On May 22, the House passed, 313-104, the Federal Housing Finance Reform Act (H.R. 1427), a bill to reform the government-sponsored entities (GSEs) providing mortgage funds. Prior to the final vote on H.R. 1427, Rep. Eric Cantor (R-VA) offered a motion to recommit the bill with instructions to add language narrowing the purpose of the affordable housing fund to expanding homeownership and to add language requiring that the fund in 2007 be used to assist those whose homes were destroyed by hurricanes Katrina and Rita or other natural disasters. The motion failed, 182-232.
Sponsored by Rep. Barney Frank (D-MA), H.R. 1427 would regulate the three GSEs Fannie Mae, Freddie Mac, and the Federal Home Loan Bank by establishing management and operating standards and creating the Federal Housing Finance Agency (FHFA) to oversee their activities. The bill also would create an affordable housing fund, which FHFA would manage and Fannie Mae and Freddie Mac would fund. Only very low- and extremely low-income individuals could receive financial assistance from the fund, which they could use for rental housing, purchasing a home, or building public infrastructure related to housing.
In addition, the bill contains a provision that would require each of the three GSEs to establish an Office of Minority and Women Inclusion that would be responsible for ensuring diversity in management, employment, and business activities. H.R. 1427 also would create the Diversity in Agency Workforce program to ensure diversity at the FHFA by recruiting individuals from minority-serving and women’s colleges and universities; partnering with girls’ high schools, high schools with majority minority student populations, or inner-city high schools; and partnering with organizations to provide internships within the FHFA to women and minority youth.
During consideration of the bill, the House adopted, by voice vote, an en bloc amendment that included an amendment by Rep. Eddie Bernice Johnson (D-TX) to allow the affordable housing fund to be used for programs that address financial literacy and education to promote the understanding of consumer, economic, and personal finance issues, including managing credit, identity theft, and predatory lending.
The House rejected, 164-256, an amendment by Rep. Randy Neugebauer (R-TX) to cap the affordable housing fund at the lesser of 1.2 percent of Fannie Mae and Freddie Mac’s total outstanding mortgages, or $520 million. The House also rejected, 148-269, an amendment by Rep. Spencer Bachus (R-AL) to eliminate the affordable housing fund provision from the bill.
