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Federal Housing News

December 15, 2014

At Last! Funding for National Housing Trust Fund to Begin

Federal Housing Finance Agency (FHFA) Director Mel Watt sent letters on December 11, 2014 to the CEOs of Fannie Mae and Freddie Mac informing them that he was terminating the temporary suspension of the allocations the companies are to make to fund the National Housing Trust Fund (NHTF) and the Capital Magnet Fund (CMF). FHFA issued a press release announcing the decision at the same time.

The companies are directed to begin setting aside the required funds in FY2015 and each year thereafter. Within 60 days after the end of the fiscal year, they are to transfer the funds. Because the companies operate on a January to December fiscal year, the first dollars will be made available in the early months of 2016.

The suspension was imposed in November 2008 after Fannie and Freddie were taken into conservatorship at the height of financial crisis caused by unsustainable mortgage lending practices. The companies returned to profitability in 2012. NLIHC and many others argued that the conditions that led to the suspension no longer applied at that point and have advocated for the suspension to be lifted for over two years.

In a statement to the press, NLIHC President and CEO Sheila Crowley said “The decision by Mr. Watt that will result in the first funds for the National Housing Trust Fund is a great victory for the thousands of housing and homeless advocates who have worked tirelessly to establish the NHTF. More importantly, it is a victory for the people we strive to serve.” In an email sent to NHTF endorsers, Ms. Crowley said, “Together, we made this happen. Your commitment to stay the course over these many years is a testament to the power of a just cause.”

The National Housing Trust Fund and the Capital Magnet Fund were created in the Housing and Economic Recovery Act of 2008 (HERA). HERA requires Fannie and Freddie to allocate “4.2 basis points of each dollar of the unpaid principal balance of total new business purchases” to support the funds. The allocation is not based on profit, but rather volume of business. HERA directs 65% to the NHTF and 35% to the CMF. HERA also provides for Congress to direct other funds to the NHTF and CMF as it so chooses.

While advocates welcome the decision, it calls for the funding to be based on future business and does not require the companies to make allocations retroactively. NLIHC and others think the companies should be required to make payments based on business in 2012 to 2014 as well.

With a sluggish housing market and the waning of the refi boom, Fannie and Freddie’s volume of business is declining. The amount of funding for 2015 is projected to be between $300 and $500 million, split between the two funds.

FHFA also announced that it has sent an Interim Final Rule to be published in the Federal Register that would implement the statutory requirement that Fannie and Freddie not transfer the expense of the allocation to loan originators and others. The rule is in effect immediately; there is a 30 day comment period.

The next step is for HUD to release the final regulations for the NHTF. In a press statement applauding Mr. Watt’s decision, HUD Secretary Julián Castro said “HUD will soon issue regulations to implement the Housing Trust Fund.” The proposed regulations were released on October 29, 2010 and comments were received until December 28, 2010. NLIHC has prepared a detailed analysis of the proposed regulations and will update the analysis as soon as the final regs are released.

The NHTF is structured as a block grant to states. At least 90% of the funds must be used for the production, preservation, rehabilitation, and operation of rental housing and at least 75% of the rental housing funds must benefit extremely low income households (0-30%  of area median income or AMI). Up to 10% of the funds can be used for homeownership activities and up to 25% can be targeted to very low income households (31-50% AMI.)

The CMF is administered by the Department of the Treasury. CMF received a one time allocation of $80 million in the American Recovery and Reinvestment Act of 2009 (the stimulus bill). Its regulations have already been finalized. The CMF is direct grant program to Community Development Financial Institutions and others to support a range of housing and community development activities, with at least 70% used for housing. The statute requires that the majority of funds benefit low income households; the regulations define a majority as 51%.

Senators Jack Reed (D-RI), Bernie Sanders (I-VT), Barbara Boxer (D-CA), and Elizabeth Warren (D-MA) issued a statement praising the decision, as did Senate Banking Committee Chairman Tim Johnson (D-SD), House Financial Services Ranking Member Maxine Waters (D-CA), and Representative Keith Ellison (D-MN). Public naysayers were Senator Bob Corker (R-TN), House Financial Services Chairman Jeb Hensarling (R-TX), and Representatives Randy Neugebauer (R-TX) and Ed Royce (R-CA). Chairman Hensarling said he will call Mr. Watt to testify before the committee early in the new Congress.  He said that “Director Watt is making a grave mistake that harms taxpayers and violates both the letter and spirit of the law.”

