Order Code RL33879
Housing Issues in the 110th Congress
Updated July 20, 2007
Libby Perl, Maggie McCarty, and Bruce E. Foote
Domestic Social Policy Division
Eugene Boyd, Darryl E. Getter, 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
In the 110th Congress, several broad, overarching issues could frame the housing
debate. A recently developing issue involves the prevalence of subprime loans and
the increased mortgage default and foreclosure rates that have resulted from their
increased use. Congress has already held a number of hearings about subprime and
predatory lending in the 110th Congress, and the issue could affect regulation of some
federal housing programs. A second and ongoing issue 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. A third overarching issue is housing
affordability for low-income renters.
The 110th Congress has continued efforts begun in the 109th Congress to reform
oversight of the government-sponsored enterprises (GSEs) — Fannie Mae and
Freddie Mac — and Federal Home Loan Banks (FHLBs). On May 24 the House
passed and sent to the Senate H.R. 1427, which would create a new regulator for the
GSEs. The bill would also use profits from the GSEs to create an affordable housing
fund, the funds from which would be transferred to a National Affordable Housing
Trust Fund (H.R. 2895), if enacted. The Senate’s version of GSE and FHLB reform,
S. 1100, was introduced on April 12. The Senate bill contains some provisions that
are similar to those in the House bill, but also has some differences.
Another issue being considered in the 110th Congress involves potential
revisions to the Federal Housing Administration (FHA) loan insurance program.
Bills that would make changes to the FHA program include H.R. 1752, H.R. 1852,
and S. 947. On May 3, 2007, the House Financial Services Committee passed H.R.
1852; similar to H.R. 1427, the bill would authorize the transfer of some FHA funds
into an affordable housing fund.
Another agenda item for the 110th Congress is providing assistance to victims
of the 2005 hurricanes. On March 7, the House Financial Services Committee
approved the Gulf Coast Hurricane Housing Recovery Act of 2007 (H.R. 1227), and
on March 23, 2007, the House passed the bill. In the Senate, H.R. 1227 was referred
the Committee on Banking, Housing, and Urban Affairs. In addition, a similar
Katrina recovery bill (S. 1668) was introduced in the Senate on June 20, 2007.
Additional legislation in the 110th Congress includes Section 8 voucher reform
legislation, which was approved by the House on July 12, 2007 (H.R. 1851). In the
area of subprime and predatory lending practices, a number of bills have been
introduced, including S. 1222, S. 1299, S. 1386, and H.R. 2061. Two bills that
would reauthorize the McKinney-Vento Homeless Assistance Act have been
introduced (H.R. 840 and S. 1518). Additionally, Congress has continued to monitor
implementation of a new public housing operating fund rule.

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Key Policy Staff
CRS
Telephone and
Name
Area of Expertise
Division
E-Mail
Eugene Boyd
Community and economic
development, including
7-8689
Community Development Block
G&F
eboyd@crs.loc.gov
Grants, Brownfields,
empowerment zones
Bruce E. Foote
Homeownership, including FHA,
7-7805
predatory lending, rural housing,
DSP
bfoote@crs.loc.gov
RESPA
Darryl E. Getter
Housing finance issues, including
7-2834
mortgage underwriting and FHA
G&F
dgetter@crs.loc.gov
lending criteria
Pamela Jackson
Housing tax policy, including the
Low- Income Housing Tax Credit
and other incentives for rental
7-3967
G&F
housing and owner-occupied
pjackson@crs.loc.gov
housing
Maggie McCarty Assisted rental housing, including
7-2163
Section 8, public and assisted
DSP
mmccarty@crs.loc.gov
housing, HOME
Edward Vincent
Non-traditional mortgages,
Murphy
including lending oversight by the
7-4972
G&F
OCC, OTS, FDIC, and Federal
tmurphy@crs.loc.gov
Reserve
Libby Perl
Housing for special populations,
7-7806
including the elderly, disabled,
DSP
eperl@crs.loc.gov
homeless, HOPWA
N. Eric Weiss
Fannie Mae, Freddie Mac, and
7-6209
Federal Home Loan Banks, SBA
G&F
eweiss@crs.loc.gov
disaster loans
Division abbreviations:
! ALD — American Law
! DSP — Domestic Social Policy
! G&F — Government and Finance

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Overarching Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Subprime Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Securitization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Subprime Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Budget Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Housing Affordability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Rent Burdens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Housing Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
GSE Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Fannie Mae, Freddie Mac, and Federal Home Loan Bank Regulation . 6
Affordable Housing Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
FHA Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Predatory Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Housing After the 2005 Hurricanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Rebuilding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Ongoing Housing Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Housing Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Federally Assisted Housing Funding and Reform . . . . . . . . . . . . . . . . . . . 20
Section 8 Voucher Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Public Housing Operating Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
HOPE VI Reauthorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Assisted Housing Preservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Previous Legislative Efforts to Preserve Affordable Housing . . . . . . . 24
Preservation Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Housing Tax Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Low-Income Housing Tax Credit Modifications . . . . . . . . . . . . . . . . . 25
The LIHTC and HUD Assisted Housing Programs . . . . . . . . . . . . . . . 25
Homelessness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
CRS Reports on Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

