Washington Recap: June 2025

Jun 27

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

Senate Republicans Work to Pass Reconciliation Bill

Senate Republicans are racing to pass their version of the One Big Beautiful Bill Act via budget reconciliation ahead of the July 4 recess, but key hurdles remain, including certain bill provisions’ compliance with Senate rules. The Senate text includes a permanent expansion of the Low-Income Housing Tax Credit (LIHTC), permanent extension of the New Markets Tax Credit, and permanent extension of the Opportunity Zone tax incentive. It also rescinds certain clean energy and energy efficiency tax provisions enacted in the Inflation Reduction Act and unobligated funds for the Green and Resilient Retrofit Program administered by the Department of Housing and Urban Development (HUD). Unfortunately, the Senate bill text, like the House-passed version of the reconciliation bill, excludes the bipartisan Neighborhood Homes Investment Act, which would boost affordable homeownership supply. Click here to read NAAHL’s readout of key provisions in the Senate bill.

What’s next? The Senate continues to make significant changes to its bill text to comply with Senate rules that require the bill’s provisions to be related to federal spending in order to be considered under special procedures that allow the bill to pass with a majority vote in the Senate. The process to make changes to the bill text could delay a floor vote in the Senate. Leader Thune and Speaker Johnson are under pressure to pass the legislation before July 4 recess.

The Senate Budget Committee reported that several provisions in the Senate’s original text must be changed or removed to comply Senate rules on reconciliation. This includes provisions to eliminate funding for the Consumer Financial Protection Bureau, require public land sales for housing and related infrastructure, limit agency rulemaking, and authorize the executive branch to reorganize federal agencies. Additional changes are possible up until the Senate’s final vote.

Once the Senate passes its version of the reconciliation bill, the bill will return to the House, which passed its version of the bill in May. House Speaker Mike Johnson and the GOP conference will need to decide whether to support the Senate bill or push for further negotiations. Congress’s urgency to pass the bill is in part driven by the debt limit. Treasury Secretary Bessent asked Congress to pass an increase in the debt limit by mid-July to avoid any negative consequences for borrowing costs or the U.S. credit rating. Both the House and Senate versions of the reconciliation bill include a debt limit increase.

NAAHL supports expanding and strengthening LIHTC and permanently extending the New Markets Tax Credit to support housing and community development benefiting low-income families and communities. We continue to urge Republican leadership to include the Neighborhood Homes Investment Act in the reconciliation package to support affordable housing supply for homeownership.

FY 2026 Appropriations: The President’s Budget and Committee Markups

Congressional appropriators continue to hold hearings and committee markups to pass FY 2026 funding bills before the end of the fiscal year in September. House Appropriations Chair Tom Cole (R-OK) says he hopes to pass all 12 spending bills through the House in July. On June 23, the appropriations bill for the U.S. Department of Agriculture (USDA) was voted out of the House Appropriations Committee. The bill maintains FY25 funding levels for USDA’s rural housing loan programs, including Sections 502, 515, and 538, as well as the Section 542 Rural Voucher Assistance Program. The Section 521 Rental Assistance Program would receive nearly $1.72 billion, an increase of 7% from FY25. The Rental Preservation Demonstration Program (MPR) would receive $30 million, a decrease of 12% from FY25. Text for other relevant spending bills, including the Transportation, Housing and Urban Development, and Related Agencies and Financial Services and General Government bills, has not yet been released.

Meanwhile, the White House released additional program-level details for its FY 2026 Budget request on May 30. The budget proposes a 22% cut to non-defense discretionary spending—which includes HUD, USDA Rural Housing Service, and CDFI funding—while leaving defense spending flat. Most key housing and community development programs would be cut or eliminated, including some that had been preserved by Congress in previous budgets. Notably, the budget proposes new eliminations beyond those seen during the first Trump Administration. One exception to these proposed housing cuts is the rural rental assistance – the President’s budget proposed increase for this account.

NAAHL reported that these cuts 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.

White House Sends Recissions Package to Congress, Signaling More to Come

The White House sent a $9.4 billion recissions package to Congress, aiming to claw back funding for foreign aid and public broadcasting. The House passed the package on June 12 by a 214-212 vote, with all but four House Republicans voting for the measure, and all Democrats opposing. The bill is now awaiting consideration in the Senate. The Senate must pass the bill by July 18 to use the special rescission rule that requires only a majority vote for passage.

