The drive to reform the Sec. 8 voucher program got a boost with the introduction of a bipartisan bill (H.R. 5443) backed by key House of Representatives legislators.
The bill was sponsored by Reps. Robert W. Ney (R-Ohio) and Maxine Waters (D-Calif.), chairman and ranking member on the housing subcommittee, respectively; Barney Frank (D-Mass.), ranking member on the parent Financial Services Committee; and Christopher Shays (R-Conn.), a housing subcommittee member.
Despite the heavyweight backing, it is still unclear whether voucher reform can be passed in the short time left for the 109th Congress.
The bipartisan bill is substantially different from the flexible voucher proposal put forward by the Bush administration, which has been met with indifference at best and hostility at worst and seems to be going nowhere.
While the administration proposal would radically change the voucher program, allowing public housing authorities (PHAs) to set their own subsidy and rent rules, the bipartisan measure would retain the basic structure of the current program.
The key provisions in the Ney-Waters bill would simplify the rent and income requirements for Sec. 8 and public housing. Current law sets the tenant rent payment at the higher of 30 percent of adjusted income, 10 percent of gross income, or the housing portion of any welfare payment, and the bill would modify that by dropping the gross income provision.
The bill would also simplify the determinations of income and adjusted income, replacing the current exclusions used to calculate adjusted income with deductions of $750 for any elderly or disabled family member and $500 for each dependent household member.
Family income would generally have to be reviewed annually, though a review could also be conducted when income changed by $1,500 or more. However, families who certify that at least 90 percent of their income comes from fixed-income sources, such as Social Security payments or supplemental security income, would only have to be reviewed every three years.
PHAs could generally use prior-year figures in determining family income, although they would subtract 10 percent from the earned-income component when adding together all the pieces that make up a family’s total income. The earned-income reduction would not apply in determining eligibility for assisted housing or for calculating the income mix in public housing.
Also, a safe harbor provision would allow a PHA, instead of crunching the numbers itself, to use a recent income determination made by another means-tested assistance program.
The bill would also modify the income-targeting provision in the tenant-based voucher program. Currently, at least 75 percent of the assistance must go to families with incomes no higher than 30 percent of area median. The bill would change the income limit for this provision to the higher of the poverty line or 30 percent of area median.
The legislation would also codify as part of Sec. 8 the mechanism for allocating voucher renewal funding, which is currently set in each year’s appropriations act. Each PHA’s allocation would be based on prior-year leasing and costs, as adjusted by an annual adjustment factor to be established by the Department of Housing and Urban Development (HUD), any adjustments necessary to provide for the first-time renewal of tenant protection and other special-needs vouchers, and any other adjustments HUD considers appropriate.
House subcommittee approves rural housing preservation bill
The housing subcommittee of the House of Representatives has approved legislation (H.R. 5039) to preserve and revitalize the aging Sec. 515 rural rental housing inventory, while giving some owners who want out of the program the unrestricted right to prepay their mortgages.
The bill provides for debt restructuring and financial incentives to encourage owners to extend the low-income use of Sec. 515 projects where such an extension can be financially viable.
Owners who still want to leave the program would be allowed to prepay their mortgages if they were obtained before Dec. 15, 1989, when prepayments were banned.
Tenants in prepaid or foreclosed projects would be eligible for voucher assistance. Under the original bill, a tenant would have had to be a project resident on the date of prepayment to be eligible for a voucher. When tenant advocates objected that this restriction could penalize tenants who move out because they know a loan will be prepaid, the subcommittee amended the bill to extend voucher eligibility to those who are residents on the date when notice of prepayment is given.
The subcommittee also changed the required timing of the tenant notification to 90 days before prepayment, rather than 90 days before any action is taken to prepay, as provided in the original bill. Owners had complained that the original language was ambiguous.
In a related development, the House has passed the fiscal 2007 agriculture appropriations bill (H.R. 5384), which includes funding for rural housing programs. The bill provides $100 million for Sec. 515; $100 million for Sec. 538 guaranteed multifamily loans; $335.4 million for rural rental assistance, with the contract term reduced to one year; $1.237 billion for Sec. 502 direct home loans; and $3.564 billion for Sec. 502 guaranteed loans.
Fannie Mae, regulators settle dispute over accounting issues
Fannie Mae has reached a settlement of its accounting problems with the Office of Federal Housing Enterprise Oversight (OFHEO) and the Securities and Exchange Commission, agreeing to pay $400 million in civil penalties and accept limits on its mortgage portfolio.
“We are pleased that we have been able to reach a comprehensive agreement and bring these matters to a conclusion,” said Fannie Mae Board Chairman Stephen B. Ashley. “This important step today builds on some of the changes and progress we have made over the past 18 months to rebuild the company and restore the confidence of our shareholders and stakeholders.”
As part of the settlements, Fannie Mae neither admitted nor denied any wrongdoing.
Under the agreement with OFHEO, Fannie Mae will limit its portfolio of mortgage assets to the Dec. 31, 2005, level, except as provided in a plan to be submitted to OFHEO and subject to its approval. The plan could allow for a moderate annual increase in the portfolio for reasons of liquidity, meeting housing goals, maintaining portfolio flexibility, and competitive considerations.
Fannie Mae is also required to undertake a comprehensive reform of its corporate governance and control mechanisms, including its accounting procedures.
“The penalty and settlements represent a major step in correcting a dangerous course that had been followed by one of the largest financial institutions in the world,” said acting OFHEO Director James B. Lockhart. “Unprincipled corporate behavior and inadequate controls will simply not be tolerated.”
House committee approves FHA reform measure, other housing bills
The House Financial Services Committee has approved a bill (H.R. 5121) to reform the Federal Housing Administration (FHA) single-family mortgage programs in an effort to provide more flexibility and promote homeownership.
The committee also reported out three other housing bills, including a measure exempting persons with disabilities from the prohibition on Sec. 8 assistance to college students (H.R. 5117), a reauthorization of the HOPE VI public housing revitalization program through fiscal 2011 (H.R. 5347), and a pilot zero-downpayment program for FHA loans for first-time home buyers (H.R. 3043).
The broader FHA reform measure would allow risk-based pricing of mortgage insurance, with premiums based on such factors as loan-to-value ratio, debt-to-income ratio, and historical experience with similar borrowers.
The bill would also provide more flexibility in downpayments by eliminating the current 3 percent cash requirement, and it would eliminate the $250,000-loan cap on home equity conversion mortgages.
In addition, the bill would raise the basic FHA one-family mortgage limit from 95 percent to 100 percent of the area median sales price, with the floor and ceiling limits increased from 48 percent and 87 percent of the Freddie Mac limit to 65 percent and 100 percent. The two-, three-, and four-family loan limits would be based on the ratio of the comparable Freddie Mac limit to the Freddie Mac one-family limit.
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.