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Housing Issues in the 110th Congress
Introduction
In the 110th Congress, several broad, overarching issues could affect the way in
which housing policy is developed. Three of these potential overarching issues are
subprime lending and the resulting increase in mortgage defaults and foreclosures;
a budget environment in which discretionary spending will likely be limited; and
concerns about housing affordability. Within the framework of these overarching
issues, proposals in the 110th Congress include 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, housing in the
Gulf Coast region in the wake of the 2005 hurricanes, Section 8 voucher reform,
oversight of the public housing operating fund, preservation of existing assisted
housing, and reauthorization of the McKinney-Vento Homeless Assistance Act. (See
the end of this report for a listing of CRS reports related to housing.)
Overarching Issues
Subprime Loans
Since the early 1990s, lenders have developed better methods for estimating the
risks posed by borrowers with blemished credit profiles, with the result that lenders
now offer home loans to consumers who earlier would have been denied mortgage
credit. These loans are often referred to as subprime loans. Typically, loans to
subprime borrowers have higher interest rates and fees than loans to prime borrowers
because subprime borrowers have historically experienced higher default rates.
Delinquency and foreclosure rates for subprime loans rose rapidly during the second
half of 2006 and the first half of 2007. On April 11, 2007, the Joint Economic
Committee issued a special report on rising foreclosures. The report predicted that
subprime foreclosures would continue to rise, and recommended immediate action
to minimize any costs that foreclosures can impose on surrounding communities.1
(For more information about subprime loans, see CRS Report RL33930, Subprime
Mortgages: Primer on Current Lending and Foreclosure Issues, by Edward Vincent
Murphy.)
Although the primary causes of foreclosure are personal financial setbacks (job
loss or medical calamity), the recent rise in subprime foreclosures may be partly due
to imprudent underwriting standards during the housing boom that occurred between
1 U.S. Congress Joint Economic Committee, Sheltering Neighborhoods from the
Foreclosure Storm, April 11, 2007, available at [http://jec.senate.gov/Documents/Reports/
subprime11apr2007.pdf].

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CRS-2
approximately 2002 and 2005. House prices rose rapidly in certain markets, which
may have encouraged some borrowers in hot markets to assume more debt than was
prudent. Rapidly rising prices encourage excess debt because, once in the home, the
borrower earns the house price appreciation, which can then be used to refinance the
house on more favorable terms. In order to take advantage of anticipated
appreciation, some subprime borrowers turned to mortgage products with low
introductory payments, but which risked higher future payments. Alternative terms
included interest-only (I/O) periods, adjustable interest rates (ARM), and negative
amortization (Neg-Am). Negative amortization loans allow borrowers to pay less
than the current interest due, which results in a higher loan balance. (For more
information about alternative mortgage terms, see CRS Report RL33775, Alternative
Mortgages: Risks to Consumers and Lenders in the Current Housing Cycle, by
Edward Vincent Murphy.)
The 110th Congress has held a series of hearings on subprime markets. For
example, on March 27 the House Financial Services Committee held “Subprime and
Predatory Mortgage Lending: New Regulatory Guidance, Current Market Conditions
and Effects on Regulated Financial Institutions.” The Senate Banking, Housing, and
Urban Affairs Committee held “Mortgage Market Turmoil: Causes and
Consequences” on March 22. After the Senate Banking Committee hearing,
Chairman Dodd on April 18 convened a summit of mortgage market stakeholders to
discuss ideas and propose solutions to subprime market volatility.
Securitization. Volatility in the subprime market and concerns about
predatory lending, discussed later in this report, have focused attention on the
financing process used in extending loans to more vulnerable borrowers. Less than
half of subprime loans are originated by banks that actually retain the loans in their
own portfolio. Instead, many subprime loans are originated by mortgage lenders,
sold to secondary markets, pooled in special-purpose trusts, and then issued as new
securities for sale to sophisticated investors. The transformation of debt into new
securities, often called securitization, allows a wider array of financial institutions to
fund mortgage debt. For example, a pension fund may not be able to directly fund
a risky subprime loan but may be able to purchase the least-risky slices of the
securitization pool. Securitization allows investors to tailor the pool slices, often
called tranches, to the risk tolerance of specific investors.
The 110th Congress is examining the role of securitization in recent subprime
volatility. The House Financial Services Committee held a hearing, “The Role of the
Secondary Market in Subprime Mortgage Lending,” on May 8. The Senate Banking
Committee held a hearing on April 17, “Subprime Mortgage Market Turmoil:
Examining the Role of Securitization.” One concern is that securitization may have
separated the up-front returns of mortgage originators from the long-term risk of
securities holders. If the securitization process does not have adequate controls,
mortgage originators could have the incentive to encourage borrowers to take on too
much debt because the mortgage originator might not suffer losses if the borrower
defaults in the future. The securitization community argues that investors are
sophisticated market analysts who include contract clauses in securitization
transactions to prevent mortgage originators from passing on this risk.

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CRS-3
One proposal to address securitization would make secondary market investors
liable for deceptive or predatory marketing by primary lenders. Some believe that
extension of liability to the secondary market, referred to as assignee liability, would
prevent secondary market investors from purposefully remaining ignorant of the
marketing strategies of primary lenders. In this view, if secondary market investors
were held liable, they would tighten underwriting standards and more closely monitor
the practices of their lending partners. Others argue that extension of liability could
create too much uncertainty for rating agencies to evaluate risks and lead to a
shutdown of the secondary market.
Subprime Legislation. Although at this time there is no legislation that
would federally fund a general rescue of overextended subprime borrowers, on May
3, 2007, Senators Schumer, Casey, and Brown proposed that $300 million be
appropriated to help refinance subprime loans. In addition, there are a number of
legislative proposals to address other aspects of subprime foreclosures. One obstacle
to avoiding foreclosure is the tax code’s treatment of debt forgiveness as income.
H.R. 1876, the Mortgage Cancellation Relief Act of 2007, excludes forgiveness of
certain mortgage debts from adjusted gross income. A change in the tax treatment
of debt forgiveness may make it easier for borrowers and lenders to renegotiate loans
and avoid the high costs of foreclosure proceedings.
Another bill, the Stopping Mortgage Transactions Which Operate to Promote
Fraud, Risk, Abuse, and Underdevelopment Act (STOP FRAUD Act, S. 1222),
introduced on April 25, 2007, would impose civil and criminal penalties against
mortgage brokers and lenders that defraud consumers in the process of extending
credit. The bill would also require lenders of home loans without certain disclosure
features to go through the state judicial or administrative process in foreclosure. In
addition, S. 1222 contains provisions that would allow borrowers going through
foreclosure proceedings to assert defenses against assignees of the original mortgage
lender.
The Borrower’s Protection Act of 2007 (S. 1299) would require mortgage
originators (including mortgage brokers) to verify the ability of an applicant to repay
a loan. The bill would also prohibit the practice of steering borrowers to mortgage
products that are not advantageous to them. Lenders and brokers would be prohibited
from mischaracterizing borrowers’ credit histories or the appraised value of the
property securing the loan. Another provision of S. 1299 would require borrowers in
rate spread mortgage transactions to make payments into escrow accounts for the
purposes of paying taxes and insurance. (Rate spread mortgages are those in which
the annual percentage rate meets or exceeds the rate at which institutions must report
the rate under the Home Mortgage Disclosure Act.)
Another bill, the Federal Housing Finance Reform Act of 2007 (H.R. 1427),
includes provisions that would require the Director of the Federal Housing Finance
Agency (created by H.R. 1427) to establish standards to characterize loans as
subprime, and to submit a report to Congress detailing the extent to which Fannie
Mae, Freddie Mac, and the Federal Home Loan Banks are involved in purchasing
subprime loans.

