Order Code RL33879
Housing Issues in the 110th Congress
Updated March 16, 2007
Maggie McCarty, Libby Perl, and Bruce E. Foote
Domestic Social Policy Division
Eugene Boyd, Pamela J. Jackson,
Edward Vincent Murphy, and N. Eric Weiss
Government and Finance Division
Meredith Peterson
Knowledge Services Group

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Housing Issues in the 110th Congress
Summary
Two overarching issues can be expected to frame the housing debate in the 110th
Congress. The first is the current budget environment, within which Congress and
the Administration have attempted to reduce discretionary spending in recent years.
The President’s budget request for FY2008 proposes to hold the growth in non-
defense discretionary spending to 1%, less than the rate of inflation. However, the
new Congress, controlled by Democrats, might not be as likely as previous
Congresses to use the President’s budget as a starting point in crafting its own
budget. The second overarching issue is housing affordability for both homeowners
and renters. The new Democratic majority has expressed an intention to address
issues of affordable housing in the 110th Congress.
The 110th Congress can be expected to both carry forward housing legislation
considered in the 109th Congress and to introduce new initiatives. On February 6,
2007, the House Financial Services Committee held a hearing to discuss federal
housing efforts in response to Hurricane Katrina. On March 7, the committee
approved the Gulf Coast Hurricane Housing Recovery Act of 2007 (H.R. 1227).
Another agenda item the 110th Congress could address is the government-
sponsored enterprises — Fannie Mae and Freddie Mac — and Federal Home Loan
Banks (GSEs and FHLBs). On March 9, 2007, the Chairman of the House Financial
Services Committee introduced H.R. 1427, the Federal Housing Finance Reform Act
of 2007. It would create a new regulator for the GSEs, and, similar to legislation
considered in the 109th Congress, it would use profits from the GSEs to create an
affordable housing fund. Another issue that was considered in the 109th Congress
and can be expected to arise in the 110th Congress is potential revisions to the Federal
Housing Administration (FHA) loan insurance program.
Based on statements of Members and issues raised in the 109th Congress, a
number of programs within the area of assisted housing will likely receive attention
in the 110th Congress. Congress could consider Section 8 voucher changes, as well
as the implementation of the new public housing operating fund rule, both of which
arose in the 109th Congress. Another potential issue could be the preservation of
existing affordable housing, which involves efforts to ensure that assisted properties
funded through HUD and the Low Income Housing Tax Credit (LIHTC) program
remain available to low-income households after their initial commitments end. The
109th Congress considered legislation to reauthorize the Mark-to-Market program (a
preservation tool); two bills (S. 131 and H.R. 647) have been introduced in the 110th
Congress that would reauthorize the program.
Additional issues that the 110th Congress may consider include the ability of
assisted housing developers to combine the LIHTC program with HUD programs to
create affordable housing, new initiatives to help the homeless, and efforts to curb
certain subprime lending practices, sometimes characterized as predatory lending.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Overarching Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Budget Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Housing Affordability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Factors Affecting Homeownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Factors Affecting Rent Burdens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Housing After the 2005 Hurricanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Rebuilding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Ongoing Housing Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Housing Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
GSE Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Fannie Mae, Freddie Mac,
and Federal Home Loan Bank Regulation . . . . . . . . . . . . . . . . . . 10
Affordable Housing Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
FHA Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Predatory Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Housing Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Federally Assisted Housing Funding and Reform . . . . . . . . . . . . . . . . . . . 14
Section 8 Voucher Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Public Housing Operating Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
HOPE VI Reauthorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Assisted Housing Preservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Previous Legislative Efforts to Preserve Affordable Housing . . . . . . . 18
Mark-to-Market Reauthorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Additional Preservation Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Housing Tax Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Low-Income Housing Tax Credit Modifications . . . . . . . . . . . . . . . . . 19
Single-Family Housing Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
The LIHTC and HUD Assisted Housing Programs . . . . . . . . . . . . . . . 20
Homelessness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
CRS Reports on Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

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Key Policy Staff
CRS
Name
Area of Expertise
Division
Telephone and E-Mail
Eugene Boyd
Community and
economic development,
including Community
7-8689
G&F
Development Block
eboyd@crs.loc.gov
Grants, Brownfields,
empowerment zones
Bruce E. Foote
Homeownership,
including FHA,
7-7805
DSP
predatory lending, rural
bfoote@crs.loc.gov
housing, RESPA
Kamilah M. Holder
Fair Housing and
7-9496
housing-related legal
ALD
kholder@crs.loc.gov
questions
Pamela Jackson
Housing tax policy,
including the Low-
Income Housing Tax
7-3967
Credit and other
G&F
pjackson@crs.loc.gov
incentives for rental
housing and owner-
occupied housing
Maggie McCarty
Assisted rental housing,
including Section 8,
7-2163
DSP
public and assisted
mmccarty@crs.loc.gov
housing, HOME
Edward Vincent
Non-traditional
Murphy
mortgages, including
7-4972
lending oversight by
G&F
tmurphy@crs.loc.gov
the OCC, OTS, FDIC,
and Federal Reserve
Libby Perl
Housing for special
populations, including
7-7806
DSP
the elderly, disabled,
eperl@crs.loc.gov
homeless, HOPWA
N. Eric Weiss
Fannie Mae, Freddie
Mac, and Federal
7-6209
G&F
Home Loan Banks,
eweiss@crs.loc.gov
SBA disaster loans
Division abbreviations:
! ALD — American Law
! DSP — Domestic Social Policy
! G&F — Government and Finance

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Housing Issues in the 110th Congress
Introduction
The 110th Congress, like its recent predecessors, will likely contend with two
overarching issues regarding housing: a budget environment in which discretionary
spending will likely be limited and concerns about affordable housing. Within the
framework of these overarching issues, proposals likely to be addressed in the 110th
Congress include housing in the Gulf Coast region in the wake of the 2005
hurricanes, the creation of a stronger regulator for Fannie Mae and Freddie Mac, the
creation of an affordable housing fund, revisions to the Federal Housing
Administration (FHA) loan insurance program, Section 8 voucher reform, oversight
of the public housing operating fund, preservation of existing assisted housing, and
new Low Income Housing Tax Credit (LIHTC) initiatives. (See the end of this report
for a listing of CRS reports related to housing.)
Overarching Issues
Budget Environment
Both the Administration and Members of Congress have shown increasing
concern about the size of the federal budget deficit and have sought ways to reduce
it. In his FY2008 budget, the President has proposed to hold the growth in non-
defense discretionary spending to 1% in the coming year, and to keep discretionary
spending below the rate of inflation for the next five years.1 The majority of the
budget for the Department of Housing and Urban Development (HUD), the agency
primarily responsible for housing, is discretionary funding, and the President has
requested large cuts for several programs in FY2008, including Housing for the
Elderly and Disabled and the Community Development Block Grant. However, the
new Congress, controlled by Democrats, unlike previous Congresses, might be less
willing to use the President’s budget as a starting point in crafting its own budget.2
Efforts to contain discretionary spending have also increased internal pressures
in the HUD budget. The cost of the Section 8 voucher program is partially pegged
to housing costs, which have risen faster than inflation in recent years. As a result,
the voucher program generally requires increased funding to serve the same number
1 Overview of the President’s 2008 Budget, p. 5, available at [http://www.whitehouse.gov/
omb/budget/fy2008/pdf/budget/overview.pdf].
2 See, for example, Statement of Representative John Spratt, Chairman of the House Budget
Committee, February 5, 2007, available at [http://budget.house.gov/news/08_budget_
statement.htm].

