Senators Bob Corker (R-TN) and Mark Warner (D-VA) are expected to introduce housing finance reform legislation sometime during the week of June 24. The latest draft of the legislation, reviewed by NLIHC, would require funding for the National Housing Trust Fund (NHTF). However, the amount of funding for the NHTF remains uncertain.
Their proposal would wind down the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac over five years, and would create a new agency, the Federal Mortgage Insurance Corporation.
The bill would create a new fund that would be funded by a five to ten basis point assessment on all mortgage backed securities. A portion of the fund would be used to capitalize NHTF. Another portion would go to the Capital Magnet Fund.
Both the NHTF and the Capital Magnet Fund were authorized in the Housing and Economic Recovery Act (HERA) of 2008 to be funded with contributions from Fannie Mae and Freddie Mac. The contributions were suspended when the two enterprises were taken into conservatorship in 2008 and none have ever been made. NLIHC wants the suspension to be lifted and the contributions made retroactive to the first quarter of 2012. NLIHC and the Right to the City Alliance sent a letter on April 25 to the conservator and regulator, Ed DeMarco, Acting Director of the Federal Housing Finance Agency, demanding the suspension be lifted. He has not responded. (see Memo, 4/19).
The draft legislation would add a third program to be funded with by the new fund, a Market Access Fund that could be used to provide housing affordable to households up to 120% of area median income.
It is the position of NLIHC that any new legislation should not only protect the intent of the NHTF to address the shortage of rental homes that extremely low income households can afford, but should also maximize the amount of funding directed to that purpose. NLIHC will oppose legislation that retreats in any way from that commitment. The level of funding provided in HERA for that purpose, 65% of 4.2 basis points, is the minimum that is acceptable. NLIHC has communicated this position to the bill’s drafters.