The National Affordable Housing Trust Fund Act

April 1, 2008

A National Affordable Housing Trust Fund bill, S. 2523, was introduced in the Senate on December 19, 2007, with bipartisan cosponsors led by Senators John Kerry (D-MA) and Olympia Snowe (R-ME). Other Senators who are original cosponsors are Pete Domenici (R-NM), Susan Collins (R-ME), Bernie Sanders (I-VT), Edward Kennedy (D-MA), Jack Reed (D-RI), and Charles Schumer (D-NY). Senators Sherrod Brown (D-OH) and Richard Durbin (D-IL) recently signed on as cosponsors. The goal of the National Housing Trust Fund is to produce, rehabilitate and preserve 1.5 million units of housing over the next 10 years.

The bill is very similar to H.R. 2895, the House’s National Housing Trust Fund bill that passed the House on October 10, 2007. The House effort was led by Representative Barney Frank (D-MA), Chair of the House Committee on Financial Services. The bill had strong bipartisan support, passing the House by a vote of 264-148 with 41 Republicans voting for the measure.

In both the House and Senate bills, all housing assistance is for households with incomes less than 80% of the greater of state or local median income, with at least 75% of the funds going to extremely low income households, that is, those with incomes that do not exceed the higher of 30% of the median income for the area or the poverty line. At least 30% of the Trust Fund dollars must be used for housing that is affordable to households with incomes at the equivalent of the federal Supplemental Security Income payment level or less. The House bill requires that not less than 10% of the resources serve households with income above 50% of the area median, but the Senate bill does not.

Why should your Senator become a cosponsor of this important legislation?

Every state in the country has a shortage of affordable and available rental housing. The shortage is especially acute for those families making 30% of area median income or below. Nationwide, there is an absolute shortage of 2.8 million affordable rental units for people with the lowest incomes. You can locate the size of the affordable housing shortage in each state by going to congressional district profiles at: http://www.nlihc.org/detail/article.cfm?article_id=3810&id=61.

Urge your Senators to co-sponsor S. 2523 as it will establish a dedicated source of funding to help end the affordable housing crisis in their state and our nation.

Where will the funds for the National Housing Trust Fund come from?

Currently, there are two designated sources of funds for the National Housing Trust Fund in both S. 2523 and H.R. 2895. The first comes from the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, as provided in the House-passed bill, H.R. 1427. The second is from the expansion of the FHA Home Equity Conversion Mortgage program, HECM, contained in the Expanding American Homeownership Act of 2007, H. R. 1852. Both bills passed the House in 2007. Both bills also contain a provision to allow Congress to designate additional dedicated sources of funding in the future.

Funding from the GSEs. The House-passed GSE regulatory reform bill, H.R. 1427, is expected to provide an estimated $500 million a year in an affordable housing fund. While this affordable housing fund is separate from the National Affordable Housing Trust Fund proposed in H.R. 2895, the bill includes a provision to reserve the use of these GSE funds for a future National Housing Trust Fund, such as the one proposed in H.R. 2895.

The Senate has not as yet taken up GSE reform legislation, but Senator Jack Reed (D-RI) introduced S. 2391, the Government Sponsored Enterprise Mission Improvement Act on November 15, 2007. This bill creates an affordable housing program with 65% of the funds used for an affordable housing fund and 35% to go to a capital magnet fund. The bill provides that, if a National Housing Trust Fund is established in the future, all of the affordable housing program funds would be directed to the NHTF. The bill is expected to be included in any comprehensive GSE reform legislation considered by the Senate Committee on Banking, Housing and Urban Affairs this year. GSE reform legislation (S. 1100) introduced by Senator Chuck Hagel (R-NE) on April 12, 2007, does not contain the affordable housing fund provision. The Senate committee held a hearing on GSE legislation on February 7, and committee action on comprehensive GSE legislation is expected shortly.

Ask your Senator to urge passage of GSE reform legislation in this session of Congress and to ensure that it includes the funds for the affordable housing program that will be dedicated to the National Housing Trust Fund.

Funding from the expansion of the FHA Home Equity Conversion Mortgage program. The House passed H.R. 1852, the Expanding American Homeownership Act, in September 2007. The bill includes a provision to expand the Home Equity Conversion Mortgage program (HECM). The increased revenues to FHA from this bill, including from the HECM expansion, are to be reinvested in the FHA program and an affordable housing fund. First, funds would be used for the FHA single family 203(b) program, if necessary, to keep the program solvent. Then, $58 million would go to housing counseling, and then $25 million is allocated for improving FHA information technology. All funds remaining, which are expected to be approximately $250 million, would go to an affordable housing fund for affordable rental housing and homeownership opportunities for low income families. These funds will pass to the National Housing Trust Fund when it is established. None of these funds can be expended if the Secretary does not certify that FHA is on a sound financial footing. And none of these funds come from raising fees in the FHA program. The Senate FHA bill, S. 2338, which passed the Senate in December, does not include language to designate the FHA revenue from the expansion of the HECM program for the affordable housing fund. Senator Christopher Dodd (D-CT), Chair of the Senate Committee on Banking, Housing and Urban Affairs, said that he would support adding this funding source to the FHA bill.

Ask your Senators to support Senator Dodd’s efforts to accept the House provision on the HECM funding for the NHTF when House/Senate conferees meet to iron out the differences in the two FHA bills.

NETWORK Values

NETWORK believes that access to safe, affordable housing is a basic human right.