Washington Recap: July 2025

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

Reconciliation Bill Signed into Law: Changes to LIHTC, NMTC, and Opportunity Zones

After months of work on the budget reconciliation process, President Trump signed the One Big Beautiful Bill Act (OBBB) into law on July 4. The bill includes significant policy changes for the Medicaid program, immigration, and the tax code. Notably, the bill permanently expands and strengthens the Low-Income Housing Tax Credit (LIHTC), permanently extends the New Markets Tax Credit (NMTC), and permanently authorizes Opportunity Zones. Novogradac estimates that the OBBB’s LIHTC provisions will finance more than one million additional affordable rental homes.

The bill also winds down and adds new requirements for the Clean Electricity Investment Tax Credit, with a particularly fast phase-out for wind and solar investments and eliminates tax credits to support energy efficiency for residential and commercial buildings. Related, on July 7, the White House issued an executive order emphasizing that the Treasury Department would strictly enforce the newly-enacted clean electricity tax credit provisions, following reports that some members of Congress wanted a faster end to tax credits related to wind and solar energy in order to support the OBBB.

NAAHL applauded the legislation’s historic expansion of the Low-Income Housing Tax Credit. However, the bill did not include the bipartisan Neighborhood Homes Investment Act (H.R. 2854, S. 1686), which is focused exclusively on increasing the supply of affordable homes for homeownership. NAAHL is working closely with congressional leaders to ensure that the Neighborhood Homes Investment Act is enacted to provide relief to current and aspiring homeowners. NAAHL serves on the Steering Committee of the ACTION Campaign, a national coalition of more than 2,400 organizations advocating for LIHTC, and co-chairs the Neighborhood Homes Coalition.

Click here to see NAAHL’s fact sheet of key provisions in the bill.

What’s next: Following passage of the OBBB, Senate Finance Chair Mike Crapo (R-ID) stated that he intends to pursue a second reconciliation bill before the end of the year. Ways & Means Chair Jason Smith (R-MO) has expressed similar interest, though it remains uncertain what changes would be part of a new package and whether another major package could move that quickly.

FY 2026 Appropriations and Risk of Government Shutdown in September

Congress must pass legislation to fund the government by September 30 to avoid a government shutdown. Annual appropriations require 60 votes in the Senate; therefore, bipartisan agreement is necessary. However, Democrats have threatened to walk away from negotiations, citing actions by Senate Republicans and the Office of Management and Budget (OMB) to shift more spending authority to the executive branch.

Rescissions: On July 24, President Trump signed a bill rescinding foreign aid, NPR, and PBS funding, becoming the first President in decades to receive approval for such a measure. OMB plans to send more rescissions to Congress before the end of the fiscal year, which they argue will become “pocket rescissions” if Congress does not act. Director Vought argues that if a rescission proposal is submitted with fewer than 45 legislative days remaining until the funding expires, the funds can be withheld without congressional approval. Democrats and Senate Appropriations Chair Susan Collins (R-ME) have argued that this practice is unlawful. Read more: “Democrats confront appropriations trust deficit with White House,” Roll Call.

Transportation, Housing and Urban Development, and Related Agencies (THUD): Both the House and Senate Appropriations Committees have advanced FY 2026 THUD spending bills. The Senate Appropriations Committee voted to send the THUD bill to the full Senate on bipartisan 27-1 vote, while the House Appropriations Committee advanced its bill on a partly-line 35-28 vote. While the President’s budget request called for the elimination of many HUD programs, both appropriations bills provide funding for most of HUD’s programs.

While the House THUD bill does not reduce HUD funding as steeply as proposed in the President’s Budget, it would provide $67.751 billion for HUD—$939 million below the FY 2025 enacted level. The House bill eliminates several key programs, including the HOME Investment Partnerships Program, the only federal block grant to state and local governments exclusively for affordable housing. Read NAAHL’s summary of the House THUD bill here.

The Senate THUD bill provides $73.3 billion for HUD in FY 2026, significantly higher than both the House’s $67.8 billion and the President’s request of $42.8 billion. The Senate also preserved funding for programs eliminated in the House bill, including HOME, and, like the House, did not adopt the Administration’s proposal to consolidate and block grant rental assistance programs. Read NAAHL’s summary of the Senate THUD bill here.

Financial Services and General Government (FSGG): The House Appropriations FSGG Subcommittee has approved its FY 2026 FSGG. The House FSGG bill includes $276.6 million to fund most of the existing grant and technical assistance programs and administrative costs of the Community Development Financial Institutions (CDFI) Fund—below the $324 million enacted in FY 2025, but consistent with the House proposal for FY 2025 and substantially higher than the President’s FY 2026 request. The President’s Budget proposed eliminating existing CDFI grant programs and creating a new $100 million Rural Financial Assistance Program. Read NAAHL’s summary of the House FSGG bill here.