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of people. Since HUD’s overall budget has been constrained, any increases in
funding for the voucher program have come at the expense of other programs.
Another internal HUD budget pressure involves the contribution of the FHA
insurance program. FHA collects fees from participants, and excess fees are used by
Congress to offset the cost of the HUD budget. FHA’s market share has been
dropping in recent years, and as a result, the amount of excess fees has been
declining. With fewer fees to offset the cost of the HUD budget, the President and
Congress have had to find additional dollars to keep the overall budget at the same
level.
Housing Affordability
Even as Congress faces pressure to reduce discretionary spending, the Chairman
of the House Financial Services Committee, the committee responsible for housing,
has expressed an intention to take up affordable housing legislation in the 110th
Congress.3 The U.S. Housing Act of 1949 (P.L. 81-171) established a national goal
of “a decent home and a suitable living environment for every American family.” In
the time since the enactment of P.L. 81-171, progress toward this goal is incomplete.
The bi-partisan, congressionally-mandated Millennial Housing Commission’s 2002
final report identified “affordability”4 as “the single greatest housing challenge facing
the nation.” The Harvard Joint Center for Housing Studies found that between 2001
and 2004, the number of households paying more than 30% of their income toward
housing increased from 31.3 million to 35.0 million (an increase from 29.4% of all
households to 31.8%).5 Affordability is a concern for both owners and renters,
although different factors affect the two groups.
Factors Affecting Homeownership. The state of the housing market has
affected both affordability and rates of homeownership. Starting in 2000, the
housing market boomed, leading to speculation that there was a housing “bubble.”6
Lower interest rates and improved financing options increased demand for home
purchases and contributed to rising prices. Median house prices rose from under
$150,000 to over $180,000 between the summer of 2000 and the summer of 2003.
House prices began rising so rapidly in some regions of the country that affordability
declined significantly despite lower financing costs. Overall, though, due to falling
mortgage interest rates from 8% to under 6% during the same period,7 housing
affordability improved slightly according to the Housing Affordability Index (HAI),
3 Remarks of Representative Barney Frank at the Office of Thrift Supervision Housing
Forum, National Press Club, December 11, 2006, pp. 65-72, transcript available at
[http://www.ots.treas.gov/docs/4/48982.pdf].
4 Housing is generally considered affordable if it costs no more than 30% of a family’s
income.
5 Joint Center for Housing Studies of Harvard University, The State of the Nation’s Housing,
2006, pp. 25, 39, available at [http://www.jchs.harvard.edu/publications/markets/son2006/
son2006.pdf].
6 For a discussion of the question of a housing bubble, see CRS Report RL31918, U.S.
Housing Prices: Is There a Bubble?, by Marc Labonte.
7 Source: Federal Reserve release for conventional 30-year mortgage.

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CRS-3
a measure of the ability of a family with median earnings to qualify to purchase a
median-priced house under current market conditions.8
Beginning in 2006, however, the housing market turned. Although still low by
historical standards, mortgage rates rose back above 6%. Growth in housing prices
slowed across the country and declined outright in some formerly booming areas.
The slowing market resulted in improved affordability as measured by the HAI
during the second half of the year as median prices began falling and mortgage rates
dipped back closer to 6%.
Perhaps due to the earlier housing boom, homeownership rates reached record
highs by 2004 and 2005. In 2005, the rate for all homeowners was just below its
previous high in 2004, slipping from 69.0% to 68.9%.9 Homeownership rates among
minorities, which have consistently lagged behind rates for whites, increased from
43.7% to 53.1% between 1995 and 2005. During the same period, the percentage of
white homeowners increased from 70.9% to 75.8%. Despite this positive news, fears
about the health of the housing market and the sustainability of recent
homeownership gains are growing.
Delinquency rates and foreclosure rates are increasing nationwide despite
improved affordability (as measured by the HAI).10 One possible reason for these
rates to rise even in areas with relatively low unemployment and improving
affordability is alternative mortgage products and subprime loans. Alternative
mortgage products include features such as adjustable rates (in which interest rates
are reset at various times), extremely low down payments, negative amortization,
and/or optional monthly payments. While subprime loans might have the same
features as alternative mortgage products, they are typically made to borrowers with
poor or no credit history and at higher interest rates. The growth of the subprime
market has allowed borrowers with impaired credit or no credit history more
opportunities to apply for loans. Similarly, the increased use of alternative mortgage
products has expanded opportunities for homeownership and allowed home buyers
to purchase larger houses than they might otherwise have been able to afford.11
8 Source: National Association of Realtors Housing Affordability Index (HAI). Note,
although the HAI incorporates current median home prices, current interest rates, and
current household income, it does not incorporate inflation so it is used as a measure of the
current ability of buyers to qualify for a home purchase, not as a measure of the full long
term cost of financing the home.
9 State of the Nation’s Housing 2006, p. 35, Table A-5.
10 Source RealtyTrac, as reported in Les Christie, “Foreclosure Rates up Big in December,”
CNN Money, January 17, 2007.
11 Naomi Cytron and Laura Lanzerotti, “Homeownership at High Cost: Recent Trends in the
Mortgage Lending Industry,” Federal Reserve Bank of San Francisco, Community
Investments Newsletter 18, no. 2, December 2006, p. 5, available at [http://www.frbsf.org/
publications/community/investments/0612/cytron_homeownership.pdf].

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CRS-4
Increased delinquency and foreclosure rates could be due to rising interest rates as the
reset periods of these mortgage products take effect.12
Factors Affecting Rent Burdens. In 2004, 8.4 million renter households
were severely cost burdened (paying more than 50% of their income toward housing),
an increase of over one million from 2001 (and an increase from 13.0% of all
households to 14.3%).13 While moderate-income renters were not immune from
severe rent burdens, low-income renters faced the greatest burdens; over 86% of
severely cost burdened renters were in the bottom quintile of the income distribution.
When low-income families pay such a large portion of their incomes for housing,
they have little left to meet their other needs, let alone establish savings or build
assets. The problem of severe rent burdens appears to be growing as the supply of
low-cost rental units continues to dwindle. The Joint Center for Housing Studies’
report attributes the growing affordability problem to two principal factors: land use
regulations that drive up the price of housing and the growth of low wage jobs.14 The
report notes that solving the problem will be difficult and will require the cooperation
of government, business, and non-profits. However, the federal government’s role
in addressing what HUD has termed “worst-case housing needs” — those earning
less than half the area median income and paying more than half their income for
housing — is increasingly in question as deficits grow and pressure to restrain
domestic spending mounts.
Housing After the 2005 Hurricanes
Hurricanes Katrina, Rita, and Wilma, which struck Gulf Coast states in the fall
of 2005, had an enormous effect on the housing stock in that region. Studies estimate
that the hurricanes and their related flooding damaged 1.2 million housing units in
Louisiana, Mississippi, Florida, Texas, and Alabama.
! Of the 1.2 million damaged housing units, over 305,000 were
severely damaged.15 Severe damage includes real or personal
property loss above certain dollar thresholds.16
! Louisiana, specifically New Orleans, had the highest percentage of
severely damaged units; approximately 67%, or 204,737 renter- and
12 See CRS Report RL33775, Alternative Mortgages: Risks to Consumers and Lenders in
the Current Housing Cycle, by Edward Vincent Murphy.
13 State of the Nation’s Housing 2006, p. 36, Table A-6.
14 Ibid., p. 25.
15 CRS analysis of data found in U.S. Department of Housing and Urban Development,
Office of Policy Development and Research, Current Housing Unit Damage Estimates:
Hurricanes Katrina, Rita, and Wilma, February 12, 2006, available at [http://www.huduser.
org/Publications/pdf/GulfCoast_HsngDmgEst.pdf].
16 For a detailed breakdown of damage that qualifies as severe, see ibid., pp. 4-5.

