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| Testifying for the proposed G.R.E.E.N. Act: (from left) Doris Koo, president and CEO, Enterprise Community Partners; Marshall Purnell, FAIA, president, American Institute of Architects; Jerry Howard, president, National Association of Homebuilders; Tom Hicks, vice president, International Programs and Leadership in Energy and Environmental Design for Neighborhood Development, U.S. Green Building Council; Alan George, executive vice president and CIO, Equity Residential; Scott Bernstein, president, Center for Neighborhood Technology. Photographer: Lloyd Wolf |
A new bill proposes to raise the bar for environmental performance in affordable housing. If passed, it would authorize new federal resources for green affordable development while providing incentives to the private sector to invest in green affordable homes.
The Green Resources for Energy Efficient Neighborhoods Act of 2008 (G.R.E.E.N. Act), introduced by Rep. Ed Perlmutter (D-Colo.), was the topic of a hearing held June 11 by the House Financial Services Committee. Testifying to both the need and benefits of such a bill, Enterprise Community Partners President and CEO Doris Koo said: “This legislation thoughtfully builds on lessons learned through the Enterprise Green Communities® initiative.”
In her testimony, Koo also underscored the linkage among housing, transportation, health and environmental challenges facing low-income families. “Affordable green development can make progress toward improving low-income families’ health and wealth while simultaneously tackling climate change by making the places where low-income people live more energy efficient and environmentally sustainable,” she said. “The federal government must act swiftly and boldly to help make energy efficiency the mainstream in affordable housing.”
News release. (PDF, 33K) | Testimony (PDF, 98K)
The House recently passed an expanded version of the Foreclosure Prevention Act of 2008, major housing legislation approved by the Senate in April. However, the Administration has issued a veto threat on the bill. And even though the bill garnered bipartisan support on the major component, it still fell short of the two-thirds majority that is needed to override a veto. Congress is expected to take further action on this important housing stimulus legislation later this month.
The House-approved measure includes three separate amendments to the bill. The centerpiece is an amendment sponsored by House Financial Services Chairman Barney Frank (Mass.). It combines several major pieces of legislation, including:
- An overhaul of regulation of Government Sponsored Enterprises (GSE)
- A modernization of the Federal Housing Administration (FHA)
- An expansion of the FHA’s loan programs aimed at helping borrowers refinance distressed mortgages
The House-passed bill would authorize the FHA to guarantee up to $300 billion in new mortgages. These new mortgages will help borrowers threatened with foreclosure refinance into new affordable fixed-rate mortgages. Although voluntary, the program requires lenders to agree to a substantial write-down of the value of the original loan in order to make it more affordable. In exchange for the FHA guarantee, homeowners must share any future appreciation of the value of the home under the new loan. According to the Congressional Budget Office, an estimated half a million borrowers will refinance under the new program – totaling nearly $2 billion from 2008 to 2013.
In an effort to relieve the tax burden on new and struggling homeowners, the House easily passed a second amendment to the housing package. This amendment, passed by a vote of 322-94, will establish a refundable tax credit of up to $7,500 for first-time homebuyers. It also includes an additional standard deduction in 2008 of up to $350 for individuals and $700 for couples for state and local property taxes. The bill authorizes a temporary increase of $10 billion in tax-exempt private activity bond authority and temporarily increases the volume cap for Low-Income Housing Tax Credits.
The Neighborhood Act of 2008 passed the House with a vote of 239-188 while the Senate passed similar legislation in April. The bill establishes a $15 billion loan and grant program for the purchase, rehabilitation and resale or (if market conditions warrant it), conversion of formerly foreclosed properties into rental housing. The Act was introduced by House Financial Services, Housing and Community Opportunity Subcommittee Chairwoman Maxine Waters (Calif.).
The funds – $7.5 billion for loans and $7.5 billion for grants – will be distributed by states based on foreclosure and sub prime delinquency rates. The loans will be non-recourse, zero-interest to finance acquisition and rehabilitation costs. All funds used for homeownership assistance are limited to families earning no more than 140 percent of area median income (AMI). All rental assistance is limited to families earning no more than AMI.
At least 50 percent of grant funds are reserved for families earning no more than 50 percent of AMI. Of those funds, at least 50 percent must go to families earning less than 30 percent of AMI.
The Administration has issued a veto threat on the Neighborhood Stabilization Act, which is awaiting further action in Congress. Visit www.saveamericasneighborhoods.org for further information on how to urge Members of Congress to include this funding in the final housing bill expected to be considered later this month.
After one postponed committee mark-up and days of negotiations, the Senate Banking, Housing and Urban Affairs Committee approved bipartisan legislation addressing the nation’s housing crisis. The bill also reforms oversight of the government-sponsored enterprises (GSE), Fannie Mae and Freddie Mac.
