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House approves Affordable Housing Trust Fund.

The House of Representatives passed a bill last week that would provide a new source of federal funding for cities to increase affordable housing. The National Affordable Housing Trust Fund Act (H.R. 2895) passed by a vote of 264 to 148. The bill, sponsored by Financial Services Committee Chairman Barney Frank (D-Mass.), would be the largest expansion in federal housing programs in decades.

If enacted into law, the National Affordable Housing Trust Fund (AHTF) would provide around $1 billion annually for the production, preservation and rehabilitation of 1.5 million affordable homes over 10 years Sixty percent of the trust fund would go directly to cities and towns, and 40 percent would go to states.

Under the bill, cities and towns could make grants to either nonprofit or for-profit organizations for the construction, rehabilitation, acquisition and preservation of affordable housing, Activities outside of construction, such as administrative costs, advocacy, counseling, or tax-preparation assistance would be ineligible for trust funds.

Frank has made housing legislation a top priority for the House this year, saying, "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."

Funds for the AHTF would come from mortgage lending surpluses at the Federal Housing Administration (FHA) and from a portion of the housing portfolios of the government-sponsored mortgage finance companies Fannie Mae and Freddie Mac.

The diversion of these funds into the AHTF, however, would first have to be authorized in legislation. Two bills to accomplish this, the Expanding American Homeownership Act (H.R. 1852) and the Federal Housing Finance Reform Act (H.R. 1427), have both passed the House, but have yet to be considered by the Senate.

The Administration is opposed to the bill and has threatened a veto, saying essentially that it is an unwarranted expansion of the federal government's role in housing construction. Opponents also criticize the funding mechanism of the bill, saying that the diversion of funds from the FHA could jeopardize the financial stability of the government's only mortgage-insurance program.

According to Senate sources, a draft of companion legislation to H.R. 2895 is circulating in the Senate to gauge the support of senators NLC endorsed the House bill in a letter to House Speaker Nancy Pelosi, which can be found by clicking on the most recent "Federal Relations Update" section under the "Advocating for Cities" tab at www.nlc.org.
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Author:Wallace, Mike
Publication:Nation's Cities Weekly
Geographic Code:1USA
Date:Oct 15, 2007
Words:438
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