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CRS-5
owner-occupied homes with severe damage were located in
Louisiana.17
! Of the 305,000 severely damaged units in all five affected states,
most were owner occupied — about 63% or 193,000 homes.18
! More than half of the 193,000 severely damaged, owner-occupied
units lacked flood insurance (55%) and about a quarter of them
lacked any insurance (23%).19
! Approximately 112,000 rental units in the five affected states were
severely damaged.20
! Of the 112,000 severely damaged rental units, 13%, or
approximately 14,500 units, were HUD subsidized.
On February 6, 2007, the House Financial Services Committee held a hearing
to discuss federal housing efforts in response to the 2005 hurricanes. Much of the
discussion at that hearing focused on the slow pace of rebuilding, as well as the
future of the damaged federally-assisted housing stock. On March 7, 2007, the
Committee approved the Gulf Coast Hurricane Housing Recovery Act of 2007 (H.R.
1227). (For more information, see the “Legislation” section below.)
Rebuilding
Although private insurance will pay some of the cost of rebuilding housing in
the affected states, federal funds are part of the effort as well. Thus far, the federal
response includes $15.3 billion paid out under the National Flood Insurance Program;
$10.4 billion in Small Business Administration (SBA) disaster loans; $6 billion from
the Federal Emergency Management Agency (FEMA) in the Individuals and
Households Assistance Program; $4.8 billion in reimbursements to Alabama,
Louisiana, and Mississippi for activities such as debris removal; and nearly $975
million approved in Community Disaster Loans. FEMA has also approved housing
and rental assistance including travel trailers, mobile homes, and personal housing
repairs for 1.6 million households.21 Additional funds include more than $16 billion
in Community Development Block Grant (CDBG) funds to the five affected states
(Louisiana, Mississippi, Florida, Texas, and Alabama) to help with rebuilding
efforts.22 (For more information, see CRS Report RL33761, Rebuilding Housing
After Hurricane Katrina: Lessons Learned and Unresolved Issues, by N. Eric Weiss.)
17 Ibid.
18 Ibid.
19 Ibid.
20 Testimony of HUD Deputy Secretary Roy A. Bernardi before the House Committee on
Financial Services Hearing “Federal Housing Response to Hurricane Katrina” February 6,
2007, (hereafter “Katrina Hearing”), available at [http://www.house.gov/apps/list/hearing/
financialsvcs_dem/htbernardi020607.pdf].
21 Federal Emergency Management Agency, By the Numbers — One Year Later: FEMA
Recovery Update for Hurricane Katrina, Aug. 22, 2006, available at [http://www.fema.gov/
news/newsrelease.fema?id=29109]. All numbers are as of Aug. 18, 2006.
22 See P.L. 109-148 and P.L. 109-234.

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CRS-6
Many Members of Congress have expressed displeasure at the perceived slow
pace of rebuilding after Katrina.23 While there are indications that the pace of
rebuilding is quickening,24 many areas have not been rebuilt and many families are
still displaced. According to FEMA, 90,000 families still lived in temporary housing
and 35,000 families are still receiving rental assistance 17 months after the storm.25
Factors behind the delay include the length of time it took to develop and approve
rebuilding plans, the pace of infrastructure repairs in the neighborhoods and
surrounding communities, the decisions on the future of damaged public housing
units, and the size and timing of private insurance settlements to homeowners
seeking to return to those neighborhoods.
Another rebuilding issue involves the rehabilitation and/or rebuilding of
federally-assisted housing in areas damaged by the 2005 hurricanes. At the February
6, 2007 hearing before the House Financial Services Committee, HUD Deputy
Secretary Roy Bernardi testified that of the 5,100 occupied public housing units
damaged in New Orleans during Hurricane Katrina, nearly 2,000 were habitable and
approximately 1,200 are occupied or would be shortly.26 However, members of the
Financial Services Committee questioned HUD’s plans to demolish the
approximately 4,100 units in the four largest public housing developments and
replace them with mixed income housing. HUD’s demolition plans have been met
with opposition from tenant organizations and low-income housing advocates and
several lawsuits have been filed.27 Provisions included in H.R. 1227 (discussed
below) are designed to limit HUD’s ability to demolish public housing.
Oversight
As noted earlier, Congress has appropriated tens of billions of dollars toward
hurricane recovery and relief. Given its large investment, Congress has conducted
several oversight hearings and requested many oversight reports on how effectively
and efficiently the recovery and rebuilding money is being spent.
23 See Opening Remarks of Honorable Maxine Waters, Katrina Hearing, available at
[http://www.house.gov/apps/list/hearing/financialsvcs_dem/oswaters020607.pdf]; and David
Hammer, “Senate Democrats vow to fix disaster recovery,” New Orleans Times Picayune,
January 29, 2007, available at [http://www.nola.com/newslogs/tpupdates/index.ssf?/
mtlogs/nola_tpupdates/archives/2007_01_29.html#231017].
24 Brookings Institution, Katrina Index: Tracking Recovery of New Orleans and the Metro
Area, in collaboration with the Greater New Orleans Community Data Center, January 2007,
[http://www.gnocdc.org/KI/KatrinaIndex.pdf].
25 Statement of David Garratt, Acting Director of Recovery, Federal Emergency
Management Agency, Department of Homeland Security, Katrina Hearing, available at
[http://www.house.gov/apps/list/hearing/financialsvcs_dem/htgarratt020607.pdf].
26 Deputy Secretary Bernardi’s testimony is available at [http://www.house.gov/apps/list/
hearing/financialsvcs_dem/htbernardi020607.pdf].
27 See Julia Cass and Peter Whoriskey, “New Orleans to Raze Public Housing: Many Units
Closed Since Katrina to Be Demolished, Despite Protests,” The Washington Post, December
8, 2006.

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CRS-7
Much of the assistance provided to displaced families immediately after
Hurricane Katrina was in the form of individual and household direct assistance from
FEMA. The Government Accountability Office (GAO) has found that system to be
fraught with waste, fraud, and abuse.28 In response to these and other concerns,
Congress has enacted several pieces of legislation aimed at improving the flexibility
and accountability of FEMA, and may consider others in the 110th Congress.29
In addition to concerns about waste, fraud, and abuse, Congress has expressed
concern about the slow pace of spending in the funding it has provided for helping
families rebuild their homes. Congress twice appropriated CDBG funds to Gulf
Coast states affected by the 2005 hurricanes to help rebuild homes and infrastructure.
The first amount disbursed was $11.5 billion and the second amount was nearly $5.2
billion. Each state that received funds — Louisiana, Mississippi, Florida, Texas, and
Alabama — was required to develop and have approved by HUD a plan for how it
would use the funds. HUD approved the state plans in the late spring and early
summer of 2006, so funds have begun to be released to households and to local
communities.30 At the House Financial Services Committee Hearing on February 6,
2007, HUD Deputy Secretary Roy Bernardi testified that approximately $1.2 billion
in CDBG funds had been expended. Committee members expressed concern at the
slow disbursement rate, particularly regarding the Louisiana “Road Home” program,
in which only 400 claimants had received funds.
Ongoing Housing Assistance
Both HUD and FEMA are currently providing ongoing rental assistance to
tenants displaced by the 2005 hurricanes. HUD provides rental assistance through
vouchers in its Disaster Voucher Program (DVP) to households that lived in HUD-
assisted housing or were homeless prior to Hurricanes Katrina and Rita. The voucher
is similar to a Section 8 voucher, and may be used to help pay for rent anywhere in
the country as long as a landlord is willing to accept it. One year after Hurricane
Katrina, HUD estimated that 25,000 households have been assisted through DVP;31
at the February 6 hearing before the House Financial Services Committee, Assistant
Secretary Bernardi testified that about 12,000 families were still participating in the
program. DVP is scheduled to end September 30, 2007; provisions included in H.R.
1227 would extend the length of time families could receive DVP assistance. At that
time, families are expected to transition back onto the programs from which they
28 U.S. Government Accountability Office, Unprecedented Challenges Exposed the
Individuals and Households Program to Fraud and Abuse; Actions Needed to Reduce Such
Problems in Future, GAO Report GAO-06-1013, September 2006.
29 For more information, see CRS Report RL33729, Federal Emergency Management Policy
Changes After Hurricane Katrina: A Summary of Statutory Provisions, coordinated by Keith
Bea.
30 Office of the Federal Coordinator for Gulf Coast Rebuilding, Continuing Progress: A 1-
Year Update on Hurricane Recovery and Rebuilding, August 2006, available at
[https://www.dhs.gov/xlibrary/assets/GulfCoast_Katrina1yearFactSheet.pdf].
31 Ibid.

