Washington Recap: February 2026
NAAHL, in partnership with the Center for Affordable Housing Lending, is pleased to provide this monthly recap of the top federal policy developments in affordable housing and community development. NAAHL Members receive breaking policy updates and additional policy resources directly; however, any partner can sign up for NAAHL alerts and the monthly Washington Recap here.
CONGRESS
Federal Government Reopens After Brief Partial Shutdown
On January 30 the government went into a partial shutdown affecting agencies that had not received a full-year appropriation, including HUD and the CDFI Fund. Senate Democratic leadership and President Trump reached a deal to pass full Fiscal Year (FY) 2026 appropriations for all remaining agencies, except for the Department of Homeland Security (DHS), which received a continuation of funding until February 13.
The Senate approved the funding legislation on January 30, and the House returned and passed the legislation on February 3. President Trump signed the legislation later that evening, reopening the shutdown parts of the government. Due to the brief nature of the shutdown, HUD and CDFI Fund operations were not significantly impacted.
Enacted FY 2026 funding levels for HUD and the CDFI Fund were the same as the amounts that had previously been negotiated by the House and Senate Appropriations Committees. The legislation included $324 million for the CDFI Fund, the same as FY 2025 funding, showing broad bipartisan support for the role that CDFIs play in expanding economic opportunity. It also provided $77.3 billion for HUD, which was an increase over FY 2025 levels and included important increases for the Housing Choice Voucher and Project-Based Rental Assistance programs, as well as level funding for the HOME Investment Partnerships program and Community Development Block Grant program.
In addition to funding, the legislation also included language that provides a timeline for the noncompetitive renewal of expiring HUD Continuum of Care (CoC) grants, until awards can be made under a new FY 2025 Notice of Funding Opportunity (NOFO). These grants support housing and homelessness services.
While most federal agencies are funded for the remainder of the fiscal year, DHS funding expired on February 13, sending the agency into a shutdown, which is ongoing. The National Flood Insurance Program (NFIP), which is administered by the Federal Emergency Management Agency (FEMA) within DHS, was extended through the end of the fiscal year as part of the government funding bill enacted on February 3 and will not be impacted by this shutdown.
NAAHL’s budget chart, which provides a more detailed breakdown of the funding levels for key programs, is available here.
House Passes the Housing for the 21st Century Act
On February 9, the House passed the Housing for the 21st Century Act with an overwhelming bipartisan vote of 390-9. The bill is led by House Financial Services Committee Chairman French Hill (R-AR) and Ranking Member Maxine Waters (D-CA) and Housing and Insurance Subcommittee Chairman Mike Flood (R-NE) and Ranking Member Emanuel Cleaver (D-MO). The final version of the bill also contained several community banking provisions that had previously passed the House Financial Services Committee with bipartisan support.
The Housing for the 21st Century Act contains provisions aimed at increasing investment in affordable housing, modernizing federal housing programs, cutting red tape, and increasing flexibility for local communities, including:
An increase in banks’ public welfare investment (PWI) cap from 15 to 20 percent, allowing for additional private investment to support affordable housing and community development;
Updates to the HOME Investment Partnerships program to expand eligibility and reduce local administrative burden;
Modernizing CDBG to better support housing construction;
Increasing FHA’s multifamily loan limits to expand affordable financing options;
Support and guidance for communities that want to reduce barriers to housing construction; and
Streamlining of environmental requirements.
Increasing the PWI cap is a top NAAHL priority. This change could increase investments in affordable housing and help unlock the full potential of the expansion of the Low-Income Housing Tax Credit passed in the One Big Beautiful Bill Act.
NAAHL wrote to House Speaker Mike Johnson (R-LA), Minority Leader Hakeem Jeffries (D-NY), and relevant Committee leaders, and signed onto letters led by the National Housing Conference and National Multifamily Housing Council urging all House members to support the legislation.
