H.R. 5830 would provide a voluntary program to permit the FHA to provide up to $300 billion in outstanding loan guarantees to help refinance at-risk borrowers into viable mortgages. The program would require a participating lender to accept a substantial write-down of principal in exchange for a “short payment” (i.e., a payment for less than the outstanding balance as payment in full) from the proceeds of a new FHA-guaranteed mortgage. The new loan would have terms that the borrower can reasonably be expected to pay, and the borrower would agree to share future home appreciation with the federal government.
The program is available only to borrowers who occupy the residence subject to the refinancing and such borrowers cannot own any other homes. The existing loan must have been originated on or before December 31, 2007. The program would be overseen by a “Refinance Program Oversight Board,” consisting of the Secretary of Treasury, the Secretary of HUD, and Chairman of the Federal Reserve.
The bill would also authorize $210 million for foreclosure counseling, including counseling to veterans recently returning from active duty in the armed forces, with at least $30 million targeted to low income and minority homeowners and $35 million to assist with legal aid.
Floor Action on Foreclosure Crisis in House on May 7-8: The House is expected to spend at least one day and possibly two in the coming week to move major legislation to address the foreclosure crisis.
H.R. 5818, the Neighborhood Stabilization Act of 2008, will be considered as a stand-alone bill. This bill, sponsored by Representative Maxine Waters (D-CA), chair of the House Financial Services Subcommittee on Housing and Community Opportunity, would establish a $15 billion loan and grant program for the purchase and rehabilitation of owner-vacated, foreclosed homes, with the goal of stabilizing and occupying them as soon as possible. Half of the grant funds would be required to support housing for very low income families (VLI, families at or below 50% of AMI) and half of that amount—25% of the total—would be for extremely low income families (ELI; families at or below 30% of AMI) (see Memo, 4/25). This bill has drawn a veto threat from the Administration due to its price tag.
H.R. 5830, the FHA Housing and Homeowner Retention Act, will also be considered, most likely as an amendment to H.R. 3221, the housing stimulus bill that passed the Senate passed on April 10 (see Memo, 4/11). (The Senate actually added its provisions as an amendment to a bill, H.R. 3221, that the House had already sent to the Senate. The Senate then sent it back to the House.)
Additional amendments to H.R. 3221 could include H.R. 5579, the Emergency Mortgage Loan Modification Act of 2008, which makes it easier for servicers to modify troubled mortgages without threat of liability to investors (see Memo,H.R. 5720, the Housing Assistance Tax Act of 2008, which makes several changes to the Low Income Housing Tax.
Credit and Housing Bond programs and provides a tax credit for first-time home buyers (see Memo, 4/11); H.R. 1427, the Federal Housing Finance Reform Act of 2007, which reforms the regulatory system for the Government Sponsored Enterprises (GSEs) and would provide funding for a National Housing Trust Fund (see Memo, 10/12/07); and H.R. 1852, the Expanding American Homeownership Act of 2007, which reforms the FHA program (see Memo, 9/21/07). 4/25);
By amending a Senate-passed bill, the House will set the stage for a conference between the House and Senate on the various initiatives and programs passed by the House. H.R. 1427 and H.R. 1852 previously passed the House; H.R. 5830, H.R. 5579 and H.R. 5720 have been reported out of committee, but have not been considered by the full House.
Senate Letter Supports Funding for Current and New Vouchers: Twenty-five senators, led by Senators Russell Feingold (D-WI) and Susan Collins (R-ME), sent a letter to the chair and ranking member of the Senate Appropriations Subcommittee on Transportation, Housing and Urban Development and Related Agencies on April 28, urging “the highest fiscally responsible increase in funding for the Section 8 Housing Choice Voucher program” in FY09.
“We ask that you include funding sufficient to renew existing vouchers as well as fund new vouchers in fiscal year 2009,” the letter to Subcommittee Chair Patty Murray (D-WA) and Ranking Member Christopher Bond (R-MO) said. The letter commends the Subcommittee for is support for the voucher program in FY07 and FY08.
Committee Consideration of Asset Management Bill Delayed: The House Committee on Financial Services this week postponed the scheduled mark up of H.R. 5829, the Public Housing Asset Management Improvement Act of 2008. This bill, which was introduced by Representative Albio Sires (D-NJ) April 17, is the second version of the asset management legislation. The first version faltered on February 26 on the House floor when an unexpected amendment threatened to send the bill back to the Financial Services Committee. (see Memo 4/18). A new markup date has not yet been scheduled.
National Housing Trust Fund / Senate Committee Postpones Consideration of GSE Bill: The Senate Committee on Banking, Housing and Urban Affairs, chaired by Senator Christopher Dodd (D-CT), has rescheduled a mark-up of pending legislation that would restructure Fannie Mae and Freddie Mac, the housing-related government sponsored enterprises (GSE). The mark- up was scheduled for Tuesday, May 6, and now is tentatively set for Thursday, May 8. The delay will allow additional time for Chairman Dodd and Ranking Member Richard Shelby (R-AL) to work out solutions to several areas of disagreement.
The Committee will also at the same time take up legislation to use the Federal Housing Administration (FHA) to prevent foreclosures. The GSE provisions and the FHA provisions are expected to be two titles of one bill.
The Senate’s GSE overhaul is expected to include provisions to establish an Affordable Housing Fund, modeled after S. 2391, the Government Sponsored Enterprise Mission Improvement Act of 2007, introduced by Senator Jack Reed (D-RI) on November 16 (see Memo, 11/19/07). The NHTF campaign is working to have S. 2523, the National Affordable Housing Trust Fund Act, included in the overall bill. Senators John Kerry (D-MA) and Olympia Snowe (R-ME), the lead sponsors of S. 2523, sent a letter to Chairman Dodd and Ranking Member Richard Shelby urging inclusion of S. 2523.
New Cosponsor of S. 2523 (National Housing Trust Fund): Senator Patrick Leahy (D-VT) cosponsored S. 2523, the National Affordable Housing Trust Fund Act of 2008, the week of April 28. There are now 18 cosponsors of the bill, in addition to Senator John Kerry (D-MA), who introduced the bill in December.
NLIHC Submits Comments on Proposed PIH Rent Study: In comments submitted to HUD on April 28, NLIHC raised two areas of concerns in a study of rents and rent flexibility being proposed by HUD’s Office of Public and Indian Housing.
According to the Federal Register notice (FR-1594-N-06), the stated purpose of the study is to “review possible reforms and alternative rent structures to the current income-based approach for calculating rental subsidies in [the Public Housing and Housing Choice Voucher] programs.” The study is designed to survey housing authorities, households on waiting lists, and those admitted to public housing or the voucher program in the past year.
NLIHC’s first area of concern, as raised in the letter, is that the study’s sample for survey research appears to be too limited to achieve its purpose. Despite its stated broad purpose, HUD does not propose to collect information from either private landlords or longer-term residents. Not only are these two large constituencies likely to be affected by any reforms to the program, but they are also likely to provide valuable insight, particularly on past changes to rent policy and the impact of the existing alternative rent programs already in place at some housing authorities. NLIHC’s comments conclude that “omitting the perspectives of landlords and longer-term residents will make the sample unrepresentative for the purposes described and will seriously bias the results.”
The second concern raised in NLIHC’s comments is that HUD’s Paperwork Reduction Act submission states that there are no plans to publish the results of the $2 million study. NLIHC commented that a study of this magnitude should have a public purpose and inform the public debate.
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