Today, the Senate continues debate on a comprehensive housing bill that by one account could help close to half a million homeowners keep their homes. The Senate bill will strengthen the Federal Housing Administration’s ability to keep people in their homes and provide them with secure fixed-rate mortgages, reform government sponsored enterprises (Fannie Mae and Freddie Mac) and assist potential homebuyers with a tax incentive to purchase their first home. In addition, the measure also creates a landmark low-income housing trust fund to assist in the construction of affordable rental housing and provides assistance to communities with redevelopment aid.
Highlights of the Senate Housing Bill:
- The Senate Housing Bill Will Allow Up to Half a Million Homeowners Keep Their Homes and Refinance Their Mortgages in Stable Fixed Rate Loans. The measure creates a voluntary program within the Federal Housing Administration to help struggling families by offering secure FHA backed mortgages. The new program could at least 400,000 families save their homes. According to the Congressional Budget Office, “Based on information from the Federal Reserve and mortgage industry data, CBO estimates that there are about 11 million subprime and alt-A mortgages outstanding, with a face value of over $2 trillion. Of those 11 million loans, we estimate that about 9 million are for owner-occupied houses. Of those 9 million borrowers, CBO estimates that, over the 2009-2011 period, about 400,000 would refinance troubled loans worth about $68 billion under the new program that this bill would establish.” [Congressional Budget Office, 6/9/08; Democratic Policy Committee HR 3221 Summary and Background]
- The Senate Housing Bill Provides Incentives for First Time Homebuyers to Purchase Homes. The measure calls for an $8,000 refundable, repayable tax credit that will help first time home buyers to purchase homes and reduce the existing stock of unoccupied housing. [Senate Finance Committee Press Release, 6/18/08]
- The Senate Housing Bill Creates a Landmark Low-Income Housing Trust Fund. The measure creates a new Housing Trust Fund and a Capital Magnet Fund, financed by annual contributions from Fannie Mae and Freddie Mac, which will be used for the construction of affordable rental housing. The bill specifies that 75 percent of the amounts in the Housing Trust Fund must be used for the benefit of extremely low-income families. In addition, the measure provides $4 billion in emergency assistance to communities with the highest foreclosure rates for the purchase and redevelopment of abandoned and foreclosed-upon properties. The funds would be administered through the Community Development Block Grant (CDBG) program. [Democratic Policy Committee HR 3221 Summary and Background]
- The Senate Housing Bill Reforms Fannie Mae and Freddie Mac. The measure establishes a new, independent regulator to oversee Fannie Mae, Freddie Mac and the Federal Home Loan Banks. Among the regulator’s new authority would be to establish capital and management standards (including internal controls, audits, risk management, and management of the portfolio; enforce its orders through cease and desist authority; impost civil penalties, and remove officers and directors. [Senate Banking Committee Summary of HR 3221]
- The Senate Housing Bill Incentivizes The Construction of More Low-Income Housing. The measure establishes the providing Low-Income Housing Tax Credit program helps finance the development of rental housing for low-income families. [HR 3221, as amended; Senate Finance Committee Press Release, 6/18/08]
- The Senate Housing Bill Establishes Minimum Standards for All Residential Mortgage Brokers and Lenders. Themeasure encourages the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators to create a Nationwide Mortgage Licensing System and Registry that would establish minimum national standards for all residential mortgage brokers and lenders in an effort to curb abusive lending practices. [Democratic Policy Committee HR 3221 Summary and Background]