Not all of Washington D.C. is in the grip of credit-market panic. The U.S. Housing and Economic Recovery Act of 2008 (HR 3221), signed by President Bush on July 30, takes effect Oct. 1. Of particular interest to poor people and housing advocates is its establishment of the National Housing Trust Fund.
The trust fund has been the object of much advocacy and organizing for years nationwide. Ninety percent of the funds -- its total is $300 million for fiscal year 2009 -- must be used for production, preservation, rehabilitation or the operating of rental housing. Ten percent will be for homeownership activities for first time buyers. All of the funds must benefit households making less than half the area median income in their region; in the Seattle area, that's an annual income of $35,000 for a family of three.
The Trust Fund will be administered by the Department of Housing and Urban Development (HUD), which will provide grants to states.The Housing Trust Fund is a permanent program with a dedicated source of funding. The funds will come from annual contributions made by Fannie Mae and Freddie Mac.
Subprime mortgage woes have diverted the fund's initial intent: for its first year, all of the money will be diverted to a reserve fund to cover losses from FHA's refinancing of troubled mortgages through the act's HOPE for Homeowners program. In fiscal year 2010, half the money will go to the FHA; one quarter will be devoted to the same purpose in the next year.
Besides the Housing Trust Fund, HR 3221 included other housing related benefits. Reform of Fannie Mae and Freddie Mac will be regulated. It establishes a Capital Magnet Fund. One provision will address the stabilization of neighborhoods hurt by the foreclosure crisis, appropriating a onetime $3.9 billion in emergency assistance to areas most in need.
Low income housing tax credits and tax-exempt bonds are included. The bill also makes a $30 million increase to McKinney-Vento homeless assistance programs to help those who have become homeless due to foreclosures, whether they were renting or owning their homes. Housing counseling services, public housing, protections for Service members who are renters, a low income housing tax credit, and tax-exempt bonds were also approved.