Washington Recap: July 2026

Aug 1

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.

**Center for Affordable Housing Lending Releases Incentive to Impact Report**

This month, the Center for Affordable Housing Lending (the Center) released Incentive to Impact, a comprehensive analysis of how the Community Reinvestment Act (CRA) leverages private investment to support affordable housing, homeownership, and small businesses across the U.S.

The report finds that in 2024 alone, CRA incentivized more than $430 billion in loans and investments in low- and moderate-income communities. This is nearly six times the combined federal budgets of the U.S. Department of Housing and Urban Development (HUD), the U.S. Department of Agriculture’s (USDA) Rural Housing Service, the Small Business Administration (SBA), and the CDFI Fund.

This includes:

Nearly $168 billion in affordable housing and community development loans and investments;
More than $152 billion in small business loans;
More than $100 billion in mortgages to homeowners; and
More than $10 billion in small farm loans.

View the Incentive to Impact fact sheet here.

Read the full Incentive to Impact report here.

View Impact Profiles of CRA-qualifying affordable housing and community development loans and investments here.

CONGRESS

Legislation

Landmark 21st Century ROAD to Housing Act Becomes Law

The 21st Century ROAD to Housing Act became law on July 11. This landmark housing bill, which passed both the House of Representatives and the Senate with overwhelming bipartisan votes, was enacted 10 days after it was transmitted to the White House without the President’s signature.

Housing stakeholders praised the enactment of the legislation, which NAAHL President and CEO Sarah Brundage called “a historic moment for housing policy.” The final bill includes 47 housing provisions, including a provision increasing banks’ public welfare investment cap, one of NAAHL’s top priorities. This provision alone opens up the potential for billions in additional investment in affordable housing and community development. The 21st Century ROAD to Housing Act includes a number of other provisions that NAAHL has supported to expand housing supply and increase affordability, including provisions to:

Modernize rural housing programs and provide a path to preserve hundreds of thousands of affordable rural units;
Update and reauthorize the HOME Investment Partnerships program;
Cut red tape and streamline environmental reviews for homes constructed with funds from the Department of HUD and USDA;
Increase HUD’s multifamily loan limits to expand access to affordable financing;
Authorize a Whole-Home Repairs program to preserve existing homes with repair needs;
A three-year authorization of the Community Development Block Grant-Disaster Recovery (CDBG-DR) program, the primary federal program that supports long-term recovery after major disasters; and
Permanently authorize the PRICE program, which helps maintain manufactured housing communities – an under-appreciated part of our affordable housing stock – as affordable housing.

With the legislation enacted, NAAHL and its partners have now turned to ensuring that the law is implemented quickly and effectively to realize the increase in housing supply and affordability that Congress intended. On July 13, NAAHL and the Center released ROADmap: an Implementation Guide mapping exactly what federal agencies, Congress, and stakeholders must do next to bring the law’s provisions to life. The guide identifies 124 distinct implementing actions required across the federal government and finds that HUD is the lead agency on 88 of them, or 71 percent.

NAAHL will continue to work with partners and policymakers to encourage agencies to prioritize implementation, with a focus on actions that will have the most immediate and meaningful impact on housing supply.

Reconciliation 3.0 Framework Passes House

On July 22, the House passed a budget resolution to provide $95 billion in additional funding through a reconciliation bill. This budget resolution is much narrower than was initially expected and is limited to defense spending, farm aid, and money to encourage states to adopt voting identification laws. The House budget resolution does not include a tax component. A budget resolution is the first step for advancing a reconciliation bill, which can become law with only a majority vote in each chamber. If both chambers adopt the same budget resolution, legislative language still needs to be drafted by the specific committees and passed by both chambers to become law.

The Senate has signaled more hesitation about advancing what would be the third reconciliation measure this Congress. President Trump has publicly pressured Majority Leader Thune (R-SD) to pass the budget resolution and kick off the reconciliation process before the Senate leaves for August recess on August 7.

Hearings

OMB Director and Acting CFPB Director Vought Addresses CDFI Funding, Capital Magnet Fund Before Congress

During the week of July 10, Office of Management and Budget (OMB) Director Russ Vought appeared in front of the House Financial Services Committee and Senate Banking Committee in his role as Acting Director of the Consumer Financial Protection Bureau (CFPB) to discuss the CFPB’s Semi-Annual Report to Congress. In addition to questions about the CFPB’s work, Director Vought received several questions about the status of Congressionally appropriated funds for community development financial institution (CDFI) grants, as well as Capital Magnet Fund awards. Vought confirmed that all FY 2025 funding grants and guarantee programs for CDFIs had been apportioned to the CDFI Fund and said he would look into the Capital Magnet Fund.

If FY 2025 CDFI funding is not obligated by September 30, 2026, the funds will expire. NAAHL and a coalition of housing organizations and CDFIs called for funding at the CDFI Fund to be quickly deployed in order to infuse much-needed capital into affordable housing projects. Additionally, NAAHL and a coalition of more than 85 groups called for the CDFI Fund to deploy Capital Magnet Fund dollars expeditiously to further the shared priority of increasing housing supply.

