Current Legislative & Regulatory Efforts

NALHFA is your voice on regulatory and legislative issues. As the industry faces a broad range of challenges and potentially harmful regulations, we remain committed to advocating on behalf of our members. Our legislative and regulatory priorities below showcase what we are fighting for and how we are addressing these challenges.

NALHFA also strives to educate our members on the legislative and regulatory issues impacting the industry so you can stay informed and be a part of the conversation.

2026 Legislative and Regulatory Policy Priorities

 The National Association of Local Housing Finance Agencies (NALHFA), founded in 1982, is the national association of professionals working to finance affordable housing in the broader community development context at the local level. As a non-profit association, NALHFA is an advocate before Congress and federal agencies on legislative and regulatory issues affecting affordable housing and provides technical assistance and educational opportunities to its members and the public. On behalf of our members, NALHFA will concentrate its 2026 advocacy activities on key federal affordable housing and development programs listed below. The list is not exhaustive, as other issues are likely to arise, and NALHFA will be both proactive and reactive to these as needed to support the industry both public and private.

Protecting Private Activity Bonds:

Private Activity Tax Exempt Bonds (PABs) generate 4 percent Low-Income Housing Tax Credits (Housing Credits), which finance approximately 50 percent of all Housing Credit developments. PABs are a critical affordable housing tool, leveraging private and public resources, creating tens of thousands of jobs, and facilitating the creation of millions of low- income homes. Currently, the cap on PABs is a major limiting factor for a growing number of states and localities as they seek to preserve existing affordable and public housing and create new housing to meet the growing need. Increasing the cap on PABs for affordable and public housing would help create a public good and support the country’s continuously growing housing infrastructure needs. 

Without PABs, nearly 1 million affordable homes go unbuilt in the next ten years. PABs and the 4% Housing Credits they generate are among the most successful models of public-private partnerships because they leverage additional public and private resources for housing, create tens of thousands of jobs every year, and help address the affordable housing crisis ravaging every city and state in the country. Any proposed cuts for PABs would be detrimental to the efforts of increasing housing supply for affordable homes. Enhancements to infrastructure resources, specifically, improvements to PABs, provide communities with the necessary resources to support homeownership opportunities and to facilitate low-income housing tax credit developments. Over 12 million renter and homeowner households spend more than 50 percent of their annual incomes on housing and the United States housing market cannot afford to lose this critical resource. 

Enhancing Low Income Housing Tax Credits (Housing Credit):

The Housing Credit is the most successful tool available for incentivizing private investment in the production and preservation of affordable housing. The Housing Credit is structured to allow investors in the private sector to provide equity capital in exchange for a credit against their tax liability. Since it was established in 1986, the Housing Credit has financed over 2.8 million homes for 6.5 million low-income families and generated $100 Billion in private investment in communities nationwide. Every year, the Housing Credit supports more than 90,000 affordable homes and nearly 100,000 jobs every year.

To effectively serve extremely low-income households developers frequently must eliminate or significantly reduce permanent debt to minimize reliance on tenant rental income. While state housing credit allocating agencies may provide up to a 30 percent basis boost to generate additional Housing Credit equity when necessary for financial feasibility, this support is often insufficient to reduce rents to levels affordable for extremely low-income families. As a result, additional tools and resources are needed to ensure Housing Credit properties can sustainably serve this population.

Further, as Housing Credit properties approach the end of their initial 15-year compliance period, the Tax Code allows a nonprofit general partner to obtain ownership of the property through the right of first refusal (ROFR). In practice, however, the exercise of ROFR has at times led to disputes between investors and nonprofit sponsors, particularly regarding the treatment and disposition of property-level cash assets such as operating and replacement reserves. These reserves are essential to the long-term financial stability and preservation of affordable housing. As a growing number of properties reach Year 15, addressing these conflicts has become an increasingly urgent concern.

Additionally, under current law, there are two statutory exceptions that allow properties to exit Housing Credit property affordability early: foreclosure and the presentation of a qualified contract (QC) to the state Housing Credit allocating agency. Under the qualified contract provision, an owner may, after Year 14, request that the allocating agency initiate a one-year process to identify a qualified purchaser willing to acquire the property and preserve affordability for the remainder of the extended use period. Section 42 of the Tax Code prescribes the qualified contract purchase price, which was originally intended to prevent windfall profits by limiting owners and investors to an inflation-adjusted return on their initial equity investment. As a result, QCs increasingly operate as a de facto opt-out from long-term affordability after just 15 years.

Increase Opportunities for Single Family Ownership:

Reducing bureaucratic obstacles and simplifying regulatory frameworks will empower local HFAs to more effectively address housing shortages and reduce costs. NALHFA aims to foster a more flexible and responsive housing market where financing is accessible, housing stock can be increased and essential resources are allocated to address community-specific housing needs to alleviate market disruption during high inflationary periods. Further, the bipartisan Neighborhood Homes Investment Act would support localized housing investment and private market discipline for unit construction and financing.

Further, Fannie Mae and Freddie Mac (GSEs) could dramatically increase opportunities for affordable homeownership by purchasing single-family revenue bonds of housing finance agencies at or close to the GSE’s cost of agency debt. At a time when homeownership for first-time buyers is more challenged than ever — and the median age of first-time buyers is now 40 -- GSE purchases of long-term taxable and tax-exempt maturities could greatly lower mortgage rates for hundreds of thousands of borrowers. This highly leveraged approach — similar to the New Issue Bond Program during the 2008 financial crisis — could play a key role in increasing affordability. Buying HFA bonds at below-market rates has a foregone opportunity cost, slightly deferring by several months the period in about 10 years when excess profits beyond reserve levels would be remitted to US Treasury.