Speaker Mike Johnson has said that he expects the White House to send “multiple recission packages” to Capitol Hill this year, and the House will pass them “as quickly as we can.” Office of Management and Budget (OMB) Director Russell Vought has also signaled that he may delay sending further rescissions packages to Congress until close to the end of the fiscal year in an attempt to use a controversial procedure called a “pocket rescission”: in order to prevent federal funds from being spent, the White House sends a rescissions package within 45 days of the end of the fiscal year. Because Congress has 45 days to vote on a rescissions package, the Administration would not spend the funds for those 45 days while waiting on Congress to act. At the end of the 45 days, even if Congress did not pass the rescissions package, some have said that the funds would still be rescinded because the fiscal year – and thus the funds’ period of availability – had ended.

ADMINISTRATION

HUD

HUD Begins Staff Reassignments to Address Workforce Gaps: Following federal workforce reduction efforts by the Department of Government Efficiency (DOGE), HUD is beginning to reassign staff to address operational gaps. The Washington Post reported that HUD officials are working to redeploy employees to understaffed offices, particularly within the Office of Community Planning and Development. According to an internal presentation, 13 of HUD’s field offices now have two or fewer employees. A May 23 message to staff obtained by the Post noted that the reassignments aim to "immediately cover skill gaps and critical functions." Staff accepting reassignment must work in person and cover their own relocation expenses. A HUD spokesperson wrote in a statement to Bloomberg that, given roughly 2,300 employees are “taking the opportunity to find a new path, it only makes sense that the department would have a plan in place to ensure that mission critical functions and the highest quality service to rural, tribal and urban communities remain uninterrupted.”

Changes to FHA Multifamily MIP: On June 24, Secretary Turner announced that the Federal Housing Administration (FHA) will charge a flat 25 basis point MIP for all multifamily loans. The change will reduce premiums on some loan products and eliminate the Green/Energy Efficient, Broadly Affordable Housing, and Affordable: Inclusionary Vouchers MIP pricing categories, which had offered lower insurance premiums for mortgages financing properties with meeting certain efficiency or affordability standards than pricing available for traditional FHA multifamily loans. HUD has opened a 30-day public comment period on the proposed change.

Work Requirements: HUD is reportedly considering a rulemaking to establish new time limits and work requirements for recipients of the Department’s existing rental assistance programs, according to an internal document viewed by NPR. These reports follow a May 14 op-ed penned by HUD Secretary Scott Turner, along with Secretaries Robert F. Kennedy, Brooke Rollins, and Mehmet Oz, supporting work requirements for various federal assistance programs. Any proposed rule would be subject to a public comment period before being finalized, and some have said HUD could potentially face a legal challenge over the lack of congressional approval for such requirements.

Effect of HUD Cuts on Fair Housing Enforcement: The Washington Post reported that the cuts to HUD’s Office of Fair Housing and Equal Opportunity (FHEO) are likely to make it harder for the federal government to enforce the Fair Housing Act. The National Fair Housing Alliance (NFHA) sent a letter to Secretary Turner on June 12, arguing that the Administration was using “erroneous information” to justify cuts to programs designed to fight housing discrimination. On June 24, NFHA filed a federal lawsuit against HUD for the withholding of fair housing funds.

White House Budget Sparks Concern Over Unspent CDFI Fund Awards and Future Funding

CDFIs are seeking clarity from the Administration on whether the CDFI Fund will award Congressionally appropriated FY25 funds. The White House’s more detailed budget documents released on May 30 indicate that the CDFI Fund does not intend to obligate 75% of FY25 funds for Financial Assistance and Technical Assistance, which have already been appropriated. For FY26, the budget proposes no funding for existing FA and TA awards and proposes to create a new fund which would require 60% of CDFI loans and investments to go to rural areas. The budget does not include a definition of ‘rural.’

During a Senate Finance Committee hearing on June 12, CDFI Caucus Co-Chair Mark Warner (D-VA) asked Treasury Secretary Scott Bessent if the Administration will follow the law and obligate the unspent money from the CDFI Fund. The Secretary replied that it is the first he had heard of it and that he would commit to having an answer to the Senator by “next week.” The Treasury Department has yet to respond. Footage from the hearing can be viewed here.

