The House of Representatives on Wednesday, October 26 passed legislation reforming the regulation of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. The bill created an affordable housing fund long sought by advocates — along with a provision that will reduce political participation by low-income people. Called the “nonprofit gag provision” by housing advocates, the rule was added to Federal Housing Finance Reform Act, H.R. 1461, by conservatives after the legislation was initially reported out of House Financial Services Committee 65-5 without it.
The affordable housing fund in the GSE bill directs Freddie Mac and Fannie Mae to set aside 5 percent of their after-tax profits for affordable housing for the lowest-income families. The National Low Income Housing Coalition and other housing advocates have been pushing for an affordable housing trust fund such as this for several years.

Earlier this summer the Senate Banking, Housing and Urban Affairs committee approved a version of the GSE bill that differs from the House version on a number of points. That bill as passed out of committee does not include an affordable housing trust fund, although several Senators expressed interest in a trust fund and housing advocates will continue to press the Senate to include the trust fund in any version that goes to the Senate floor.

The gag provision would generally bar nonprofits receiving money from the Affordable Housing Fund from doing any type of voter mobilization — including non-partisan voter registration (or even displaying voter registration forms in rental offices) and driving voters to the polls — as well as lobbying. It also applies to affiliates (very broadly defined) of organizations that conduct these activities and to any nonprofit that has conducted such activities in the 12 months prior to applying for a grant from the fund. Further, this restriction does not simply bar money from the Affordable Housing Fund being used to fund these activities, but rather blocks nonprofits that use any money from any source at all for these activities from accessing the Housing Fund. The restrictions would not apply to for-profit entities making use of the fund.

It is not yet clear how this legislation will fare in conference, since the version passed out of the Senate Banking, Housing and Urban Affairs Committee does not include provisions creating the Affordable Trust Fund.

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