Congress Eyes Vast New Source of Affordable Housing Funds

WASHINGTON – Lawmakers expect to renew efforts in the opening days of the new Congress to pass a new regulatory scheme for the secondary mortgage market, which would tap Fannie Mae and Freddie Mac for as much as $750 million a year in affordable housing funds. The money would be collected by requiring the two secondary mortgage market giants to contribute 5% of their annual earnings to the fund, according to Massachusetts Congressman Barney Frank, who is scheduled to become chairman of the House Financial Services Committee today. The fund is good news for credit unions, who have been largely left out of the more than $350 million a year in affordable housing funds given out by the 12 Federal Home Loan Banks, which are controlled by the thrift industry, still bitter enemies of credit unions. Frank said yesterday restoring federal funding for affordable housing will be his top priority as head of the key financial panel. Funds collected from the two companies in the first year would be dedicated to helping victims of Hurricane Katrina, according to Frank. Frank expressed optimism the Democrats, who initially opposed a GSE bill, will be able to pass a measure that sets a new regulator over both Fannie and Freddie, as well as the FHLBs, without requiring Fannie and Freddie to sell off large portions of their mortgage portfolios, as the Republicans wanted to do. “We will pass a bill that will substantially increase the ability of the regulator to oversee Fannie Mae and Freddie Mac,” he said, during remarks at the National Press Club.