Meanwhile, the Native CDFI Network (NCN) sent a letter to Congressional leaders and the Administration, protesting the White House’s plan to obligate just $4 million of the $28 million appropriated for the FY25 Native CDFI Assistance (NACA) Program. NAAHL also joined a CDFI Coalition letter urging Secretary Bessent to commit to using the FY25 appropriations and to publish a timetable for making awards.

There have been reports of senior staff departures at the CDFI Fund, raising concerns about internal capacity. Departing staff include CDFI Fund Director Pravina Raghavan (whose last day is June 27) and Senior Policy Advisor Dan Aiello.

Federal Housing Finance Agency (FHFA) and the GSEs

Oversight: This month, FHFA issued its 2024 Annual Report to Congress on Fannie Mae, Freddie Mac, and the Federal Home Loan Banks as required by law. The report followed the same format as prior reports, outlining the financial status of all of FHFA’s regulated entities, as well as their activities and compliance with safety and soundness and mission requirements, and does not offer any indication of future plans for the entities. While FHFA Director Bill Pulte posted on social media that he would meet with the members of the Federal Housing Finance Oversight Board – Securities and Exchange Commission Chair Atkins, HUD Secretary Turner, and Treasury Secretary Bessent – on June 17, there was no publicly available information about the meeting or what was discussed. There have been no additional updates on the future of Fannie Mae and Freddie Mac following President Trump’s posts on social media about the two companies late last month.

Personnel: In June, FHFA also reportedly placed two senior leaders – Anne Marie Pippin, Senior Associate Director of the Division of Conservatorship Oversight and Readiness, and Maria Fernandez, Senior Associate Director of the Office of Housing and Regulatory Policy – on administrative leave. While there was no written reporting, there have also been reports that Fannie Mae and Freddie Mac have terminated additional staff over the course of the past month.

Changes to Financial Oversight and Regulation

Personnel: Personnel changes at financial regulators continued this month as the Senate confirmed Michelle Bowman to serve as Federal Reserve Vice Chair for Supervision. Vice Chair Bowman outlined her priorities for supervision and regulation in her first public remarks since her confirmation.

At the Consumer Financial Protection Bureau (CFPB), the top enforcement official, Cara Petersen, resigned, stating her belief that current leadership had “no intention to enforce the law in any meaningful way.” Last month, the Administration withdrew the nomination of Jonathan McKernan to head the CFPB and nominated him to a leadership position at the Treasury Department. No new nominee has been named to run the CFPB, and OMB Director Vought continues to serve as acting director.

Enforcement Terminations: In recent weeks, financial regulators also sought to terminate five enforcement actions related to redlining. The effort to terminate enforcement against one lender, Townstone Financial, was rejected by the court.

CRA Rulemaking: In testimony before the House Financial Services Committee, Federal Reserve Chair Jerome Powell confirmed that the Federal Reserve, Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance Corporation (FDIC) are still on track to rescind the 2023 CRA final rule and reinstate the 1995/2021 rule. Chair Powell said it was a “question of execution” and that this rulemaking was “certainly coming.” The proposed rule may be released as soon as July and may have a brief comment period.

CONFIRMATIONS & APPOINTMENTS

Department of Agriculture

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

Department of Housing and Urban Development (HUD)

CONFIRMED: Andrew Hughes to be Deputy Secretary of HUD.
HEARINGS HELD: David Woll to be General Counsel of HUD.
HEARINGS HELD: Craig Trainor to be Assistant Secretary for Fair Housing and Equal Opportunity.
HEARINGS HELD: 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 of HUD.

Department of the Treasury

CONFIRMED: Kenneth Kies to be an Assistant Secretary for Tax Policy.
CONFIRMED: William Long to be Commissioner of the Internal Revenue Service (IRS).
AWAITING FLOOR VOTE: Luke Pettit to be Assistant Secretary for Financial Institutions.
HEARINGS HELD: Brian Morrissey, Jr. to be General Counsel for the Department of the Treasury.
NOMINATED: Jason De Sena Trennert to be Assistant Secretary for Financial Markets.
NOMINATED: Derek Theurer to be Assistant Secretary for Legislative Affairs.
NOMINATED: Jonathan McKernan to be Under Secretary for Domestic Finance.

Office of the Comptroller of the Currency (OCC)