House Financial Services Subcommittee Holds Hearing on the Federal Home Loan Bank System

On July 21, the House Financial Services Subcommittee on Housing and Insurance held a hearing titled “Oversight of the Federal Home Loan Bank System”. Subcommittee Ranking Member Emanuel Cleaver (D-MO) noted that this is the first time in almost 15 years that the committee has held a hearing on the Federal Home Loan Banks (FHLBanks). The hearing explored the history and current role of the FHLBanks in the housing system, and the potential for the system to further support access to housing across the country.

During the hearing, multiple members highlighted the importance of the FHLBanks’ Affordable Housing Program (AHP) in expanding access to affordable housing in communities, as well as the important role that FHLBank liquidity plays in supporting housing finance and economic development. Members and witnesses also discussed FHLBank membership, including the challenges some FHLBank member CDFIs face in accessing liquidity through the system.

The Subcommittee’s hearing on the FHLBank System shows Congress’s continued focus on housing after passage of the bipartisan 21st Century ROAD to Housing Act.

NAAHL submitted a letter for the hearing record emphasizing the FHLBanks’ critical role in our housing ecosystem and the additional ways the FHLBanks can drive impact as an irreplaceable tool in our toolbox when it comes to affordable housing finance.

Senate Holds Hearing for CFPB Director Nominee

On July 23, the Senate Banking, Housing, and Urban Affairs Committee held a hearing on nominees, including Brian Johnson, who is nominated to be the Director of the CFPB. OMB Director Russell Vought has served as Acting CFPB Director since February 2025. During the hearing Mr. Johnson testified that he would keep an “open mind” about the staffing levels at the CFPB. The CFPB recently paused significant staffing cuts until the new Director is confirmed, according to court filings in a case challenging the layoffs from the agency. When asked about whether he believes the CFPB should be eliminated, Mr. Johnson responded that it was created by statute and he will follow the law. The Committee has not yet scheduled a vote on whether to advance Mr. Johnson’s nomination to the full Senate.

Since Mr. Johnson will not be confirmed by August 1, when OMB Director Vought’s term as Acting CFPB Director expires, it was reported that CFPB Chief Legal Officer Mark Paoletta will serve as Acting Director until the CFPB Director is confirmed. It has also been reported that Vought will remain with the CFPB in a senior advisor role.

Appropriations

Funding the Government for Fiscal Year 2027

This month, Congress continued working toward passing legislation to fund the government for Fiscal Year 2027, which begins on October 1, 2026. Congress funds the government through 12 appropriations bills. Over the course of the spring and summer, the House Appropriations Committee voted to send all 12 appropriations bills to the House floor for a vote, including the Agriculture bill, which funds the USDA's Rural Housing Service; the Transportation, Housing and Urban Development, and Related Agencies (THUD) bill, which funds the Department of Housing and Urban Development; and the Financial Services and General Government (FSGG) bill, which funds the CDFI Fund. However, only three of the 12 bills have passed the House so far, and neither the THUD nor FSGG bills have passed the full House. A more detailed breakdown of the funding levels for key programs from the House FSGG and THUD bills, is available here.

The Senate has not yet released any appropriations bills. There was reporting in June that Senate appropriators could not reach agreement on the amount of funding for each appropriations bill, which is central to bill negotiations. The absence of Senator McConnell (R-KY), a senior appropriator, has also complicated the Senate’s appropriations process.

Given the short window until the end of FY 2026, both chambers are seeking to extend government funding until after the midterm election as Congress works to find agreement on all 12 appropriations bills. On July 21, the House passed a “continuing resolution” (CR) to fund the government at existing levels through December 4. Senate Majority Leader Thune (R-SD) has also indicated that he plans to hold a vote on a CR before the Senate leaves for August recess, though the Senate version is expected to differ from the House-passed bill by including adjustments to certain funding lines based on programmatic differences and needs. If appropriations bills or a CR are not passed before October 1, any part of the government without funding will shut down.

ADMINISTRATION

FHFA

FHFA Proposes Overhaul of Duty to Serve Requirements for Fannie Mae and Freddie Mac

In June, the Federal Housing Finance Agency (FHFA), the regulator of Fannie Mae and Freddie Mac, proposed to rewrite the regulation implementing Fannie Mae and Freddie Mac’s statutory requirement to serve very low-, low-, and moderate-income families in three underserved housing markets: manufactured housing, affordable housing preservation, and rural housing.

Members of the Underserved Mortgage Markets Coalition, which is convened by NAAHL and is dedicated to ensuring Fannie Mae and Freddie Mac fulfill their duty to support access to mortgages throughout the nation, submitted a comment letter in response to FHFA’s proposal. While the group supported the decision to retain a strategic planning process with public input, the letter also raised concerns that the proposal removes most of the program’s structure, giving Fannie Mae and Freddie Mac significant discretion in how to implement their Duty to Serve. The letter also raised concerns that the proposal could give Fannie Mae and Freddie Mac credit for serving higher-income borrowers, leaving many families behind.