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CRS-8
were initially displaced. There are remaining questions regarding what will happen
to families who were homeless before the storm and those whose homes are still
under construction. For more information about DVP see CRS Report RL33173,
Hurricane Katrina: Questions Regarding the Section 8 Voucher Program, by Maggie
McCarty.
While HUD provides assistance for tenants previously receiving HUD subsidies,
FEMA provides rental assistance for any other tenant or homeowner in need of
housing assistance. Just after Hurricanes Katrina and Rita, FEMA began providing
short-term rental assistance to disaster victims; after six months, in February of 2006,
it began to convert the short-term assistance to longer-term rental assistance (up to
18 months). Although this assistance was to end on February 28, 2007, President
Bush recently extended the assistance for an additional six months. For more
information on the status of FEMA rental assistance see CRS Report RS22560,
Disaster Housing Assistance: A Legal Analysis of ACORN v. FEMA, by Kamilah M.
Holder.
Legislation
On March 7, 2007, the House Financial Services Committee approved the Gulf
Coast Hurricane Housing Recovery Act of 2007 (H.R. 1227). The bill contains a
wide range of provisions, including making of modifications to, and increasing
reporting on, assistance provided in earlier supplemental appropriations acts and
clarifying the treatment of certain federally assisted properties. Key provisions are
summarized below.
CDBG-related provisions:
! Would transfer certain FEMA Hazard Mitigation funds to
Louisiana’s CDBG program;
! Would authorize and fund a pilot program in Louisiana to acquire
certain individual properties for the purpose of aggregating them and
making them available for development;
! Would require quarterly reports from GAO on CDBG spending; and
! Would make other changes to the treatment of CDBG funds for
purposes of (1) individual eligibility for other disaster-related
assistance and (2) meeting match requirements in other programs.
Public and Assisted Housing related provisions:
! Would require HUD to conduct a survey of displaced New Orleans
public housing residents to determine their interest in returning;
! Would require the Housing Authority of New Orleans (HANO) to
make available for occupancy by August 1, 2007, the greater of
3,000 public housing units or a number of units sufficient to house
families wishing to return;
! Would prohibit HANO from demolishing or disposing of public
housing without a plan to replace each unit with a public housing (or
other comparable) unit;

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CRS-9
! Would guarantee a right of return to all New Orleans public housing
residents wishing to return;
! Would place restrictions on the demolition and disposition of other
public housing units in the disaster areas and require PHAs to offer
a right of return for displaced families;
! Would authorize such sums as necessary to rehabilitate, repair,
and/or redevelop public housing in New Orleans, including the cost
of providing supportive services to tenants;
! Would extend the Disaster Voucher Program through January 1,
2008, and permit families to transfer their DVP vouchers to the
regular voucher program upon expiration of the DVP program;
! Would clarify the allocation of FY2007 Section 8 voucher renewal
funding for disaster-affected areas;
! Would direct the Secretary to approve feasible proposals to preserve
project-based rental assistance connected to damaged privately
owned multifamily rental properties;
! Would authorize such sums as necessary to supply replacement
vouchers for public housing or private multifamily project-based
rental assistance units that will not be rebuilt; and
! Would authorize such sums as necessary to create 4,500 new
project-based vouchers for use in supportive housing for the
homeless, seniors and persons with disabilities, 3,000 of which
would be available for the state of Louisiana, upon request.
Other provisions:
! Would authorize a transfer of funds from FEMA to HUD to be used
to reimburse landlords for damages incurred as a result of their
participation in FEMA’s city lease program;
! Would give the Secretary of HUD the authority to either take title of
or make insurance payments on behalf of certain FHA-insured
single-family properties that did not have hazard or flood insurance;
! Would require GAO to study the distribution of federal funds to
Gulf Coast states; and
! Would commend Americans for the rebuilding efforts.
Several of these provisions proved controversial during committee markup.
Amendments were considered, but rejected, that would have struck the authorization
of additional vouchers and would have limited the amount of funds authorized for
rebuilding public housing. The bill is expected to be considered by the full House
before the end of March.

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CRS-10
Housing Finance
GSE Regulation
Fannie Mae, Freddie Mac, and Federal Home Loan Bank Regulation.
Fannie Mae and Freddie Mac are federally chartered, privately owned corporations
charged with supporting the secondary mortgage market. They are not allowed to
lend directly to homeowners, but by purchasing mortgages from the original lenders,
they free up funds to be lent for more mortgages. After Fannie Mae and Freddie Mac
purchase mortgages, they either package and sell them to investors, or keep them in
their own portfolios. To finance their portfolios, they sell bonds and other debt to
investors.
This buying and selling of existing mortgages has created a secondary mortgage
market that has improved the efficiency of mortgage lending and lowered the interest
rate that homeowners pay. Many economists and other analysts believe that because
of their ties to the federal government, Fannie Mae and Freddie Mac (also known as
government-sponsored enterprises, or GSEs) can borrow at lower interest rates than
they could otherwise and that some of this advantage accrues to stockholders and
employees.
Regulation of Fannie Mae and Freddie Mac is split between two parts of HUD.
The independent Office of Federal Housing Enterprise Oversight (OFHEO) is the
safety and soundness regulator, while HUD’s Financial Institutions Regulation
Division establishes and monitors affordable housing lending goals. OFHEO has
been the primary regulator during recent accounting problems, although the
Securities and Exchange Commission (SEC) has also been involved. For more
information about accounting problems at Fannie Mae and Freddie Mac, see CRS
Report RS21949, Accounting Problems at Fannie Mae, and CRS Report RS21567,
Accounting and Management Problems at Freddie Mac, both by Mark Jickling, for
more details.
Both Fannie Mae and Freddie Mac have statutory exemptions from filing
financial documents with the SEC, but both have voluntarily agreed to make these
filings. Freddie Mac announced on July 12, 2002 that it would begin filing with the
SEC, but its accounting problems have prevented it from doing so. Fannie Mae filed
its 2004 annual report (form 10-K) with the SEC on December 6, 2006, which was
approximately 21 months late. Neither GSE is yet filing current financial statements.
On May 23, 2006, Fannie Mae signed a consent order with OFHEO agreeing to
limit its portfolio of mortgages and mortgage-backed securities to $727 billion, the
December 13, 2005, level. Freddie Mac agreed on July 1, 2006 to limit retained
portfolio growth to 0.5% quarterly until the company can file financial reports on a
timely basis. OFHEO has said that these limitations are likely to remain in place for
several years.
The Federal Home Loan Bank System is comprised of 12 regional banks (the
Banks) that collectively comprise the third housing GSE. Started in 1932 as lenders
to the savings and loan associations that were the primary lenders for home

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CRS-11
mortgages, the Banks have undergone major changes, particularly since the cleanup
of the savings and loan association failures of the 1980s. As a result, membership in
the Banks has changed, today encompassing more commercial banks than savings
associations and including credit unions, insurance companies, and some associated
housing providers. Purposes of lending — while still primarily housing-related —
now include agricultural and small business lending. The changes also have resulted
in special mission set-asides for low- and moderate-income housing, special
programs for community development, and a continuing responsibility for paying
debt raised to fund deposit insurance payouts in the 1980s. For both mission and
safety and soundness, the five-member Federal Housing Finance Board (FHFB)
regulates the System. For information on the FHLBs, see CRS Report RL32815,
Federal Home Loan Bank System: Policy Issues, by Barbara Miles and Edward
Vincent Murphy.
The 109th Congress considered two bills to strengthen the oversight of Fannie
Mae, Freddie Mac, and the Banks under a single regulator, neither of which was
enacted. House Financial Services Committee Chairman Barney Frank and Senate
Banking, Housing and Urban Affairs Committee Chairman Christopher J. Dodd have
announced that GSE reform legislation will be a top committee priority in the 110th
Congress. For information on provisions of GSE reform bills in the 109th Congress,
see CRS Report RS22336, GSE Reform: A New Affordable Housing Fund, by Eric
Weiss, and CRS Report RS22307, Limiting Fannie Mae’s and Freddie Mac’s
Portfolio Size, by N. Eric Weiss.
On March 9, 2007, Chairman Frank introduced H.R. 1427, the Federal Housing
Finance Reform Act of 2007. It would change the regulation of the GSEs,
consolidate oversight, and create the Federal Housing Finance Agency (FHFA) as an
independent regulator with authority similar to that of bank regulators. Hearings on
the legislation were held on March 12, 2007 and March 15, 2007.
Affordable Housing Fund. H.R. 1427 would create an affordable housing
fund, which would be funded by contributions by Fannie Mae and Freddie Mac based
on their total mortgage portfolios (essentially, mortgages retained in portfolio plus
those guaranteed and sold regardless of the form such as mortgage backed securities).
Legislation proposed in the 109th Congress (H.R. 1461) would have required Fannie
Mae and Freddie Mac to contribute a percentage of their profits to a fund.
The primary purpose of the fund in H.R. 1427 and H.R. 4161 would be to
increase housing opportunities for extremely low- and very low-income homeowners
and renters. Both would end the requirement for Fannie Mae and Freddie Mac to
contribute money to the fund after five years. In the first year, the fund would go to
Louisiana (75%) and Mississippi (25%). In years two through five, H.R. 1427 would
distribute the funds to the states and recognized Indian tribes using a formula to be
developed by HUD. The states would develop plans to further distribute the funds
to for-profit, not-for-profit, and faith-based organizations.
H.R. 1427 would give the Federal Housing Finance Agency explicit authority
to adjust the enterprises’ risk-based capital and, in specific circumstances, to limit the
size of their portfolios for limited periods of time.

