Washington Recap: May 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
House Passes Bipartisan 21st Century ROAD to Housing Act
On May 13, House Financial Services Committee Chairman French Hill (R-AR) and Ranking Member Maxine Waters (D-CA) released an updated version of the 21st Century ROAD to Housing Act. This was in response to the Senate’s version passed in March. The House’s version maintained many parts of the Senate bill, removed a number of Senate provisions, and restored certain sections previously included in the House-passed Housing for the 21st Century Act. This was released in anticipation of a House floor vote the following week.
On May 19, Chairman Hill and Ranking Member Waters released an updated version of their bill that was negotiated between House leadership and the White House. This version removed the Build Now Act, removed the establishment of a HUD eviction hotline, added back in the Housing Supply Frameworks Act, and extended the Innovation Fund authorization from 5 to 7 years. It also continued to include a key NAAHL priority, the Community Investment and Prosperity Act, which raises banks’ public welfare investment (PWI) cap from 15 percent to 20 percent.
Most notably, this May 19 version also made significant changes to the section designed to limit large institutional investor purchases of single-family homes, a key priority for President Trump. In its revised bill text, the House largely adopted the Senate’s institutional investor provision with three significant changes. First, it revised the definition of build-to-rent, which is exempt from the prohibition. Second, it removed the seven-year forced divestiture provision, which would have required large institutional investors to sell certain single-family rental properties after seven years. Third, it included a provision to create a new renter outreach resource. The White House issued a Statement of Administration Policy (SAP) in support of the House’s bill.
On May 20, the House passed its version of the 21st Century ROAD to Housing Act by a vote of 396-13.
For a full breakdown of how the House-passed bill compares to the Senate-passed version, see NAAHL’s comparison chart.
What’s Next
After the House released its bill text supported by the White House, Senate Banking Chair Tim Scott (R-SC) and Ranking Member Elizabeth Warren (D-MA) released a statement that there is “still work to be done” and that they are “committed to continuing to work with the White House and our colleagues in the House on a housing bill that can pass the Senate and get to the President’s desk.”
The White House’s SAP also included language that acknowledges that the Senate might have additional changes and requests that “both chambers resolve any remaining differences expeditiously.” Senate Minority Leader Chuck Schumer (D-NY) expressed openness to the House version of the bill. It is unclear whether the Senate will take up the House-passed bill, or whether they will try to come to agreement with the House on further revisions.
NAAHL will continue monitoring next steps and urges swift passage of a broad bipartisan housing package.
HUD Secretary Turner Testifies Before House and Senate Appropriators
This month, Department of Housing and Urban Development (HUD) Secretary Scott Turner appeared before the House and Senate Appropriations Subcommittees on Transportation, Housing and Urban Development, and Related Agencies (THUD). These hearings are a part of Congress’s appropriations process and were in response to the President’s Fiscal Year 2027 Budget Request released in April.
House THUD Subcommittee
On Tuesday, May 12, Secretary Turner appeared before the House THUD Subcommittee. During this hearing there was notable bipartisan pushback against the President’s proposal to eliminate CDBG, HOME, and other broadly supported programs. In his opening remarks, Subcommittee Chair Steve Womack (R-AR), admitted that the committee may not be able to accept some of the President’s requested cuts and noted that a “significant portion of the proposed savings come from eliminating programs like CDBG, HOME and self-sufficiency initiatives, programs that enjoy strong bipartisan support among our members.” Full Committee Chair Tom Cole (R-OK) also described the impact that CDBG funds have on the lives of Americans as “profound” and said the program is “direct and community focused.”
Senate THUD Subcommittee
When Secretary Turner appeared before the Senate THUD Subcommittee later in the week, there was again bipartisan pushback against the President’s request to eliminate the HOME and CDBG programs. Subcommittee Chair Cindy Hyde-Smith (R-MS) said she disagreed with the request to eliminate CDBG and HOME funding and emphasized how important the programs are to state and local governments’ efforts to build and preserve affordable housing. Senator Shelley Moore Capito (R-WV) and Senator Chris Coons (D-DE) also spoke about the importance of CDBG.
Additionally, full Committee Chair Susan Collins (R-ME) raised concerns that HUD’s implementation of Build America, Buy America (BABA) was stalling affordable housing projects in Maine. She described HUD’s BABA waiver process as a “black hole where affordable housing dies,” and asked what HUD is doing to improve the BABA process. Secretary Turner responded that they are working hard to streamline the waiver process.
