With overwhelming bipartisan support last week the House passed legislation that allocates funds to begin to address the huge shortage of housing affordable for very low- income families.  Under the leadership of Chairman of the House Financial Services Committee Barney Frank (D-MA), the Federal Housing Finance Reform Act of 2007, H.R. 1427, passed the House by a vote of 312-104.
The core of the bill overhauls the regulatory oversight of Fannie Mae, Freddie Mac and the Federal Home Loan Banks, all of which write mortgages with federal help.  The bill would also establish an affordable housing fund financed by a portion of their portfolios, an estimated $600 million annually, for the construction, maintenance and preservation of affordable housing benefiting very low income (below 50% of area median income) and extremely low income (below 30% of area median income) families.  In the first year, 75% of the funds would go to Louisiana and 25% of the funds would go to Mississippi for housing needs arising from the Gulf Coast hurricanes.   Thereafter funds would be allocated to states on a formula basis.

Earlier in May, the Financial Services Committee also approved other legislation, the Federal Housing Administration reform bill, which would dedicate hundreds of millions of dollars a year in FHA surpluses toward an affordable housing fund.  Chairman Frank is expected to introduce a bill this summer to consolidate the two funding sources, creating a single federal affordable housing trust fund.  Advocates are urging Senate Banking, Housing and Urban Affairs Chairman Dodd (D-CT) to move companion bills through his committee and to the floor of the Senate.

The National Low Income Housing Coalition, a leader in the campaign to establish a national housing trust fund, says there are only 6.2 million homes renting at prices affordable to the 9 million extremely low-income renter households – a shortage of 2.8 million homes.  Nearly 600 state and local governments have established housing trust funds that together generate $1.6 billion a year for affordable housing programs.

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