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CRS-4
The Homeownership Protection and Enhancement Act of 2007 (S. 1386),
introduced on May 14, 2007, emphasizes homeownership counseling and assistance.
The bill would direct the Secretary of HUD to award competitive grants to enable
state housing finance agencies to establish State Homeownership Protection Centers.
S. 1386 would require lenders to notify borrowers of the availability of
homeownership counseling and homeownership protection center services. Under
special circumstances, it would allow a one-time emergency grant to help troubled
borrowers to remain in their homes.
Two bills in the House of Representatives would address unfair lending
practices with licensing requirements. The Predatory Mortgage Lending Practices
Reduction Act, H.R. 2061, introduced by representative Stephanie Tubbs Jones on
April 26, 2007,2 requires certification of mortgage lenders specifically for subprime
federally related lending. The Secretary of the Department of Housing and Urban
Development would establish standards and procedures for suspension and
revocation of the certification. The Fair Mortgage Practices Act, H.R. 3012,
introduced by representative Spencer Bachus on June 12, 2007,3 provides for a
national system for licensing mortgage originators. This legislation would require
that a person engaging in the business of a loan originator first obtain and maintain
a registration as a registered loan originator or a license as a State-licensed loan
originator. These bills also provide for educational requirements for mortgage
originators.
The 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 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.4 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 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.5 Both House
(H.R. 3074) and Senate (S. 1789) versions of the FY2008 appropriations bills include
funding levels for HUD above the President’s request. The former Office of
2 Cosponsors of H.R. 2061 include Shelley Berkley, Alcee Hastings, Julia Carson, and Eddie
Bernice Johnson.
3 Cosponsors of H.R. 3012 include Shelley Moore Capito, Paul Gillmor, Gary Miller, Ralph
Regula, Vernon Ehlers, Steven LaTourette, Deborah Pryce, and Fred Upton.
4 Overview of the President’s 2008 Budget, p. 5, available at [http://www.whitehouse.gov/
omb/budget/fy2008/pdf/budget/overview.pdf].
5 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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CRS-5
Management and Budget Director stated that he would recommend that the President
veto any appropriations bill that exceeds the President’s request.6 As a result, it is
unclear whether the HUD funding bill would face a veto if the conference agreement
were to exceed the President’s request.
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
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
The ability of low-income households to afford housing is another issue that has
arisen in the 110th Congress through legislation such as the National Affordable
Housing Trust Fund Act (H.R. 2895). 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 bipartisan, congressionally mandated Millennial
Housing Commission’s 2002 final report identified “affordability”7 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%).8
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
6 Letter from Office of Management and Budget Director Rob Portman to Budget
Committee Chairman Spratt on the Concurrent Budget Resolution, dated May 11, 2007, and
reproduced by Congressional Quarterly, at [http://www.cq.com/displayfile.do?product
Id=4&docid=2510197].
7 Housing is generally considered affordable if it costs no more than 30% of a family’s
income.
8 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].

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CRS-6
14.3%).9 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.10 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 households 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 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
9 State of the Nation’s Housing 2006, p. 36, Table A-6.
10 Ibid., p. 25.

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CRS-7
Report RS21949, Accounting Problems at Fannie Mae, and CRS Report RS21567,
Accounting and Management Problems at Freddie Mac, both by Mark Jickling.)
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
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 Edward Vincent Murphy.)
On March 9, 2007, House Financial Services Committee Chairman Frank
introduced H.R. 1427, the Federal Housing Finance Reform Act of 2007. The bill
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. 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. Hearings on the legislation were held on March 12 and March 15, 2007. On
March 29, 2007, the House Financial Services Committee approved H.R. 1427 and
reported it to the House floor. The House passed H.R. 1427 on May 24, 2007, and
sent it to the Senate where it was referred to the Banking, Housing, and Urban Affairs
Committee. On April 12, 2007, Senator Hagel introduced S. 1100, The Housing
Enterprise Regulatory Reform Act of 2007. The Senate bill does not have an
affordable housing fund. The Banking Committee has not acted on either bill. (For
more information about GSE reforms in H.R. 1427 and S. 1100, see CRS Report
RL33940, H.R. 1427 and S. 1100: Reforming the Regulation of Government-