In early May, the House passed similar measures in a broader legislative package. The bill, as approved by the Banking Committee, expands the FHA insurance programs to guarantee up to $300 billion in loans to help distressed borrowers refinance their mortgages. Similar to the House-passed bill, the legislation will also create a new regulator for the GSEs with the authority to set capital levels and portfolio limits for the companies’ holdings.
The estimated cost of the FHA program expansion in the Senate bill will be paid for by temporarily diverting money from an affordable housing trust fund created by contributions from the GSEs. The program, though voluntary, requires the new loan amount be no more than 90 percent of the home’s appraised value and has to provide a 30-year fixed-rate mortgage. Under the compromise, 100 percent of the dollars from the Affordable Housing Fund go to the FHA program in 2009, 50 percent in 2010 and 25 percent in 2011. The program will be decoupled from the fund thereafter.
Among other important FHA modernization provisions, the legislation raises the loan limits for mortgages that FHA can insure from $362,000 to $417,000. It also reduces the minimum required down payment for an FHA loan from 3 percent to 1.5 percent. The bill will set the GSE conforming loan limit at $550,000.
Ali Solis, vice-president of Public Policy and Industry Relations for Enterprise Community Partners, Inc., participated in a symposium and a summit highlighting neighborhood stabilization last month.
The symposium, “Weathering the Storm in the Wake of Foreclosure,” examined the issues affecting neighborhoods where homeowners are facing foreclosure. Solis was part of a panel on “What Happens Next? Challenges and Opportunities for Communities with REO Properties.” The panel, moderated by Federal Deposit Insurance Corporation Director Thomas J. Curry, also included Mayor Douglas Palmer of Trenton, N.J., Jim Satterwhite, Chase Bank, and Amy Klaben of the Columbus Housing Partnership. The event was hosted by NeighborWorks America at its Training Institute in Cincinnati.
Solis also spoke at a foreclosure summit for nationwide state housing policy staff. Topics included the various pieces of legislation before Congress that aim to address the foreclosure crisis.
During the summit, Solis talked about Enterprise’s response in addressing the increasing number of real estate-owned properties in communities affected by concentrated foreclosures. She also discussed the Neighborhood Stabilization Fund as authorized by the Neighborhood Stabilization Act of 2008, which allows for the purchase, rehabilitation and sale of foreclosed properties to help return foreclosed homes to productive occupancy as quickly and as sustainably as possible.
A two-part hearing examining the need for a Neighborhood Stabilization Fund was held by the House Committee on Oversight and Government Reform, Domestic Policy Subcommittee last month.
The fund is authorized in the Neighborhood Stabilization Act, introduced by Rep. Maxine Waters (Calif.).
The first session, "Neighborhoods: The Blameless Victims of the Sub Prime Mortgage Crisis,” was led by Domestic Policy Subcommittee Chairman Dennis Kucinich (Ohio). It explored the differences between strong and weak housing markets as well as local strategies to mitigate and prevent the effects of vacant properties. Witnesses estimated foreclosures and federal legislation aimed at addressing the problem. Other subcommittee members in attendance included Reps. Diane Watson (Calif.), Brian Higgins (N.Y.), John Tierney (Mass.), Elijah Cummings (Md.) and Michael Turner (Ohio) as an honorary member of the committee.
Three panels of witnesses also spoke before the Subcommittee:
- Panel one: Daniel T. Kildee, nephew of Rep. Dale Kildee (Mich.), and treasurer, Genesee County in Michigan; and Nancy Floreen, Montgomery County Council member from Maryland.
- Panel two: Vicki Been, director, Furman Center for Real Estate and Urban Policy, New York University School of Law; Dr. Phyllis Betts, director, Center for Community Building and Neighborhood Action, School of Urban Affairs and Public Policy, University of Memphis; and John Talmage, president and CEO, Social Compact.
- Panel three: Allan Mallach, senior fellow, National Housing Institute; Doug Leeper, Code Enforcement manager, the city of Chula Vista, Calif.; and Dean Baker, co-director, Center for Economic Policy Research.
Read the full testimonies.
Part two of the hearing was held by the Domestic Policy Subcommittee and the Financial Services, Housing and Community Opportunity Subcommittee. It examined distressed neighborhoods and focused on the various kinds of data that could be used to target new federal funds authorized in the Neighborhood Stabilization Act of 2008.
The hearing was co-chaired by Domestic Policy Subcommittee Chairman Dennis Kucinich and Housing and Community Opportunity Chairwoman Maxine Waters. Other subcommittee members include Domestic Policy Committee ranking member Darrell Issa (Calif.) and Reps. Al Green (Texas), Stephen Lynch (Mass.) and Emanuel Cleaver (Mo.).
Experts testified on the limitations of available data, the most appropriate, and the bill’s proposed optimal allocation formula as called for in the bill. The committee heard from Frank Alexander, Emory University School of Law; Todd Richardson, Office of Policy Development and Research, U.S Department of Housing and Urban Development; Thomas Kingsley, Urban Institute; and Christopher Walker, Local Initiatives Support Corporation.
Read the full testimonies.
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