NLIHC and our partners now will focus on three objectives:

  • Educating advocates about the NHTF regulations and how to influence their state plans.
  • Protecting the NHTF from efforts to repeal or defund it in the new Congress.
  • Continuing to push for more funding for the NHTF through housing finance reform and mortgage interest deduction reform.

To read the FHFA announcement, go to

To read Secretary Castro’s statement, go to

Find NLIHC’s press release at and Ms. Crowley’s message to NHTF endorsers at

To review NLIHC’s analysis of the proposed NHTF regs, go to

For a compendium of statements by Members of Congress, go to


Comprehensive Tax Reform Bill Introduced in the House

On December 11, House Ways and Means Committee Chair David Camp (R-MI) introduced the Tax Reform Act of 2014 (H.R. 1). His bill would amend the mortgage interest deduction (MID) by capping the size of a mortgage for which a taxpayer can deduct the interest at $500,000. The current cap is $1 million. The reduction to the MID cap proposed by Chair Camp would be phased-in over four years, becoming $500,000 in 2018 and would only be applied to new mortgage debt. The tax reform proposal would also eliminate the deduction of interest paid on home equity loans.

H.R.1 is the comprehensive tax reform legislation that Mr. Camp has been working on throughout the 113th Congress. He circulated a discussion draft in February (Memo 2/28) , but did not introduce it at that time. The conventional wisdom was that House leadership discouraged Mr. Camp from introducing the bill prior the November 2014 election, because it is far-reaching and controversial.

Mr. Camp is retiring at the end of the 113th Congress. Representative Paul Ryan (R-WI) will chair the Ways and Means Committee in the 114th Congress. Mr. Ryan is expected to craft his own approach to tax reform.

Nonetheless, Mr. Camp has left a marker that makes room for future changes to the MID. He rejected the position that MID reform is harmful to the housing market stating, “historical data show that the strength of the nation’s housing market is tied more closely to the health of the overall economy than to any specific tax policies that may be in place.”

The United for Homes campaign proposes to modify the MID by decreasing the cap on the amount of mortgage interest that is deductible to the first $500,000, and converting the deduction to a 15% non-refundable credit. The new tax revenue generated would be used to fund the National Housing Trust Fund. Unlike the campaign’s proposal, Mr. Camp’s bill would use the new revenue to lower individual tax rates. The United for Homes proposal is reflected in H.R. 1213, the Common Sense Housing Investment Act of 2013, introduced by Representative Keith Ellison (D-MN), see Memo 3/15/13.

Mr. Camp’s bill would also amend the Low Income Housing Tax Credit by eliminating the 4% credit and tax-exempt bonds. The bill would also spread the housing tax credit over a 15-year period, compared to the current 10-year period, lengthening the time it would take for LIHTC investors to realize the full tax benefit. Other proposed changes to the LIHTC would eliminate the 130% basis boost for high cost difficult-to-develop areas (DDA), and occupancy preferences for artists in housing credit developments. Instead, preferences would only be given for special needs households and veterans.

The fact that Mr. Camp’s bill retains the LIHTC, albeit with changes, while he would eliminate numerous other tax breaks, is considered to be a victory for affordable housing advocates.

In addition, the bill would reduce Earned Income Tax Credits available to working poor households. The Center on Budget and Policy Priorities estimates that this cut would cost a working parent with two children earning $14,500 per year about $2,000 when fully implemented by 2018, even with the bill’s proposed increase to the Child Tax Credit for working households.

H.R. 1 is a bill number reserved by the Speaker of the House for a bill he or she considers to be significant. The bill number remained unused until Mr. Camp’s last minute introduction of his bill.

The draft bill and related materials are at


Congress Approves FY15 HUD, USDA Funding Bill

The House and Senate, on December 12 and 13 respectively, passed a broad FY15 funding bill, H.R. 83, spanning programs in 11 of the 12 appropriations subcommittees, including the Transportation, Housing and Urban Development, and Related Agencies (THUD) and Agriculture, Rural Development, Food and Drug Administration, and Related Agencies (USDA) Subcommittee bills. The House passed the bill by a vote of 219 to 206 and the Senate on a vote of 56 to 40. President Barack Obama is expected to sign the bill early this week.