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CRS-8
Sponsored Enterprises, by Mark Jickling, Edward Vincent Murphy, and N. Eric
Weiss.)
Affordable Housing Fund. H.R. 1427 would also create an affordable
housing fund, which would be funded by contributions from Fannie Mae and Freddie
Mac based on a percentage of their total mortgage portfolios (essentially, mortgages
retained in portfolio plus those guaranteed and sold regardless of the form, such as
mortgage backed securities). The primary purpose of the fund in H.R. 1427 would
be to increase housing opportunities for extremely low- and very low-income
homeowners and renters. Specifically, the funds could be used for the production,
preservation, and rehabilitation of rental and homeownership housing, as well as for
related infrastructure costs.
In the first year of the Affordable Housing Fund, money would be allocated to
areas affected by the 2005 hurricanes. 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. The bill would end the
requirement for Fannie Mae and Freddie Mac to contribute money to the fund after
five years.
National Affordable Housing Trust Fund. The affordable housing fund
portion of the GSE reform bill includes a provision requiring that the affordable
housing funds be transferred to a National Affordable Housing Trust Fund upon
enactment of such a trust fund. A National Affordable Housing Trust Fund would
provide a dedicated source of revenue to support affordable housing. A coalition of
low-income housing organizations, led by the National Low Income Housing
Coalition, has advocated establishment of such a trust fund for several years.
Legislation to create a National Affordable Housing Trust Fund using a portion of
Federal Housing Administration receipts as the dedicated source of revenue was
introduced, but not enacted, in the 106th, 107th, and 108th Congresses. Since FHA
receipts are currently deposited in the U.S. Treasury, diverting them to a housing trust
fund would count as new spending. In the 109th and 110th Congresses, the NLIHC
advocated including an affordable housing fund provision funded by non-federal
resources in GSE reform legislation.
The most recent National Affordable Housing Trust Fund bill was introduced
on June 27, 2007, by House Financial Services Committee Chairman Frank and
several bipartisan cosponsors. The National Affordable Housing Trust Fund Act of
2007 (H.R. 2895) proposes to use affordable housing funds created by the GSE and
FHA reform bills (discussed below) to provide formula grants to states and localities
and competitive grants to Indian Tribes. The funds could be subgranted to for-profit
and non-profit organizations for the creation, rehabilitation, or financial support of
rental housing as well as downpayment and closing cost assistance for first-time
homebuyers. The bill would require that all funds be used to benefit families at or
below 80% of local area median income, and that 75% of all funds would have to be
used to benefit families at the higher of 30% of local area median income or the
poverty line. The bill has been referred to the House Financial Services Committee;
no companion legislation has been introduced in the Senate.

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CRS-9
FHA Reform
The Federal Housing Administration (FHA), an agency within HUD, 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 to borrowers, 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. (For more information on FHA, see CRS
Report RS20530, FHA Loan Insurance Program: An Overview, by Bruce E. Foote
and Meredith Peterson.)
In 1934, FHA was established to provide consumers with an alternative during
a lending crisis. Since then, FHA has insured more than 34 million properties. In
recent years, however, its market share has been dropping. In 1991, FHA loans
accounted for about 11% of the market; by 2004, that share had dropped to about
3%.11 The mortgages insured through the FHA program are also judged to have
become increasingly risky.12 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.13
To date, three bills to reform FHA have been introduced in the 110th Congress:
the 21st Century Housing Act (S. 947, by Senator Clinton), the Expanding American
Homeownership Act (H.R. 1752, by Representative Biggert), and the Expanding
Homeownership Equity Act (H.R. 1852, by Representative Waters). Each of these
bills aims to make FHA loans more marketable by increasing the loan amount
insured under the program, making it easier for low-income borrowers to get FHA
loans without down payments, and pricing mortgage insurance premiums according
to borrower risk.
FHA mortgage limits are set on an area-by-area basis, and under current law,
loans on one-family homes are limited to the lesser of 95% of the median home price
for an area, or 87% of the conforming loan limit for Freddie Mac and Fannie Mae.
All three bills — H.R. 1852, H.R. 1752, and S. 947 — would increase the FHA limit
11 Alan Greenspan and James Kennedy, Estimates of Home Mortgage Originations,
Repayments, and Debt on One-to-Four-Family Residences, Federal Reserve Board.
September 2005, available at [http://www.federalreserve.gov/Pubs/feds/2005/200541/
200541pap.pdf].
12 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.
13 Ibid.

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CRS-10
to the lesser of 100% of the area’s median home price, or 100% of the Freddie Mac
limit. Both H.R. 1752 and H.R. 1852 would increase the maximum loan term from
35 to 40 years, while S. 947 would increase it to 50 years.
Under current law, FHA borrowers must pay an up-front insurance premium of
1.5% of the loan amount for mortgages made after January 1, 2001. Borrowers must
also pay an annual premium of either 0.50% or 0.55% of the loan for eleven or thirty
years, depending on the amount of the down payment. In the 110th Congress, H.R.
1852 as introduced would allow FHA to increase its up-front premium to 3%, and
would have increased the annual premium to 0.75%. As amended, however, the bill
would maintain the current annual premium at 0.55%. Without annual premium
pricing flexibility, FHA may still have to rely on its current up-front premium pricing
to collect its insurance fees. FHA would argue that mimicking present industry
premium collection practices without greater annual premium pricing flexibility
would be difficult. (For more information about this issue, see CRS Report
RS22662, H.R. 1852 and Revisiting the FHA Premium Pricing Structure: Proposed
Legislation in the 110th Congress, by Darryl E. Getter.)
Except for veterans of the armed forces, present law requires borrowers to make
a down payment of at least 3% of the acquisition cost of the property in order to
obtain an FHA-insured loan. H.R. 1752 and S. 947 would give FHA the discretion
to base the down payment amount on the likelihood that the borrower will default.
Under H.R. 1752, the original down payment requirement would be temporarily
reinstated whenever the percentage of claims against the FHA insurance fund
increases by at least 25% over the claims rate for the previous calendar year. H.R.
1852 would exempt first-time home buyers from the 3% down payment requirement.
Each of the three FHA reform bills would allow FHA to set mortgage insurance
premiums based on the risk that the borrower poses to the FHA insurance fund. H.R.
1752 and H.R. 1852 would then permit FHA to reduce the insurance premiums for
borrowers who establish a record of timely mortgage payments. The payments would
be reduced after a five-year period under H.R. 1752 and after a three-year period
under H.R. 1852.
The present eligibility requirements for FHA-approved lenders are set by
regulation, not by statute. The regulation permits independent mortgage brokers to
become FHA-approved lenders, but they must have a minimum net worth of
$250,000, and they must be sponsored by lenders. H.R. 1752 would place the
requirements for mortgage brokers in statute by amending the National Housing Act.
The bill would also change the eligibility requirements to permit mortgage brokers
to become FHA-approved lenders if they are licensed in the state where the property
is located, they post a $75,000 surety bond, and they meet other FHA requirements.
Under present law, HUD may insure no more than 275,000 home equity
conversion mortgages (HECMs), a limit that HUD has already reached. The
maximum mortgage limit for HECMs is set on an area-by-area basis. H.R. 1752 and
H.R. 1852 would amend the National Housing Act to remove the limit on the number
of HECMs that may be insured, and provide that the national mortgage limit for
HECMs would be 100% of the Freddie Mac limit. H.R. 1752 would permit HECMs
to be used for the purchase of a one- to four-family home by an elderly borrower who

