Funding the National Housing Trust Fund

The National Housing Trust Fund was signed into law in July of 2008. Since then, NLIHC and the National Housing Trust Fund Campaign have focused on securing short- and long-term funding for the program.

Back in June, we held a webinar where we reported to the NHTF Campaign about the NHTF regulations proposed by HUD, and the funding sources currently identified for the program.

The first source we discussed is the $1 billion mandatory, one-time funding requested by President Obama in his FY12 budget. The President left to Congress finding a way to offset this expenditure in the budget, but it could be possible to find an offset in a future tax bill. The President requested NHTF funding in FY10 and FY11 as well.

The second possible source is a bill in both the House and Senate that would provide $1 billion in one-time funding from proceeds from the sale of TARP warrants. These bills- S. 489, sponsored by Sen. Reed (D-RI), and H.R. 1477, sponsored by Rep. Cummings (D-MD)- have some potential for controversy as some Members of Congress say all new revenue should go to deficit reduction.

A third option for funding the NHTF could come from a new housing finance structure that could someday replace the current government supported enterprises (GSEs) for housing, Fannie Mae and Freddie Mac. While such a funding source could result in $1 billion to $5 billion in yearly funding for the NHTF, there is some controversy. Housing finance reform discussions in the House of Representatives have included a bill to abolish the NHTF, which passed out of subcommittee.

Finally, the fourth source of funding identified for the NHTF is reforming the mortgage interest deduction (MID) and using the savings to fund the NHTF. The MID subsidizes home ownership and goes to just 25% of taxpayers, with the top 32% of taxpayers by income receiving 72% of the benefit. Many advocates are beginning to see the inequities inherent in subsidizing home ownership for higher income people to this extent, and there is a growing call for a rebalancing of American housing policy. MID reform could result in up to $30 billion annual for the NHTF, while actually increasing the percentage of home owners eligible for the deduction.

Want to support the National Housing Trust Fund? Contact your Member of Congress and let him or her know that investment in the NHTF is the right thing to do for our communities- and that there are funding sources out there waiting to be tapped.

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