Senate Takes Up Its Bipartisan Housing Legislation
On February 26, Senate Majority Leader John Thune (R-SD) took procedural steps to set up votes on bipartisan housing legislation in the Senate the week of March 2. The Senate is expected to vote on legislation that largely mirrors the Senate Banking Committee’s bipartisan housing package, the ROAD to Housing Act, which passed the Committee unanimously and was included as an amendment on the Senate-passed version of the National Defense Authorization Act last fall, though it was not ultimately enacted.
News reports and a Statement of Administration Policy issued by the Office of Management and Budget indicate that the White House is pushing for any bipartisan housing legislation to include a ban on institutional investors purchasing single-family homes, which is one of President Trump’s housing priorities. This was not included in either the House or Senate Committee-passed bipartisan housing bills but could be added during consideration on the Senate floor. For more on legislation related to institutional investors, see “Congress Works to Craft Legislation Banning Institutional Investor Ownership of Single-Family Homes” below.
If the Senate passes bipartisan housing legislation that differs from the House-passed text, both chambers would need to reconcile any differences and vote on a final version before a bill could be signed into law. NAAHL applauded the Senate Banking Committee for unanimously passing the ROAD to Housing Act and has repeatedly urged Congress to enact bipartisan housing legislation to help increase housing supply and bring down costs.
Congress Works to Craft Legislation Banning Institutional Investor Ownership of Single-Family Homes
Following President Trump’s call for Congress to make his Executive Order banning institutional investors from purchasing single-family homes permanent, members on both sides of the aisle are reportedly working on legislation to put a ban in law.
On February 24, Senate Banking, Housing, and Urban Affairs Committee Ranking Member Elizabeth Warren (D-MA) and16 additional Senate Democrats introduced the American Homeownership Act, which is aimed at limiting institutional investor ownership of housing. The American Homeownership Act would limit large institutional investors’ ability to take tax deductions, purchase single-family loans or properties from federal agencies, and access federally-backed financing, and would establishing new disclosure and Federal Trade Commission review requirements for large purchases of single-family homes for antitrust violations. This legislation includes exemptions for both new construction and affordable housing.
Senator Bernie Moreno (R-OH) has also indicated that he is working on legislation to ban institutional investors from purchasing single-family homes and has said he plans to introduce that legislation by March 3.
In the House, three pieces of legislation related to purchases of single-family homes were included with the Committee’s February 10 hearing on affordability. While some Committee members had expressed concerns about proposals to limit investor purchases, following a meeting with Treasury Secretary Scott Bessent, several members said they were now open to considering legislation on the issue.
House Financial Services Committee Holds Housing Hearings
This month the House Financial Services Committee held multiple hearings related to housing.
Full Committee Holds Hearing on Affordability, Emphasizes Housing Supply
On February 10, the full House Financial Services Committee held a hearing titled, “Priced Out of the American Dream: Understanding the Policies Behind Rising Costs of Housing and Borrowing.” Members used the hearing to discuss a host of issues, including housing affordability, access to credit for small businesses, bank regulation, and interest rates. There was also strong emphasis on the need to increase the supply of housing from members on both sides of the aisle.
During the hearing, Chairman Hill (R-AR) and Ranking Member Waters (D-CA) both highlighted their support for the Housing for the 21st Century Act, which passed the House the day before the hearing. Ranking Member Waters (D-CA) and Representative Joyce Beatty (D-OH) also spoke about the importance of CDFIs and raised concerns about delays in awarding CDFI grant funds.
Subcommittee Holds Hearing on the Secondary Mortgage Market
The Housing and Insurance Subcommittee held a hearing titled “Homeownership and the Role of the Secondary Mortgage Market.” During the Subcommittee hearing, both sides of the aisle agreed that the secondary mortgage market is central to liquidity, the 30-year fixed rate mortgage, and broader access to homeownership. Members also discussed the future of Fannie Mae and Freddie Mac (the Enterprises), which remain in conservatorship after they experienced significant losses during the 2008 financial crisis. Chairman Hill stated that he believes Fannie Mae and Freddie Mac are not ready to sell new shares to private shareholders and that Congress needs to have a say in how the Enterprises will look before any shares are sold, while Representative Scott Fitzgerald (R-WI) indicated that members would introduce legislation to end the conservatorship of the Enterprises in the coming weeks.