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CRS-11
would occupy one of the units as a principal residence. (For more information on
HECMs, see CRS Report RL33843, Reverse Mortgages: Background and Issues,
by Bruce E. Foote.)
The loan limits for various FHA multifamily housing programs are set by
statute, but HUD may, by regulation, increase those limits. The limits may be
increased by up to 140% in any geographic area where the construction costs exceed
the national average, and on a project-by-project basis, HUD may increase the limits
by up to 170% where justified by costs. S. 947, H.R. 1752, and H.R. 127 (the FHA
Multifamily Loan Limit Adjustment Act of 2007, introduced by Chairman Frank)
would amend the law to permit HUD to increase the limits by up to 170% on an area-
by area basis and by up to 215% on a project-by-project basis.
On May 3, 2007, the House Financial Services Committee approved H.R. 1852
and reported it to the House floor. Members made a number of amendments to H.R.
1852 during markup, including an increase in funds for housing counseling grants,
from $42 million to $100 million per year, and a cap on loan origination fees made
on reverse mortgages. In addition to these amendments, and to the other provisions
discussed above, the bill would create a National Housing Trust Fund with
approximately $250 million that would be garnered from the FHA program. The
fund would provide down payment assistance to low-income borrowers.
Predatory Lending
As discussed earlier in this report, the subprime mortgage market has made it
possible for borrowers with poor credit, low income, or little savings to qualify for
mortgage loans. The subprime market may be considered a dual market. There is
“good” subprime lending that opens up credit opportunities for higher-risk borrowers,
and there is “predatory” subprime lending. (Although prime loans may also be
predatory loans, they are most often subprime loans.) Under “good” subprime
lending, the loans are made with terms that appropriately compensate the lender for
the enhanced risk posed by the borrowers, and the terms include a reasonable return
to the lender. The loans are marketed in a manner that is fair to borrowers and
understandable by borrowers.
Predatory subprime lending is the opposite of good subprime lending. Predatory
lenders make loans on terms that overcompensate the lenders for the risk posed by
the borrowers. The loans are marketed on terms that are not fair to the borrowers or
understandable to the borrowers. The loans are often actively and purposely marketed
to low-income minorities and the elderly.14
14 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. 69, available at [http://www.huduser.org/Publications/pdf/
treasrpt.pdf].

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CRS-12
The Home Owner Equity Protection Act (HOEPA), P.L. 103-325,15 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.16
The 110th Congress has begun to examine the practices of predatory lending.
The Senate Banking Committee held a hearing on February 7, 2007, entitled
“Preserving the American Dream: Predatory Lending Practices and Home
Foreclosures.” In addition, legislation has have been introduced in the 110th
Congress that contains provisions intended to address lending practices that could be
considered predatory. Two of these bills are H.R. 1289 and H.R. 2061.
The Community Reinvestment Modernization Act of 2007 (H.R. 1289) would
amend the Community Reinvestment Act of 1977 (CRA) to provide that if a
regulated financial institution is found to have engaged in a credit practice, such as
predatory lending, that negatively affects a community or neighborhood, the loans
would not count toward determining whether the institution is meeting the credit
needs of the entire community, and the CRA rating of the institution would be
reduced accordingly. The bill would also allow limits to be placed on the ability of
the institutions to sell their loans to Fannie Mae, Freddie Mac, and Ginnie Mae.
The Predatory Mortgage Lending Reduction Act (H.R. 2061) would amend the
Real Estate Settlement Procedures Act of 197417 to prohibit any person from
providing mortgage lending services or mortgage brokerage services in connection
with a subprime federally related mortgage loan unless such a person were certified
by HUD as having been adequately trained with regard to subprime lending. H.R.
2061 would also make it illegal to engage in any unfair or deceptive act or practice
when providing mortgage lending or mortgage brokerage services on a subprime
federally related mortgage loan. HUD, the Federal Reserve, and the Federal Trade
Commission would be able to jointly issue interpretive rules, statements of policy,
and regulations defining such acts and practices. Violators would be subject to a civil
15 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.
16 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 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].
17 12 U.S.C. §2610.

