Rep. Melancon Supports Bill Dedicating An Estimated $600 Million To Building Affordable Housing in Hurricane-Affected Louisiana and Mississippi

Press Release

Rep. Melancon Supports Bill Dedicating An Estimated $600 Million To Building Affordable Housing in Hurricane-Affected Louisiana and Mississippi

U.S. Rep. Charlie Melancon voted today in support of legislation creating a non-taxpayer-financed Affordable Housing Fund that will dedicate an estimated $600 million to the construction of affordable housing in areas of Louisiana and Mississippi still recovering from Hurricane Katrina. The bill also restores accountability to the Fannie Mae and Freddie Mac mortgage-funding enterprises through stronger oversight and an independent regulator.

"Katrina and Rita wiped out hundreds of thousands of homes in south Louisiana, causing housing costs to shoot through the roof," said Rep. Melancon. "Many people who want to return home or move out of their FEMA trailers into more permanent housing can't afford to do so. This bill will jumpstart affordable housing construction in hurricane-affected areas with a $600 million shot of adrenaline. I urge the Senate to swiftly pass this bill so we can move forward with helping our people finally return home."

The Housing Finance Reform Act/Affordable Housing Fund (H.R. 1427) creates a non-taxpayer-financed Affordable Housing Fund, to be financed by required contributions from Fannie Mae and Freddie Mac, which will help meet the critical shortage of affordable housing across the country. In the first year, grants from the fund would be solely dedicated to the Katrina-stricken areas of Louisiana and Mississippi. Included in the bill are strict accountability standards and clear guidelines governing the use of the housing grants.

Rep. Melancon worked with the bill's authors to ensure that Louisiana would receive 75% of the housing grants, in keeping with the state's much higher proportion of damage. Rep. Melancon also encouraged the bill's authors to distribute the housing grants though the Louisiana Housing Finance Agency, the state agency that helps low- and moderate-income Louisianians with their housing needs through partnerships with banks, lending institutions, and developers to make housing more affordable.

The Housing Finance Reform Act/Affordable Housing Fund (H.R. 1427) also addresses problems exposed by the high-profile accounting scandals at Freddie Mac and Fannie Mae in recent years. In January 2003, Freddie Mac accountants discovered that the company had accounting problems and the company eventually had to reduce their declared earnings by $5 billion. In June 2003, the top three executives at Freddie Mac were dismissed. Similarly, in 2005, accounting irregularities at Fannie Mae came to light. Fannie Mae ended up having to restate some $12 billion in past earnings. In the wake of the news, both the CEO and CFO of Fannie Mae were removed.

This bill would substantially strengthen the oversight of Fannie Mae, Freddie Mac, and the 12 Federal Home Loan Banks, collectively referred to as the housing government-sponsored enterprises (GSEs). The bill creates a strong, independent regulator of Fannie Mae and Freddie Mac, with broad powers comparable to those of federal bank regulators.

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