This month HUD Insights highlights five critical policy and regulatory developments shaping the future of housing and urban development.

• 1. House, Senate Versions of Appropriations Bill Spare Deep HUD Cuts
• 2. Affordable Housing Measure Calling for New FHA Multifamily Loan Limits Advances
• 3. Rollback of Multifamily Flood Rules Put on Hold
• 4. PAVE Task Force Dissolved, Further Relaxing Fair Housing Oversight
• 5. Final Decision on Green MIP Rescission Expected This Fall

1. House, Senate Versions of Appropriations Bill Spare Deep HUD Cuts

The Story

The House and Senate released their versions of an appropriations bill to fund the Department of Housing and Urban Development (HUD) in 2026, and neither endorses the deep cuts the Trump administration requested.

• The House proposal slashes $939 million from HUD’s budget and, notably, eliminates the HOME program.
• The Senate proposal adds $3.3 billion to the agency’s coffers, with higher allocations for rental assistance and public housing, and reauthorizes HOME.
• Neither version includes a two-year limit on rental assistance, which could put 1.4 million renters at risk of eviction, according to a New York University study.
• The Trump administration had proposed cutting more than $30 billion, which would nearly halve HUD’s budget.

“Programs like HOME and CDBG are important to every single Congressional district in the nation.”
– Megan Booth, Vice President of Commercial Real Estate Finance Policy, Mortgage Bankers Association

The Follow-Up

Congress must pass the final bill by midnight on Oct. 1 to avoid a partial government shutdown. Unfortunately, Booth says, the likelihood of a shutdown is high given that expectations for a compromise on Capitol Hill are low.

The Bottom Line

During previous shutdowns, HUD loans with a scheduled closing were able to close while other actions were suspended. Even if a shutdown occurs this fall, HUD operations won’t simply cease.

2. Affordable Housing Measure Calling for New FHA Multifamily Loan Limits Advances

The Story

The Senate Banking, Housing, and Urban Affairs Committee unanimously approved the “ROAD” to Housing Act, which aims to expand the nation’s affordable housing supply through greater production of manufactured and prefabricated units. The bill includes several provisions that would:

• Require the Federal Housing Administration (FHA) to reevaluate its multifamily statutory loan limits for the first time since 2003
• Direct the FHA to develop flexible financing options for modular housing
• Direct HUD to create best practices for housing-friendly zoning and land-use policies
• Incentivize zoning plans that take nearby transit into account
• Remove regulatory barriers to modular construction, like special foundations that increase developer costs
• Streamline environmental reviews and other processes to speed up infill housing projects

“It’s a series of measures, some of which are bold, some of which are modest, some of which will be helpful, some of which may be harmful. The hope is that overall, it’s a significant step forward.”
– Alys Cohen, Director of Federal Housing Advocacy, National Consumer Law Center to CNBC

The Follow-Up

The bill is expected to go to the Senate floor in the fall. Meanwhile, housing advocates are pushing for companion legislation in the House. The National Low Income Housing Coalition says the Senate bill doesn’t go far enough to help “extremely low-income” renters.

The Bottom Line

Housing affordability is at the top of Americans’ priorities, so lawmakers are likely to give this legislation high priority.

3. Rollback of Multifamily Flood Rules Put on Hold

The Story

HUD has paused its plan to remove the Federal Flood Risk Management Standard (FFRMS) for multifamily properties after the devastating Texas floods in July. The plan would drop enhanced flood requirements for properties in the 500-year floodplain.

• The repeal is still expected, but the optics did not favor moving forward with implementation at this time, Booth says.
• Senators had sent a letter to HUD invoking the Texas floods in an argument against relaxing the flood risk rules.
• The FFRMS requires federally funded buildings to be constructed outside high-risk flood zones, limiting location options for developers.

“It is an objective truth that disaster events are occurring more frequently and at a larger scale than ever before. … An ounce of prevention is worth a pound of cure.”
– Senate letter to HUD

The Follow-Up

The rollback of the FFRMS rule for multifamily properties is expected to take effect at a later date, which has not yet been determined.

The Bottom Line

HUD plans to continue to revisit the rule as it assesses the ongoing impact on housing providers.

4. PAVE Task Force Dissolved, Further Relaxing Fair Housing Oversight

The story

HUD has disbanded the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE), which developed policies to combat racial discrimination in the real estate appraisal process. Information on PAVE now appears in the HUD Archives.

• HUD Secretary Scott Turner said in a statement that the move is intended to cut red tape that drove up costs and inhibited market access for program participants.
• Officials who created the task force under the last administration called it partisan.
• The Brookings Institution, a liberal think tank, found in a 2022 study that homes in Black neighborhoods are twice as likely to be undervalued than homes in White neighborhoods.
• However, the American Enterprise Institute, a conservative think tank, said in a 2023 study that valuation gaps were due to socioeconomic differences, not racial bias.

“For many Americans, the dream of homeownership and the long-term financial security this investment represents is a dream deferred or unrealized.”
– Opening statement of the now-defunct PAVE Action Plan

The Follow-Up

This is in line with HUD’s recent efforts to dial back fair housing regulations and remove government obstacles that impede housing providers’ business. Worth noting: The Senate appropriations bill maintains funding for HUD’s fair housing activities at $86 million in 2026, but the House bill cuts that to $29 million.

The Bottom Line

Fair housing remains a pillar of HUD’s business, although there’s a reimagining of how the agency fulfills this mission.

5. Final Decision on Green MIP Rescission Expected This Fall

The Story

HUD is expected soon to announce a final decision on its proposal to eliminate the Green Mortgage Insurance Premium (MIP) Reduction program. Booth says she’s looking at September as a possible release period, but it could be longer.

• In addition, HUD’s proposal would lower the MIPs .25 basis points across the board for all multifamily programs, including 223(f), 221(d)(4), 241(a), 223(a)(7).
• This means you won’t have to meet ENERGY STAR requirements, which often increases building costs, to access loan savings.
• Program participants who have already earned the Green MIP Reduction will no longer be required to meet annual compliance rules.

“Since nearly all borrowers have been taking advantage of the Green MIP, an overall reduction in the premium will add no risk to the FHA program.”
– Booth

The Follow-Up

The Trump administration has signaled a move toward embracing tax incentives for energy efficient property improvements.

The Bottom Line

It’s widely expected that the rescission will be approved, which means you’ll be able to get a lower MIP without incurring the additional costs of meeting federal energy efficiency standards.