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The American Homeownership and Economic Opportunity Act Passes House Banking Committee March 20 -- A bill which would expand homeownership opportunities has passed the House Banking and Financial Services Committee by a voice vote on March 14. The American Homeownership and Economic Opportunity Act (H.R. 1776) would expand eligibility for the HOME and CDBG programs to 150% of the area median income (as long as they are public employees), when used for homeownership. The Center for Community Change warns that the use of CDBG and HOME funds for "people with $94,000 incomes" is unfair, as many of the benefits for the more affluent public employees would be more lucrative than those going to low income people.
CCC also warns that the bill would exempt another 10 jurisdictions from the CDBG and HOME income cap, allowing them to spend these monies originally meant solely for low and moderate income people on those with incomes up to 80% of their area's median income. This means that someone living in San Jose CA who earns $66,000 (80% of the area median income of $82,600) could benefit from CDBG funds. The income cap adjusts the maximum income amount for affluent areas by establishing a cut-off of 100% of the nationwide median income of $47,800. This bill would exempt at least another 10 jurisdictions, as the 1998 bill that actually read the same ended up exempting 68 jurisdictions in 10 metropolitan areas.
According to the National Low Income Housing Coalition, there are a number of positive measures in the bill, such as providing for a pilot program to demonstrate the use of Section 8 vouchers for the purchase of a home by a disabled family.
Also included in the bill is an initiative to sell local governments thousands of HUD-owned homes for $1 each if HUD has been unable to sell the home for more than six months. The local governments may then rent or sell the homes to low and moderate income families, to first time homebuyers or to groups that will use the homes to provide services such as child care or job training centers.
CCC is recommending you to urge your representative to oppose the previously mentioned two provisions in the H.R. 1776 as they divert funds meant for the truly poor to those with higher incomes and less need.
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HUD Calls on Fannie Mae and Freddie Mac to Increase Housing Purchases March 20 --HUD is proposing a new rule which would require the two government-sponsored enterprises (GSEs) of Freddie Mac and Fannie Mae to significantly increase their purchases of affordable housing mortgages each year. Fannie Mae and Freddie Mac are the two federally chartered companies that buy mortgages from lending companies such as banks who deal directly with consumers. The two GSEs have been required by Congress to live up to mortgage purchase goals set by HUD in order to serve the affordable housing needs of low and moderate income Americans.
The goals proposed by HUD are up for review and include increased targeting of low and moderate income housing, housing in under-served areas and special multi-family properties such as those in the Mini Loan Program UNHP has worked on with Fannie Mae.
For more information on the goals, see the Center Community Change's Policy Alert #182 or read the full proposal (very long) at www.hud.gov/gse
As a response, Fannie Mae Chairman Frank Raines has announced a committment of $2 trillion in loans before the end of the decade to go to families who would otherwise have difficulty competing in the housing market, including more women, new immigrants and racial minorities. This announcement also comes following news that Fannie Mae had reached its 1994 goal of $1 trillion going to low and moderate income people ten months before the deadline of December 2000.
Fannie Mae and Freddie Mac Trail Banks in Financing American Dream of Homeownership
March 2 -- The National Community Reinvestment Coalition, in a report funded by HUD, finds that Fannie Mae and Freddie Mac are behind the nation’s banks in financing single family and home mortgage loans to minorities and low- and moderate-income borrowers. NCRC’s report, co-authored by the KRA Corporation, concludes that Fannie Mae and Freddie Mac are more successful in financing loans made to underserved populations where they collaborate with banks, local public agencies, and community organizations in designing affordable lending programs.
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President Proposes Expansion of Earned Income Tax Credit March 8 -- President Clinton has proposed a ten-year, $23.6 billion expansion of the Earned Income Tax Credit which will be included in this coming year's budget. Established in 1975, the EITC is credited with helping 19 million low income families this past year alone, and pulling 4 million of those families out of poverty. The credit has been expanded three times in the past (1986, 1990 and 1993) and will likely continue to receive bi-partisan support. However, the expansion of the credit may be tied to a giant tax-cut bill by Congressional Republicans.
According to the National Low Income Housing Coalition, the President's proposal would increase the maximum credit for families with 3 or more children, expand the credit for married two-earner households, lower the phase-out rate and encourage the use of 401(k) accounts by EITC beneficiaries.
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CRA Modernization Bill to be Introduced March 8 -- It has now been a few months since "Financial Modernization" legislation was passed, changing the way banks, securities, and insurance companies do business, while weaking the Community Reinvestment Act (CRA) of 1977. CRA requires banks serve economically depressed areas and to invest money and other resources in those neighborhoods. "Financial Modernization" weakened CRA by not modernizing it to keep up with the new regulations, allowing banks to find many loopholes to avoid investing as much in the neighborhoods that need the resources.
A new bill introduced by Representatives Gutierrez (D-IL) and Barrett (D-WI) seeks to help CRA keep up with these changes in order to remain current and effective. The Barrett-Gutierrez bill would extend CRA-like requirements to non-depository lending institutions, insurance companies and securities firms, whose roles were expanded last year, according to the National Low Income Housing Coalition.
NLIHC also reports that the bill would extend Home Mortgage Disclosure Act-like reporting requirements to insurance activities and small business and farm lending. The bill would also do away with Financial Modernization's new reporting requirement that forced community groups to report private CRA-related contractual agreements with banks, as well as returning CRA exam cycles to how they were prior to the 1999 law.
Learn More About CRA
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Study Shows States are Denying Medicaid and Food Stamps to Low Income Families February 29 -- The National Campaign for Jobs and Income has released an analysis which shows that many states are denying low income families who are leaving welfare for work or applying for welfare Medicaid and Food Stamps, often in direct violation of federal law.
NCJI is a new grassroots coalition of 65 community organizations in 35 states working for renewed federal commitment on poverty and income inequality issues. Their analysis documents a dramatic drop in Medicaid and Food Stamp enrollment over the last few years that far exceeds the decline of the poverty rate.
NCJI has also released information stating that the vast majority of states are not spending millions of dollars of their TANF (Temporary Aid to Needy Families) funds, including New York which has $1.12 billion (or 16% of their total allottment) in unspent TANF monies. This number (the second largest in the nation) has been on the rise in the last few years, despite persistent and often increased poverty in the state.
Unspent funds mean the federal government may decrease allocation in years to come. According to NCJI, New York could use unspent TANF funds for providing supports for low-income workers and those leaving welfare for work, such as child care, worker stipends and transportation stipends. The State could also increase grant levels, education and training, public jobs and housing assistance for poor families still receiving welfare.
New York is actually one of six states which has diverted TANF funds to other programs, including tax cuts!
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