UPDATED: June 29, 2009
(from National Housing Trust Fund Newsletter of the National Low Income Housing Coalition)
During a national teleconference to supporters of the National Housing Trust Fund (NHTF), Sheila Crowley, President of the National Low Income Housing Coalition (NLIHC), reported on the status of the $1 billion proposed by the Obama Administration to capitalize the NHTF.
While the statute creating the NHTF on July 30, 2008 also designated an initial dedicated source of funding for the NHTF to come from a very small portion of the unpaid principle balance of new business purchases made by Fannie Mae and Freddie Mac, those two institutions have since hit on financial hard times.
The NHTF campaign remains committed to the goal of securing $15 billion per year for ten years (for a total of $150 billion) to capitalize the NHTF.
NLIHC then was very pleased when President Obama's proposed budget for FY2010 included a one-time $1 billion to capitalize the NHTF. The source of that $1 billion was not specified in the original budget documents. Recently the Administration announced that it proposes the $1 billion to come from Ginnie Mae's $9 billion reserves. Ginnie Mae is the secondary market for FHA loans; given the high volume of FHA loans made during this credit crisis its reserves have grown.
It is important to keep in mind that the Administration is not seeking a HUD appropriation for this $1 billion, and the NHTF campaign will stand by its firm commitment to ensure the NHTF does not compete with other HUD programs for funding.
In its FY2010 Budget Resolution, Congress determined that the $1 billion should be subject to "pay-go" (as in "pay as you go") which means there must be an "off-set" of an equal amount of cuts from somewhere else in the budget. Though not required, ideally the off-set would be one that is in the jurisdiction of authorizing committees; in the case of the NHTF those would be the House Financial Services Committee and the Senate Banking, Housing, and Urban Affairs Committee.
The Administration proposed that the $1 billion would be on the "mandatory" side of the budget (along with other mandatory allocations such as Social Security and Medicare). The other side of the budget, the "discretionary" side, requires spending to be approved through one of the twelve appropriations committees. Because the Administration proposed the $1 billion to be mandatory, once approved by Congressional authorizing committees (anticipated to take place before Congress recesses in November or December) it would be available automatically - without going through the appropriations process.
Barney Frank, Chairman of the House Financial Services Committee has identified a new source of funds that is within the purview of his committee that can be used for this purpose. On Friday's call Sheila Crowley reported that Chairman Frank was working on a new revenue source for the NHTF, but it was not yet public. Shortly after the call NLIHC received word from Chairman Frank's office that he officially submitted ("dropped") H.R. 3068, the "TARP for Main Street Act of 2009" which would direct $1 billion to the NHTF.
TARP (the Troubled Asset Relief Program) was created in October 2008 as part of the Emergency Economic Stabilization Act to make billions of federal dollars available to bail out struggling financial institutions. Some of those transactions are now producing dividends to the federal treasury. Chairman Frank is proposing that $1 billion of the dividends paid by financial institutions assisted by TARP be used as initial capitalization for the NHTF.
In addition to the NHTF, the "TARP for Main Street Act" provides an additional $1.5 billion from TARP dividends for the Neighborhood Stabilization Program (NSP), $2 billion in TARP funds to the Emergency Homeowner Relief Fund at HUD, and $2 billion in TARP funds for a program that the HUD Secretary is directed to develop to prevent the loss of multi-family housing that is in default or foreclosure.
H.R. 3068 is cosponsored by Representatives Maxine Waters (CA), Dennis Cardoza (CA), and Nydia Velasquez (NY). A hearing on the bill is expected on July 9.
Regarding NHTF implementing regulations, the NHTF statute requires HUD to make the NHTF distribution formula available by July 30 of this year. HUD's Office of Policy Development and Research has had the formula ready for some time, but has been holding off pending updated Census data. HUD will make the distribution formula available by the statutory deadline, at which point jurisdictions will know how much to expect from the $1 billion.
In addition, NLIHC has been told that implementing regulations have been ready since February. NLIHC speculates that release of the regulations has been slowed down while awaiting approval by the Senate of all HUD political appointees.
