Glimmer of Hope for More Affordable Housing Funds

April 10, 2014

Remember the National Housing Trust Fund? I wouldn’t blame you if you don’t because it has never helped finance any affordable housing units, though that’s what it’s supposed to do.

Now it looks as if the Trust Fund may fulfill expectations, but probably not until some time around 2020, if then. So we’ll still need more funding for affordable housing programs now — and would even if the Trust Fund were a for-sure, near-term source.

Why the Trust Fund Has No Funds

As I wrote some time ago, Congress established the Trust Fund in 2008 to address what was already an affordable housing shortage.

The Fund was to be a source of grants to states. They were to use 90% of the money for rental housing. And 75% of it had to go to rental housing that was affordable for extremely low-income households, i.e. those with incomes at or below 30% of the median for the area they live in.

But the Fund never had any funds for grants because its revenue stream was to come from Fannie Mae and Freddie Mac. They became essentially bankrupt when the housing bubble burst.

The agency that took over to manage them back to solvency suspended their contributions to the Trust Fund. And the freeze still stands, even though they’re turning profits again.

President Obama has repeatedly included one-time $1 billion financing for the Trust Fund in his proposed budgets. Well, we know what’s come of them. Bills have been introduced in Congress to provide funding in others ways. Nothing has come of them either.

And so, as PoltiFact says, the Trust Fund “is nothing more than a page on HUD’s website.”

A New Revenue Stream

Senator Tim Johnson, who chairs the Senate Banking Committee, and Senator Mike Crapo, its most senior Republican member, have introduced a bill that would provide the Trust Fund with an ongoing revenue stream — potentially more than $5 billion a year,* according to the National Low Income Housing Coalition.

The bill as a whole would replace Fannie and Freddie with a new entity to regulate the secondary mortgage market, i.e., securities backed by bundled mortgages that are sold to pension funds, insurance companies and other investors.

Like Fannie and Freddie, the new entity — the Federal Mortgage Insurance Corporation — would guarantee investors against losses, but only those that exceed 10% of the securities’ value.

Institutions that choose to participate in the new system would be charged a user fee. FMIC could calibrate it to provide incentives for issuing mortgages in underserved areas. But fees would have to average 10 basis points, i.e., 10 hundredths of a percent, on all covered securities.

Seventy-five percent of the fees would go to the Housing Trust Fund. AnotherĀ  15% would go to the Capital Magnet Fund, providing a further boost for affordable housing.

So one can understand why NLIHC says that the bill “would provide the most significant new investment in rental housing affordable to America’s neediest families in forty years.”

But Will It Pass?

Zillow Real Estate Research, which provides a very useful summary of the very complex bill, cites “substantial” near-term hurdles to Congressional approval — and some that may prove not only near-term.

Some Democrats and advocacy groups, it says, believe the bill doesn’t do enough to promote affordable housing. This, I take it, refers to the fact that it eliminates the affordable housing goals that were supposed to govern Fannie and Freddie’s mortgage purchases.

The bigger hurdle, as you might expect, is right-wing Republicans’ antipathy to most anything the federal government does to regulate private markets — and to compensate for their failures.

Housing Finance Committee Chairman Jeb Hensarling is thus “skeptical of any approach that does not end the permanent government guarantee in the secondary mortgage market” — a function his committee’s bill would largely privatize.

More to the point, the bill would eliminate the Trust Fund and the Magnet Fund — and replace them with … well, nothing. “The best affordable housing program is a job,” Hensarling says.

All the Congress-watchers I’ve read agree that we’ll see no definitive action on housing finance reform any time soon — almost surely not until next year, when the upcoming elections are history.

Meanwhile the Affordable Housing Crisis Worsens

NLIHC reports a shrinking “sliver” of the rental market still affordable and available to ELI households, making for a shortfall of seven million units in 2012. Only a quarter of households eligible for federal and local subsidy programs receive assistance, it adds.

In the last year alone, some 70,000 fewer families have had federally-funded vouchers to help pay their rent, according to Center on Budget and Policy Priorities estimates. And last December’s budget deal won’t free up enough funding to restore even half the vouchers lost.

Even if Congress were to provide funding for all the lost vouchers, we’d still have waiting lists — and at least 4.9 million ELI households paying more than half their income for rent.

* This figure comes from the NLIHC report I recently wrote about. Its earlier press release (linked to further on) put the potential revenue stream at more than $3.5 billion a year.



Dreaming of a Freezing Cold Christmas

December 22, 2012

Jesse, my husband, hopes for a white Christmas, as he always does. I, a California child, like the Christmas card prettiness of a fresh snowfall. But I hate cold weather. Always have.

I find myself hoping for another cold snap nonetheless — preferably with snow, for my husband’s sake, but without if that’s the best the weather gods can do.

Because unless the forecast calls for freezing temperatures — 32 degrees or less, including wind chill factor — some homeless families in the District of Columbia may have no safe place to bed down tomorrow night.

Nor any night thereafter until we get that arctic blast.

Time was not so long ago when the District’s shelter doors were always open to families who’d otherwise have no safe place to stay, i.e., those the intake system ranked as Priority One.

Then came a significant increase in family homelessness — an acute symptom of recession-related job losses, stagnant (or reduced) wages for those still working and rising rental costs.

What didn’t come were increases in funding for housing vouchers beyond what was needed to pay for those already in use.

So once homeless families were admitted to DC General — the main shelter for them — they tended to stay there longer than they had in the past.

A whole series of failures to fully come to grips with this problem.

Insufficient funding — both local and federal — to support services for the growing number of homeless families.

Formal plans for sheltering homeless families during the winter season that attempted to make everything look okay, funding constraints notwithstanding.

Large costs incurred for motel rooms and related needs because the plans really weren’t okay.

A sharp drop in funds to support the development and preservation of affordable housing. First, because the designated revenue stream shrank when the real estate market went south.

Then because the Mayor, with the Council’s consent, tapped the recovering revenue stream to cover the costs of locally-funded housing vouchers. But only those already issued.

For homeless families, the District had some Recovery Act funds for short-term housing vouchers. But for a variety of reasons, including the terms, they proved only a limited substitute.

So, at some point, the Family Services Administration, which administers the District’s homeless services program, changed the policy for Priority One families.

Henceforward, they’d gain shelter only when they were legally entitled to it, i.e., when the effective temperature was expected to drop to 32 degrees before the following morning.

Now, I’m told, it will also shelter them in less frigid weather if there’s room for them at DC General. Midweek, units were filling up fast. So I don’t know whether any will be vacant by the time you read this.

Jesse and I don’t see homeless families when we take our pre-dinner strolls around the neighborhood. I doubt residents in most other parts of the District do either.

The families are scattered in the safest, warmest places they can find — in their cars, if they’re fortunate enough to have them, in hospital waiting rooms, bus stations, stairwells, etc.

So they probably don’t weigh heavy on our consciences as we prepare to celebrate the birthday of someone whose mother was given shelter when there was no room at the inn.

But I think of them now and hope the forecast for the upcoming week is wrong.