Proposal Would Set $1B for Affordable Housing

WASHINGTON - Lawmakers and community activists unveiled plans for an Affordable Housing Trust Fund that would provide as much as $1 billion a year for affordable housing projects.

However, the main source of funding, as much as $600 million a year to be set aside by Fannie Mae and Freddie Mac, is part of the ongoing legislative debate over reform of the secondary mortgage market. And passage of the bill is problematic, as it has died in each of the last three congresses and is now stuck in the Senate.

Rep. Barney Frank, chairman of the House Financial Services Committee and a chief sponsor of the Trust Fund bill, said he is confident the Senate will pass the bill on government sponsored enterprises this congress, which has already been passed by the House.

The Trust Fund would also be funded by rearranging certain federal housing programs. Rep. Maxine Waters, head of the Financial Services Subcommittee on Housing, said the first year's funding would be devoted to building affordable housing in New Orleans and elsewhere in the Gulf Coast where residents are still rebuilding from the devastation caused by hurricanes Katrina and Rita.

"We believe that if we are able to establish the credibility of this approach now, going forward we will be able to build on it," said Frank, during a news conference introducing the initiative.

The program would produce, rehabilitate or preserve 1.5 million new affordable housing units over the next 10 years, according to Frank, who has made the expansion of affordable housing funds his top priority as committee chairman.