Senator Jack Reed (D-RI) introduced legislation on March 3 that would capitalize the National Housing Trust Fund. The bill, the Preserving Homes and Communities Act of 2011, would use funds received from the sale of warrants provided to the Treasury by banks in exchange for receiving Troubled Asset Relief Program (TARP) funds authorized by the 2008 bank bailout bill.

Upon introduction of the bill, Senator Reed said, “with this bill, I continue my efforts to fund the National Housing Trust Fund, which would enable the building, preservation, and rehabilitation of affordable rental housing through the proceeds received from the warrant provisions I crafted for the financial rescue package in 2008. These warrant provisions ensured that as banking institutions recovered from their near collapse, American taxpayers, who bankrolled their recovery, would also benefit from the upside. To date, more than $8 billion in warrant proceeds have been recouped by taxpayers. As I have stated before, my view is that some of these returns from providing a firmer foundation for our financial institutions would be put to good use by providing a firmer foundation for affordable rental housing in our country by finally funding the National Housing Trust Fund….”

The bill is a reintroduction, with some modifications, of S. 1731 from the 110^th Congress. The bill would prohibit foreclosure of a home when the owner is going through a loan modification process and would establish a mediation program for state and local governments so independent third parties would preside over discussions between homeowners and servicers, as well as provide other protections for homeowners.

The bill, S. 489, is cosponsored by Senators Richard Durbin (D-IL), Patrick Leahy (D-VT), Jeff Merkley (D-OR), Sheldon Whitehouse (D-RI), and Al Franken (D-MN). The bill was referred to the Senate Committee on Banking, Housing and Urban Affairs.