Invisible amid all of the media talk of a congressional “bailout” for Fannie Mae and Freddie Mac is a triumph for affordable housing advocates secured when the House Wednesday passed the American Housing Rescue and Foreclosure Prevention Act of 2008 and the Senate today ratified the measure with a significant Republican contingent joining Senate Democrats.
The measure included a provision for creation of a National Housing Trust Fund, designed to create and preserve affordable rental housing for very low-income Americans, with a dedicated source of funding in the form of fees from Fannie Mae and Freddie Mac. It’s an idea that’s had support in housing advocacy circles since 2000, but as recently as two weeks ago still seemed unattainable in the current political landscape.
Last year, when the 110th Congress brought the Democrats into power, Massachusetts Congressman Barney Frank, chair of the House Financial Services Committee, introduced a bill to authorize the fund. But the Bush administration and fellow Republicans expressed strong opposition, citing what they considered to be the excessive cost. Though Frank often quipped that the funding could come from the same source as the billions flowing to the war in Iraq, the stalemate rendered passage improbable.
Until, that is, the administration needed cooperation of congressional Democrats to bolster Fannie Mae and Freddie Mac in the midst of the ongoing foreclosure freefall. So in a few short weeks in July, the unattainable suddenly morphed into the doable. Politics makes for strange bedfellows, which in turn sometimes makes pipedreams into realities.
The 700-page bill’s complete package is being touted as one of the most significant federal interventions into the housing market — which to some commentators and legislators is a positive thing and to others is a frightening example of government intrusion. The bill’s provisions to save hundreds of thousands of families from losing homes to foreclosure is something to celebrate, despite cries from the right calling for market self-correction and warnings from some housing-advocacy groups that the measure is too little, too late to protect millions of Americans in danger of losing their homes through foreclosure as the cascade of adjustable rate mortgages continues to make them unaffordable for mortgage-holders during the next few years.
The trust fund, to be managed by the U.S. Department of Housing and Urban Development, will offer funds using a needs-based formula, with states issuing grants to housing property managers and developers. Funding for the trust fund will come from annual contributions from Fan and Fred, and is expected to offer upward of $300 million per year once it is up and running in 2012.
Despite the Bush administration’s persistent threats to veto the bill, pressure from the Treasury and Federal Reserve apparently convinced him otherwise. According to The New York Times, the White House issued a statement praising the vote, while again opposing the $4 billion in grants for an emergency neighborhood stabilization fund to local governments to buy and refurbish foreclosed properties, which the administration has characterized as a “giveaway.”
Clearly, there is no unanimity of opinion on the components of the measure, nor about the adequacy of its response to the country’s housing woes. Nevertheless, for proponents of affordable housing, the overwhelming passage of this bill with the National Affordable Housing Trust Fund and $4-billion neighborhood stabilization fund intact is a triumph.