Washington Recap: May 2025

May 30

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

The House Passes Reconciliation Bill, Sends to Senate

On March 22, the House passed a reconciliation bill by a vote of 215-214 with all but three Republicans voting in favor. The bill extends tax cuts passed in 2017, boosts funding for border and defense, and increases the debt limit. The Senate is now preparing its own version of the bill, with plans to vote by July 4.

SUMMARY: Affordable Housing and Community Development Tax Policies in or Out of the House-Passed Reconciliation bill:

Includes key LIHTC provisions drawing from the bipartisan Affordable Housing Credit Improvement Act
Does NOT include enactment of the bipartisan Neighborhood Homes Investment Act
Does NOT include an extension of the bipartisan New Markets Tax Credits
Does NOT include modernization of Historic Tax Credits
Includes a suite of provisions to extend, expand, and modify Opportunity Zones
Includes an accelerated termination of clean energy tax credits from the Inflation Reduction Act

News reports indicate that Senate Republicans want to make several changes to the bill. There are disagreements over spending cuts, Medicaid, the state and local tax deduction (SALT), and the bill’s impact on the federal deficit. Majority Leader John Thune can only afford to lose three Republican votes for the bill to pass before it returns to the House.

The Senate Reintroduces Bipartisan Housing Bills to Boost Housing Supply for Renters and Homeowners

In May, NAAHL applauded the Senate reintroduction of the Affordable Housing Credit Improvement Act (AHCIA) and the Neighborhood Homes Investment Act (NHIA), following the House reintroduction of the bipartisan, bicameral proposals. The Affordable Housing Credit Improvement Act was introduced by Senators Maria Cantwell (D-WA), Todd Young (R-IN), Marsha Blackburn (R-TN), and Ron Wyden (D-OR) and the Neighborhood Homes Investment Act was introduced by Representative Mike Kelly (R-PA) and John Larson (D-CT).

NAAHL is urging Senate leaders to retain the Low-Income Housing Tax Credit provisions which will support affordable housing supply for renters, and to include the NHIA proposal to provide relief to homeowners. NAAHL has developed additional resources to support member advocacy, including a new Fact Sheet on Housing Supply Priorities in the 2025 Tax Package and a refreshed website for the Neighborhood Homes Coalition, where partners can access advocacy materials.

Partners can also register for a June 10 webinar exploring how the bipartisan Neighborhood Homes Investment Act would boost affordable housing supply in communities most in need. The session will feature supporters of the program, including sponsors, developers, and investors, who will explain how the program would function, why it is needed, and how stakeholders can help advocate for its passage. This webinar is open to builders, policymakers, advocates, investors, and housing practitioners seeking to learn more and get involved in advancing this critical housing supply legislation.

Click here to register!

Congress Prepares to Move on FY2026 Appropriations

The House and Senate Appropriations Subcommittees have begun hearings on federal agencies’ FY 2026 budget requests, and next week House Appropriations Subcommittees will begin marking up their bills as the House works to have all twelve bills through the Committee by July, with some of them on the floor that month.

The White House released an outline of its 2026 federal budget proposal (also called a “skinny budget”) on May 2, calling for $163 billion in cuts to non-defense spending while boosting Pentagon funding. While Congress determines federal funding levels through the appropriations process, lead Republican appropriators will use the President’s budget as a framework to guide their decisions. The White House is expected to release a more detailed request soon.

What’s in the President’s “Skinny Budget” Request: The budget proposes significant cuts to housing and community development programs, including:

Eliminating existing Community Development Financial Institutions (CDFI) Fund grant funding, while creating a new $100 million rural financial program through the Fund;
Cutting funding for the U.S. Department of Housing and Urban Development (HUD) by 43.6%, including eliminating funding for the Community Development Block Grant (CDBG) program, HOME Investment Partnerships Program (HOME), Native Hawaiian housing, Pathways to Removing Obstacles to Housing (PRO Housing) grants, and the Fair Housing Initiatives Program, and consolidating and slashing major rental assistance programs and homelessness support;
Defunding the Low-Income Home Energy Assistance Program (LIHEAP), NeighborWorks America, and the U.S. Interagency Council on Homelessness (USICH).
The proposal would, however, provide a modest increase for rural rental assistance provided by the U.S. Department of Agriculture (USDA).

ADMINISTRATION

Treasury, Congress, and the White House Weigh the Future of the CDFI Fund

Treasury Secretary Scott Bessent reaffirmed his support for CDFIs during a House Financial Services Committee hearing on May 7, saying, "We believe that if CDFIs follow their statutory obligations and do not digress into more ideological boundaries, that they can be important institutions.” After the White House released its skinny budget proposing to eliminate the CDFI Fund, several Congressional Republicans pushed back against the idea, including House Financial Services Committee Chair French Hill (R-AR).

