Responding to concerns about continuing housing problems in the hurricane-ravaged areas of the Gulf Coast, the Bush administration agreed to extend disaster housing assistance for an additional 18 months.
Aid was set to terminate at the end of August, but it will now continue until March 1, 2009.
The extension applies to the rental housing assistance and travel trailer/mobile home programs currently being operated by the Federal Emergency Management Agency (FEMA). FEMA and the Department of Housing and Urban Development (HUD) are working on an agreement to transfer operational responsibility for the rental assistance program to HUD, with local Public Housing Authorities (PHAs) administering the program, while FEMA will continue to run the travel trailer/mobile home program. “The overwhelming scale of this human tragedy has meant that families have been displaced for an unprecedented period of time. Such a reality calls for an unprecedented, compassionate response,” said HUD Secretary Alphonso Jackson. “As disaster housing needs continue and move into a longer-term program, HUD is working to ensure the affected families will continue to get the housing assistance they need as well as the individual services that will help them rebuild their lives.”
Under the revised disaster housing assistance program (DHAP), FEMA will provide resources to HUD to extend rental assistance to up to 40,000 families now living in FEMA-provided units. FEMA plans to provide HUD with a list of currently assisted families by Sept. 1.
While FEMA pays the full cost of rental units, the assistance will be phased out after HUD takes over the program. Under the plan, assisted families will be required to pay $50 toward their monthly rent in March 2008, with the payments increasing over the remaining term of assistance until the families are able to cover their full housing costs.
FEMA will also phase in tenant payments for the trailer/mobile home program, beginning next March. To the extent permitted by law, seniors and the disabled will continue to receive full rental subsidies throughout the 18-month extension of assistance.
FEMA also is setting up a process to enable hurricane victims living in travel trailers and mobile homes to purchase their units at a reduced cost. The price will be based on the type of unit, whether it was new or used when the family occupied it, and the duration of occupancy. Purchasers may have to pay for other costs, including any permit fees, hazard and flood insurance, and any expenses incurred in moving the unit.
Modernizing the FHA
The House Financial Services Committee approved a bill to modernize the Federal Housing Administration (FHA) that focuses on expanding FHA financing for home buyers, but also includes multifamily and affordable housing provisions.
The key elements of the bill would increase home mortgage limits and give FHA authority to set downpayment requirements and mortgage insurance premiums.
The bill would raise the basic FHA home mortgage limit from 95 percent to 100 percent of the area median house price, while raising the minimum limit from 48 percent to 65 percent of the Freddie Mac conforming loan limit and the maximum limit from 87 percent to 100 percent of the Freddie Mac limit.
FHA could insure no-down-payment loans, and it also would be able to establish risk-based mortgage insurance premiums, with higher-risk borrowers paying higher premiums until they establish a good payment record. Premiums could be reduced after three years of timely mortgage payments, and they would have to be reduced after five years.
If the changes boosted revenue or cut expenses for the FHA insurance fund, the extra money would go first to increasing annual housing counseling funding to $100 million and then to an affordable housing fund, unless it was needed to offset the costs of the Sec. 203(b) program.
The fund would be used for grants to provide affordable rental housing and homeownership opportunities to low-income families.
The bill also would increase FHA multifamily mortgage limits in high-cost areas—a longtime concern of committee chairman Barney Frank (D-Mass.). The maximum area-wide high-cost adjustment would be raised from 140 percent to 170 percent of the basic mortgage limit, and the maximum project-by-project increase would be raised from 170 percent to 215 percent.
In a related development, HUD announced the calendar 2007 basic FHA multifamily mortgage limits, which are adjusted annually for inflation.
The mortgage limits have been increased about 3.5 percent from 2006. For example, the two-bedroom Sec. 221(d)(4) limit for a non-elevator project has been raised to $58,186 from $56,192.
Sec. 8 voucher reform on horizon
House housing subcommittee chairwoman Maxine Waters (D-Calif.) introduced a Sec. 8 voucher reform bill (H.R. 1851) that would simplify income determinations, modify income targeting requirements, and revise voucher renewal funding allocations and inspection requirements.
Income would be defined as income received from all sources by household members 18 or over, including recurring gifts and receipts, actual income from assets, and profit or loss from a business. There would be no imputed return on assets, and earned income of students would be excluded. HUD could also establish other exclusions.
In determining adjusted income, income would be reduced by $725 for a family with an elderly or disabled member, and $500 for each dependent. Unreimbursed health and medical expenses in excess of 10 percent of income and any other deductions established by PHA would also be subtracted.
Family income would generally be reviewed annually, but families on fixed incomes would only have to be reviewed every three years. They could self-certify their incomes in other years. Fixed income includes Social Security payments, supplemental security income (SSI), income from pension plans, and other periodic payments.
In determining family income, a PHA or project owner could generally use the prior-year income, taking into account any increase in adjusted income of $1,500 (excluding earned income) or, at the family’s request, any reduction of $1,500.
The amount of earned income to be included in income would be the prior-year amount minus either 10 percent of the lesser of that amount or $10,000.
Housing assistance could not be provided to any family with net assets exceeding $100,000 or an ownership interest in housing suitable for occupancy. The latter restriction wouldn’t apply to victims of domestic violence, owners making a good-faith effort to sell their property, or property for which a family is already receiving assistance.
The current requirements to target voucher and public housing assistance to families with incomes not exceeding 30 percent of the area median income (AMI) would be revised to apply to incomes which don’t exceed the higher of the poverty limit or 30 percent of the AMI. This change wouldn’t apply to Puerto Rico or other U.S. territories or possessions.
The bill would allocate voucher renewal funding to PHAs based on leasing and costs from the previous calendar year, as adjusted by an annual adjustment factor to be established by HUD, any adjustments needed to provide for the first-time renewal of tenant protection and HOPE VI vouchers, and any other adjustments determined appropriate by HUD.
HUD would recapture from PHAs at the end of each calendar year unused funds in excess of one-twelfth of the allocation for 2007 and 2 percent of the allocation for 2008 through 2011. Recaptured funds would be used to reimburse PHAs for the increased costs of portability and family self-sufficiency activities, and any remaining amounts would be reallocated.
Under the revised inspection provisions, voucher assistance could be provided for a unit that initially fails to meet housing quality standards, provided that the failure is due solely to non-life-threatening conditions. Assistance would be suspended if the problems aren’t corrected within 30 days.
Also, assisted units would only have to be inspected for continuing compliance with the quality standards every two years, rather than annually.
Barry G. Jacobs is editor of Housing and Development Reporter, the nation’s premier source for in-depth, factual coverage of all aspects of affordable housing and community development. The two-part publication includes informed reports and insightful analyses in “HDR Current Developments,” and an always up-to-date compilation of essential documents in the “HDR Reference Files.” Jacobs is also the author of the annually updated HDR Handbook of Housing and Development Law. For more information, call (800) 723-8077.