What’s Next: Both chambers will be in recess for August, leaving a narrow window in September to pass all 12 appropriations bills funding the government before the end of the fiscal year. Congress could also pass a continuing resolution to maintain current funding levels, as it did in FY 2025.

NAAHL reported in June that the cuts included in the President’s FY 2026 Budget Proposal would significantly reduce affordable housing options and vital community services nationwide, undermining efforts to expand housing supply and weakening financial markets. Programs at HUD and USDA and a strong CDFI sector are essential to the Administration’s stated goals around housing access, affordability, rural and Tribal support, capital access, and economic development. NAAHL has recently signed onto letters led by the HOME Coalition, the ACTION Campaign, and the National Multifamily Housing Council urging Congress to fully fund the HOME program.

Banking Committee Markup

On July 29, the Senate Banking Committee unanimously advanced a bipartisan housing and community development package, the ROAD to Housing Act. The Committee passed the bill 24-0 without amendment. The package includes a number of bipartisan proposals from Committee Members aimed at expanding and preserving housing across all types, streamlining development processes, supporting innovation in construction, and increasing investment in affordable housing.

NAAHL supports the ROAD to Housing Act and is encouraging congressional leaders to pair it with a few key, bipartisan tax provisions to invest in affordable housing, particularly the Neighborhood Homes Investment Act and provisions of the Affordable Housing Credit Improvement Act to support developments in rural communities, as Congress advances this critical housing package. Click here to read NAAHL’s press release and summary of the package.

ADMINISTRATION

Supreme Court Allows Administration to Proceed with Federal Layoffs

The Supreme Court ruled on July 8 that the Administration may move forward with plans to implement large-scale layoffs of federal employees. A federal judge in California had previously blocked the layoffs, finding they would likely violate federal law. However, the Supreme Court granted the Administration’s emergency appeal, allowing enforcement of a February 11 executive order directing agencies to implement broad reductions in force. The White House is reportedly preparing for additional legal challenges aimed at halting or limiting implementation of the order.

Department of Housing and Urban Development (HUD)

Changes to Fair Housing: HUD continued to roll back certain fair housing rules and enforcement activities in the month of July. ProPublica reported that the Department is preparing to close seven major investigations into alleged housing discrimination and segregation, including cases where HUD had already identified civil rights violations. On July 10, HUD announced it has “effectively disbanded” the interagency Property Appraisal and Valuation Equity (PAVE) initiative. Launched in 2021, the PAVE task force aimed to address racial and ethnic bias in home appraisals. Senator Raphael Warnock (D-GA) introduced legislation on July 16 to codify PAVE, titled the Appraisal Modernization Act.

CDFI Fund: Stalled FY 2025 Funds and New Leadership

Senate Responds to Stalled FY 2025 Funds: The CDFI Fund has not yet awarded FY 2025 Financial Assistance, Technical Assistance, and Native American CDFI Assistance (NACA) programs or published a Notice of Funds Availability for the FY 2025 round of the Bank Enterprise Award (BEA) program. Reports indicate that the delay may be caused by OMB not releasing the funds to the Treasury Department to allow the CDFI Fund to make the awards. On July 29, Senate CDFI Caucus Co-Chairs Mike Crapo (R-ID) and Mark Warner (D-VA) sent a bipartisan letter to OMB, urging the Administration to disburse these congressionally appropriated funds without further delay and requests a spending plan.

New CDFI Fund Acting Director: The Treasury Department named Dietrich Douglas as Acting Director of the CDFI Fund following Director Pravina Raghavan’s resignation on June 27. Acting Director Douglas has served as the CDFI Fund’s Legal Counsel since January 2023.

Federal Housing Finance Agency (FHFA) and the GSEs

 

FHFA Director Announces Credit Score Policy Change and Proposed Rule: This month, FHFA Director Bill Pulte announced that Fannie Mae and Freddie Mac (the government sponsored enterprises, or GSEs) would soon begin accepting delivery of mortgages using VantageScore 4.0 credit scores, in addition to accepting loans based on FICO classic credit scores that lenders use today, and would continue to require lenders to use credit reports from three credit bureaus (a tri-merge). In 2022, FHFA announced that the GSEs would move toward requiring lenders to deliver loans with both FICO 10-T and VantageScore 4.0 credit scores and move to using two credit reports (a bi-merge) instead of the tri-merge. But there were several challenges to the transition for lenders and investors, and the GSEs had not begun accepting new score types or moved to a bi-merge report. FHFA published an FAQ document on the transition.

