Housing-related issues continue to be Congressional focus.  Two of the most important and visible issues are the prevalence of sub-prime loans and growing mortgage default and foreclosure rates.

The Housing and Economic Recovery Act of 2008 was passed by Congress and signed into law.  The law provides the Federal Housing Administration (FHA) the authority to insure an additional $300 billion in mortgage loans.  This allows borrows at risk of foreclosure to refinance into more manageable loans.  Problems in the sub-prime mortgage markets have helped push the housing market into its worst slump in 17 years

This program is called HOPE for Homeowners. The new law also appropriates $4 billion to the Community Development Block Grant (CDBG) program to be allocated to states and localities for the purchase, rehabilitation, resale or rental of foreclosed properties.

The law also establishes a new regulator for Fannie Mae and Freddie Mac and gives the Treasury Department temporary authority to purchase an unlimited amount of debt or stock in Fannie Mae and Freddie Mac.  In addition, the law increased the maximum loan amount that FHA can insure and prohibited certain seller-financed down payment assistance programs.

 Another important provision created an affordable housing trust fund that will be financed by profits from Fannie Mae and Freddie Mac.  In the initial years after enactment, a declining portion of GSE profits will support the HOPE for Homeowners Program, with the remainder supporting the housing trust fund.  The trust fund contains two separate funds: (1) the Housing Trust Fund, the primary purpose of which is to increase housing opportunities for extremely low- and very low-income renters and (2) the Capital Magnet Fund, which promotes affordable housing and economic development.

While the House approved a bipartisan Section 8 voucher reform bill in the last Congress, the Senate failed to take up the bill.  This important bill would change the way income is calculated for the purposes of eligibility and rent-setting and adopt a new method for allocating voucher funds, among other changes.  Other provisions included expanding the “Moving to Work” program and authorization of up to 20,000 new incremental vouchers in each of the next five years.   These changes are needed to ensure the program works effectively for the nation’s low-income working families.

There is still a great deal of work needed to strengthen the housing market, expand affordable mortgage loan opportunities for families at risk of foreclosure and to provide consumer protections against risky loans in the future.