Today, Senate Banking Committee Chair Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID) released the legislative text of their bipartisan housing finance reform proposal. The bill as drafted would provide the most significant new investment in rental housing affordable to America’s neediest families in forty years. It could provide over $3.5 billion a year for the National Housing Trust Fund.
“The National Low Income Housing Coalition commends Senators Johnson and Crapo for their bipartisan commitment to addressing much needed reform of the nation’s housing finance system and for creating a robust dedicated source of revenue for the National Housing Trust Fund in the process,” said Sheila Crowley, President and CEO of the National Low Income Housing Coalition (NLIHC).
The Johnson-Crapo bill, which builds on the framework developed by Senators Mark Warner (D-VA) and Bob Corker (R-TN), would wind down Fannie Mae and Freddie Mac and create the new Federal Mortgage Insurance Corporation (FMIC) to regulate the secondary mortgage market, similar to the way the FDIC regulates banks.
All FMIC covered securities will be assessed ten basis points to be used to fund affordable housing activities. The total fund could be as high as $5 billion annually. The draft bill calls for 75% to go to the National Housing Trust Fund and 15% to the Capital Magnet Fund. Both were created in 2008 and were to be funded by an assessment on Fannie Mae and Freddie Mac, which was suspended before it could be implemented. The remaining 10% would go to a new Market Access Fund provided for in the draft bill.
The primary purpose of the National Housing Trust Fund is to build, preserve, rehabilitate, and operate rental housing affordable to extremely low income families. Extremely low income is 30% of the area median or less. There is a nationwide shortage of seven million rental homes that are affordable and available to households in this income group. The National Housing Trust Fund is a block grant to states administered by HUD.
The Johnson-Crapo proposal would make two changes to the existing National Housing Trust Fund, both of which NLIHC strongly supports. It creates a new tribal set-aside, directing 2% or at least $20 million to federally recognized tribes or a tribally designated housing entity to be used for eligible affordable housing activities under section 202 of the Native American Housing Assistance and Self-Determination Act of 1996. The bill also increases the small state minimum from $3 million to $5 million.
“Once funded to scale, the National Housing Trust Fund is the solution to ending homelessness in the United States and assuring housing stability for low wage earners and poor people who are elderly or who have a disability, “said Crowley. “The Johnson-Crapo bill offers real hope to some of our nation’s most vulnerable and underserved citizens. I urge the Senate to act swiftly to pass this landmark legislation.”
The committee is expected to take up the bill prior to the April congressional recess, possibly as soon as the first week of April.
Dr. Crowley is available for further comment.