Housing Bill a Boost for Affordable Sector

Having cleared Congress with the Senate’s passage over the weekend, and anticipated to be signed by President Bush without delay, the Housing and Economic Recovery Act of 2008 will provide assistance to thousands of homeowners facing foreclosure, but it will also provide a boost for the affordable housing industry, which has also fallen prey to the credit crunch. The legislation includes alterations of the Low-Income Housing Tax Credit and changes for mortgage lenders Fannie Mae and Freddie Mac that are designed to ease the process of developing affordable housing. The bill calls for the modernization of the LIHTC in an effort to spur the development of more affordable housing. Amidst the credit crises, the value of the credits declined and in a move to reinvigorate the value, the legislation stipulates an increase in the maximum credits–a larger increase for large-population states and a smaller amount for those states with lower populations. Additionally, LIHTC rules will be simplified. With regard to government-sponsored enterprises Fannie Mae and Freddie Mac, the housing bill calls for new oversight of the organizations, as well as new guidelines. The mortgage lenders’ affordable housing goals will be adjusted to provide liquidity to the rental housing markets for low-income residents. A new focus will be placed on addressing neglected areas of the affordable housing market including rural communities, manufactured housing and preservation projects. Additionally, Fannie Mae and Freddie Mac will fund the New Housing Trust Fund and Capital Magnet Fund, which will serve as finance tools for the development of affordable rental units.