Housing Bills Vie With Deficit Cutting

Now that the 99th Congress is in session and Ronald Reagan has been inaugurated for a second term in the White House, the nation’s capital is focusing on our huge national deficit, possible tax changes, the encouraging state of the economy and possibly significant negotiations with the Soviet Union in regard to world peace.

Yet, housing-oriented associations and persons are basking in the recent report that 1984 was a better year for new housing production than was 1983 (a relatively strong year). Also, mortgage rates are at their lowest since late 1982. Even nationally-known economist Henry Kaufman recently said that all interest rates (the prime rate has been falling, too) should come down even more if the Congress does something significant such as trimming spending to wipe out at least $50 billion of the staggering national deficit.

Michael Sumichrast of the National Assn. of Home Builders caught enough economic sunshine rays recently to comment that builders “are telling us that their perception of the next six months looks somewhat better.”

On Capitol Hill, which had to take a back seat to the White House during Inauguration-Superbowl weekend, it has been noted that the current political makeup of the Congress is not much different from the 98th session. The Republicans gained 14 seats in the Democrat-controlled House but the Democrats gained two in the Senate, where Republicans maintain a slim majority.

In the Senate, Jake R. Garn (R-Utah) heads the key Banking, Housing and Urban Affairs Committee, of which Wisconsin’s William Proxmire is ranking minority member. In the House, Fernand J. St. Germain (D-R.I.) heads the Banking, Finance and Urban Affairs Committee, while Chalmers P. Wylie (R-Ohio) is ranking minority member. But once again it was Rep. Henry B. Gonzalez (D-Tex.) who introduced the first legislative bill. He sought the symbolism of the HR 1 designation (just as he did in 1983, when a generally minor housing bill was introduced and enacted) to emphasize the commitment of Congress to housing.

In a year when actions to trim the deficit and reduce federal spending seem to have a national priority, Gonzalez proposed $22.3 billion in spending for fiscal year 1986. That includes funding for 22,500 units of Section 202 housing for elderly persons, 16,500 units under the grants program for cities, and 10,800 housing units under subsidized homeownership.

Also included is a new grant program, which would provide no-interest second mortgages up to $15,000 to bring the cost of rehabbing or purchase within reach of families at or less than the national median income.

The Gonzalez bill also sets the FHA insurance authority at $50.9 billion and the GNMA-MBS guaranty authority at $68.5 billion for fiscal 1986. Those levels are unchanged from 1984 and 1985. Another provision would prohibit any increase in the GNMA-MBS guaranty fee and deny authority to impose new fees on FNMA or FHLMC loans. OMB has proposed increases in those fees for fiscal 1986.

Oh yes, Gonzalez also would reinstate the authority of the HUD secretary to set the FHA interest rate. That authority was repealed in 1983. Reimposition of this authority relative to the FHA rate and HUD will be opposed by the strong mortgage banking force that supported the repeal.

Somewhat comparable legislation to the Gonzalez proposals may or may not be introduced in the Senate, where the strong spending for federally subsidized housing cannot expect much support. Nevertheless, Gonzalez told the generally liberal National Housing Conference recently, that “this year we either force the Reagan Administration into a change of direction on housing policy or there will be no meaningful federal housing programs for the foreseeable future.”

A House subcommittee source indicated that hearings will be held in February or March to find out what is “passage in the House” and then send the resultant housing bill to the full House Banking, Finance and Urban Affairs Committee in April or May.

A Senate source mentioned the more prevalent anti-spending mood of the Congress and the nation by noting that the kinds of proposed increases in spending for housing subsidies are highly unlikely due to the present fiscal climate for cutting programs that contribute to the high national deficit.