NAAHL is continuing to engage the Administration and Congress to reinforce the importance of CDFIs and the CDFI Fund.

Federal Housing Finance Agency and GSEs

In recent weeks, President Trump has posted on social media stating that he is working with Treasury Secretary Bessent, Commerce Secretary Lutnick, and the FHFA Director Pulte to determine the next steps for Fannie Mae and Freddie Mac and that he will work to take the companies public. The President also stated that there would still be an implicit federal guarantee standing behind the two companies. The Administration has not provided any other details on how it would pursue changes to ownership of the two companies, and the President’s statements have not indicated that he is pursuing legislation.

Changes to Financial Oversight and Regulation

CFPB Leadership: This month, President Trump withdrew the nomination of Jonathan McKernan for Director of the CFPB after Treasury Secretary Bessent announced that McKernan would be nominated to serve as Undersecretary of Domestic Finance, which oversees the CDFI Fund. McKernan is currently serving as an advisor at Treasury while awaiting confirmation. The President has not yet announced a new nominee for CFPB Director, though some news reports have indicated that current Acting Comptroller of the Currency Rodney Hood and OMB Associate Director Mark Calabria may be under consideration. OMB Director Russell Vought is serving as the Acting CFPB Director.

CFPB Rescinds Guidance and Other Documents: On May 12th, the CFPB rescinded 67 policy statements, interpretive rules, advisory opinions, and guidance documents on topics ranging from fair lending to no action letters. While the CFPB noted that the rescissions are not necessarily final and some documents may be reinstated, it clarified that the rescinded materials will not be enforced as the agency reviews their compliance with a previous internal memo on the use of guidance.

Federal Reserve Chair: Following the removal of Senate-confirmed leaders at several independent agencies, there was growing discussion about whether the President would attempt to remove Federal Reserve Chair Jerome Powell before the end of his term. In a ruling this month in which the Supreme Court allowed a case to proceed to determine whether the President could remove leaders at other independent agencies, the Supreme Court signaled that, even if courts determined that the President could remove leaders at independent agencies, the Court would treat the Federal Reserve differently, likely protecting the Chair of the Fed from being fired without cause. Litigation continues to determine the circumstances in which the President can remove confirmed leaders at other agencies.

Federal Reserve Personnel: This month, Federal Reserve Chair Powell told staff that he would seek a 10% reduction in the Federal Reserve Board’s more than 3,100 person staff over the next couple of years, including through a voluntary deferred resignation program.

Department of Government Efficiency (DOGE)

The Administration is indefinitely barred from issuing or finalizing widespread layoffs at most major federal agencies after a judge on May 22 issued a preliminary injunction. The order extends a temporary restraining order issued by a federal judge saying congressional authorization is needed to engage in large-scale reorganizations of agencies. The Administration has made an emergency appeal to the Supreme Court to allow it to proceed with mass downsizing plans.

Reuters reported on May 20 that DOGE has managed to cut nearly 12% of the federal workforce largely through firings, buyouts, and early retirement offers. Roughly 260,000 civil servants have accepted buyouts or incentives to leave immediately or by the end of September.

Elon Musk confirmed on May 28 that his time with DOGE is coming to an end. As a “special government employee” in the Administration, his service is limited to 130 days.

New Tariffs Create Uncertainty for Homebuilders Amid Trade Talks

The White House on May 2 announced sweeping tariffs that have created uncertainty in the homebuilding industry, as builders brace for potential price hikes and supply chain issues. A major concern is the impact of tariffs on Canadian lumber, which is used to build roughly a quarter of wood-framed single-family homes in the U.S. The Administration has continued adjusting the tariffs throughout May while negotiating with international trade partners, leaving the long-term effects on the homebuilding industry unclear.

CONFIRMATIONS AND APPOINTMENTS

Department of Housing and Urban Development (HUD)

AWAITING FLOOR VOTE: Andrew Hughes to be Deputy Secretary of HUD.
AWAITING FLOOR VOTE: David Woll to be General Counsel of HUD.
NOMINATED: Craig Trainor to be Assistant Secretary for Fair Housing and Equal Opportunity.
NOMINATED: Benjamin DeMarzo to be Assistant Secretary for Congressional and Intergovernmental Relations.
NOMINATED: Benjamin Hobbs to be Assistant Secretary for Public and Indian Housing

Department of the Treasury

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

Consumer Financial Protection Bureau (CFPB)