DOGE staff comes to HUD, CFPB with forced resignations, layoffs, and potential market disruptions

Elon Musk’s Department of Government Efficiency (DOGE) staff began taking action against thousands of staff at the U.S. Department of Housing and Urban Development (HUD) and the Consumer Financial Protection Bureau (CFPB), while shutting down websites, data resources, and market-critical reporting functions across the government. It’s not clear that any DOGE staff have experience in financial markets or administration of housing programs. Similar actions are being taken at agencies and departments throughout the government.

NHC President and CEO David Dworkin expressed concern that “efforts by DOGE teams unfamiliar with the complex operations and diverse market impact of HUD functions could create billions of dollars of unintended consequences that President Trump’s appointees could spend much of the next four years repairing.” Dworkin also cautioned that “firing regulatory staff and shutting down other functions would add significant financial risk to lenders, who depend upon safe harbor from actions under existing statutes that could be brought in future administrations, risking disruptions to mortgage markets. Lenders who face enforcement actions under the False Claims Act and other statutes in the future are likely to withdraw from the market altogether, as we’ve seen in the past, or create underwriting overlays that curtail lending to millions of qualified first-time home buyers.”

HUD Secretary Scott Turner announced that the department will launch its own DOGE Task Force to review “how HUD is spending American taxpayer dollars,” seeking to ensure that “HUD will be detailed and deliberate about every dollar spent to serve rural, tribal and urban communities.” The HUD statement said the task force “will be composed of HUD employees” suggesting that Secretary Turner may be trying to get in front of a more indiscriminate effort by DOGE staffers unfamiliar with programs at other agencies like the National Nuclear Security Administration (NNSA), where 300 employees responsible for the safety of the nation’s nuclear weapons stockpile were dismissed. Efforts to rehire the employees have been hampered by difficulty contacting them, according to a recent report in Newsweek. 

Over the weekend, nearly a quarter of the staff at Ginnie Mae were notified they were being dismissed, according to those familiar with the actions. Ginnie Mae oversees a $2.7 trillion mortgage-backed securities (MBS) portfolio with an average monthly issuance of over $35 billion over the last two years, outpacing Fannie Mae and Freddie Mac. Ginnie Mae is a negative subsidy, returning $1.3 billion to the U.S. government in 2024. Prior to the current hiring freeze and layoffs, Ginnie Mae was already considered understaffed and chronically underfunded.

HUD also directed agency staff to cease all enforcement actions of the Equal Access Rule, a 2016 directive which required HUD to determine program eligibility based on a person’s stated gender-identity. The rollback of this rule will allow shelters to turn away those seeking assistance based on a “good faith belief” of the individual’s biological sex. The move references an executive order signed by President Trump requiring agencies of the federal government to recognize only two genders.

DOGE staff at the CFPB shut down several key systems associated with mortgage closings, raising industry concerns about the ability of lenders to get safe harbor for loans under Reg. Z’s Ability to Repay requirements. Weekly reporting of the Average Prime Offer Rate (APOR) was cancelled earlier last week but was restored after intervention by a broad range of housing market leaders. APOR is the key benchmark used in determining whether a mortgage qualifies as a Qualified Mortgage, Higher-Priced Mortgage Loan, or High-Cost Loan. Without timely publication of APOR, lenders cannot accurately assess liability, potentially leading to market uncertainty, credit tightening, and liquidity constraints in the $11 trillion mortgage market.

Websites associated with the Property Appraisal and Valuation Equity (PAVE) task force – which was formed to combat appraisal discrimination – have been shut down, as have the pages for HUD’s Office of Policy Development and Research (PD&R) publications, Evidence Matters and Edge.  

Some in the affordable housing field have already expressed dissatisfaction with the new directive. “Enterprise strongly opposes any effort to change or pause the enforcement of equal access protections for people seeking support from shelters and housing programs,” said Enterprise CEO and President, former HUD Secretary Shaun Donovan. “Our communities are all safer and better off when everyone has access to a safe place to sleep at night and the chance to get back on their feet."

Jonathan McKernan tapped as new CFPB director

President Trump nominated Jonathan McKernan to lead the Consumer Financial Protection Bureau (CFPB) on Tuesday, the consumer watchdog’s third leader in two weeks as the agency faces intense scrutiny from the administration and remains shuttered.

