President Signs Landmark Federal Housing Bill
by Mike Wallace
A landmark federal housing reform and foreclosure mitigation bill that Senate Banking Chairman Christopher Dodd (D-Conn.) calls “the most important piece of housing legislation in a generation” was signed by President Bush on Wednesday after Congress approved the measure last week.
The bill, H.R. 3221, the American Housing Rescue and Foreclosure Prevention Act, is intended to bring additional relief to homeowners in response to the mortgage foreclosure crisis and strengthen the economy by stabilizing the credit markets. The bill would also help ease the burden of vacant housing caused by foreclosure on cities and states. The bill has been a top legislative priority for NLC for this Congress.
Last week, after a breakthrough in negotiations between Congress and the White House, the House passed the 700-page bill by a bipartisan vote of 272 to 152. The Senate followed by a vote of 72 to 13.
“The National League of Cities congratulates the Administration and Congress for enacting legislation that will help thousands of Americans stay in their homes, provide cities with the funding they need to stop the downward spiral of home vacancies and neighborhood deterioration, and stabilize the home financing system,” said NLC President Cynthia McCollum, council member, Madison, Ala., upon the President signing the bill.
“The Administration and Congress are often criticized for partisanship and stalemates on the most vexing problems facing our nation, so it is particularly important to acknowledge when the system works as the framers of the Constitution intended,” McCollum said. “The legislation signed today gives local governments the federal assistance they need to bolster and expand the measures they have begun on a city-by-city level. With Americans expected to lose $1.14 trillion in housing wealth by the end of 2008, Congress and the Administration finally did what our local officials must do every day in cities across America — they put aside partisanship and focused on getting the job done.”
Prior to the House vote, President Bush announced a withdrawal of his veto threat against the bill, and urged Congress to pass the measure quickly. Opponents of the bill conceded the President’s support all but guaranteed the bill’s eventual enactment.
The veto threat had been the main obstacle for the bill, which has undergone several revisions to accommodate a variety of interests and gain key bipartisan support.
Although the Administration was opposed to several provisions in the bill, the President mainly objected to a one-time allocation of nearly $4 billion in additional Community Development Block Grant (CDBG) funds to cities and states to help stabilize neighborhoods distressed by rising rates of vacant housing caused by foreclosure. Funding could be used for acquisition, rehabilitation or demolition of foreclosed and abandoned properties. Earlier this month, House leaders, concerned that the bill would not pass with a veto-proof majority, appeared ready to concede to the President and remove the funding.
Housing and Community Opportunity Subcommittee Chairwoman Maxine Waters (D-Calif.) worked closely with NLC and a coalition of other local government and community development groups to keep the CDBG funding in the bill.
In addition, NLC, along with a small group of other interested organization, met with Office of Management and Budget staff and other White House advisors to argue in favor of the $4 billion in CDBG neighborhood stabilization funds contained in the bill. NLC shared letters that local elected officials had written urging attention to the housing crisis and provided several examples of local efforts already underway to mitigate neighborhood decline caused by vacant housing that would benefit from CDBG funding under the bill.
Other provisions in the bill include: new authority for the Federal Housing Administration to refinance up to $300 billion in distressed mortgage loans; billions in new tax-exempt bond authority to help state housing finance agencies refinance distressed loans; the creation of an National Affordable Housing Trust Fund to help cities, states, and other organizations build new affordable housing; new authority for the Federal Home Loan Banks to guarantee tax-exempt municipal bonds as an alternative to traditional bond insurance; and additional funding for homebuyer and foreclosure counseling programs.
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