By Eugene T. Lowe
October 22, 2007

H.R. 2895, the National Affordable Housing Trust Fund Act of 2007, passed the House of Representatives by a vote of 264 to 148 on October 10. The bill, called for passage in the Mayors 10-Point Plan, will provide for the production, rehabilitation, and preservation of 1.5 million housing units over the next ten years. Approximately $800 million to $1 billion will be allocated initially to states and local governments with the money coming from the Federal Housing Administration’s mortgage lending surpluses and from the portfolios of Fannie Mae and Freddie Mac.

Representative Barney Frank (MA), chairman of the House Financial Services Committee and sponsor of the bill said, “The growing shortage of affordable housing is one of the most serious social and economic problems facing our country. Given our severely constrained fiscal realities, we are today doing the best we can to address this – creating a low income housing trust fund that will be paid for in ways that do not draw from federal tax revenues.”

Bills passed by the House make it possible for the trust fund to be funded outside the regular channel of federal appropriations. Last month, H.R. 1852, the Expanding American Homeownership Act of 2007, was passed. The legislation reforms the Federal Housing Administration (FHA) and allows the agency’s excess funds to be diverted to the trust fund. And, in May of this year, the House passed H.R. 1427, which allows funds from Fannie Mae and Freddie Mac to go to the Housing Trust Fund.

House Speaker Nancy Pelosi (CA) said, “The bill will assist cities and states address the most urgent affordable housing needs in their communities, while keeping our promise of fiscal responsibility to taxpayers with no new deficit spending.” Pelosi added, “The bill will increase the supply of affordable housing available to our nation’s lowest-income households, directing 75 percent of the funds to provide housing for very low-income residents – those making less than 30 percent of an area’s median income.”

Passage of H.R. 2895 was not without challenges. Representative Randy Neugebauer (TX) offered an amendment, which was defeated (163-257) that would have merged the trust fund with the HOME Investment Partnership Program. Representative Marilyn Musgrave (CO) offered an amendment to send the bill back to the Financial Services Committee to add work requirements for adults living in trust fund financed housing. The amendment was defeated (199-218).

White House senior advisers will recommend that the President veto the bill. Frank, however, believes that an agreement can be reached with the White House because there are “a number of things the President wants” associated with the trust fund. Meanwhile, the Senate has not acted on a trust fund. A companion draft bill has been circulated and there is a tentative plan to soon introduce a bill in the Senate.