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CRS-12
FHA Reform
The Federal Housing Administration (FHA) oversees a variety of mortgage
insurance programs that insure lenders against loss from loan defaults by borrowers.
Through FHA insurance, lenders make loans that otherwise may not be available, and
enable borrowers to obtain loans for home purchase and home improvement, as well
as for the purchase, repair, or construction of apartments, hospitals, and nursing
homes. The programs are administered through two program accounts — the Mutual
Mortgage Insurance/Cooperative Management Housing Insurance fund account
(MMI/CMHI) and the General Insurance/Special Risk Insurance fund account
(GI/SRI). The MMI/CMHI fund provides insurance for home mortgages. The
GI/SRI fund provides insurance for more risky home mortgages, for multifamily
rental housing, and for an assortment of special-purpose loans such as hospitals and
nursing homes.
In recent years the mortgages insured through the FHA program are judged to
have become increasingly risky.32 Default rates and the amounts of insurance claims
have grown even as participation in the program has declined, raising the need to
both increase participation in the program and improve its financial stability by
ensuring that participants are credit-worthy.33 The 109th Congress considered
legislation that would have raised FHA mortgage limits (H.R. 5121) in order to allow
more buyers to qualify for FHA loans. Currently FHA has mortgage limits that
prevent loans from being insured if they are above a certain dollar threshold, which
is determined on an area-by-area basis. H.R. 5121 also would have provided that
mortgage insurance premiums be set according to borrower risk. Language from
H.R. 5121 was included in the House version of the FY2007 HUD funding bill (H.R.
5576), however neither bill was enacted. Proposals can be anticipated in the 110th
Congress that would raise FHA loan limits.34
In the 110th Congress, legislation to make small modifications to the FHA
program has been introduced. One of these bills (H.R. 127) would increase the loan
limits allowed on certain multifamily properties from 140% to 170% of the
limitations stated in the statute and from 170% to 215% in high cost areas. Another
bill (H.R. 172) would create a home purchase program for teachers and public safety
officers and increase the FHA loan limit for participants in the program.
32 Senate Appropriations Committee, report to accompany H.R. 5576, the Transportation,
Treasury, Housing and Urban Development Appropriations Act 2007, 109th Cong., 2nd sess.,
S.Rept. 109-293, July 26, 2006.
33 Ibid.
34 Remarks of Representative Barney Frank at the Office of Thrift Supervision Housing
Forum, National Press Club, December 11, 2006, p. 70, transcript available at [http://www.
ots.treas.gov/docs/4/48982.pdf].

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CRS-13
Predatory Lending
Since the early 1990s, lenders have developed better methods for estimating the
risks of certain mortgage loans, with the result that lenders now make home loans to
persons who earlier would not have qualified based on their income, savings, and
credit profiles. These loans are often referred to as subprime loans. Typically
subprime loans have higher interest rates and fees associated with them due to the
higher risk presented by the borrower. However, some subprime loans are made
through abusive lending practices that result in unfair loan terms. These are
sometimes called “predatory loans.” Lenders who make predatory loans may
misinform borrowers about the loan terms, intimidate borrowers, or take advantage
of the borrowers’ lack of knowledge or understanding of financial matters.35 The
lenders may also target specific populations like those with low incomes, the elderly,
and minorities.36 Borrowers who have predatory loans may find themselves at greater
risk of foreclosure or bankruptcy because they are unable to afford their mortgage
payments.37
The Home Owner Equity Protection Act (HOEPA), P.L. 103-325,38 provides
federal prohibitions on certain predatory lending practices. Twenty-five states and
several municipalities have enacted similar statutes that sometimes offer much
broader protections than those afforded under HOEPA. (See CRS Report RL32784,
Predatory Lending: A Comparison of State Laws to the Federal Home Ownership
and Equity Protection Act, by Kamilah M. Holder and Kate M. Manuel.) Varying
requirements among state and local statutes that seek to limit predatory lending have
led many in the lending community to call for a uniform federal statute. The
challenge, from a public policy standpoint, is how to limit predatory lending without
at the same time restricting the ability of lenders to make loans that are legitimately
priced according to borrower risk.39
Several bills to address predatory lending issues were introduced in the 109th
Congress, but no action was taken on any of the bills. That could change during the
110th Congress. No bills have been introduced to date but, on February 7, 2007, the
35 National Predatory Lending Task Force, Curbing Predatory Home Mortgage Lending: A
Joint Report, U.S. Department of Housing and Urban Development and U.S. Department
of Treasury, June 2000, p. 17, available at [http://www.huduser.org/Publications/pdf/
treasrpt.pdf].
36 Ibid., p. 69.
37 Ibid., p. 17.
38 Subtitle B of Title I of the Riegle Community Development and Regulatory Improvement
Act, P.L. 103-325; 15 U.S.C. § 1601 et seq.
39 Some groups argue that state and local predatory lending laws result in a reduction of the
availability of credit to those who need the loans. A recent report by the Center for
Responsible Lending suggests that state and local laws work to reduce predatory lending,
and that such laws increase the availability of credit to those in need of it. Wei Li and Keith
S. Ernst, The Best Value in the Subprime Market: State Predatory Lending Reforms, The
Center for Responsible Lending, February 23, 2006, available at [http://www.
responsiblelending.org/pdfs/rr010-State_Effects-0206.pdf].

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Senate Committee on Banking, Housing and Urban Affairs held a hearing entitled
“Preserving the American Dream: Predatory Lending Practices and Home
Foreclosures.” A recent newspaper article suggested that a top priority for
Representative Barney Frank, the new chairman of the House Financial Services
Committee, will be enactment of a nationwide lending-standards law designed to
protect consumers from predatory mortgage practices.40
Housing Assistance
Federally Assisted Housing Funding and Reform
Section 8 Voucher Reform. The Section 8 voucher program provides
portable housing subsidies to low-income families to enable them to find rental
housing in the private market. Since 2003, HUD has advocated the abolishment of
the existing Section 8 housing choice voucher program and its replacement with a
new program. Part of the Administration’s rationale for advocating major program
changes was a desire to curb cost growth in the program. However, the effects of
earlier program reforms, market changes, and recent funding allocation changes have
all worked together to limit growth in the cost of a voucher within the structure of the
current program.41 The other rationale for program reform has to do with reducing
administrative complexity in the program and providing the public housing
authorities (PHAs) with more flexibility. It is generally agreed, by the
Administration, low income housing advocates, and PHA industry groups, that the
voucher program is too complex and administratively burdensome. However, the
Administration, low-income housing advocates, and PHA industry groups do not
necessarily agree about the best way to reduce that complexity without compromising
the level of assistance provided to low-income tenants.
In the 109th Congress, two major voucher reform bills were introduced. The
State and Local Housing Flexibility Act of 2005 (S. 771/H.R. 1999), which had
support from the Administration, would have abolished the existing voucher program
and replaced it with a new Flexible Voucher Program (FVP). Under FVP, PHAs
would have had broad discretion in determining program eligibility, calculating
income, and setting rents, among other areas. The bill would have extended the
income and rent-setting flexibility to the public housing program. The Section 8
Voucher Reform Act of 2006 (H.R. 5443) was a bi-partisan bill that would have
maintained the existing Section 8 voucher program, but would have changed the way
income was calculated for the purposes of eligibility and rent-setting (for the voucher
program, as well as public housing and project-based Section 8) and adopted a new
method for allocating voucher funds, among other changes. H.R. 5443 was approved
by the House Financial Services Committee, but not enacted before the end of the
40 Kenneth R. Harney, “Stricter Standards Sought for Lenders, Brokers,” Washington Post,
January 27, 2007.
41 For more information, see CRS Report RS22376, Changes to Section 8 Housing Voucher
Renewal Funding, FY2003-FY2006, by Maggie McCarty.

