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NLIHC President Sheila Crowley Testifies on Principles, Proposals for Housing Finance Reform
WASHINGTON - April 14 - As Congress considers reform of the housing finance system, including overhaul of Fannie Mae and Freddie Mac, NLIHC President Sheila Crowley testified before Congress on April 14 on principles that should guide such reform. She also called on Congress to fund the National Housing Trust Fund as a component of any reform, as a way to address the longstanding shortage of rental housing for the lowest income people.
The hearing, titled "Housing Finance - What Should the New System Be Able to Do?: Part II-Government and Stakeholder Perspectives," was held in the House Financial Services Committee by Chairman Barney Frank (D-MA).
"We are interested in the topic of today's hearing primarily because the housing finance system in the United States to date has failed miserably in assuring enough housing for all Americans and we want any reform that Congress undertakes to address that serious shortcoming," Ms. Crowley said in her testimony.
Ms. Crowley identified several principles that should be used to shape reform proposals, including:
- Federal subsidies to the housing sector should be directed to meeting the needs of those with the most serious housing problems first.
- All segments of the housing finance sector have a duty to contribute to solving the most serious housing problems.
- Federal policy should not favor one form of tenure over another; rather, federal policy should incentivize balance in the housing market and the full range of housing choices in every community.
In support of these reform principles, Ms. Crowley reiterated the need for Congress to fund the National Housing Trust Fund, which would provide communities with funds to build, rehabilitate and preserve rental housing for people with the lowest incomes. Legislation creating the National Housing Trust Fund passed in 2008, but Congress has not yet capitalized the fund.
Suggestions for funding sources that could be dedicated to the National Housing Trust Fund as part of housing finance system reform include:
- Fees on federal support to financial institutions. The federal government provides private financial institutions with low-cost funds through a variety of sources. A 5 basis point annual fee on outstanding low-cost funding balances could raise several billion dollars a year for the NHTF.
- Securitization fees. Congress should levy a fee on the securitization of mortgages by any capital markets participant.
- Capital gains tax surcharge. Homeowners can take a tax deduction for capital gains on the sale of their homes. A 10% surcharge on the percentage of the capital gains that a seller realizes at the time of sale would generate several billion dollars a year.
Sheila Crowley's complete testimony is
available at: http://www.nlihc.org/doc/
More information on the hearing is available