Representative Carolyn Maloney (D-NY) introduced H.R. 4791, the Responsible GSE Affordable Housing Investment Act of 2014, on May 30. The intent of the bill is to preserve existing affordable housing by assuring that Fannie Mae and Freddie Mac cannot get credit toward their affordable housing goals for projects that reduce the supply of affordable housing.
Fannie Mae and Freddie Mac have a federal mandate to promote affordable housing. Their regulator, the Federal Housing Finance Agency (FHFA), sets single-family and multifamily affordable housing goals that they must meet each year. Credit toward multifamily goals can be obtained for mortgage purchases that promote multifamily housing for households with income below 50% and 80% of the area median income.
Ms. Maloney introduced H.R. 4791 in response to Fannie and Freddie’s investment in the 2007 sale of Stuyvesant Town/Peter Cooper Village in New York City, for which they received goals credit. However, after the purchase, it became apparent that the buyers intended to convert rent-regulated affordable housing units to units with market rate rents.
“At the time of the deal it was clear that the Stuyvesant Town property was overleveraged – the debt on the property was larger than the rental income it was receiving. After the transaction closed, over the course of several years, the new owners of the property engaged in aggressive tactics to convert affordable units to market rate so that they could increase their rental income,” according to a media release issued by Ms. Maloney.
H.R. 4791 would take steps to assure that affordable housing goals credit could not be received for projects like Stuyvesant Town/Peter Cooper Village by:
- Prohibiting sponsors to get affordable housing goals credit for projects if debt is disproportionate to revenue,
- Denying goals credit if FHFA concludes that a project will result in accelerated conversion of affordable housing units to market rate units, and
- Requiring FHFA to take steps to assure that financial underwriting is not dependent on future revenues based on deliberate conversion of affordable units to units with market rate rents.
The bill was referred to the House Committee on Financial Services. Introduction of the bill took place after a press conference announcing the newly created, New York City-based “Coalition against Predatory Equity in Housing.”
Read the text of H.R. 4791 at: http://1.usa.gov/1oN7mlm