Posted by:
Steve Dubb
Affordable housing bill passes House
As an Associated Press wire report indictates, HR 1427, the Federal Housing Finance Reform Act of 2007, passed a floor vote by a margin of 313-104 in the House of Representatives last week. The bill would provide for stricter federal supervision of Fannie Mae and Freddie Mac, the two government-sponsored companies, which together finance or guarantee more than three-quarters of U.S. home mortgages. The legislation also would create a housing aid fund—worth as much as $3 billion over five years—to be financed by profits generated from those two companies.
As the National Low Income Housing Coalition notes, this bill marks the fourth Congress in which a bill to create a National Low Income Housing Trust Fund has been introduced. Nationwide, 600 state and local housing trust funds currently generate $1.6 billion a year for affordable housing. Passage by the House of federal support gives the federal legislation perhaps its best chance of passage ever.
Nonetheless, the bill still has to pass the Senate and get signed by President Bush (or get passed over his veto). And noises of resistance from Republican opponents have not been slow to emerge. As the AP Wire report indicates, Republicans are claiming that, “Diverting company profits to the housing fund would impose a ‘mortgage tax’ on every home loan financed by Fannie Mae and Freddie Mac, thereby making middle-class homeowners pay for the fund.”
OK: for argument’s sake, let’s assume that 100% of the incidence of the fee goes straight to the middle class home purchasers and do the math. About 6-7 million homes sell a year, of which over three-quarters are financed or guaranteed by Freddie Mae or Fannie Mae. So this works out to slightly over $100 a home. On a median priced home of just over $215,000, that would amount to a “tax” of 0.05% (one twentieth of one percentage point). Somehow, it seems doubtful that funding a national affordable housing trust fund in this way will impede middle class Americans from buying homes.