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CRS-13
penalty of up to $10,000 for the first violation and up to $20,000 for subsequent
violations.
The Predatory Mortgage Lending Reduction Act would also amend the
Consumer Credit Protection Act18 to add a title cited as the “Consumer Fairness Act.”
The title would declare as unenforceable a provision in any consumer contract or
transaction that requires binding arbitration to resolve any controversy arising out of
the contract. An exception would be made for a written agreement entered into after
the controversy that calls for binding arbitration of the controversy.
H.R. 2061 would also amend the Community Development Banking and
Financial Institutions Act of 199419 to authorize the Community Development
Financial Institutions Fund to make grants to nonprofit community development
corporations for the education and training of borrowers and community groups
regarding predatory lending practices.
In addition, the bill would make a number of changes to HOEPA. It would
! require that lenders that enter into high-cost mortgages establish and
maintain a best-practices plan in accordance with regulations that the
Federal Reserve Board would be directed to prescribe. All
employees, subcontractors, and agents involved in such loans would
be trained in the best-practices plan of the lender, and the lender
would be required to periodically review and evaluate their
performance.
! prohibit lenders from imposing or collecting fees on high-cost
mortgages if they had not been previously disclosed. It would also
prohibit lenders from imposing or collecting a previously disclosed
fee in excess of the amount disclosed, unless the charge were
reasonable and could not have reasonably been foreseen (as
determined by regulations the Federal Reserve Board would be
required to provide).
! require that all disclosures of charges and fees on high-cost
mortgages be separately enumerated and clearly labeled and
described. It would also require that disclosure of the right of
rescission regarding high-cost mortgages be provided in plain
language before the mortgage is executed.
18 15 U.S.C. §1601 et seq.
19 12 U.S.C. §4701 et seq.

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CRS-14
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, more than 305,000 were
severely damaged.20 Severe damage includes real or personal
property loss above certain dollar thresholds.21
! Louisiana, specifically New Orleans, had the highest percentage of
severely damaged units; approximately 67%, or 204,737 renter- and
owner-occupied homes with severe damage were located in
Louisiana.22
! Of the 305,000 severely damaged units in all five affected states,
most were owner occupied — about 63% or 193,000 homes.23
! 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%).24
! Approximately 112,000 rental units in the five affected states were
severely damaged.25
! 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.
20 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].
21 For a detailed breakdown of damage that qualifies as severe, see ibid., pp. 4-5.
22 Ibid.
23 Ibid.
24 Ibid.
25 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].

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CRS-15
1227), which was subsequently approved by the full House on March 21, 2007. (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.26 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.27 (For more information, see CRS Report RL33761, Rebuilding Housing
After Hurricane Katrina: Lessons Learned and Unresolved Issues, by N. Eric Weiss.)
Many Members of Congress have expressed displeasure at the perceived slow
pace of rebuilding after Katrina.28 While there are indications that the pace of
rebuilding is quickening,29 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.30
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.
26 Federal Emergency Management Agency, By the Numbers — One Year Later: FEMA
Recovery Update for Hurricane Katrina, August 22, 2006, available at [http://www.fema.
gov/news/newsrelease.fema?id=29109]. All numbers are as of August 18, 2006.
27 See P.L. 109-148 and P.L. 109-234.
28 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].
29 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].
30 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].

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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.31 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.32 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.
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.33 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.34
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
31 Deputy Secretary Bernardi’s testimony is available at [http://www.house.gov/apps/list/
hearing/financialsvcs_dem/htbernardi020607.pdf].
32 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.
33 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.
34 For more information, see CRS Report RL33729, Federal Emergency Management Policy
Changes After Hurricane Katrina: A Summary of Statutory Provisions, coordinated by Keith
Bea.

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CRS-17
communities.35 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
Currently, both HUD and FEMA provide ongoing rental assistance through two
programs to tenants displaced by the 2005 hurricanes. HUD provides rental
assistance through the Disaster Voucher Program (DVP) to households that lived in
HUD-assisted housing or were homeless prior to Hurricanes Katrina and Rita.
FEMA provides rental assistance to any other tenant or homeowner in need of
housing assistance. Beginning on September 1, 2007, however, HUD will assume
administration of the FEMA rental assistance program for the program’s duration.
This new arrangement was announced on April 26, 2007.36
Although both the HUD and FEMA programs provide rental assistance to
disaster victims, they operate independently. HUD provides DVP rental assistance
through vouchers. 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 had
been assisted through DVP;37 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 was originally scheduled to end
September 30, 2007, at which time families were expected to transition back onto the
programs from which they were initially displaced. However, the FY2007
supplemental appropriations act (P.L. 110-8) extended the period of DVP availability
to December 31, 2007. There are remaining questions regarding what will happen
to families who were homeless before the storm and those whose homes are still
under construction. Provisions included in H.R. 1227, The Gulf Coast Hurricane
Housing Recovery Act (discussed below) would further extend the length of time
families could receive DVP assistance. (For more information about DVP see CRS
Report RL33173, Hurricane Katrina: Questions Regarding the Section 8 Voucher
Program, by Maggie McCarty.)
FEMA began providing short-term rental assistance to disaster victims just after
Hurricanes Katrina and Rita struck; after six months, in February of 2006, FEMA
began to convert the short-term assistance to longer-term rental assistance (up to 18
35 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].
36 See HUD News Release, Housing assistance extended for Gulf Coast hurricane victims
for another 18 months, April 26, 2007, available at [http://www.hud.gov/news/release.
cfm?content=pr07-051.cfm], and HUD, Fact Sheet: Providing Continued Assistance for
Gulf Coast Hurricane Victims, available at [http://www.hud.gov/news/releases/
pr07-051.cfm], accessed April 30, 2007. Hereinafter “HUD News Releases.”
37 Continuing Progress: A 1-Year Update on Hurricane Recovery and Rebuilding.

