CREF Policy Update: GSEs’ Low Income-Housing Tax Credit (LIHTC) Investment Cap Set to Double
GSEs’ Low Income-Housing Tax Credit (LIHTC) Investment Cap Set to Double
FHFA announced it is doubling the GSEs’ cap on LIHTC investment to $2 billion per company per year.
• There will continue to be restrictions in place to ensure that half of the money invested must be in projects that have difficulty attracting investors, and a minimum of twenty percent of that half will be Duty to Serve Rural Communities.
• H.R. 1 (now Public Law 119-21) made durable enhancements to the LIHTC program, e.g., by providing a permanent 12 percent increase in 9% credit authority, while permanently lowering the bond financing test from 50 to 25 percent.
What they’re saying: In a [press statement], MBA President and CEO Bob Broeksmit, CMB, said, “The LIHTC program is the federal government’s most successful tool to support the construction and rehabilitation of housing for low- and moderate-income households. FHFA’s doubling of the GSEs’ cap on LIHTC investment to $2 billion comes on the heels of program improvements included in H.R. 1 (now Public Law 119-21), both of which will help to increase rental housing supply.”
Why it matters: The LIHTC program continues to provide a critical source of funding for the preservation and development of affordable rental housing.
What’s next: MBA continues to engage the Administration on policy and regulatory issues related to the production of affordable rental housing, including LIHTC.
For more information or to join MBA’s LIHTC Committee, please contact John Lammle at 202-557-2789 or Megan Booth at 202-557-2740.
Federal Reserve Keeps Rates Unchanged
The Federal Reserve held the federal funds rate at a target range of 4.25-4.50% last Wednesday.
Why it matters: The Committee emphasized that, “the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2% objective.”
What they are saying: “Unfortunately for the housing and mortgage markets, the Fed’s actions with respect to short-term rates are likely to have little impact on longer-term rates, including mortgage rates,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “MBA’s forecast is for 30-year fixed mortgage rates to move just a little lower to perhaps 6.5% over the next year, as longer-term rates continue to be impacted by large deficits and debt and the growing issuance of Treasury securities to fund those deficits, which will likely keep mortgage rates near today’s level even as the Fed loosens monetary policy.”
Read more of Fratantoni’s commentary here.
For more information, please contact Mike Fratantoni at (202) 557-2935.
Senate Banking Committee Advances Comprehensive, Bipartisan “ROAD to Housing” Legislation
Following months of negotiations between senators on many individual housing-related measures, the full Senate Banking, Housing, and Urban Affairs Committee last Tuesday passed the Renewing Opportunity to the American Dream (“ROAD”) to Housing Act, by a bipartisan vote of 24-0.
• The text of the legislation can be found here and a section-by-section breakdown here. Additionally, a memo summarizing the markup is available here.
The legislation as reported to the Senate floor contains numerous bills and legislative text from each of the Banking Committee’s members as well as some off-committee Senators. It seeks to expand and preserve housing supply, improve housing affordability and access, and bolster the oversight of major federal housing programs.
What they’re saying: MBA President and CEO Bob Broeksmit, CMB, in a press statement said, “MBA applauds and supports the Senate Banking Committee’s favorable reporting of this significant package that will help make housing more affordable and available to households in both urban and rural communities across America. Many of the bill’s provisions will help to boost housing supply for both owning and renting [and] streamline federal housing program offerings….”
Broeksmit added, “Ahead of the proposal’s Senate floor consideration, we will continue to engage with Senators Scott and Warren to potentially refine and improve certain sections of the bill…,”
Why it matters: In advance of the Banking Committee markup, Bill Killmer, MBA’s SVP for Legislative and Political Affairs, sent a letter in support of the overall proposal and provided specific commentary on several key sections of the package, including:
• Rural Housing Service (RHS) program reforms that include vital IT upgrades, improved lending guidelines for Accessory Dwelling Units (ADUs), and the assumption of USDA/RHS loans;
• A required study of the Federal Housing Administration’s (FHA) multifamily loan limits, and the appropriateness of those limits’ accompanying inflation index/measure, while granting the Department of Housing and Urban Development (HUD) rulemaking authority (with FHA input) to adjust the limits upward to better match individual housing market costs and conditions;
• Simplification/acceleration of National Environmental Protection Act (NEPA) reviews for small and infill housing projects;
• Federal Transit Administration (FTA) program guide changes designed to encourage more housing located near public transportation routes; and,
• Directing HUD to develop “best practice” zoning and land-use frameworks to help communities identify and overcome barriers to housing development.
What’s next: MBA will continue working with Chairman Scott, Ranking Member Elizabeth Warren (D-MA), and their staffs to support the beneficial elements of the Act and its passage.
For more information, please contact George Rogers at (202) 557-2797 or Ethan Saxon at (202) 557-2913.
House and Senate Appropriations Committees Report Conflicting Housing and Urban Development Appropriations for Fiscal Year 2026
Recently the Senate Committee on Appropriations filed its report for the Fiscal Year (FY) 2026 Transportation, Housing and Urban Development, and Related Agencies (THUD) Appropriations Act, with significantly different funding and policy priorities than those reported previously by the House Committee on Appropriations.
• Overall, the Senate provided $73.3 billion for HUD while rejecting many of the major cuts to housing funding requested by the Trump administration. The House Appropriations Committee approved $67.7 billion, and the President’s budget requested only $42.765 billion. MBA sent a letter highlighting our members’ priorities for HUD programs, which can be found here.
