Federal Economic Recovery Bill Includes Low Income Housing Trust Fund
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The Housing and Economic Recovery Act of 2008 (HR 3221) was signed by President Bush on July, 30 and will take effect October 1, 2008. There are many provisions in the bill, but of particular interest to poor people and housing advocates is the establishment of the National Housing Trust Fund. This Trust Fund has been the object of much advocacy and organizing for years nation-wide. 90% of the funds must be used for production, preservation, rehab or operating rental housing. 10% will be for homeownership activities for first time buyers. 75% of the rental housing funds must benefit extremely low income households and the rest of the funds must benefit at least very low income households. The Trust Fund will be administered by HUD which will provide grants to states.
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The Housing Trust Fund is a permanent program with a dedicated source of funding. The funds will come from annual contributions made by Fannie Mae and Freddie. The first three years of the funds will be diverted to a reserve fund to cover losses from FHA’s refinancing troubled mortgages through HR3221”s HOPE for Homeowners program (100% in FY09, 50% in FY10, and 25% in FY11).
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Besides the Housing Trust Fund, HR3221 will include other housing related benefits. Reform of Fannie Mae and Freddie Mac will be regulated. It establishes a Capital Magnet Fund. One provision will address the stabilization of neighborhoods hurt by the foreclosure crisis, appropriating a one-time $3.9 billion in emergency assistants to areas most in need. Low income housing tax credits and tax-exempt bonds are included. There will be a $30 million increase to McKinney-Vento homeless assistance programs to help those that have become homeless due to foreclosures, whether they were renting or owning their homes. There are provisions for housing counseling services, public housing, protections for service members that are renters, a low income housing tax credit and tax-exempt bonds and other items.