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CRS-15
109th Congress. (For more information, see CRS Report RL33270, The Section 8
Housing Voucher Program: Reform Proposals, by Maggie McCarty.)
While the 109th Congress did not enact Section 8 voucher reform, the 110th
Congress is expected to resume the debate. As noted earlier, nearly everyone agrees
that the current voucher program rules are unduly complicated and burdensome.
Further, recent funding changes enacted in annual appropriations bills have served
to leave some PHAs with too little funding to maintain all of their vouchers, while
other PHAs have more funds than they are legally permitted to spend. In order to
address these concerns, some degree of program reforms and, possibly, funding
allocation changes would need to be enacted. On March 9, 2007, the Housing and
Community Opportunity Subcommittee of the House Financial Services Committee
held a hearing to discuss potential Section 8 reform legislation.
Public Housing Operating Funds. In January 2007, HUD began using a
new formula to distribute public housing operating funds to public housing
authorities. Under the new formula, some PHAs’ eligibility for funding increased,
and others decreased. However, any funding increases will be reduced and any
funding decreases will be further deepened if the appropriations provided by
Congress are not sufficient to fund all PHAs at their full eligibility levels.
Operating funds make up the difference between what tenants pay in rent and
the cost of running public housing. The amount a PHA receives is based on a set of
allowable expenses set by HUD. PHAs calculate their budgets by totaling up the
allowable expenses for all of their units and subtracting the amount they receive in
tenant rents. HUD then adds together all of the agencies’ budgets and compares the
total to the amount Congress appropriated for the operating fund that year. Typically,
Congress appropriates less than the full amount that PHAs qualify for under the
formula, so HUD applies an across-the-board cut to agencies’ budgets, called a
proration. The 2006 proration was 86%.
The new funding formula for FY2007, established by HUD through regulation
with input from PHA industry groups, adopts new allowable expense levels. It also
requires PHAs to adopt a new form of property management — called asset-based
management — by FY2011. Some agencies will qualify for a higher budget under
the new allowable expense levels and others will face reductions, although both
increases and decreases will be phased in. Those that face a decrease can transition
to asset-based management sooner to help limit their losses. However, the magnitude
of gains and losses under the new formula will depend on how much is appropriated
for the operating fund and, subsequently, how low a proration HUD will set.
The President requested $3.5 billion for operating funds in FY2007, which is
the same amount that was provided in FY2006. According to HUD estimates, the
requested FY2007 funding level would lead to a 79% proration. PHA advocacy
groups have protested that HUD’s request would be insufficient to meet their needs.
For FY2007, the 110th Congress provided an additional $300 million for the
operating fund above FY2006 levels (P.L. 110-5). According to HUD, that funding

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CRS-16
level would be sufficient to increase the proration level to about 83%.42 (For more
information, see CRS Report RS22557, Public Housing: Fact Sheet on the New
Operating Fund Formula, by Maggie McCarty.) For FY2008, the Administration
has requested $4.0 billion in operating funds.
Asset-based Management. The new operating fund rule also contained a
requirement that PHAs convert to a new type of management, called asset-based
management, by 2011. Currently, PHAs are able to centrally manage their public
housing stock, meaning a PHA can receive funding, budget, and provide services for
all of their units in the same way, on a portfolio-wide basis. Under asset-based
management, PHAs will receive funding and will be required to budget for their units
on a project-by-project basis. As noted earlier, PHAs that are slated to lose funding
under the new operating fund rule can convert to asset-based management before the
2011 deadline in order to limit their losses. In order for PHAs to limit their losses
in 2008, they must prove that they have converted to asset-based management by the
deadline set by HUD.
There have been two main controversies surrounding this process, with the first
concerning the deadline. HUD’s initial guidance stated that PHAs must prove that
they have converted to asset-based management by April 15, 2007 in order to stop
their losses in the first year.43 A subsequent draft notice published by HUD stated
that the deadline was October 1, 2007.44 HUD has since published a statement on its
website that the April 15 deadline is the correct deadline. PHA advocacy groups are
actively lobbying for HUD to use the October 1, 2007, deadline, and have asked
Members of Congress to support legislation requiring HUD to use that deadline.45
The second controversy surrounds how PHAs should demonstrate that they have
converted to asset-based management. HUD published preliminary guidance in
September 2006.46 PHA industry groups have argued that HUD’s guidance is “overly
prescriptive,” and have lobbied for HUD to make modifications. On January 16,
2007, the Chairmen of the Senate Banking and House Financial Services Committees
sent a letter to HUD asking the Department to suspend implementation of the
42 HUD, Operating Fund Proration Percentage for CY 2007 at Proposed Appropriation
Levels, available at [http://www.hud.gov/offices/pih/programs/ph/am/of/estprorationexpl07.
pdf]
43 HUD, PIH Notice 2006-14, Operating Fund Program Final Rule: Transition Funding and
Guidance on Demonstration of Successful Conversion to Asset Management to Discontinue
the Reduction of Operating Subsidy, issued March 22, 2006.
44 HUD, “Public Housing Operating Fund Program; Revised Transition Funding Schedule
for Fiscal Year 2008 Through Fiscal Year 2012,” 71 Federal Register 68404, November 24,
2006.
45 Letter from Council of Large Public Housing Authorities, National Association for
Housing and Redevelopment Officials, and Public Housing Authorities Directors
Association to HUD Secretary Alphonso Jackson, dated December 6, 2006.
46 HUD, PIH Notice 2006-35, Operating Fund Program Final Rule: Transition Funding and
Guidance on Demonstration of Successful Conversion to Asset Management to Discontinue
the Reduction of Operating Subsidy — Extension of Stop Loss Deadline to April 15, 2007,
issued September 25, 2006.

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CRS-17
conversion to asset-based management until after the authorizing committees have
“had the opportunity to look into the issue further.”
HOPE VI Reauthorization. The HOPE VI program provides competitive
grants to PHAs for the demolition and/or revitalization of distressed public housing.
HOPE VI has been popular with many Members of Congress, but it has been
criticized by the Administration, which argues that grantees spend money too slowly,
and by tenant advocates, who argue the program displaces more families than are
housed in new developments. Reflecting these criticisms, HUD has requested no
new funding for HOPE VI each year since FY2004. Congress has continued funding
the program, although at lower levels than in previous years (the current
appropriation is $99 million, compared with $570 million in FY2003).
The statute authorizing the HOPE VI program includes a sunset clause. The
sunset date was September 30, 2006. However, the series of continuing resolutions
that funded HUD into the 110th Congress (P.L. 109-289, as amended by P.L.
109-383), included a provision continuing the HOPE VI program until February 15,
2007. The FY2007 funding bill (P.L. 110-5) then provided an extension of the
HOPE VI program through the end of FY2007. Reauthorization legislation
considered in the 109th Congress varied from extensive program reforms to bills that
only amended the date in the sunset clause. On March 8, 2007, the HOPE VI
Improvement and Reauthorization Act of 2007 was introduced by Senator Mikulski
and Senator Martinez. It would reauthorize the program through FY2013 and,
according to the sponsors’ press release, make “several improvements to ensure
grants are cost-efficient, and effective at improving resident and community life.”47
(For more information, see CRS Report RL32236, HOPE VI Public Housing
Revitalization Program: Background, Funding, and Issues, by Maggie McCarty.)
Assisted Housing Preservation
For the 110th Congress, Representative Barney Frank, the Chairman of the
House Financial Services Committee, has stated that preservation of affordable
housing will be on the Committee’s agenda.48 Housing preservation involves efforts
to maintain the affordable nature of federally-assisted housing. When many HUD-
assisted and Low Income Housing Tax Credit (LIHTC) housing projects were
developed, building owners entered into contracts in which they agreed to serve low-
income families through reduced rents and/or federal rent subsidies for a certain
number of years in exchange for government assistance in developing the property.
Depending on the assisted housing program, the duration of these contracts, or “use
restrictions,” is between 15 and 50 years.49 In recent years, these contracts have
47 Press release from the office of Barbara Mikulski, Mikulski Introduces Legislation To
Continue, Strengthen Hope VI Program, March 8, 2007 [http://mikulski.senate.gov/
record.cfm?id=270346].
48 Remarks of Representative Barney Frank at the Office of Thrift Supervision Housing
Forum, National Press Club, December 11, 2006, p. 72, transcript available at [http://www.
ots.treas.gov/docs/4/48982.pdf].
49 Programs in which assisted housing preservation is an issue are the Section 221(d)(3)
(continued...)