The full comment letter is available here.

HUD

HUD Changes Focus of Fair Housing Grants

On July 2, HUD announced in a Notice of Funding Opportunity (NOFO) that the Fair Housing Initiatives Program (FHIP) FY 2025-2026 awards would have an altered approach. The FHIP program has historically provided grants to more than 100 legal aid organizations, fair housing centers, and other private nonprofit organizations to enforce the Fair Housing Act and educate the public about fair housing laws. However, in the NOFO, HUD stated that the agency intends to shift the focus of the program. Instead, HUD laid out a plan to allocate $46 million of the $56 million that Congress provided for FHIP in FY 2025 to just five grants. These grants will fund “special projects” at nonprofits and universities that focus on increasing technical efficiency in civil rights enforcement. The notice also puts new restrictions on applicants applying for a subset of FHIP awards known as Private Enforcement Initiative and Education and Outreach Initiative funds for FY 2026. These new restrictions will exclude a large number of fair housing organizations that have been eligible to apply for these grant dollars in the past.

On a call with potential applicants, HUD Acting Deputy Assistant Secretary Nathan Roth described that this is a shift away from enforcement of what the administration has viewed as illegal or an overstep. It was also reported that in early July, HUD Assistant Secretary Craig Trainor sent an email to HUD staff about transforming the Fair Housing and Equal Opportunity office. In this email Trainor stated that the FHIP program was being returned “to its original goals.”

On July 23, the National Fair Housing Alliance (NFHA) and the Massachusetts Fair Housing Center filed a lawsuit challenging these changes.

BANKING REGULATORS

Financial Regulators Issue Guidance on Individuals Not Legally Authorized to Work in the U.S.

On July 13, the Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA) jointly released guidance for their regulated institutions on lending to individuals not legally authorized to work within the U.S. This guidance was issued pursuant to the May 2026 Executive Order on “Restoring Integrity to America’s Financial System,” which was intended to address credit risks from extending financial services to non-work authorized individuals.

This guidance was not specifically required by the Executive Order. It draws extensively on a statement CFPB issued in June on determining ability to repay for non-work authorized individuals that was also issued pursuant to the Executive Order. In addition to its focus on consumer compliance risk, the guidance focuses on credit and concentration risk from lending to non-work authorized individuals or from having significant exposure to geographies, employers, or industries that could be disproportionately impacted by enforcement of work authorization requirements or immigration enforcement.

The Federal Reserve is the only federal bank regulator that is not a party to the guidance.

OCC, FDIC Propose Revisions to CRA Regulations

On July 31, the OCC and FDIC released a proposal to revise the agencies’ regulations implementing CRA. CRA was enacted in 1977 and requires federally insured banks to help meet the credit needs of the communities where they are chartered to do business, including low- and moderate-income communities. The three banking regulators – the OCC, the FDIC, and the Federal Reserve – are responsible for implementing CRA for the banks they regulate. The Federal Reserve did not join the new proposal.

The agencies state that the proposed revisions preserve large parts of the framework of the existing rule while making four categories of changes. The agencies state that their proposal seeks to:

Reduce regulatory burden by increasing the asset thresholds for bank CRA evaluations, with small banks defined as banks with up to $1 billion in assets (up from $412 million) and intermediate banks defined as those with up to $10 billion in assets (up from $1.649 billion);
Increase the focus on lending;
Increase clarity and objectivity for determining CRA-qualifying community development activities, including by maintaining a list of examples of qualifying community development activities, creating a process for banks to get agency confirmation that an activity qualifies for CRA credit, and clarifying when community development activity outside of a bank’s assessment area can receive credit; and
Update eligibility of community development grants, limiting CRA qualifying grants and donations to those that are used directly for a program, project, or initiative with a primary purpose of community development in the bank’s local community and capping administrative costs.

The new proposed rule will be open for 60 days for public comment once it is published in the Federal Register. NAAHL is engaging members and partners to assess the impact of these changes for affordable housing and community development.

The same day, the OCC and FDIC submitted a proposed judgment to the U.S. District Court for the Northern District of Texas in the pending litigation over the interagency 2023 CRA rule. The filing proposes that the court issue a judgment finding that the OCC and FDIC exceeded their authority under CRA in creating assessment areas other than those tied to a bank’s deposit-taking facilities and in assessing a bank’s deposit products. The court has not yet responded to the filing.

CONFIRMATIONS AND APPOINTMENTS

Department of Agriculture (USDA)

CONFIRMED: Glen Smith to be Under Secretary for Rural Development.

Department of Housing and Urban Development (HUD)

HEARING HELD: Irving Dennis to be Chief Financial Officer.
HEARING HELD: Jeffrey Ledbetter to be Inspector General of the Department of Housing and Urban Development.

Department of Treasury