H.R. 2441, the Housing Trust Fund Elimination Act of 2011, was passed by the Subcommittee on Capital Markets and Government Sponsored Enterprises (GSEs) of the House Financial Services Subcommittee on July 12 on a party line vote of 18-14. The bill, introduced by Representative Ed Royce (R-CA), would abolish the National Housing Trust Fund (NHTF) as well as the Capital Magnet Fund.

H.R. 2441 was one of seven bills intended to dismantle the housing GSEs, Fannie Mae and Freddie Mac, approved by the Subcommittee.

During the markup, Mr. Royce said that the NHTF should be abolished because “the money would subsidize lobbying and campaign related activities” by groups such as the now-defunct ACORN. He made this assertion despite that fact that the NHTF statue explicitly prohibits the use of NHTF dollars for “political activities, lobbying, counseling, outreach, and project administration.”

Financial Services Ranking Member Barney Frank (D-MA) does not sit on the Subcommittee, but participated in the markup to defend the NHTF. Mr. Frank described the conversation about ACORN as a “red herring” and clarified that nothing in the NHTF statute empowers ACORN or anyone else to engage in the activities that Mr. Royce found objectionable. Subcommittee Ranking Member Maxine Waters (D-CA) and Representative Al Green (D-TX) also made this point, and asked that markup record be corrected to reflect this fact.

The other major argument offered by Mr. Royce and other Republican members of the Subcommittee was that the NHTF was duplicative of other federal programs and unnecessary. They cited a list of 89 different HUD programs that supposedly do the same thing as the NHTF. Most of the programs on the list were unrelated to rental housing production and none are rental production programs specifically targeted to extremely low income households. Mr. Royce also associated the NHTF with the HOME program, which recently was criticized in a series in the Washington Post (see Memo, 6/3)

Mr. Green offered an amendment to H.R. 2441 that would have decoupled the NHTF from Fannie Mae and Freddie Mac as a source of funding. While the initial source of funding for the NHTF was to be contributions from the GSEs, the entities were taken over by the Federal Housing Finance Administration in September 2008 and have never made a contribution to the NHTF. The statute authorizing the NHTF also allows the NHTF to be funded by other sources.

Ms. Waters said in support of the Green Amendment that it is inappropriate to abolish the NHTF altogether and that future Congresses should have the option to fund the NHTF if they so choose.

After a lengthy debate, Mr. Green’s amendment was defeated by a vote of 17 to 15. One Republican, Representative Robert Dold (R-IL) voted in support of the Green Amendment. The underlying bill, H.R. 2441, passed by a vote of 18 to 14. The starkly partisan nature of this action is evidenced by the vote against the Green amendment and for the Royce bill by Representative Judy Biggert (R-IL), despite her role as co-chair of the Congressional Caucus on Homelessness.

The next step would be for H.R. 2441 to be considered by the full committee. There was extensive debate in the markup about when the full Committee on Financial Services will consider GSE reform. There does not appear to be agreement among Republicans on the direction of GSE reform, but some action on GSE reform by the full committee may come as soon as the fall. 

The Corporation for Supportive Housing and the United States Conference of Catholic Bishops sent letters in support of the NHTF to the Subcommittee in advance of the markup. These letters of support were inserted into the Committee record, as was a letter from the NHTF campaign. In the campaign’s letter, NLIHC President and CEO Sheila Crowley urged Subcommittee members to oppose H.R. 2441. “We are hopeful that the members of the Subcommittee will recognize the value of and need for the National Housing Trust Fund and reject this effort to eliminate it,” Ms. Crowley said in the letter.

The list of 89 programs mentioned in the HUD hearing is available at: http://www.nlihc.org/doc/89_HUD_Programs_List.pdf

A letter in support of the NHTF from NLIHC is available at: http://www.nlihc.org/doc/NLIHC_NHTF_Letter_HR2411_7-11-11.pdf

The letter from the Corporation for Supportive Housing is available at: http://www.nlihc.org/doc/CSH_Letter_HR2411.pdf

The letter from the United States Conference of Catholic Bishops is available at: http://www.nlihc.org/doc/USCCB_Letter_HR2411_7-11-11.pdf

A press release from NLIHC on the hearing is available at http://nlihc.org/detail/article.cfm?article_id=8032&id=48