The bottom line:
• For FHA operational expense levels, both the Senate and the House provided $160 million for administrative contract expenses, a $10 million increase for contract expenses above the FY25 enacted level.
• Both the House and Senate appropriators provided $35 billion in commitment authority for the FHA multifamily and healthcare program.
• The House provided only $299.4 million for HUD’s information technology fund that includes FHA programs. The Senate provided $365 million, which is the amount requested by the President for FY26 and is an $18 million reduction in funding from the funding provided for FY25.
• The House did not provide any funding for housing counseling in FY26 while noting that the funds provided for FY25 had not yet been allocated. The Senate voted to allocate $57.5 million for housing counselling in FY26.
Go deeper: The Senate committee included a new report requirement to address the impact rising costs of insurance premiums may have on (1) the supply of new affordable housing, and (2) the financial sustainment of existing affordable housing as well as a separate GAO study on the effectiveness of the FHA Multifamily 221(d)(4) program to identify legislative and regulatory programmatic improvements that would expand program uptake.
What’s next: As a matter of practice, Congress will need to reconcile and vote on a completed T-HUD funding measure before federal funding for all federal agencies expires September 30, 2025. It is unclear as of this writing if congressional leaders will be able to move the full range of appropriations bills through regular order and/or pass another stop-gap measure to avoid a federal government shutdown.
For more information, please contact Ethan Saxon at (202) 557-2913, George Rogers at (202) 557-2797, Madisyn Rhone at (202) 557-2741, or Rachel Kelley at (202) 557-2816.
Key Treasury Nomination Advances Toward Future Senate Floor Vote
Last week, the Senate Finance Committee advanced President Donald Trump’s pick for a top Treasury Department job overseeing domestic finance issues. In a 14-13 party-line vote, the committee approved Jonathan McKernan’s nomination to be Treasury’s Undersecretary for Domestic Finance.
• Finance Committee Chair Mike Crapo (R-ID) praised McKernan and said he would “bring back sound and balanced regulation to our financial system.” Democrats, meanwhile, opposed his nomination. Senator Ron Wyden (D-OR), the panel’s ranking member, said he was voting against McKernan over the Administration’s decision to allow the Department of Government Efficiency (DOGE) to access sensitive Treasury payment systems.
Go deeper: McKernan is a former FDIC board member who the White House tapped for the Undersecretary role at Treasury in May. He has been serving at Treasury since then as a top adviser to Treasury Secretary Scott Bessent – working on the Administration’s financial deregulatory efforts.
Why it matters: McKernan will play a key role on issues related to financial institutions/markets and fiscal service – including municipal debt finance and the housing GSEs – in his role as Undersecretary, if confirmed.
What’s next: McKernan’s nomination is likely to advance to a full Senate floor vote after the August congressional recess.
For more information, please contact Ethan Saxon at (202) 557-2913 and/or George Rogers at (202) 557-2797.
Commercial/Multifamily Borrowing Increased 66% in the Second Quarter of 2025
Commercial and multifamily mortgage loan originations were 66% higher in the second quarter of 2025 compared to a year earlier, and increased 48% from the first quarter of 2025, according to MBA’s Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, released last week.
What they are saying: “Commercial and multifamily borrowing gained significant momentum in the second quarter of 2025, with strong increases across most property types and capital sources,” said Reggie Booker, MBA’s Associate Vice President of Commercial Research. “While multifamily and hotel lending remain below last year’s levels, much of the strong annual growth reflects the exceptionally low levels of activity reported last year. Lending by depositories more than doubled, and originations by investor-driven lenders surged by over 90%, highlighting renewed interest from both traditional institutions and private capital.”
Read the full report here.
For more information, please contact Reggie Booker at (202) 557-2863.
Upcoming MBA CREF Councils and Committee Meetings
MBA’s CREF Councils and Committees are a key way to connect to everything MBA has to offer around policy, advocacy, market intelligence and research, education, and networking. Councils and Committees are built around specific capital sources and serve as an opportunity for you to join other commercial real estate finance professionals to hear from experts, discuss opportunities and challenges, and connect with peers.
Upcoming virtual meetings include:
• FHA Committee: Aug. 12
• Private Credit Council: Aug. 21
• Commercial Council: Aug. 26
• Life Company Council: Sept. 16
• Servicer Council: Sept. 18
• Bank Council: Sept. 24
For more information, click on the links above and/or contact Kelli Burke at (202) 557- 2742.
Upcoming MBA Education Webinars on Critical Industry Issues
MBA Education continues to deliver timely commercial/multifamily and single-family programming that covers the spectrum of challenges, obstacles and solutions pertaining to our industry. Below, please see a list of upcoming and recent webinars – all complimentary to MBA members:
• Practical Application of Distressed Asset Valuation – Case Examples and Lender Perspectives – Aug. 13
• Using Ordinance and Law Insurance to Protect Your Property and Business Recovery – Aug. 27
• Trends in Commercial Non-Bank Lending: Evolving Strategies & Creating Operational Advantages – Sept. 9
• Leveraging Inspection Networks: Ensuring Compliance Across Large, Geographically Disparate Portfolios – Sept. 17
• Fundamentals of Commercial Insurance Issues and Problems – Sept. 18
MBA members can register for any of the above events and view recent webinar recordings by clicking here.
For more information, please contact David Upbin at (202) 557-2931.
