Federal Housing News
July 25, 2014
NATIONAL HOUSING TRUST FUND
78 House Members Sent Letter to FHFA Director Watt Urging Funding for NHTF
On July 21, 78 members of the House of Representatives sent a letter to Mel Watt, Director of the Federal Housing Finance Agency (FHFA), urging him to lift the suspension of payments by Fannie Mae and Freddie Mac to the National Housing Trust Fund (NHTF) and Capital Magnet Fund (CMF). Representative Keith Ellison (D-MN) spearheaded the letter.
The initial dedicated source of funding for the NHTF and the CMF was an assessment on the volume of business of Fannie Mae and Freddie Mac. However, their obligation to fund the NHTF and CMF was temporarily suspended shortly after the programs were authorized in July 2008, due to the potential financial instability at Fannie Mae and Freddie Mac in the midst of the fall 2008 financial crisis. Even though financial markets have since stabilized and Fannie Mae and Freddie Mac have been profitable since 2012, payments remain suspended.
In the letter, the House signatories wrote, “We urge you to lift this temporary suspension and begin to follow the intent of Congress by contributing to the National Housing Trust Fund and the Capital Magnet Fund. The need for affordable rental housing and job and business investment in disadvantaged communities has only grown since the Great Recession…We respectfully request that you review this matter soon and respond to our request.”
When Director Watt’s predecessor, Edward DeMarco refused to lift the suspension, NLIHC and others filed suit in July 2013 against the FHFA Director, then Mr. DeMarco, for his failure to do so (see Memo, 7/12/13). The lawsuit is still pending. Advocates and Members of Congress are hopeful that Director Watt will take a different position on the matter.
The letter is at: http://nlihc.org/sites/default/files/CMF_letter_to_Mel_Watt.pdf
Appropriations Continuing Resolution Likely
Congress is not likely to enact a FY15 Transportation-HUD (THUD) appropriations bill or other appropriations bills before the start of the new Fiscal Year (FY) on October 1. Instead, Congress is expected to enact a continuing resolution (CR) providing funding for programs equal to FY14 amounts. Observers generally agree that a CR would last through the November elections and FY15 appropriations will be left to the lame duck session. While there was some speculation that the House might pass a CR prior to its August recess, it now appears that discussion and passage will occur when Congress reconvenes in September.
Although the House passed its FY15 THUD spending bill on June 10 (see Memo, 6/13), the Senate bill was pulled from the floor due to disagreement between Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY) about the process for considering amendments to the bill. Advocates are urging consideration of the FY15 Senate THUD bill that provides much better funding than both the FY14 enacted levels and the House bill.
To see NLIHC’s Budget Chart, go to: http://nlihc.org/sites/default/files/FY15_Budget_Chart_HUD_USDA.pdf
MORE CAPITOL HILL
House Budget Committee Chair Releases Anti-Poverty Plan
Representative Paul Ryan (R-WI), Chair of the House Committee on the Budget, released a broad anti-poverty plan, Expanding Opportunity in America, on July 24. The plan could result in a decrease in funding to housing programs targeted to extremely low income households. Notably, Mr. Ryan proposes consolidating a number of means-tested anti-poverty programs, including the major federal housing programs, into a pilot block grant program called “Opportunity Grants.” The pilot would be carried out in a limited number of states, affording them great flexibility in deciding how to use federal anti-poverty funds.
Mr. Ryan would consolidate the Housing Choice Voucher program, Public Housing Capital and Operating Funds, the Section 8 Project-based Rental Assistance program, and Rural Development’s Section 521 Rental Assistance program. Other related programs subject to consolidation into Opportunity Grants include the Community Development Block Grant program, the Weatherization Assistance Program, and the Low Income Home Energy Assistance Program. Other means-tested programs to be consolidated into Opportunity Grants include the Supplemental Nutrition Assistance Program (SNAP, or food stamps), the Temporary Assistance for Needy Families (TANF) program, the Child Care and Development fund, and Workforce Investment Act Dislocated Workers program.
Reactions from Democrats have been negative, especially from Representative Chris Van Hollen (D-MD), Ranking Member of the Budget Committee. While Ranking Member Van Hollen acknowledged a few bright points of the plan such as the expansion of the Earned Income Tax Credit (EITC), he said in a written statement, "The majority of what Mr. Ryan is proposing is not new and will not help more Americans get out of poverty. It is part of an ongoing Republican effort to put programs into easily-cut block grants, while at the same time putting new red tape between those who need help and our arsenal of weapons in the War on Poverty that have effectively helped millions of Americans going through hard times.”
