On December 9, the Senate Banking, Housing, and Urban Affairs Subcommittee on Housing, Transportation, and Community Development held a hearing, “Inequality, Opportunity, and the Housing Market.” While the hearing focused primarily on homeownership and access to affordable credit, witness Julia Gordon of the Center for American Progress included support for the National Housing Trust Fund (NHTF) and the Low Income Housing Tax Credit program in her written testimony. Ms. Gordon also spoke in favor of changes to the mortgage interest deduction that are similar to changes sought by the United for Homes campaign.
Subcommittee Chair Robert Menendez (D-NJ) opened the hearing saying that the housing market was at the epicenter of the Great Recession, and that when the housing bubble popped the devastation was broad. While the nation is rebounding, challenges remain because more than five million households still owe more on their mortgages than their homes are worth, and first-time homebuyers and underserved markets continue to face significant obstacles to participating in the housing market, according to Senator Menendez. said.
Regarding the NHTF Ms. Gordon states, “[The Federal Housing Finance Agency (FHFA)] should capitalize the Housing Trust Fund and Capital Magnet Fund. We believe that FHFA has both the right and the responsibility to direct [Fannie Mae and Freddie Mac] to begin contributing to these funds right away.” On December 11, FHFA Director Mel Watt announced he had lifted the suspension on funding for the National Housing Trust Fund and Capital Magnet Fund (see Memo, 12/8).
Ms. Gordon also urged Congress to “extend the [Low Income Housing Tax] Credit’s 9% minimum credit rate floor for two years until the end of 2015 so at least one year would have the full benefit.” On December 16, Congress passed a tax extenders bill that only extends the 9% credit floor through 2014 (see article elsewhere in Memo.)
During the hearing, Senator Jeff Merkley (D-OR) said that the home mortgage interest deduction (MID), the country’s major homeownership program, “doesn’t extend to lower income families” and suggested adding a grant program onto the MID for people who currently cannot take advantage of it. Deborah Goldberg of the National Fair Housing Alliance agreed that the MID structure strongly disfavors people of modest means, who are often people of color. Ms. Gordon added that the MID is a huge subsidy, and in order to direct the subsidy toward people who most need it, the MID should be capped and converted from a deduction to a tax credit.
An archived stream of the hearing and witness testimony is at http://www.banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=9a041872-9581-4912-8414-16c343da15f2