Senators Introduce Bipartisan CDFI Legislation
On Thursday, February 26, Senators Steve Daines (R-MT) and Mark Warner (D-VA) introduced the Access to Fair Financing for Opportunity and Resilient Development (AFFORD) Act, which combines several proposals to create additional liquidity for CDFIs and enhance transparency at the CDFI Fund. These proposals were offered as an amendment, but not ultimately included, within the National Defense Authorization Act last year.
The AFFORD Act would:
Require annual testimony from the Treasury on the operations of the CDFI Fund;
Extend the authorization of the CDFI Bond Guarantee program and expand access to this source of long-term financing;
Support a secondary market and other facilities to create liquidity for CDFI loans, freeing up resources for CDFIs to extend more affordable credit; and
Expand a partnership between USDA and Native CDFIs that expands access to homeownership for Native homebuyers.
The AFFORD Act has 28 additional bipartisan cosponsors. NAAHL issued a public letter of support for the legislation urging members of Congress to quickly pass the AFFORD Act to increase investment in affordable housing and in communities across the country.
ADMINISTRATION
HUD Proposes Mixed-Status Rule Revisions
On February 20, HUD released a proposed rule to revise its “mixed status” regulation implementing citizenship requirements for residents in federally assisted housing.
This proposed rule would require all members of a federally assisted household to prove citizenship or eligible immigration status. This would eliminate the ability for families with mixed immigration statuses who currently receive housing assistance on a prorated basis to continue residing in federally assisted housing. The proposal also requires eligibility documentation from seniors, who are currently exempt from that requirement, and requires all residents, regardless of immigration status, to sign a consent form acknowledging that the information provided may be shared with HUD and DHS.
HUD’s proposal is similar to a rule proposed in 2019 during the first Trump Administration. The 2019 rule was not finalized and was withdrawn by the Biden Administration.
On February 18, HUD Secretary Turner published an op-ed in the Washington Post related to this proposed rule and families with mixed-status in federally assisted housing.
HUD Proposes Allowing Time Limits, Work Requirements for Most Assisted Housing
On February 27, HUD published a proposed rule to allow most public housing agencies (PHA) and owners of properties receiving project-based rental assistance (PBRA) to establish work requirements for work-eligible adults and time limits for non-elderly, non-disabled households. The proposal would allow PHAs and owners, at their option, to set work requirements of up to 40 hours per week and time limits of two years or longer for residents of public housing and households assisted through tenant-based vouchers, project-based vouchers, and PBRA. Residents receiving assistance through the HUD-VASH program, Foster Youth to Independence initiative, and Family Unification Program would not be subject to these requirements under the proposal.
BANKING REGULATORS
NAAHL Emphasizes Importance of the Community Reinvestment Act for Affordable Housing and Community Development
This month, NAAHL submitted comments in response the Office of the Comptroller of the Currency’s (OCC) request for input on proposed guidance creating a simplified strategic plan option for banks with less than $30 billion in assets to fulfill their Community Reinvestment Act (CRA) requirements. The OCC’s proposal would create a form to help smaller banks provide all of the information necessary for a complete strategic plan, as well as provide a set of elective goals that smaller banks could use to help them set the measurable goals that they are required to set in any strategic plan.
In its comment, NAAHL noted the important role that CRA plays in encouraging private sector lending and investments in affordable housing and community development, including investments in tax credits that help drive housing production and business growth, like Low-Income Housing Tax Credits and New Markets Tax Credits. NAAHL emphasized the importance of ensuring that any guidance fulfills the shared goal of increasing housing and community development resources for low- and moderate-income families and neighborhoods.
CONFIRMATIONS AND APPOINTMENTS
Department of Agriculture (USDA)
NOMINATED: Glen Smith to be Under Secretary for Rural Development.
Department of Housing and Urban Development (HUD)
NOMINATED: Irving Dennis to be Chief Financial Officer of the Department of Housing and Urban Development [Privileged Nomination]
Federal Reserve
AWAITING NOMINATION: Kevin Warsh to be Chairman of the Board of Governors of the Federal Reserve System.