 

This month, FHFA also issued a proposal to rescind its Fair Lending, Fair Housing, and Equitable Housing Finance Plans rule. The rule, which was finalized in 2024, codified FHFA’s fair lending and fair housing oversight of the GSEs and the Federal Home Loan Banks, including through the supervisory process, as well as FHFA’s oversight process to prevent unfair or deceptive acts or practices (UDAP) violations. It also codified a requirement that the GSEs create Equitable Housing Finance Plans detailing steps they would take to support one or more underserved communities. FHFA had suspended the requirement for the GSEs to comply with the Equitable Housing Finance Plans portion of the rule in March 2025.

FHFA Director Discusses Conservatorship: FHFA Director Pulte responded to questions about the future of the GSEs by saying that they would “likely” remain in conservatorship, but that the Trump Administration might try to take pieces of the companies public. It was not clear what the timing for any changes would be or how those changes would work.

Changes to Financial Oversight and Regulation

Bank Regulators Request Comment on CRA Rule: On July 18, banking regulators issued a joint proposal to rescind the 2023 Community Reinvestment Act (CRA) final rule and to reinstate the CRA rule that was in place immediately prior to the 2023 rule (often referred to as the 1995 rule). Because implementation of the 2023 rule was paused pending legal action, banks are complying with the 1995 rule today. The comment period on the joint proposal ends on August 18. NAAHL will be submitting a comment letter.

This month, the banking regulators also issued a request for comments on CRA, as well as bank operations and capital, as part of the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) process. EGRPRA requires the banking regulators to review their regulations for outdated, burdensome, or unclear requirements every 10 years. The comment period closes on September 26. NAAHL will be submitting a comment letter.

Gould and Pettit Confirmed and new Chief Counsel at OCC: This month, the Senate confirmed Jonathan Gould as Comptroller of the Currency and Luke Pettit as Assistant Secretary for Financial Institutions at the Treasury Department. As Comptroller of the Currency, Gould will play an important role in implementing a number of banking and community development policies, including CRA. Gould previously served as the Chief Counsel at the Office of the Comptroller of the Currency (OCC) during the first Trump Administration. The OCC also announced a new Chief Counsel, Adam Cohen.

As Assistant Secretary for Financial Institutions, Pettit is responsible for the Department’s financial institutions policy, community and economic development policy, and cybersecurity and critical infrastructure protection. The CDFI Fund falls under his jurisdiction. 

Federal Reserve Oversight: This month, President Trump and several administration officials increased scrutiny of the Federal Reserve and Chair Jerome Powell. President Trump and Administration officials, including FHFA Director Pulte and Commerce Secretary Howard Lutnick, called on Chair Powell to lower interest rates, and President Trump and FHFA Director Pulte also raised concerns about the cost of building renovations at the Federal Reserve Board. Treasury Secretary Scott Bessent also called for the Federal Reserve to do a comprehensive review of its mission. While there have been news reports about whether the President might try to fire Chair Powell, President Trump recently suggested that he was not planning to do so.

 

CONFIRMATIONS AND APPOINTMENTS

Department of Agriculture

  • NOMINATED: Glen Smith to be Under Secretary for Rural Development.

Department of Housing and Urban Development (HUD)

  • AWAITING FLOOR CONSIDERATION: David Woll to be General Counsel.

  • AWAITING FLOOR CONSIDERATION: Craig Trainor to be Assistant Secretary for Fair Housing and Equal Opportunity.

  • AWAITING FLOOR CONSIDERATION: Benjamin DeMarzo to be Assistant Secretary for Congressional and Intergovernmental Relations.

  • NOMINATED: Benjamin Hobbs to be Assistant Secretary for Public and Indian Housing.

  • NOMINATED: Jeremy Ellis to be Inspector General.

  • NOMINATED: Ronald Kurtz to be Assistance Secretary for Community Planning and Development.

Department of the Treasury

  • CONFIRMED: Luke Pettit to be Assistant Secretary for Financial Institutions.

  • AWAITING FLOOR CONSIDERATION: Brian Morrissey, Jr. to be General Counsel for the Department of the Treasury.

  • AWAITING FLOOR CONSIDERATION: Jonathan McKernan to be Under Secretary for Domestic Finance.

  • HEARINGS HELD: Derek Theurer to be Assistant Secretary for Legislative Affairs.

  • NOMINATED: Jason De Sena Trennert to be Assistant Secretary for Financial Markets.

Office of the Comptroller of the Currency (OCC)

  • CONFIRMED: Jonathan Gould to be Comptroller of the Currency.

National Association of Affordable Housing Lenders

NAAHL is the only national alliance of banks, CDFIs, and other capital providers dedicated to expanding economic opportunity by financing affordable housing and neighborhood revitalization. NAAHL has worked to advance responsible community reinvestment, fight predatory lending, and strengthen public-private partnerships.

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Senate Banking Committee Unanimously Passes Landmark Housing Bill