RULES & REGS: Senate Debate of Housing Trust Fund Shows Bipartisan Support, Vote Imminent

By Erika Schnitzer, Associate EditorWashington, D.C.–The Senate is set to debate HR 3221, the Housing and Economic Recovery Act of 2008 (previously called the Federal Housing Finance Reform Act). The bill would restructure Fannie Mae and Freddie Mac, as well as reform the Federal Housing Administration (FHA) to help homeowners facing foreclosures.The bill includes a provision that would create an Affordable Housing Trust Fund, which would carve out some funds from Fannie Mae and Freddie Mac and put them into a new housing trust fund, explains Linda Couch, deputy director of the National Low Income Housing Coalition (NLIHC). “The money would be used to produce and preserve housing affordable to extremely low- and very low-income people.”Another portion of the bill would allow homeowners to refinance their mortgages into FHA-insured mortgages. “The risk that the FHA would be exposed because of the refinancing could cost the Fed some amount of money, and some of the Housing Trust Fund, specifically the portion from Fannie Mae and Freddie Mac, could be used to back up the FHA for a few years,” notes Couch.This bill would be the first new source of housing funding since the Section 8 program was implemented. “This is the first time a stand-alone housing fund would exist,” Couch tells MHN.Last week, an amendment was proposed to make Fannie Mae and Freddie Mac contributions to the fund voluntary, rather than mandatory. The Senate rejected the proposal, demonstrating strong bipartisan support for the National Housing Trust Fund. Additional proposals are expected this week, and a vote on the Housing Trust Fund may take place as early as today.The timeline for the bill is still up in the air, though many hope to send it to President Bush before the July 4 recess, says Couch. “We have reason to believe the White House would support the bill or a compromise between the House and Senate.”