senate confirmed Sandra L. Thompson as Director of the FHFA.¹⁹⁴

For more information, see the following:

• CRS Report R44525, Fannie Mae and Freddie Mac in Conservatorship: Frequently Asked Questions
• CRS Report R46746, Fannie Mae and Freddie Mac: Recent Administrative Developments
• CRS Legal Sidebar LSB10614, Supreme Court: Structure of Federal Housing Finance Agency Violates Constitution

Appendix. Housing Bills in the 117^th Congress

This Appendix lists housing-related legislation that received committee or floor action during the 117^th Congress as of October 21, 2022. The table does not include broader bills that contained some housing-related provisions (e.g., the CARES Act, the American Rescue Plan Act, what is commonly referred to as the Build Back Better Act) and received committee or floor action.¹⁹⁵