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As banks labor to raise capital seawalls, underwater home equity loans continue to wash against their foundations - at Wells Fargo, such assets are equal to nearly half of capital. Most of the loans are within initial periods where borrowers are required to make only monthly interest payments.
November 1 -
After a six-year delay, Fannie Mae and Freddie Mac will finally begin setting aside a portion of their revenues to fund the development of rental housing for low-income families.
December 11 -
The Federal Housing Finance Agency is in an uncomfortable spot in 2015, caught between a Republican majority already critical of its recent actions and an Obama administration bent on increasing access to credit in part by using the agency's powers.
December 31 -
At a hearing Tuesday, GOP lawmakers hammered FHFA Director Mel Watt for four hours over his recent decisions to allow Fannie Mae and Freddie Mac to buy loans with lower downpayments and provide money to two affordable housing trust funds.
January 27
Americans in search of affordable rental housing received a glimmer of hope this monthwhen Fannie Mae and Freddie Mac
The lawmakers in question are House Financial Services Committee Chairman Jeb Hensarling and Sen. Bob Corker, a member of the Senate Committee on Banking, Housing and Urban Affairs. Both object to the idea that a small percentage of the revenue generated by Fannie Mae and Freddie Mac is to be used to help low-income families put a roof over their heads, rather than going to the Treasury for general use.
The plan to use the mortgage companies to finance the trust fund was approved by Congress in 2008 and signed by George W. Bush. But it was suspended when the government-sponsored entities got into trouble because of bad loans. In December, Federal Housing Finance Agency head Mel Watt reinstated the suspended requirement.
Most of the mandated contributions from Fannie and Freddie go to the NHTF, which provides funding to state housing finance agencies based on a formula reflecting their housing needs. Ninety percent of the money must be used to help provide or preserve rental housing; of that assistance, 65% must be used for housing that's affordable for very low-income people. The remaining 35% of contributions go to the Capital Magnet Fund, a Treasury Department program that provides funding to community development financial institutions.
Hensarling
Corker issued a much more
Both men would like to see the affordable housing funding put on hold until Congress finally decides what to do about Fannie and Freddie and settles the question of what role federal financial guarantees should play in the secondary mortgage market.
This position ignores three very important facts. First, we have a
Second, Congress has already had six years to figure out what to do with Fannie and Freddie and is nowhere near finding a solution. Why should affordable housing be held hostage to this legislative impasse?
Lastly, the federal government has already been repaid for bailing out Fannie Mae and Freddie Mac. The Treasury no longer has a legitimate claim on all excess revenue.
Hensarling was also misleading when he called the funding "a gift for Acorn-like, liberal housing activists." The majority of the funding will be handled by state housing finance agencies, which have an excellent record of fiscal responsibility. This includes agencies in the states governed by Republicans as well as Democrats.
But most disturbing is how little these powerful men appear to care about the housing problem that's eating away at families and communities throughout the United States.
Of the 42.4 million renter households in America in 2013, roughly a quarter put more than 50% of their income toward rent, according to the
Some families eventually find they cannot afford to keep a place of their own at all. The number of school children in America who are homeless reached 1.3 million in the 2012-13 school year, according to the most recent available data from the U.S. Department of Education.
There's no reason to give Congress another six years to fiddle around with housing finance while the poor and homeless face a declining level of government housing assistance each year. The only feasible path is to end the government's federal conservatorship of the GSEs and return Fannie and Freddie to their stockholders, with an ongoing mandate to fund affordable housing.
If Congress ever gets around to creating a better system that provides equal benefits with less risk, they can let us know.
Andre Shashaty is president of the nonprofit Partnership for Sustainable Communities and author of
