State Roundup
FY 08 Budget Sent to Governor
The House/Senate Conference Committee has concluded its work on the FY 08 budget , and the Legislature voted today to approve the budget. The budget includes $128 million for line items administered by the Department of Housing and Community Development. Only three accounts were subject to conference, and the committee agreed on the larger dollar amount in each case. The public housing operating subsidy account and the SoftSecond Home Mortgage Program received the largest increases, though the Department's operating account was also increased and includes earmarks for various programs.
The proposal to dedicate certain surplus fund to the Affordable Housing Trust Fund and the Smart Growth Housing Trust Fund (Ch. 40R) was changed by the committee. The committee's report creates a new trust fund and would allow surplus funds to be credited to the fund; however, it removes the language which would have dedicated the funds for housing, and it also makes expenditures of the the funds in the new trust subject to appropriation.
CHAPA wishes to thank Senate President Murray, Speaker DiMasi, Ways and Means Chairmen Panagiotakos and DeLeo, and Housing Chairs Tucker and Honan for their ongoing support. The budget will be sent to the Governor who will have 10 days to sign the budget (and issue his vetoes).
Federal Roundup
National Housing Trust Bill Introduced in House
Legislation (H.R. 2895) to establish a National Housing Trust Fund was introduced in the House on June 28th by Representative Barney Frank. The 16 co-sponsors include 8 Democrats and 8 Republicans. Called the "National Affordable Housing Trust Fund Act of 2007", the bill aims to create a dedicated funding source for the production, preservation and rehabilitation of 1.5 million units over the next ten years primarily for extremely low income households (at or below 30% of median). Eligible uses also include 12 months of project-based rental assistance. All of the funding must assist households with incomes at or below 80% of median and at least 75% of the funding must assist the extremely low income. At least 30% of the funding must assist households below the SSI income limit.
The monies would be allocated to cities (60%) and state/Indian tribes (40%) through a formula to be developed by HUD, based on a number of factors specified in the bill. The bill includes provisions to ensure rural areas are served, both in terms of funding and program usability. States and cities would distribute the money as grants to any entity (for profit, nonprofit) with the capacity and experience to carry out eligible activities. It includes a local match requirement ($2 of Trust Funds for every $1 dollar of state, local and private resources and $1 of Trust Funds for every $1 match provided using federal resources).
The bill provides for a number of funding sources, including an estimated $800 million to $1 billion in the first year from the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac and from savings in Federal Housing Administration (FHA) programs. Two separate pending bills allow the use of these resources - the GSE reform bill (H.R. 1427) which passed the House in May and the FHA reform bill (H.R. 1852) which was reported out of the Financial Services Committee. The House Financial Services Committee will hold a hearing on the bill on July 12th. Details on the bill can be found at www.nhtf.org.
Federal Oversight Agencies Issue Final Guidance on Subprime Lending
On June 29th, five federal agencies (the Office of the Comptroller of the Currency, the FDIC, the Office of Thrift Supervision, the Federal Reserve and the National Credit Union Administration) issued a final interagency Statement on Subprime Mortgage Lending, based on responses to a proposed statement issued in March.
The Statement focuses on adjustable rate products typically offered to subprime lenders, often with little or no income documentation and significant prepayment penalties. These loans usually start out with a low fixed rate, but then convert to a higher adjustable rate. The Statement outlines standards lenders should follow in making such loans, including a fully-indexed, fully-amortized qualification for borrowers. It describes acceptable documentation and limits the situations in which borrower income does not have to be documented. It expands consumer protections by recommending clear disclosures about loan products, by limiting prepayment penalities to the fixed-rate period of a loan and by giving borrowers a period when they can refinance without penalty near the end of the fixed-rate period (usually about 60 days). The full Statement is available online at http://www.occ.treas.gov/ftp/release/2007-64a.pdf
Bill to Reauthorize Federal Homeless Programs is Filed
Senator Jack Reed of Rhode Island has filed legislation in the Senate (S. 1518 - the Community Partnership to End Homelessness Act) to reauthorize federal homelessness assistance programs. The bill proposes a number of changes to the current programs, including consolidating HUD's three main homelessness programs into one, adding families to the definition of chronic homelessness and reintroducing a homelessness prevention program for rural areas. Information on bill provisions can be found at the National Alliance to End Homelessness website at http://www.endhomelessness.org