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CRS-18
begun to expire or, in some cases, property owners have chosen to pay off their
mortgages early and end the use restrictions. Contracts for rental assistance,
including project-based Section 8 rental assistance, have also begun to expire. By
2005, nearly 200,000 formerly assisted housing units were no longer subject to use
restrictions due to mortgage prepayment or expiration of project-based rental
assistance.50 The mortgages on a further 2,328 HUD properties, representing 237,000
housing units, are expected to mature by 2013.51 These properties make up 21% of
the total number of properties with HUD mortgages.
Previous Legislative Efforts to Preserve Affordable Housing.
Beginning in 1987, Congress started to enact legislation to help preserve affordable
rental housing. Congress first attempted to address the problem through the
Emergency Low-Income Housing Preservation Act (ELIHPA).52 The act temporarily
prevented owners of Section 221(d)(3) and Section 236 developments from
prepaying their mortgages without approval from HUD. In 1990 Congress enacted
the Low-Income Housing Preservation and Resident Homeownership Act
(LIHPRHA) as part of the Cranston-Gonzalez National Affordable Housing Act (P.L.
101-625). The program created incentives for building owners to continue offering
affordable housing through the Section 221(d)(3) and Section 236 programs.
LIHPRHA has not been funded since FY1997 (P.L. 104-204), but during the 1990s
it is estimated to have preserved 100,000 units of Section 221(d)(3) and Section 236
housing.53
In 1997, the Multifamily Assisted Housing Reform and Accountability Act
(MAHRA, P.L. 105-65) created the Mark-to-Market program. Under Mark-to-
Market, owners of multifamily housing projects with project-based Section 8 rental
assistance contracts can renew those contracts with HUD while also, in some cases,
restructuring their outstanding debt on the property. The program is designed both
to ensure that HUD pays reasonable market rents for subsidized properties as well as
to provide incentives for owners of assisted properties to renew their contracts with
HUD.
49 (...continued)
program, the Section 236 program, the Section 202 and 811 programs, the Section 515 rural
housing program, and the Low Income Housing Tax Credit Program.
50 National Housing Trust, HUD-Assisted, Project-Based Losses by State, March 2, 2005,
available at [http://www.nhtinc.org/prepayment/State_Loss_Report.pdf].
51 U.S. Government Accountability Office, More Accessible HUD Data Could Help to
Preserve Housing for Low-Income Tenants, GAO-04-20, January 2004, p. 4, available at
[http://www.gao.gov/new.items/d0420.pdf].
52 ELIHPA was part of the Housing and Community Development Act of 1987 (P.L. 100-
242).
53 Emily Achtenberg, Stemming the Tide: A Handbook on Preserving Subsidized Multifamily
Housing, Local Initiatives Support Corporation, September 1, 2002, p. 2, available at
[http://www.lisc.org/content/publications/detail/893].

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CRS-19
Mark-to-Market Reauthorization. The authorization that permits HUD to
undertake Mark-to-Market mortgage restructuring (discussed in the previous section)
includes a provision to repeal the authorizing language at the beginning of FY2007
(October 1, 2006). Before the repealing language could take effect, the FY2007
continuing resolution (P.L. 109-289, as amended by P.L. 109-383) extended the
program’s authorization until February 15, 2007. Then, the FY2007 funding bill
(P.L. 110-5) extended the Mark-to-Market program through the end of FY2011. Two
identical bills (S. 131 and H.R. 647), called the Mark-to-Market Extension Act of
2007, have also been introduced in the 110th Congress.
Additional Preservation Legislation. In addition to Mark-to-Market
reauthorization, another housing preservation bill, H.R. 44, the Stabilizing
Affordable Housing in the Future Act, has been introduced in the 110th Congress.
The bill would require HUD to maintain rental assistance contracts on multifamily
units it manages or owns due to mortgage default or foreclosure. In cases where
HUD-owned or HUD-managed property is no longer able to be rehabilitated, H.R.
44 would permit HUD to contract with owners of other properties to make project-
based rental assistance payments for existing tenants. Another provision would
require that in cases where HUD disposes of multifamily properties, the property
must be appraised according to industry standards (another bill in the 110th Congress,
H.R. 655, would do the same).
Housing Tax Incentives
Low-Income Housing Tax Credit Modifications. The Low Income
Housing Tax Credit (LIHTC) was created by the Tax Reform Act of 1986 (P.L.
99-514) to provide an incentive for the acquisition and development or rehabilitation
of commercial property for affordable housing for renters. These federal housing tax
credits are awarded to developers of qualified projects. Sponsors, or developers, of
real estate projects apply to the corresponding state housing finance authority for
LIHTC allocations for their projects. Developers either use the credits or sell them
to investors to raise capital (or equity) for real estate projects. The tax benefit
reduces the debt and/or equity that the developer would otherwise have to incur.
With lower financing costs, tax credit properties can potentially offer lower, more
affordable rents.
Legislation introduced in the 109th Congress, but not enacted, proposed changes
in the LIHTC. Proposals ranged from changing the name of the credit to the
Affordable Housing Tax Credit, increasing the allocation amounts for all states,
deeper targeting of the tax credit to low-income communities, and other
administrative modifications. It is expected that similar changes to the LIHTC may
be proposed in the 110th Congress.
Single-Family Housing Tax Credit. In the 109th Congress, proposals were
made to enact a tax credit program for owner-occupied housing production.
Paralleled after the LIHTC program, these tax credits would have been available for
developers of affordable single-family housing for owners rather than renters.
Proposals of a similar nature are likely to be considered in the 110th Congress.

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CRS-20
The LIHTC and HUD Assisted Housing Programs. The LIHTC may be
used in combination with other HUD assisted housing programs to fund affordable
housing. HUD programs that allow use of the LIHTC in combination with HUD
grants include the HOME Investment Partnerships program, the Section 202 and
Section 811 programs, the Housing Opportunities for Persons with AIDS program,
and the McKinney-Vento Supportive Housing Program. Representative Barney
Frank, Chairman of the House Financial Services Committee, has indicated that the
Committee would like to work with the House Ways and Means Committee in order
to improve the compatibility between the LIHTC and HUD programs in the 110th
Congress.54
Homelessness
In recent years, the federal government has taken concrete steps to end
homelessness among those who are chronically homeless — defined as disabled
individuals who have been homeless for long periods of time. The characteristics of
the chronically homeless include mental illness, physical illness and disability
including HIV/AIDS, addiction to alcohol and drugs, and veteran status. In 2002,
President Bush established an initiative to end chronic homelessness within ten years.
The result of the initiative has been the revival of the Interagency Council on
Homelessness (until 2002 it had not been funded for six years), and a concerted effort
among states and communities to develop ten-year plans to end homelessness
(currently 53 states and territories and 224 cities and counties have developed ten-
year plans). Government agencies have made efforts to coordinate housing and
supportive services to serve the chronically homeless, with the Departments of
Housing and Urban Development, Health and Human Services, and the Department
of Veterans Affairs collaborating on several programs to address the needs of the
chronically homeless.
In the 109th Congress, committees including Senate Banking, Housing and
Urban Affairs, and the House and Senate Veterans’ Affairs Committees held hearings
about homeless veterans. In addition, two bills in the 109th Congress (S. 1801 and
H.R. 5041) would have reauthorized the McKinney-Vento homeless assistance grants
(they have been unauthorized since FY1994). Both bills also would have
substantially revised the way the HUD homeless assistance grants are distributed.
They would have consolidated three of the four HUD homeless assistance grants and
codified the way in which funds are distributed (the President has also urged the
consolidation of these three programs in his last six budgets). In the 110th Congress,
Representative Julia Carson introduced H.R. 840, a bill that would reauthorize the
McKinney-Vento Homeless Assistance Act, consolidate the three competitive
homeless assistance grants, and expand the scope of HUD’s definition of
homelessness. (For more information on the homeless assistance grants, see CRS
Report RL33764, The HUD Homeless Assistance Grants: Distribution of Funds, by
Libby Perl.)
54 Remarks of Representative Barney Frank at the Office of Thrift Supervision Housing
Forum, National Press Club, December 11, 2006, p. 70, transcript available at [http://www.
ots.treas.gov/docs/4/48982.pdf].

