In an address at the Center for American Progress (CAP) on February 28, HUD Secretary Shaun Donovan reaffirmed the Obama Administration’s support for housing finance reform and for raising revenue to “dedicate at least $5 billion a year through a range of housing funds.” The event entitled “Housing Finance Reform: What Does It Mean for Rental Housing?” was an opportunity to focus on the often overlooked role of Fannie Mae and Freddie Mac in supporting rental housing. Secretary Donovan spoke on the Administration’s agenda to close the wealth gap and counted affordable rental housing as part of this agenda.
Following the Secretary’s address, CAP Housing and Finance Policy Director Julia Gordon led a discussion about the need for rental housing and a federal guarantee for multi-family housing finance. All panelists, NLIHC President Sheila Crowley, Andrew Jakobovics of Enterprise Community Partners, and Shekar Narisimhan of Beekman Advisors, agreed that a federal guarantee for multifamily housing was essential. Mr. Narisimhan thinks the multifamily departments at Fannie and Freddie should be spun off now and allowed to operate on their own.
Ms. Crowley reminded the audience of the great variance in income among households classified as low income. She cited NLIHC data on the gap between the number of extremely low income households and the number of rental homes they can afford. In response to a question posed by Ms. Gordon, Crowley said that it was apparent that the market could not solve this problem, because if it could, it would have done so by now, given the huge pent up demand. She noted the shrinking of the already insufficient HUD programs and the inability of the Low Income Housing Tax Credit to reach this population without other subsidies, and called for robust funding for the National Housing Trust Fund (NHTF) in housing finance reform.
Housing finance reform legislation is expected to be forthcoming soon from Senate Banking, Housing, and Urban Affairs Committee Chair Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID). If current indications are correct, the legislation will provide dedicated revenue for the NHTF and the Capital Magnet Fund, both of which were supposed to be funded by an assessment on Fannie Mae and Freddie Mac. The bill also could establish a third fund. The NHTF is the only fund that is deeply targeted to reach extremely low income households. NLIHC is advocating for the maximum possible total funding of at least $5 billion, and for at least 50% to go the NHTF.