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CRS-18
months). The assistance has been extended twice more since then. On February 28,
2007, President Bush extended the assistance for an additional six months. And with
the April 26, 2007, announcement of HUD’s administration of the program,
assistance was extended through March 1, 2009. A floor amendment added to H.R.
1227 would provide for otherwise income-eligible families still receiving rental
assistance or living in trailers to transfer into the Section 8 voucher program upon
expiration of their FEMA assistance.
Although HUD will assume administration of FEMA’s rental assistance
program, FEMA will continue to administer the trailer program. It has begun offering
tenants an opportunity to purchase their trailers. Beginning in March 2008, families
receiving rental assistance and living in trailers will be required to pay a portion of
the cost of their housing. Each month, the amount they are required to contribute will
increase, with an exemption made for the elderly and disabled.38
Legislation
On March 21, 2007, the House approved the Gulf Coast Hurricane Housing
Recovery Act of 2007 (H.R. 1227). The bill contains a wide range of provisions,
including those that would make modifications to, and increase reporting on,
assistance provided in earlier supplemental appropriations acts. The bill would also
clarify the treatment of certain federally assisted properties. Key provisions are
summarized below.
CDBG-related provisions 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.
! prohibit FEMA from withholding hazard mitigation funds from
Louisiana based on a provision in the Louisiana Road Home
program that penalizes families who do not agree to live in the state.
! require quarterly reports from GAO on CDBG spending.
! 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.
! 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.
38 See HUD News Releases.

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CRS-19
! prohibit HANO from demolishing or disposing of public housing
without a plan to replace each unit with a public housing (or other
comparable) unit.
! guarantee a right of return to all New Orleans public housing
residents wishing to return.
! 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.
! 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.
! authorize the extension of 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.
! clarify the allocation of FY2007 Section 8 voucher renewal funding
for disaster-affected areas.
! direct the Secretary to approve feasible proposals to preserve
project-based rental assistance connected to damaged privately
owned multifamily rental properties.
! 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.
! 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 in the Hurricane-affected regions, 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.
! 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.
! provide for otherwise income-eligible FEMA housing assistance
recipients to transfer to the Section 8 voucher program upon
termination of their FEMA assistance.
! require GAO to study the distribution of federal funds to Gulf Coast
states.
! commend Americans for the rebuilding efforts.
Several of these provisions proved controversial during both committee markup
and floor consideration. 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.
On June 20, 2007, the Gulf Coast Housing Recovery Act of 2007 (S. 1668) was
introduced in the Senate. The bill contains many of the same provisions as H.R.
1227, including a pilot program to use CDBG funds for development in Louisiana,

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CRS-20
a requirement that the Housing Authority of New Orleans make at least 3,000 public
housing units available to residents, and the extension of the Disaster Voucher
Program (to June 30, 2008), together with the right of tenants to covert DVP
vouchers to regular vouchers. The bill was referred to the Senate Banking
Committee.
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 changes39
have all worked together to limit growth in the cost of a voucher within the structure
of the current program. The other rationale for program reform has to do with
reducing administrative complexity in the program and providing the public housing
authorities (PHAs) that administer the program 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, a bipartisan Section 8 voucher reform bill was approved
by the House but not enacted before the end of the Congress (H.R. 5443). A similar
bill, the Section 8 Voucher Reform Act of 2007 (H.R. 1851), has been introduced in
the 110th Congress. The bipartisan bill is sponsored by Chairwoman Waters of the
subcommittee of jurisdiction in the House, and is cosponsored by Chairman Frank
of the full committee and the Ranking Members of both the full committee
(Representative Bachus) and the subcommittee (Representative Biggert). It would
change the way income is calculated for the purposes of eligibility and rent-setting
(for the voucher program, as well as public housing and project-based Section 8) and
adopt a new method for allocating voucher funds, among other changes. On May 25,
2007, the House Financial Services Committee passed H.R. 1851 with a number of
amendments. Among them were provisions to expand the Moving to Work program
(renamed the Housing Innovation Program) and authorization of up to 20,000 new
incremental vouchers in each of the next five years. On July 12, 2007, the bill was
approved by the full House.
The President’s FY2008 budget request indicates that HUD will submit its
reform proposal, although, to date, one has not been introduced. (For more
39 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-21
information, see CRS Report RL33270, The Section 8 Housing Voucher Program:
Reform Proposals, by Maggie McCarty.)
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 qualify for a higher budget under the
new allowable expense levels and others 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, the same
amount that was provided in FY2006. According to HUD estimates, the requested
FY2007 funding level would have led to a 79% proration. PHA advocacy groups
protested that HUD’s request was 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 level will be sufficient
to increase the proration level to about 83%.40 (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, which, according to HUD’s Congressional Budget Justifications,
would result in a proration level of about 80%.
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
40 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]

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CRS-22
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.41 A subsequent draft notice published by HUD stated
that the deadline was October 15, 2007.42 HUD then published a statement on its
website that the April 15 deadline was the correct deadline. PHA advocacy groups
actively lobbied for HUD to use the October 15, 2007, deadline, and asked Members
of Congress to support legislation requiring HUD to use that deadline.43 On April
10, 2007, HUD announced that it was postponing the deadline to October 15, 2007.44
The second controversy surrounds how PHAs should demonstrate that they have
converted to asset-based management. HUD published preliminary guidance in
September 2006.45 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
conversion to asset-based management until after the authorizing committees have
“had the opportunity to look into the issue further.” As noted previously, HUD has
since announced that it is postponing the deadline to October 15, 2007. HUD has
also announced the launch of a new help desk designed to address questions and
issues PHAs may encounter in the transition to asset-based management.46
41 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.
42 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.
43 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.
44 HUD’s website, accessed April 18, 2007, at [http://www.hud.gov/offices/pih/programs/
ph/am/].
45 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.
46 HUD’s website, accessed April 18, 2007, at [http://www.hud.gov/offices/pih/programs/

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CRS-23
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 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 (S. 829) 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 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 begun to expire or,
in some cases, property owners have chosen to pay off their mortgages early and end
46 (...continued)
ph/am/helpdesk.cfm].
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)
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.