Additionally, opening up federal lands in the United States for affordable housing development could significantly boost the nation's housing supply, especially in areas facing severe shortages. By making more land available for residential projects, particularly in regions with high housing demand, federal agencies could aid lower land acquisition costs—a major expense in housing development. This approach would create opportunities to build affordable housing units in urban and suburban areas where land is often scarce and expensive, thereby addressing housing affordability issues more directly. Utilizing federal lands will encourage innovative public-private partnerships, allowing developers and government entities to work together to create sustainable, affordable communities.

Ensuring Full HUD Funding:

Despite their proven track record, HUD’s affordable housing programs have been chronically underfunded. After years of cuts to HUD programs, low federal spending caps required by the Budget Control Act of 2011 further decreased funding for affordable housing and community development programs. This has only made it more difficult to ensure low-income seniors, people with disabilities, families with children, and other vulnerable populations are stably housed. Today, of the families who qualify for housing assistance, only a quarter will get the help that they need.

Lowered or even level HUD funding threatens affordable housing and community development investments and could destabilize millions of low-income families. More than 85% of HUD’s budget goes directly to renewing housing assistance already in place. When HUD’s resources are not fully funded, families may lose access to stable housing, putting them at increased risk of homelessness. HUD programs are critical to families, communities, and our economy, including HOME, Housing Choice Vouchers, Tenant Protection Vouchers, rental assistance, CDBG and others. Our country must continue to invest in these crucial programs.

 
Ensuring Housing Choice Vouchers Full Funding:

Housing Choice Vouchers (HCV) are an important resource for low-income Americans in need of affordable housing options. Also known as tenant-based Section 8, HCV provides reimbursement to landlords for the difference between what a household can afford to pay in rent and the actual market rent of a housing unit. Assisting more than five million people in 2.2 million low-income households, the program is HUD’s largest rental assistance program and it serves those in the most need of rental assistance due to income targeting guidelines.

Combat Private Investor Purchasing of Affordable Housing:

Private equity and other high powered outside investors are a growing problem in local housing markets and contribute to pushing home ownership further out of reach for many working families. Large investors use technology and all-cash offers to outcompete individual buyers. Because investors often target the same types of affordable starter homes as first-time homebuyers, they push families out of the housing market. In 2023 the Stop Predatory Investing Act was introduced to prohibit an investor who acquires 50 or more single-family rental homes from deducting interest or depreciation on those properties and increase the supply of affordable housing for those currently priced out of the market.

Safeguarding Homelessness Assistance:

HUD’s Continuum of Care (CoC) Program serves as the federal government’s primary initiative for addressing homelessness through coordinated, locally driven strategies. Established under the McKinney-Vento Homeless Assistance Act of 1987, the CoC Program promotes community-wide planning and strategic use of resources to prevent and end homelessness. Through a network of state and local partners including nonprofits, housing agencies and service providers, the program funds housing assistance, supportive services and coordination to help individuals and families transition from homelessness to stable housing. CoC grants support a range of housing models including permanent supportive housing, rapid rehousing, transitional housing and targeted prevention efforts aimed at reducing the risk of homelessness.

Beyond direct housing assistance CoC fosters collaboration among local stakeholders to create data-informed, results-oriented systems that address the root causes of homelessness. By requiring communities to operate under a coordinated entry system, HUD ensures that limited resources are prioritized for those most in need including veterans, youth, and individuals experiencing chronic homelessness. The program also emphasizes the integration of supportive services such as healthcare, job training, and mental health care to help participants maintain housing stability. 

 
Modernizing HOME Investment Partnership Program:

For over 30 years, the HOME Investment Partnerships Program (HOME) has been one of the most effective, locally driven flexible financing tools to help communities produce and preserve affordable rental housing while also serving as a needed subsidy for homeownership. Every $1 of HOME funds yields $4.69 in additional investments. To date, HOME has leveraged an additional $163 billion in public and private resources.

HOME’s administration suffers from years of sedimentary regulation that has impacted its efficiency and effectiveness. Modernization should include modifications to allow states and localities to do more with existing resources, better aligning HOME with other HUD programs and other affordable housing programs, and administrative improvements.

Creating a Permanent Federal Housing Administration (FHA) – Housing Finance Agency (HFA) Multifamily Loan Risk-Sharing Federal Financing Bank (FFB) Program:

The Federal Housing Administration (FHA) – Housing Finance Agency (HFA) Multifamily Loan Risk-Sharing Federal Financing Bank (FFB) Program is an important option for many HFA’s affordable rental housing developments. The Federal Financing Bank (FFB) and Risk- Sharing Program is a partnership between HUD and the U.S. Department of Treasury that provides low cost capital through a strong network of state and local HFAs across the country, efficiently leveraging private investment and state and local government resources, with little risk to the federal government.

Treasury and HUD finalized an agreement in 2021 to restart FFB’s support of HUD’s Risk Sharing program, which had been suspended in 2019, for a period of three years. In 2024, the program was extended indefinitely.  

Advocating for NALHFA Member Interests in Upcoming Federal Rulemaking Processes

HUD oversees programs that directly impact NALHFA members. Administration regulatory actions concerning deregulation and streamlining of these programs, such as Build America, Buy America (BABA) and the Community Reinvestment Act, will encourage decreased administrative burden on grantees. By streamlining regulatory actions, federal housing program participants will increase capacity to further build out housing units for communities in need. 

For more information, contact the NALHFA team at 202-367-1197 or [email protected].