Senator Brian Schatz (D-HI) also spoke about the need for permanent CDBG-DR authorization and the fact that permanent authorization was removed in the House Financial Services Committee’s latest version of the housing bill. He then asked Secretary Turner to help him keep CDBG-DR authorization separate from other legislative fights.
House THUD Subcommittee Advances FY 2027 Funding Bill
On May 21, the House Appropriations THUD Subcommittee advanced its Fiscal Year (FY) 2027 bill, which includes funding for HUD, by a party line vote of 9-7.
The House THUD bill provides $71.4 billion in funding for HUD programs. This is a nearly 8 percent cut from the FY 2026 enacted funding level of $77.3 billion. The bill rejects many, but not all, of the President’s requests to eliminate or significantly reduce certain programs. Notably, while the President proposed zeroing out the CDBG program, the House bill provides equal funding to last year.
The House THUD bill provides:
$500 million for the HOME Investment Partnerships program (decrease from FY 2026 enacted level of $1.25 billion).
$3.3 billion (before earmarks) for the Community Development Block Grant program (equal to FY 2026 enacted).
$0 for the Choice Neighborhoods Initiative (zeroed out - decrease from FY 2026 enacted level of $25 million).
$38.083 billion in Tenant-Based Rental Assistance (decrease from FY 2026 enacted level of $38.439 billion).
$18.975 billion in Project-Based Rental Assistance (increase from FY 2026 enacted level of $18.543 billion).
$42 million for Section 4 Capacity Building, including $5 million for rural capacity building (decrease from FY 2026 enacted level of $46 million).
$125 million for NeighborWorks (decrease from FY 2026 enacted level of $158 million).
The full text of the House THUD bill is available here.
NAAHL’s budget chart, which provides a more detailed breakdown of the funding levels for key programs, is available here.
Build America, Buy America Provisions Included
The House THUD bill contains two provisions related to BABA. First, it exempts affordable housing projects or activities funded through CDBG, HOME, public housing, and Native American housing program funds provided in FY 2027 or earlier from BABA requirements.
Second, the bill directs the HUD Secretary to review and update BABA guidance to clarify its application to the HOME program and provide a report to Congress. The review and updated guidance bill text is the same as language contained in the version of the 21st Century ROAD to Housing Act passed this month by the House.
Both of these provisions respond to concerns raised by housing organizations and businesses.
Next Steps for HUD Funding
The full House Appropriations Committee will vote on this bill on Wednesday, June 3. Once the full committee passes the bill, it will be sent to the House floor for a vote. The Senate has not announced when it will advance its version of funding legislation but is likely to release text before the August recess. The two chambers must then reconcile the differences and pass identical funding bills. The fiscal year ends September 30.
ADMINISTRATION
HUD Reopens Comment on Provisions of HOME Investment Partnerships Rule
On April 30, HUD issued a proposed rule to make additional changes to the HOME Investment Partnerships program regulation. HUD finalized updates to the HOME regulation in January 2025, but subsequently delayed the effective date of a few provisions of the regulation, include provisions that would allow additional subsidy for units meeting green building standards and provide certain tenant protections. The new proposal would formally rescind these delayed provisions and add new flexibilities around the use of HOME funds for scattered site manufactured housing rental properties.
Comments on the proposal are due on June 1.
HUD Takes Actions to Address Housing Supply
HUD Updates MAP Environmental Review Requirements
On May 4, HUD announced updates to environmental review requirements for the development of multifamily housing. These updates were issued in a mortgagee letter and revise the Multifamily Accelerated Processing (MAP) Guide. These revisions include removing the requirement to assess noise vibration from railroad tracks, providing clarity on what does and does not constitute a noise sensitive outdoor use, returning to the 2011 policy on pressurized pipelines and high voltage power lines, and updating requirements for fall hazards.
These updates are aimed at streamlining the process and reducing burdens for lenders and developers. This is in response to President Trump’s January executive order Delivering Emergency Price Relief for American Families and Defeating the Cost-of-Living Crisis, which instructs agencies to pursue actions that lower the costs of housing and expand supply.
HUD Issues Report on Removing Regulatory Barriers to Housing
HUD announced the release of a State and Local Best Practices for Home Construction Report on May 20. This report provides state and local governments with regulatory recommendations to reduce barriers to housing construction, increase efficiency, and enable an increase in housing supply. These recommendations were grouped into three categories: cut home construction costs, unlock land for new housing supply, and accelerate construction timelines. This report was directed by the March Executive Order Removing Regulatory Barriers to Affordable Home Construction.