McKernan stepped down from his role as a member of the Federal Deposit Insurance Corporation (FDIC) board days prior to his nomination. Prior to FDIC, McKernan was senior counsel at the Federal Housing Finance Agency and a senior policy advisor at the Treasury Department. He also served as counsel for the Senate Committee on Banking, Housing, and Urban Affairs and as a senior financial policy advisor to Senator Bob Corker (R-TN).

McKernan is set to take the reins at the CFPB during a tumultuous time for the bureau. Earlier this week, acting CFPB director and head of the Office of Management and Budget Russell Vought ordered the agency to cease all of its work, leaving staff confused and the future of the bureau unclear. Vought also fired over 70 probationary employees, primarily from the organization’s enforcement division, with firings of non-probationary employees expected to follow.

The news was met with relief for many housing groups, who took the nomination as a signal that there is a path forward for CFPB.

“Jonathan McKernan played a thoughtful and principled role on the FDIC Board. He will bring a much-needed professionalism to the role of Director of the CFPB,” said David Dworkin, NHC’s President and CEO. “We look forward to his leadership and appreciate his understanding of the many critical market functions that reside at the Bureau.”

“Jonathan’s a serious regulator, so it would seem that from their nomination, the intention would be to make the CFPB a more tightly focused, transparent, conservative steward of the statutory mandate that the agency’s got,” said Jim Parrott, who served in the Obama administration and co-owns the firm Parrott Ryan.

New CPI report reveals inflation is accelerating

U.S. inflation accelerated in January according to the latest consumer price index (CPI) report, showing a 3% increase from one year ago and a 0.5% increase since December. It was the fastest monthly increase since August 2023. Shelter costs increased by 0.4% month-over-month, and 4.4% year-over-year. It represents the smallest year-over-year increase since January 2022 and represents the sixth consecutive month that shelter inflation has decelerated.

The report reinforces the Federal Reserve’s decision to pause interest rate cuts, and left many housing groups disappointed as the Fed’s goal of 2% inflation continues to seem out of reach.

“It will be very hard for the headline inflation number to reach the Fed’s 2% goal without a slowdown in housing costs,” said Bright MLS Chief Economist Lisa Sturtevant in a statement. “More housing supply—both rental and for-sale housing—is the key to easing housing costs and bringing the overall rate of inflation down.”

Housers gather for Home Loan Bank convening

Housers from organizations across the country gathered at the National Press Club last week for a convening on the role of the Federal Home Loan Banks in shaping affordable housing and community investment. National Housing Conference cohosted the event with the Council of Federal Home Loan Banks and the Federal Home Loan Bank of San Francisco.

The event featured multiple panels and sessions where industry leaders shared important insights into FHLBanks’ programs to combat the national housing crisis. Discussion topics included addressing how member banks can best leverage FHLBank programs, exploring the structure of the FHLBanks’ Affordable Housing Program, and assessing the general effectiveness of the FHLBank system in supporting affordable housing goals.

Speakers came from a wide-range of industry backgrounds and areas of expertise, and included David Dworkin, President and CEO of the NHC; Ryan Donovan, President and CEO of the Council of Federal Home Loan Banks; Jill Cetina, Executive Professor,

Associate Director of Commercial Banking Program at Texas A&M University; Bart Dzivi, Owner of the Dzivi Law Firm; Sarah Brundage, President and CEO of the National Association of Affordable Housing Lenders; Jim Hilton, Partner with Ludwig Advisors; and Jim Tobin, President and CEO of the National Association of Homebuilders, amongst others.

PA Governor sues over funding freeze

Pennsylvania Governor Josh Shapiro filed a lawsuit challenging the Trump Administration’s freeze of federal funding, arguing that state agencies are unable to access $1.2 billion in federal funding. The suit further notes that $900 million of the funding has been marked as needing “further (but unarticulated) federal agency review”. The press release explains that while programs have reserves and discretionary dollars to cover unexpected debts, the scope of the federal freeze will far exceed typical reserve dollar amounts, putting vital initiatives in jeopardy. It is the third court challenge to the Trump administration’s funding freeze that has wreaked havoc for federally funded programs and is temporarily blocked by two federal judges.

“The federal government has entered into a contract with the Commonwealth of Pennsylvania, promising to provide billions of dollars in Congressionally-approved funding that we have committed to serious needs – like protecting public health, cutting energy costs, providing safe, clean drinking water, and creating jobs in rural communities,” said Governor Shapiro. “With this funding freeze, the Trump Administration is breaking that contract…While multiple federal judges have ordered the Trump Administration to unfreeze this funding, access has not been restored, leaving my Administration with no choice but to pursue legal action to protect the interests of the Commonwealth and its residents.”