HUD Secretary Appears before House Appropriations T-HUD Subcommittee
On Tuesday, March 24, HUD Secretary Julian Castro appeared again before the House Appropriations Transportation, Housing, and Urban Development Subcommittee to answer questions on the Obama Administration’s budget request for housing programs in fiscal year 2016. The request for Project-Based Section 8 was not discussed, but subcommittee members did ask questions on numerous other affordable housing programs.
The Chairman of the Subcommittee, Mario Diaz-Balart (R-FL), began the hearing with questions on the request for the tenant-based Section 8 Housing Choice Vouchers (HCVs) program. He wanted to know why the Department has requested an increase for this program, and he sought clarification for the number of vouchers lost during the 2013 sequester. Secretary Castro responded that approximately 70,000 vouchers were lost as a result of the automatic, indiscriminate funding cuts brought by sequestration. These vouchers were ready to be distributed to applicants on Public Housing authority waiting lists, but the PHAs had to withdraw them due to funding cuts. The requested increase over the 2015 funding level in the president’s budget would restore about 67,000 of these vouchers, and the Departments plans to target most of these as “special purpose” vouchers to the neediest populations like seniors and homeless veterans.
Representative Mike Quigley (D-IL) asked Secretary Castro to explain more about this voucher targeting as it relates to other populations like victims of domestic violence or Native tribal groups. Secretary Castro responded that the Department is included these populations in its request; about 4,900 of these new vouchers are for victims of ongoing domestic violence for example. Later on, Chairman Balart asked about the new regulations required to better target vouchers. Secretary Castro brought up a recent HUD Notice which outlines additional guidance for vouchers under the Violence Against Women Act (VAWA); he also mentioned that additional regulations would later be implemented to set the terms for other special purpose vouchers.
Representative David Valadao (R-CA) requested information for how the HOME Investment Partnerships program and the Community Development Block Grant (CDBG) may assist rural communities. Secretary Castro responded that of the amount of CDBG funds allocated directly to states (about 30%), two-thirds of this money is directed to rural communities. For HOME, Castro did not give an exact figure for the percentage of these funds which reach rural communities, but that some state Community Housing Development Organizations are given specific set-asides for rural areas.
The Ranking Member for the Subcommittee, Representative David Price (D-NC), requested information on the request for the Section 202 and 811 programs will spur more property development for the elderly or persons with disabilities. Secretary Castro responded that $10 million of the $455 million requested for Section 202 will support a demonstration program aiming to develop and rehabilitate properties for elderly communities. For 811, the requested increase in the president’s budget would assist in the development of 700 new units for persons with disabilities. Castro also highlighted that these increases could contribute to decreases in medical spending.
To view a webcast of this hearing, please click here
Senate and House Pass Budgets for FY 2016
Early today, the Senate passed S.Con.Res.11, a concurrent budget resolution which sets forth the congressional budget for fiscal year 2016 and the budgetary levels for fiscal years 2017 through 2025. This budget was introduced by Senate Budget Committee Chairman Mike Enzi (R-WY) earlier this month and passed the Senate 52-46 on strict party lines with all Democrats voting against it. Beginning on Thursday, March 26, and continuing into Friday morning, the Senate held an extensive voting session for the hundreds of amendments proposed for the budget. There was a wide variety of amendments, but none involved affordable housing priorities.
The budget passed by the Senate aims to slash spending on non-defense discretionary programs and estimates it will produce a $3 billion surplus by 2025. However, compared to the President’s budget request to Congress, there are no specific program spending requests in this Senate budget. Instead it serves as resource for the Appropriations Committee to know how much money may be allocated to various departments. It also serves as a political document which outlines the fiscal priorities for the Senate with its new Republican leadership.
The House of Representatives also passed its budget for FY 2016, H.Con.Res.27, on Wednesday, March 25. This budget also plans to sharply reduce federal spending on non-defense discretionary programs throughout the coming decade. It proposes $5.5 trillion in spending reductions over the next 10 years – an amount higher than any previous House Budget Committee proposal. The passing votes were also evenly split 228 to 199 with all Democrats voting against the bill.
Soon the House and Senate Budget Committees will convene to pass a compiled budget resolution for all of Congress in FY 2016. This final budget will undoubtedly have extreme cuts to non-defense discretionary programs. Again, this budget will not become law, but members of the Senate and House appropriations committee will have a significant challenge in funding federal programs under the tight caps proposed by this budget.
Delaney Reintroduces Housing Finance Reform Bill
On Thursday, March 19, Representative John Delaney (D-MD) reintroduced his housing finance reform legislation, the Partnership to Strengthen Homeownership Act of 2015 (H.R. 1491). Representative Delaney first introduced this bill in the 113th Congress, but it was not enacted.
The Partnership to Strengthen Homeownership Act seeks a comprehensive reform of both the single and multifamily housing finance industry. It would wind down the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac and allow them to be sold and recapitalized. However, the bill does not completely eliminate the federal government’s role in housing finance.
For multifamily housing, Ginnie Mae (a wholly owned government corporation within HUD designed to expand affordable housing finance) will be required to create and implement a workable multifamily guarantee that utilizes private sector pricing consistent with the single family model. The current multifamily businesses of Fannie and Freddie will continue to function within the new multifamily housing market as purely private organizations with an explicit government guarantee provided by Ginnie Mae and a private sector reinsurer.
Similar to other housing finance reform bills, Delaney’s legislation will implement a fee for the insurance that is provided for these government securities. The fees charged will range 10 basis points of the total principal balance of these mortgages and they will be allocated to strengthening affordable housing programs facilitated by the federal government. The funds received will be allocated to the Housing Trust Fund (75%), the Capital Management Fund (15%) and the Market Access Fund (10%).
The Partnership to Strengthen Homeownership Act of 2015 currently has 10 cosponsors and has been referred to the House Financial Services Committee. At this time, NAHMA does not anticipate any action by the House on this bill. Major reforms to the U.S. housing finance market stalled in the 113th Congress and the chair of the committee, Jeb Hensarling (R-TX) has yet to unveil his plans to reform the U.S. housing finance market. Still NAHMA will monitor the progress of this and other housing finance reform bills in the 114th Congress as they are released.
To read a press release from Representative Delaney’s office regarding this bill, please click here
New Acting Commissioner of the FHA
On Thursday, March 26, HUD announced that Biniam Gebre, the Acting Commissioner of the Federal Housing Administration (FHA) will leave his position with FHA on April 7, 2015. Ed Golding will replace Gebre as head of FHA.
Ed Golding currently serves as a senior advisor in HUD’s Office of Policy Development and Research. According to HUD, he has been deeply involved in the Obama Administration’s housing finance reform policy development process and formerly worked at Freddie Mac for 23 years. Golding will initially lead FHA and the Office of Housing as Principal Deputy Assistant Secretary. The Administration has not announced whether the President will formally nominate Golding to serve as FHA Commissioner and Assistant Secretary.
According to HUD’s Office of Multifamily Housing staff, Golding has been an excellent advocate for multifamily housing, and has reiterated to Congress that the multifamily portfolio has a substantially lower mortgage default rate as compared to the single-family portfolio.
NAHMA will alert members if Golding receives a full nomination for the FHA Commissioner position.