HUD Ends Restore-Rebuild Initiative
On May 15, HUD sent a memo to all Public Housing Authorities (PHAs) titled “Updates to the Restore-Rebuild Initiative” announcing that the program was ending. The Restore-Rebuild Initiative was formerly called “Faircloth-to-RAD” and allows PHAs to replace public housing units they removed in the past as long as the PHA’s total number of public housing units remains below the number of units they had in October 1999, as required by the Faircloth Amendment. Rebuilding these units “restores” the subsidized units within the community. Restore-Rebuild had allowed PHAs to combine public housing mixed finance development and a Rental Assistance Demonstration (RAD) conversion in an “integrated transaction.” The memo states that no applications for restoring housing subsidies will be accepted; however, applications that were already in process as of the date of the memo will continue to be reviewed.
The memo states that the ending of this program is in line with President Trump’s goal of limiting federal spending and is consistent with the President’s Budget Request to set the limit on the number of public housing units to the number in service on October 1, 2027, rather than the number in service in October 1999 as required by the Faircloth amendment.
NAAHL, Partners Call on Trump Administration to Preserve and Expand the Federal Financing Bank Risk Sharing Program
On May 8, NAAHL and a broad coalition of housing organizations called on the Administration, in a letter to the Treasury Department, HUD, and the Office of Management and Budget, to preserve and expand the Federal Financing Bank (FFB) Risk Sharing program. The letter was signed by organizations that collectively represent state and local housing finance agencies (HFAs), affordable housing lenders, developers, and advocates. The FFB Risk Sharing program provides low-cost financing for housing projects, requires no Congressional appropriation, and generates positive cash flow back to the Treasury Department. Since its inception, the program has committed over $7.03 billion in loans, financing more than 56,000 affordable rental homes. However, in its FY 2027 Budget proposal, the Trump Administration signaled that it has stopped issuing new commitments under the program. This policy shift would remove one of the most effective tools from the federal housing finance toolkit and imperil the financing of thousands of homes in the near term. The full letter is available here, and press coverage is available here.
NAAHL and 85+ Organizations Call on Administration to Release $500M+ for Affordable Housing
On May 18, NAAHL and a broad coalition of more than 85 housing organizations sent a letter to the Administration urging the release of more than $500 million in Capital Magnet Fund (CMF) resources currently sitting in a dedicated Treasury account. CMF is funded by Fannie Mae and Freddie Mac, and the resources are transferred to Treasury, which is then expected to award CMF grants. Releasing these resources would support the production and preservation of affordable housing supply in communities nationwide. CMF gap financing is more critical than ever to help make affordable housing deals pencil out, including those made possible through the One Big Beautiful Bill Act's expansion of the Low-Income Housing Tax Credit. The letter makes the case that releasing these funds now would directly amplify that investment. Releasing CMF grants is a common-sense administrative action to boost housing supply. It requires no new Congressional action and no additional cost to the federal government or taxpayers. The full letter is available here.
Coalition Sends BABA Statement and Proposal to the Hill as Bipartisan Legislation Takes Shape
This month, a coalition of housing organizations and businesses, including NAAHL, sent a joint statement and policy proposal to Capitol Hill calling for reforms to the implementation of the Build America, Buy America Act (BABA) as it applies to affordable housing development. The materials were distributed to all Hill offices and reflect growing recognition across the housing industry that current BABA implementation is impeding the delivery of federally-assisted affordable housing. Members of the coalition have additionally been engaging directly with the Administration, and the coalition's concerns are also being echoed by labor groups, several of which have acknowledged that the current BABA waiver process is problematic for housing development.
Policymakers have begun to raise alarms in line with the coalition’s concerns. As noted above, BABA was a prominent topic during the May 14 Senate Appropriations Subcommittee hearing with HUD Secretary Turner, with members on both sides of the aisle voicing frustrations with current implementation. Further, the Administration is expected to issue a Request for Information (RFI) in the coming weeks to better identify what materials are and are not available from U.S. sources.
On the legislative front, as noted above, the updated version of the 21st Century ROAD to Housing Act passed by the House on May 20 added back language directing the HUD Secretary to review and revise BABA guidance for the HOME program, and identical language was included in the House THUD funding bill.
NAAHL will track how these provisions are reconciled as the House and Senate continue to work on this legislation.
