The objective of the NHTF Campaign remains the expansion of affordable housing options for extremely low-income households by 3.5 million units over ten years. Significant funding for the NHTF, enough to end homelessness in the United States at the very least, is the National Low Income Housing Coalition’s single most important policy objective for the 113th Congress. NLIHC is dedicating new resources to achieving this goal.
The NHTF Campaign will pursue every possible dedicated revenue source, but will focus major attention on two funding avenues.
Funding the NHTF with savings achieved from modifications to the mortgage interest deduction. NLIHC proposes to lower the cap to $500,000 on the size of mortgages for which interest can be deducted and convert the deduction to a non-refundable tax credit. At a 20% credit, the number of homeowners who would receive a tax benefit would increase by 18 million, 92% of whom have incomes of $100,000 or less. These changes would produce between $20 and $30 billion a year that could be directed to the NHTF.
Representative Keith Ellison (D-MN) introduced H.R. 6677, the Common Sense Housing Investment Act, on December 18, shortly before the end of the 112th Congress. The legislation would convert the mortgage interest deduction to a flat-rate 20% tax credit, cap the maximum mortgage to receive a tax break at $500,000 and direct the majority of the savings gained from these modifications to the NHTF. The campaign will work with Mr. Ellison on the reintroduction of his bill as soon as possible and;
Contributions from the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. The NHTF is statutorily tied to the GSEs, as they were designated as its initial source of funding. The GSEs have never made a contribution to the NHTF, however, as they were placed into conservatorship shortly after the NHTF was authorized and all payments were temporarily suspended.
While comprehensive GSE reform legislation was not enacted in the 112th Congress, the Senate held several hearings on the topic, and the House Financial Services Subcommittee on Insurance, Housing, and Community Opportunity advanced a package of bills that would begin to dismantle the GSEs. Included in this package was H.R. 2441, legislation sponsored by Representative Ed Royce (R-CA) to eliminate the NHTF. The measure was voted out of the subcommittee on July 6, 2011, by a vote of 18-14. The bill was not considered by the full Committee on Financial Services, and as such ultimately failed with the end of the 112th Congress.
President Barack Obama included $1 billion for the NHTF in both budgets he proposed to the 112th Congress, as he did in the 111th Congress. Each was proposed as part of HUD’s budget, but on the mandatory side, requiring an offset. No offsets were identified by the Administration and the provisions were never taken up.
Click here to learn more about NLIHC’s housing tax reform proposal.