Kerry Applauds Banking Committee Passage of Housing Trust Fund
Senator John Kerry announced that the Senate Banking Committee passed the Federal Housing Finance Regulatory Reform Act of 2008 by a vote of 19-2. The Act overhauls regulations of government-sponsored entities Fannie Mae and Freddie Mac and establishes a Housing Trust Fund to supply rental housing for struggling homeowners across Massachusetts and the nation. Kerry first introduced the National Affordable Housing Trust Fund in 2000 and reintroduced it in each successive Congress.
"The Housing Trust Fund will help insure that all Massachusetts families, and especially our poorest children, can live in safe, decent housing. The Senate Banking committee has made a critical step towards its enactment," Senator Kerry said. "Producing affordable rental housing will create critically-needed construction jobs and help get our economy moving again. I want to thank Chairman Dodd and Senator Jack Reed for their outstanding work in developing this legislation."
In 2000, Senator Kerry wrote the National Affordable Housing Trust Fund Act to provide funds for the production of rental housing to extremely low-income families. The legislation sought to fund the construction of 1.5 million affordable housing units over ten years. The bill has a bipartisan group of 22 cosponsors in the Senate. A similar bill introduced by Congressman Barney Frank passed the House of Representatives last year. Senator Kerry's legislation is supported by approximately 5,700 housing organizations, including the National Low-Income Housing Coalition, National Association of Realtors, the National Association of Home Builders, Children's Defense Fund, United States Conference of Mayors, the National Coalition for the Homeless, and others.
Congressman Barney Frank said, "I am very pleased that the Senate has agreed to join the House in establishing an affordable housing trust fund. When I became the Chairman of the Financial Services Committee, I made this a very high priority. The fact that we have finally been able to achieve this long sought goal is one of the most important consequences of the Democrats achieving majorities in the House and Senate." Frank noted that legislation involving the affordable housing trust fund had passed both House and Senate committees in the previous Congress but was blocked in each case by Republican leadership from coming to the floor.
"Today is a milestone in the quest to assure a decent home for everyone in the United States, with bipartisan support in the Senate Banking Committee for housing trust fund to build and preserve homes for the lowest income families. The action by the Senate Banking Committee marks the path for enactment of a National Housing Trust Fund in the 110th Congress," said Shelia Crowley, President of the National Low Income Housing Coalition.
"During this time of rising rents and foreclosures, we need a Housing Trust Fund to help low income working families," said Aaron Gornstein, Executive Director of the Citizens' Housing and Planning Association (CHAPA). "We greatly appreciate the leadership of Senator Kerry in helping to alleviate the affordable housing crisis facing Massachusetts."
More specifically, the Act will require Fannie Mae and Freddie Mac to provide funding, 65% of which will be used for the Housing Trust Fund, and 35% will go toward a Capital Magnet Fund to leverage affordable housing development and community development activities. The provisions on the Housing Trust Fund are similar to the provisions included in the National Affordable Housing Trust Fund Act that Kerry introduced last December to produce rental housing for low-income families.
The Act also creates a new regulator which has the authority to keep both Fannie Mae and Freddie Mac operating in a safe, sound manner consistent with their affordable housing responsibilities. It increases capital requirements for Fannie Mae and Freddie Mac and permanently increases loan limits from $417,000 to $550,000.
It also includes a new Hope for Homeowners provision to help lenders limit losses from foreclosures by agreeing to reduce principal balances of mortgage loans at risk of default. Borrowers can then apply to refinance with a 30-year fixed-rate mortgage insured by the Federal Housing Administration. This provision will help more than 500,000 homeowners facing foreclosure stay in their homes.