The bill does not include any restrictions for HUD to administer the National Housing Trust Fund, as proposed in the House THUD funding bill. In addition, the bill does not prohibit HUD from implementing the Affirmatively Furthering Fair Housing rule, nor does it restrict HUD from approving exceptions to voucher payment standards, both of which were also in the House bill. The bill does not provide for any expansion of the Moving to Work demonstration program. An amendment to do so was filed as the Senate prepared to debate its bill, but was never considered on the Senate floor.


The bill provides $17.486 billion for voucher renewal funding, slightly below House and Senate numbers, and well below the President’s request. Given that many of the vouchers lost and then restored after the sequester are not leased up yet, it is likely that the bill will provide sufficient renewal funding in FY2015 for all vouchers in use in 2014. As a backstop, the bill would allow public housing agencies (PHAs) to access a $120 million pool of funds beyond what they are provided, which can explicitly be used by “PHAs that experience significant end of year leasing in calendar year 2014.”

The bill provides $130 million for tenant protection vouchers to protect tenants from displacement due to public housing demolition or disposition, a private owner of a project-based Section 8 contract opting out of the contract, or termination of a Section 8 contract. A set-aside of $5 million is included to protect tenants at certain properties with maturing HUD-assisted or HUD-held mortgages.

As it has for several years, the bill includes $75 million for HUD-Veterans Affairs Supportive Housing (HUD-VASH) vouchers, with a new set-aside for Native American veterans. The bill also provides $83 million for Section 811 mainstream vouchers for persons with disabilities, a cut from FY14’s $107 million.

Public Housing

The bill keeps the Capital Fund at the FY14 level of $1.975 billion, including level funding for the Resident Opportunity and Self-Sufficiency program and for the Jobs-Plus pilot program. The bill increases, from 20% to 25%, the amount of Capital Fund dollars that PHAs can transfer to their Operating Funds, and allows the Secretary to waive this limitation if used for security, anticrime, and antidrug activities. As in FY14, the bill prohibits use of funds to require or enforce HUD’s Physical Needs Assessment of a PHA’s public housing stock. For the Operating Fund, the bill provides a $40 million increase to $4.440 billion. The bill also allows the HUD Secretary to adjust flat rents. The FY14 HUD funding bill required public housing residents who opted to pay a flat rent to pay at least 80% of the fair market rent.

HUD’s Choice Neighborhoods Initiative (CNI) is funded at $80 million, down from $90 million in FY14. Of the total, at least $50 million (down from $55 million in FY14) must go to PHA applicants. CNI is open to private developers as well as PHAs.

For the Rental Assistance Demonstration (RAD) program, the bill increases the cap on the number of public housing units that can convert assistance to project-based Section 8 or project-based vouchers from 60,000 to 185,000, and extends the conversion deadline from September 2015 to September 2018. The bill permanently extends the second RAD component, which allows subsidy conversion for the Rent Supplement, Moderate Rehab, and Rental Assistance Payment programs. The bill would allow McKinney-Vento Single Room Occupancy developments to be eligible for RAD.

Project-Based Rental Assistance

The bill gives implicit approval to HUD’s request to shift the project-based rental assistance (PBRA) program to a calendar-year funding cycle. For PBRA renewals, the bill provides $9.730 billion, compared to $9.970 billion in FY14 and $9.746 billion requested by HUD and in the House and Senate versions of earlier FY15 HUD funding bills. This will require a large increase of at least $1.2 billion for FY16.

The bill continues various policies regarding preservation of the assisted housing stock, including provisions allowing transfer of debt and restricted use agreements from obsolete to viable projects, guidelines regarding HUD’s management or disposition of at-risk properties to ensure continued assistance to tenants, and actions HUD must take when a property’s real estate assessment center (REAC) scores fall below certain levels.

The bill also allows PBRA tenants to participate in the Family Self-Sufficiency (FSS) program, but provides no FSS funds for the PBRA program. There is also a new pilot to test the effectiveness of pairing FSS with Family Unification Program (FUP) vouchers.

Homeless Assistance Grants

The bill provides $2.135 billion for Homeless Assistance Grants, $271 million less than HUD requested but a $30 million increase over FY14. Of the total, at least $250 million is dedicated to Emergency Solutions Grants, and at least $1.62 billion is dedicated for the Continuum of Care and Rural Housing Stability Assistance programs. For the United States Interagency Council on Homelessness, the bill provides $3.530 million, a $30 million increase.


Funding for HOME decreases by $100 million to $900 million, less than half of the HOME funding level five years ago. The bill also provides $10 million for the Self Help Opportunity Program, which is not a set-aside within the HOME program as HUD had requested.