However, there are a few elements that might receive bipartisan consensus, such as the proposed doubling of the Earned Income Tax Credit (EITC) for adults without children, and a lowering of the EITC eligibility age.
NLIHC will provide a more detailed analysis of the plan in a future Memo.
Expanding Opportunity in America is at http://budget.house.gov/uploadedfiles/expanding_opportunity_in_america.pdf
CASTRO CONFIRMED AS HUD SECRETARY. On July 9 by a 71-26 vote the full Senate confirmed Julián Castro to replace Shaun Donovan as Secretary of HUD. The Senate has not yet voted on Donovan’s nomination as the new OMB director. (See HAC News, 5/28/14.)
CIVIL RIGHTS ANNIVERSARY NOTED. President Obama proclaimed July 2, 2014, as the 50th Anniversary of the Civil Rights Act, which was signed into law by President Lyndon B. Johnson on July 2, 1964.
SECTION 514/516 PREAPPLICATIONS DUE SEPTEMBER 2. Section 514 loans and Section 516 grants can be used for new construction or purchase and substantial rehabilitation of rental housing for farmworkers. Section 521 Rental Assistance is available. The maximum award is $3 million. Contact a USDA RD state office.
HUD OFFERS FY14 AND FY15 HOPE VI MAIN STREET FUNDS. Governments of counties, cities, and townships with populations under 50,000 are eligible for grants to replace unused commercial space with affordable housing in historic or traditional central business districts. Deadline is August 18. Contact Lawrence Gnessin, HUD, lawrence .email@example.com.
TREASURY AND HUD ANNOUNCE RENTAL HOUSING INITIATIVE. The Treasury Department’s Federal Financing Bank will finance mortgages made by Housing Finance Agencies and insured by FHA under its risk-sharing programs. Treasury is also extending the Making Home Affordable homeowner assistance program for at least one year and requesting public input by August 8 on ways to improve the private label securities market for housing finance.
CRA REGULATORS UPDATE LIST OF DISTRESSED OR UNDERSERVED NONMETRO MIDDLE-INCOME GEOGRAPHIES. The annual list identifies census tracts where bank activities will be considered as “community development” under the Community Reinvestment Act. There are slightly fewer tracts on the list in 2014 than in 2013, presumably reflecting some improvement in the economy.
NEW REPORT EXAMINES RURAL RENTAL HOUSING. Rural America’s Rental Housing Crisis: Federal Strategies to Preserve Access to Affordable Rental Housing in Rural Communities, published by the National Rural Housing Coalition, documents the successes of USDA’s rental housing programs and the challenges facing them now, including preservation and Section 521 Rental Assistance funding.
NEW YORK TIMES PIECE ON RURAL POVERTY DRAWS CRITICISM. “What’s the Matter with Eastern Kentucky?” by Annie Lowrey describes economic decline in Clay County, KY and wonders whether moving away might be residents’ best option. Tim Marema and Betsy Taylor respond with critical posts on the Daily Yonder.
HAC CALCULATES 8,000 USDA PROPERTIES WILL PAY OFF LOANS BY 2020. The oldest Section 515 and 514 loans are reaching the end of their 50-year mortgage terms. “Maturating USDA Multi-Family Housing Loans will Impact Ten-ants” explains that when a Section 515 or 514 loan is paid off, some tenant benefits (such as Section 521 Rental Assistance) are terminated. Tenant protection rules apply to prepayments but not to payoffs of mature loans. HAC’s Rural Policy Note recommends that USDA ask project owners to notify tenants well in advance of payoff.
CONCENTRATION OF POVERTY HAS INCREASED, CENSUS BUREAU REPORTS. The proportion of U.S. residents living in census tracts with poverty rates of 20% or higher fell from 1990 to 2000, then increased from 18.1% in 2000 to 25.7% in 2010. While the overall U.S. population grew by 10% over the decade, the number of people in these high poverty areas increased by about 56%. Of the people living in high poverty tracts in 2010, 51.1% lived in cities at the center of metropolitan areas, 28.6% in suburbs, and 20.4% in nonmetro areas. Census’s report, Changes in Areas with Concentrated Poverty: 2000 to 2010, includes maps and tables with data by state, race, age, and more.