President Issues Two Executive Orders Impacting the Financial System
This month, the White House released two new executive orders impacting banks and the financial system. The first executive order, “Integrating Financial Technology Innovation into Regulatory Frameworks,” seeks to foster innovation in the financial system by updating regulations and policies to better integrate digital assets and new technologies. It directs financial regulators to examine existing regulations and policies that could be updated to achieve this goal, and also asks the Federal Reserve to review legal authorities to extend access to the payments system to nonbank financial firms. The day after the executive order was published, the Federal Reserve requested public input on a proposed framework that would provide nonbank firms with access to the Federal Reserve’s payments system.
The second executive order, “Restoring Integrity to America’s Financial System,” seeks to strengthen customer identification requirements and directs federal regulators to consider guidance and regulatory changes to align with the credit risk the Administration has identified that is posed by extending financial services to non-work authorized individuals.
These two executive orders impact organizations across the financial system and could affect banks’ compliance and their relationship to other nonbank lenders.
CFPB Reportedly Initiates Investigation into CDFIs
On May 26, Bloomberg reported that the Consumer Financial Protection Bureau (CFPB) is investigating at least four CDFIs. The scope of the investigation and the relationship between this investigation and Treasury's own inquiry into "predatory practices" by CDFIs are unclear. The CFPB has not publicly indicated that has initiated an investigation.
OMB Proposes Significant Changes to Federal Grants
On May 30, the Office of Management and Budget (OMB) proposed a rule that would make significant changes to the way federal grants are reviewed, awarded, and monitored. The proposal implements provisions of the August 7, 2025 executive order titled “Improving Oversight of Federal Grantmaking” and other executive orders related to diversity, equity, and inclusion (DEI). In its background on the proposal, OMB states that, in recent years, federal grants had been used “to promote a “woke” policy agenda that did not reflect the values of the vast majority of the American public.” The proposed changes are intended to improve transparency, accountability, and oversight for use of Federal taxpayer dollars; clarify OMB’s requirements, and reduce recipient burden.
The proposed changes would impact grants from 41 different agencies and government-related entities, including the HUD, USDA, the CDFI Fund, and the Small Business Administration. The proposal makes a number of changes, including requiring senior appointees to review federal grant awards before they are made, expanding the list of factors that agencies may consider when evaluating applicant risk, and requiring non-formula discretionary grants to permit the agency to terminate the grant for discretionary reasons.
The rule is open for comment for 45 days. OMB has requested a shorter comment period in order to allow the rule to be finalized for FY 2027, which begins on October 1, 2026.
BANKING REGULATORS
Banking Regulators Propose Streamlining of PWI, Other Regulations
This month, the Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and Federal Reserve received comments on their proposed rule streamlining three banking regulations, including regulations governing public welfare investments. The proposal would remove references to “minority- and women-owned” institutions and businesses in the regulation. In each case, the reference lists minority- and women-owned institutions as examples the types of institutions that are intended by the regulation.
The proposed rule was issued pursuant to the January 2025 “Ensuring Lawful Governance and Implementing the President's “Department of Government Efficiency” Deregulatory Initiative” executive order, which directed agencies to review their regulations for consistency with law and Administration policy.
Kevin Warsh Sworn in as Chairman of the Federal Reserve
On May 13, the Senate confirmed Kevin Warsh to a four-year term as Chairman of the Federal Reserve Board of Governors. The Senate separately confirmed Warsh to fill the remainder of a 14-year term as a member of the Federal Reserve Board of Governors that began on February 1, 2026. Stephen Miran, who had previously been filling that seat on a temporary basis, resigned to open up a spot on the Board for Chairman Warsh, and Warsh was sworn in on May 22, replacing former Chairman Jerome Powell. While past Federal Reserve Chairs have usually resigned from the Board when their term as Chair expires, Powell has decided to remain as a member of the Board of Governors for at least some time. Powell’s term expires on February 1, 2028.
New leadership could bring changes for the Federal Reserve’s monetary and regulatory policy. The Chairman could seek to change the leadership and makeup of the Federal Reserve’s internal policymaking committees and who leads on certain Federal Reserve policy issues, including financial stability; payments, settlement, and clearing; and consumer and community affairs. Changes could shape the way the Federal Reserve engages with industry, community partners, and its fellow regulators in the months ahead.
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.
Federal Reserve
CONFIRMED: Kevin Warsh to be Chairman of the Board of Governors of the Federal Reserve System.