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CRS-24
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. The program applies
to owners of multifamily housing projects with project-based Section 8 rental
assistance contracts in which the rent collected is considered above-market. Mark-to-
Market allows those owners to renew their rental assistance contracts with HUD,
although at a lower rate, while also restructuring their outstanding debt on the
property. The program is designed both to ensure that HUD pays reasonable market
rents for subsidized properties and to provide incentives for owners of assisted
properties to renew their contracts with HUD. The FY2007 yearlong continuing
resolution (P.L. 110-5) extended the Mark-to-Market program through the end of
FY2011.
Preservation Legislation. 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
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-25
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).
The Mark-to Market Extension Act (H.R. 647/S. 131) would make eligible for
the program certain properties where rent is not considered above-market, as long as
the HUD Secretary determines that debt restructuring is necessary to preserve the
property. The bill would also allow the Secretary to waive the rent limits established
in the Mark-to-Market statute when it enters into rental assistance contracts with
property owners in federally declared disaster areas. In most cases, the law limits the
rent levels set in the rental assistance contract extensions to those of comparable
properties in the area.
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.
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 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

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CRS-26
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. Disabilities include
mental illness, physical illness including HIV/AIDS, and addiction to alcohol and
drugs. 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 110th Congress, two bills have been introduced that would reauthorize the
McKinney-Vento Homeless Assistance Act. The Homeless Emergency Assistance
and Rapid Transition to Housing Act of 2007 (H.R. 840) was introduced on April 14,
2007, and the Community Partnership to End Homelessness Act of 2007 (S. 1518)
was introduced on May 24, 2007. On June 21, 2007, the Senate Banking Committee
held hearings regarding reauthorization of McKinney-Vento.
The two bills, H.R. 840 and S. 1518, are similar in that they would both
consolidate many of the homeless housing programs that exist in current law and
codify the system through which the funds are distributed (the President has also
urged the consolidation of these three programs in his last six budgets). Both bills
would also allow a greater portion of funds to be used for homelessness prevention
activities, although they would each make funds available differently.
Among the differences in the bills are the way in which “homeless individual”
is defined; H.R. 840 would expand the scope of HUD’s definition to include families
and individuals who are sharing another’s housing due to loss of their own housing
or economic hardship, while S. 1518 would retain the current definition. However,
S. 1518 would change the definition of chronically homeless to include families with
an adult member who has a disability (currently only unaccompanied individuals are
included). The Senate bill would also create a separate process for rural communities
to apply for grants, while in the House bill, rural communities would be part of the
same application process as non-rural areas. The House bill would authorize the
homeless assistance grants at $2.5 billion for FY2008, and the Senate bill would
provide an authorization level of $1.8 billion. However, in S. 1518, permanent
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-27
housing contracts would be renewed through the Section 8 program rather than
through the funds made available for the homeless assistance grants. (For more
information on the homeless assistance grants, see CRS Report RL33764, The HUD
Homeless Assistance Grants: Distribution of Funds, by Libby Perl.)
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, Eugene Boyd,
and Meredith Peterson.
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.
Section 8 Rental Assistance
CRS Report RL32284, An Overview of the Section 8 Housing Program, by Maggie
McCarty.

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CRS-28
CRS Report RL33270, The Section 8 Housing Voucher Program: Reform Proposals,
by Maggie McCarty.
CRS Report RL33929, Recent Changes to the Section 8 Voucher Renewal Funding
Formula, 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.
Special Populations
CRS Report RL30442, Homelessness: Targeted Federal Programs, and Recent
Legislation, coordinated by Libby Perl.
CRS Report RL34024, Veterans and Homelessness, by Libby Perl.
CRS Report RL33764, The HUD Homeless Assistance Grants: Distribution of
Funds, by Libby Perl.
CRS Report RL33956, Counting the Homeless: Homeless Management Information
Systems, 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 RL31753, Immigration: Noncitizen Eligibility for Needs-Based Housing
Programs, by Alison Siskin and Maggie McCarty.
Housing Finance
CRS Report RL33775, Alternative Mortgages: Risks to Consumers and Lenders in
the Current Housing Cycle, by Edward Vincent Murphy.
CRS Report RL33930, Subprime Mortgages: Primer on Current Lending and
Foreclosure Issues by Edward Vincent Murphy.
CRS Report RS20530, FHA Loan Insurance Program: An Overview, by Bruce E.
Foote and Meredith Peterson.

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CRS-29
CRS Report RS22662, H.R. 1852 and Revisiting the FHA Premium Pricing
Structure: Proposed Legislation in the 110th Congress, by Darryl E. Getter.
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.
Housing Government-Sponsored Enterprises (GSEs)
CRS Report RL33940, H.R. 1427 and S. 1100: Reforming the Regulation of
Government-Sponsored Enterprises, by Mark Jickling, Edward Vincent
Murphy, and N. Eric Weiss.
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 RS21724, GSE Regulatory Reform: Frequently Asked Questions, by N.
Eric Weiss.
CRS Report RL32815, Federal Home Loan Bank System: Policy Issues, by Edward
Vincent Murphy.
CRS Report RS22172, Proposed Changes to the Conforming Loan Limit, byMark
Jickling.
Housing Tax Policy
CRS Report RS22389, An Introduction to the Design of the Low- Income Housing
Tax Credit, by Pamela J. Jackson.
CRS Report RL33904, The Low-Income Housing Tax Credit: A Framework for
Evaluation, by Pamela J. Jackson.

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CRS-30
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 Pamela J. Jackson.
Housing Discrimination
CRS Report 95-710, The Fair Housing Act: A Legal Overview, by Kamilah M.
Holder.
crsphpgw

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