Section 811 and 202

The Section 811 Housing for Persons with Disabilities program sees a $9 million increase to $135 million, but all of the funds will go to renewals. The Section 202 Supportive Housing for the Elderly program receives a $36 million increase to $420 million, including set-aside funding for service coordinators of $70 million.


CDBG is funded at $3 billion, a $30 million cut from FY14. The bill prohibits providing CDBG money to a for-profit entity for an economic development project unless the project has been evaluated and selected in accordance with certain HUD guidelines.

Fair Housing

The Fair Housing Initiatives Program (FHIP) and Fair Housing Assistance Program (FHAP) are flat-funded at $23 million and $40 million respectively. The bill’s report directs HUD to work with the United States Access Board, interested disability advocates, and other stakeholders to consider mechanisms to increase the availability of accessible housing.

Policy Development and Research

For HUD’s Office of Policy Development and Research, the bill places $22 million of HUD technical assistance programs into the PD&R account.  The bill also includes $12.3 million for research, including new HUD research on VASH for Native Americans and the FSS/FUP demonstration. Finally, the bill provides $37 million for various housing market surveys, totaling $72 million for PD&R in FY15.

Other HUD Programs

Native American Housing Block Grants are flat-funded at $650 million, as is the Housing Opportunities for Persons with AIDS program at $330 million. The bill provides $110 million, level funding, for the Office of Lead Hazard Control and Healthy Homes.


USDA had requested authority to impose minimum rents on tenants, but Congress did not adopt this proposal in the FY15 bill. Funding remained flat for Section 514 / 516 Farm Labor loans and grants and for Section 515 rental housing. The Section 521 program is reduced from $1.110 billion to $1.089 billion, and funding for the rental preservation demonstration decreases by $3 million to $17 million.

The NLIHC budget chart is at


New Ranking Members on Senate Banking and Budget Committees

Senate Majority Leader Harry Reid (D-NV) has appointed Senator Sherrod Brown (D-OH) to serve as the Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs and Senator Bernie Sanders (I-VT) to be the Ranking Member of the Senate Budget Committee in the 114th Congress that will convene in January.

The Democratic leadership position in the Banking Committee became open with the retirement of Senator Tim Johnson (D-SD). Senator Patty Murray (D-WA), who has been the chair of the Senate Budget Committee, is vacating that lead Democratic position to become the Ranking Member of the Senate Health, Education, Labor, and Pensions Committee.

Senator Richard Shelby (R-AL) is expected to resume his role as the Chairman of the Banking Committee, a position he held when the Republicans were last in the majority in the Senate. The current Ranking Member of the Senate Budget Committee is Senator Jeff Sessions (R-AL). Senator Mike Enzi (R-WY) is challenging Senator Sessions to become the new Budget Committee Chairman.

In response to the announcement about Senator Brown, Bill Faith of the Coalition on Homeless and Housing in Ohio (COHHIO) and NLIHC board member said, “We are very excited that Senator Brown was chosen for this critically important position. He has such a strong track record of fighting for housing that is safe and affordable for the lowest-income Americans, standing up for consumer protections against predatory lenders and Wall Street, and helping homeowners avoid foreclosure. He will make Ohio proud in his new leadership role on this prestigious committee.”

Senator Brown’s media release is at

Senator Sanders’s media release is at


House Committee on Veterans’ Affairs Holds Hearing on Veterans’ Homelessness

On December 11, the House Committee on Veterans’ Affairs held a hearing titled “Evaluating Federal and Community Efforts to Eliminate Veteran Homelessness.” 

Chair Jeff Miller (R-FL) opened the hearing expressing “concerns about the increasingly insular focus the VA (Department of Veterans Affairs) is placing on permanent housing.” Mr. Miller believes that except for a few veterans, the purpose of veterans’ programs should be to provide “a bridge to an independent, purpose-filled life, not a permanent government-sponsored home.”

Steven Berg of the National Alliance to End Homelessness testified that the rate of homelessness among veterans has fallen dramatically because leadership at the federal level has put the right programs in place, including those that offer long-term housing and supports such as the HUD-Veterans Affairs Supportive Housing (HUD-VASH) program. The HUD-VASH program assists homeless veterans by combining housing rental assistance vouchers from HUD with case management from the VA.

Representative Corrine Brown (D-FL) was heartened by the decrease in veteran homelessness. However, she pointed to the lack of adequate housing for veterans with families, preventing them from being able to stay together. 

