Fw: UPDATE: Understanding the Latest National Housing Trust Fund Developments

[Guest guest]

This might interest some of you who would like to advocate for affordable

housing on a national level.

Ellen

Ellen Garber Bronfeld

egskb@...

UPDATE: Understanding the Latest National Housing Trust Fund

Developments

From: " NLIHC " <memotomembers@...>

TO:

Endorsers and Supporters of the National Housing Trust Fund Campaign

FROM:

Sheila Crowley, President, National Low Income Housing Coalition

The Obama Administration has taken two important steps in the last week toward

providing funding for the National Housing Trust Fund.

The purpose of this memo is to provide you with more detail about both proposals

and about how you can help to advance them.

First, the President's FY12 budget proposal includes $1 billion as the initial

capitalization for the NHTF. Second, the report issued by the Administration on

how to reform the housing finance system in the wake of the foreclosure crisis

suggests the creation of a dedicated source of revenue for affordable housing

activities and cites the NHTF as such an activity. These two actions are

separate and distinct.

$1 Billion in the Proposed FY12 Budget

President Obama has included $1 billion for the NHTF in his FY12 budget

proposal. It is reported as part of HUD's budget, but on the mandatory funding

side of the budget. This means that the President is not seeking funding for the

NHTF through discretionary appropriations that fund other HUD low income housing

programs. This is in keeping with the NHTF Campaign's longstanding position that

the NHTF not compete with existing HUD appropriations.

The budget proposal does not identify a specific funding source for the NHTF.

Rather, HUD officials plan to look for " opportunities " to include it in

legislative vehicles as they arise. Finding a funding source ( " pay-for " or

" offset, " in federal budget speak) that can gain bipartisan support in the

Congress is key to getting it funded this year. The NHTF Campaign will accept

any offset that does not involve cuts to other services or benefits for low

income people.

Background

President Obama also asked for $1 billion for the NHTF in his FY10 and FY11

budget proposals. In the FY10 budget, the initial " pay-for " was receipts to the

federal government from Ginnie Mae, the HUD mortgage program. Later in 2009, the

Administration determined it would not be possible to use Ginnie Mae funds and

proposed an offset that was a tax provision unrelated to housing.

Eventually, the NHTF was included as one of several expenditures in a large tax

bill that extended a number of business related tax breaks and offset the cost

by raising taxes elsewhere. This bill passed the House of Representatives in

late 2009. Several versions of this bill were offered in the Senate as 2010 wore

on. All continued to include the NHTF, until the last version in the lame duck

session. Eventually, the tax breaks were included in the larger deal struck

between the White House and the Senate Republicans that extended the Bush era

tax cuts. The NHTF was dropped during those negotiations as it was tagged " new

spending. "

In the last Congress, the NHTF Campaign sought $65 million for project based

vouchers to accompany the $1 billion in capital funds. These vouchers would be

used for operating subsidies for NHTF units for the lowest income people. We

will do the same in the new Congress.

Dedicated Source of Revenue from Housing Finance Reform

The Obama Administration released a " white paper " on February 11 that offered

its recommendations for the future of housing finance. In the wake of the

financial meltdown precipitated by the foreclosure crisis, the federal

government had to take over Fannie Mae and Freddie Mac, the two

government-sponsored enterprises (GSEs) that served as the secondary mortgage

provider for many mortgages made in the U.S. This takeover has been at

considerable cost to the federal treasury.

The white paper reflects the Administration's position that the government

should play a more limited role in the general mortgage market, but continues to

have a duty to help lower income households. In particular, the paper highlights

the importance of rental housing and the need to expand its supply for the

lowest income households. The paper goes so far as to cite the gap between the

number of extremely low income (ELI) renter households and the number of rental

homes that they can afford (32 homes for every 100 ELI renters).

The Administration proposes the creation of a dedicated revenue source to pay

for several programs that the market would not provide on its own. It uses the

NHTF as an example of the kind of program that could be funded through this

dedicated revenue source. No details are offered as to where the revenue would

come from for the dedicated source.

The NHTF Campaign advocated over the last several months that the NHTF be

included in this report and that the housing finance industry be required to

direct funds toward this purpose. In a letter to the Administration, the

Campaign said, " there should be revenue-generating requirements on all financial

institutions, including, but not limited to, the next generation of secondary

market entities. The federal government provides private financial institutions

with low cost funds through a variety of sources. The most important of these

are lenders' ability to borrow from the Federal Reserve and the Federal Home

Loan Banks and to acquire low cost deposits based on federal deposit insurance.

Congress could also levy a fee on the securitization of mortgages by any capital

markets participant and direct these revenues to the National Housing Trust

Fund. "

The Administration's proposal is the starting point for the legislative debate

that will take place over the next two years and likely beyond. The future of

Fannie Mae and Freddie Mac is a subject of disagreement among policy makers with

splits along partisan lines. The fact that the Administration was as specific as

it was about the NHTF in its otherwise general paper is a positive step forward.

To read the full " white paper " , click here.

Background

The legislation that created the NHTF in 2008 was part of a large bill that

included reform of the GSEs. The bill directed the GSEs to make contributions to

the NHTF. Soon after the bill passed, the financial crisis hit and the GSEs were

taken into conservatorship by their federal regulator, who suspended any

payments to the NHTF. The fact that Congress has already determined that the

housing finance system should be one revenue source for the NHTF serves as the

basis for our advocacy going forward.

Action for Advocates

1.. We have posted a new FAQ (frequently asked questions) for the NHTF on our

website. Click here to read the new FAQ now. Please review and distribute it

widely to your networks. It includes a table with the amount of money your state

will get with each $1 billion of funding for the NHTF.

2.. Make an appointment today to see your Representative and Senators next

week when they are home for the President's Holiday recess. Go to their offices

or invite them to visit your agency. Educate them about the need for affordable

rental housing in your community and how the NHTF will help. Make sure they know

that the funds will be allocated to states, which will conduct state-level

competitive grant-making.

3.. Educate your governor. Make sure he or she knows how much money will come

to your state. Ask the governor to advocate for the NHTF with your Congressional

delegation.

4.. Make sure your other state and local public officials know how much money

will come to your state once the NHTF is funded. Ask them to advocate for the

NHTF with your Governor and Congressional delegation.

5.. Stay informed about the NHTF by endorsing the NHTF campaign if your

organization has not done so already. Encourage other organizations in your

community to endorse the NHTF campaign. Click here to endorse the NHTF now.

6.. Keep in touch with the National Low Income Housing Coalition Outreach

Associate who works with your state. Let them know about the results of your

advocacy activities. Click here to get the name and contact information of your

Outreach Associate.

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