On Saturday the Senate concurred in House amendments to HR 3221, “The Federal Housing Finance Regulatory Reform Act of 2008”. The bill contains provisions enacting the National Housing Trust Fund (NHTF). President Bush has indicated he will sign the bill into law.
The bill establishes a housing trust fund at the federal level with a dedicated source of revenue (and potentially other sources) for the production and preservation of rental housing for the lowest income people who have the most serious housing problems. (Read the text of the NHTF included in HR 3221).
This is an accomplishment of major import in the history of the nation’s affordable housing movement. The effort to get the NHTF enacted was led by the National Low Income Housing Coalition and its President Shelia Crowley. Shelia and the Coalition have worked for years to see this day come. The Coalition has consistently plead the cause of the nation’s poorest households and the need to provide a dedicated funding source to provide affordable rental housing to these households. The goal of the NHTF is to build 1.5 million new rental housing units for the lowest income families in ten years.
Watch House Committee on Financial Services Chair Barney Frank discuss the NHTF last year.
Because of the funding sources currently available to the NHTF we are still a ways off from reaching that goal, but the bill will allow us to begin. Funds originally earmarked for the NHTF will initially help pay for the mortgage refinancing plan in the bill over the course of several years. After that, funding will gradually be redirected toward the NHTF for the creation of rental housing for Americans too poor to buy homes. By the time the funds are transferred for housing the Congressional Budget Office estimates the NHTF will receive about $600 million per year, substantially short of the $5 billion per year needed to meet the NHTF housing production goal. Clearly, there is a lot more work to be done.
The bill targets at least 75% of the funds for rental housing to people with incomes below 30% of area median. All of the funds would have to benefit people with incomes below 50% of area median. Furthermore, the bill places a cap on using housing trust fund resources for homeownership at 10%. This will help ensure that the housing trust fund focuses on the very lowest income households, which have the greatest housing affordability problems.
While Texas Senators Hutchison and Cornyn were among only eleven other Senators to vote against final passage of the bill, Senator Hutchison did vote to end debate on a previous cloture vote allowing the legislation to move forward. In her remarks during final floor debate Senator Hutchison said she found much to like about the bill but was concerned with the cost of the Fannie Mae/Freddie Mac bailout.
There are lots of other provisions beyond the NHTF in HR 3221. I am busy reading all 700+ pages and will post some thoughts in the coming days.