More than 60% of transitional housing programs funded by the VA do not accept children, or they restrict children by age and number, according to the Government Accountability Office. Veteran families who are homeless, especially those headed by single mothers, have fewer housing options offered by the VA. Traditional transitional housing for veterans is in dormitory settings or with rooms without locks, an artifact of an era when veterans in need were all men. As reported in NLIHC’s 2013 report, Housing Instability Among Our Nation’s Veterans, permanent, affordable housing is what this group of veterans needs.

John Downing of Soldier On discussed the difficulty in financing permanent affordable housing for veterans, saying that even after receiving state and federal grant money along with tax credits, he usually faces a shortfall in funds needed to complete housing projects. In one situation, a lack of tax credits led to a housing project being delayed for two to three years.

Jennifer Ho, a HUD senior advisor, also testified about HUD and the VA collaborating with local partnerships, including public housing agencies, to ensure the success of the HUD-VASH program and to identify gaps in housing availability. According to Ms. Ho, “As of September 2014, almost 52,000 veteran families are being assisted through HUD-VASH vouchers, and another 3,300 families have been issued vouchers and are searching for housing.”

Watch live streaming of the hearing at

NLIHC’s 2013 report, Housing Instability Among Our Nation’s Veterans, is at




NOVEMBER IS NATIONAL NATIVE AMERICAN HERITAGE MONTH. President Obama’s proclamation also designates November 28 as Native American Heritage Day.

Both the House and Senate reconvene November 12 for a post-election session. A final FY15 spending package is on the agenda, with the current stopgap continuing resolution set to expire on December 11. Most observers are predicting a full-year continuing resolution or omnibus appropriations bill through September 30, 2015. Passage may be complicated, however, by the Obama administration’s request for $6.2 billion in emergency funds to fight Ebola. As reported in a HAC post on the Rooflines blog, some important committee positions will change in the new Congress, which takes office in January. HAC will post updates as available.

On November 3 a federal district court judge, ruling that HUD could not extend the Fair Housing Act’s ban on disparate treatment to include disparate impact, vacated HUD’s 2013 regulation on the subject (see HAC News, 2/20/13). During its current term the Supreme Court is expected to consider a different disparate impact case.

A final Consumer Financial Protection Bureau rule adopts an April proposal (see HAC News, 5/14/14), exempting some nonprofits and loans by nonprofits from some requirements and providing a way to cure some points and fees that exceed the qualified mortgage limits. Contact CFPB’s Office of Regulations, 202-435-7700. CFPB’s nonprofit exemptions will apply also to HUD’s qualified mortgage rule, but HUD is not adopting CFPB’s new points and fees cure provision, instead providing guidance to mortgagees. Contact Michael P. Nixon, HUD, 202-402-5216, ext. 3094.

The federal agencies that oversee lenders, including credit unions, suggest changes to implement statutory requirements. Comments are due December 29. Contact Rhonda L. Daniels, Office of the Comptroller of the Currency, 202-649-5405.

Proposed revisions to HUD's Manufactured Home Construction and Safety Standards are due December 31 and will be reviewed by the Manufactured Housing Consensus Committee as it develops recommendations to HUD. Contact Pamela Beck Danner, HUD, 202-708-6423.

A new memo from Farmworker Justice examines data from the Department of Labor’s 2011-12 National Agricultural Workers Survey. One-quarter of farmworker families live in poverty but, since the survey does not include dependents outside the U.S., Farmworker Justice believes the figure should be higher. Survey responses indicated 48% of workers lack work authorization, but that figure is probably understated as well. In 2011-12, only 17% of crop workers were migrants, compared to 27% in 2007-09 and 42% in 2001-02.

Covering fiscal years 2012 and 2013, the report provides national and state level data on complaints filed and their disposition, as well as complaints initiated by HUD. Discrimination against persons with disabilities remains the largest category of complaints received.

HUD’s 2014 Annual Homeless Assessment Report to Congresssays homelessness has dropped by 10% since 2010, and the number of people living on the street has declined 25%. Veteran homelessness has fallen 10.5% since 2013 and 33% since 2010. Data are available for each state and each Continuum of Care, some of which did experience increases from 2013 to 2014.

. Federal Real Property: More Useful Information to Providers Could Improve the Homeless Assistance Program (GAO-14-739) addresses HUD’s program that makes unused federal real property available to homeless assistance providers. Contact David J.Wise, GAO, 202-512-2834.

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