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CRS-21
CRS Reports on Housing
In General
CRS Report RL33344, The Department of Housing and Urban Development (HUD):
FY2007 Budget, by Maggie McCarty, Libby Perl, Bruce Foote, and Eugene
Boyd.
CRS Report RL32869, The Department of Housing and Urban Development (HUD):
FY2006 Budget, by Maggie McCarty, Libby Perl, Bruce Foote, and Eugene
Boyd.
CRS Report RL31918, U.S. Housing Prices: Is There a Bubble?, by Marc Labonte.
CRS Report RL33421, USDA Rural Housing Programs: An Overview, by Bruce
Foote.
Disaster Relief
CRS Report RL33761, Rebuilding Housing After Hurricane Katrina: Lessons
Learned and Unresolved Issues, by N. Eric Weiss.
CRS Report RS22560, Disaster Housing Assistance: A Legal Analysis of ACORN
v. FEMA by Kamilah M. Holder.
CRS Report RS22358, The Role of HUD Housing Programs in Response to
Hurricane Katrina, Maggie McCarty, Libby Perl, Bruce E. Foote, Eugene Boyd.
CRS Report RL33078, The Role of HUD Housing Programs in Response to Past
Disasters, by Maggie McCarty, Libby Perl, and Bruce Foote.
CRS Report RL33173, Hurricane Katrina: Questions Regarding the Section 8
Housing Voucher Program, by Maggie McCarty.
CRS Report RL33330, Community Development Block Grant Funds in Disaster
Relief and Recovery, by Eugene Boyd.
CRS Report RS22301, Rural Housing: USDA Disaster Relief Provisions, by Bruce
E. Foote.

Section 8 Rental Assistance
CRS Report RL32284, An Overview of the Section 8 Housing Program, by Maggie
McCarty.
CRS Report RL33270, The Section 8 Housing Voucher Program: Reform Proposals,
by Maggie McCarty.
CRS Report RS22376, Changes to Section 8 Housing Voucher Renewal Funding,
FY2003-FY2006, by Maggie McCarty.
Public Housing
CRS Report RS22557, Public Housing: A Fact Sheet on the New Operating Fund,
by Maggie McCarty.
CRS Report RS21591, Community Service Requirement for Residents of Public
Housing, by Maggie McCarty.
CRS Report RL32236, HOPE VI Public Housing Revitalization Program:
Background, Funding and Issues, by Maggie McCarty.

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CRS-22
CRS Report RS21199, No-Fault Eviction of Public Housing Tenants for Illegal Drug
Use: A Legal Analysis of Department of Housing and Urban Development v.
Rucker, by Charles V. Dale.
Special Populations
CRS Report RL30442, Homelessness: Targeted Federal Programs, and Recent
Legislation, coordinated by Libby Perl.
CRS Report RL33764, The HUD Homeless Assistance Grants: Distribution of
Funds, by Libby Perl.
CRS Report RS22328, The Homeless Management Information System, by Libby
Perl.
CRS Report RL33508, Section 202 and Other HUD Rental Housing Programs for
the Low-Income Elderly, by Libby Perl.
CRS Report RS20704, Housing Opportunities for Persons with AIDS (HOPWA), by
Libby Perl.
CRS Report RL32104, Housing Assistance and Welfare: Background and Issues, by
Maggie McCarty.
CRS Report RL31753, Immigration: Noncitizen Eligibility for Needs-Based Housing
Programs, by Alison Siskin and Maggie McCarty.
Community Development
CRS Report RL32823, An Overview of the Administration’s Strengthening
America’s Communities Initiative, by Eugene Boyd (Coordinator), Bruce
Mulock, Pauline Smale, Tadlock Cowan, Garrine Laney, and Bruce Foote.
CRS Report RL33330, Community Development Block Grant Funds in Disaster
Relief and Recovery, by Eugene Boyd.
CRS Report RS20197, Community Reinvestment Act: Regulation and Legislation,
by William D. Jackson.
Housing Finance
CRS Report RL33775, Alternative Mortgages: Risks to Consumers and Lenders in
the Current Housing Cycle, by Edward Vincent Murphy.
CRS Report RS20530, FHA Loan Insurance Program: An Overview, by Bruce E.
Foote and Meredith Peterson.
CRS Report RL33843, Reverse Mortgages: Background and Issues, by Bruce E.
Foote.
CRS Report RL32784, Predatory Lending: A Comparison of State Laws to the
Federal Home Ownership and Equity Protection Act, by Kamilah M. Holder
and Kate M. Manuel.
CRS Report RS20533, VA-Home Loan Guaranty Program: An Overview, by Bruce
E. Foote and Meredith Peterson.
CRS Report RS22389, An Introduction to the Design of the Low- Income Housing
Tax Credit, by Pamela J. Jackson.
CRS Report RS21104, Should Banking Powers Expand into Real Estate Brokerage
and Management?, by William D. Jackson.

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CRS-23
Housing Government-Sponsored Enterprises (GSEs)
CRS Report RL33756, Fannie Mae and Freddie Mac: A Legal and Policy Overview,
by Michael V. Seitzinger and N. Eric Weiss.
CRS Report RS22336, GSE Reform: A New Affordable Housing Fund, by N. Eric
Weiss.
CRS Report RS22307, Limiting Fannie Mae’s and Freddie Mac’s Portfolio Size, by
N. Eric Weiss.
CRS Report RS21567, Accounting and Management Problems at Freddie Mac, by
Mark Jickling.
CRS Report RS21949, Accounting Problems at Fannie Mae, by Mark Jickling.
CRS Report RL32815, Federal Home Loan Bank System: Policy Issues, by William
Jackson.
CRS Report RL32795, Government-Sponsored Enterprises (GSEs): Regulatory
Reform Legislation, by Mark Jickling.
CRS Report RS21724, GSE Regulatory Reform: Frequently Asked Questions, by
Loretta Nott and Barbara Miles.
CRS Report RL32230, Regulation of Fannie Mae and Freddie Mac under the
Federal Housing Enterprises Financial Safety and Soundness Act: A Legal
Analysis, by Nathan Brooks.
CRS Report RS21896, The Department of the Treasury’s Authority to Regulate GSE
Debt: A Legal Analysis, by Nathan Brooks.
Housing Tax Policy
CRS Report RS22389, An Introduction to the Design of the Low- Income Housing
Tax Credit, by Pamela J. Jackson.
CRS Report RL33094, The Low-Income Housing Tax Credit: A Framework for
Evaluation, by Pamela J. Jackson.
CRS Report RL33025, Fundamental Tax Reform: Options for the Mortgage Interest
Deduction, by Pamela J. Jackson.
CRS Report RL32978, The Exclusion of Capital Gains for Owner-Occupied
Housing, by Jane G. Gravelle and Pamela J. Jackson.
CRS Report RS22052, Tax Treatment of Short Term Residential Rentals - Reform
Proposal, by Louis Alan Talley and Pamela J. Jackson.
Housing Discrimination
CRS Report 95-710, The Fair Housing Act: A Legal Overview, by Kamilah M.
Holder.

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