Joint Panel OKs $57 Billion to Provide Homes for Poor

An estimated 240,000 low-income and homeless families would be housed under state and local programs, according to an agreement approved by House and Senate conferees late Monday.

The $57.7-billion compromise legislation, which now must be approved by both houses of Congress, is expected to be signed into law by President Bush.

The measure--the first overhaul of housing programs in a decade--also attempts to shore up the troubled Federal Housing Administration while preserving low-income interest programs.

The bill authorizes $27.5 billion for housing programs in fiscal year 1991--$3.4 billion more than in the previous fiscal year--and $29.9 billion in fiscal year 1992.

“This is landmark legislation,” said Sen. Alan Cranston (D-Calif.), who drafted the Senate version. “The federal government is at long last taking up its responsibility for making decent homes more affordable for all Americans, including the poor.”

The initiative is “a major move to reverse the federal neglect of public housing,” said Barry Zigas, head of the National Low Income Housing Coalition.

The centerpiece of the agreement is the home investment plan, which would provide $3 billion over the next two years for housing programs developed by state and local officials.

Although state and local governments would have to apply for their share of the funds, they would be given greater flexibility in how to spend the money. For example, they could choose to build new units or to assist renters of private housing with their monthly payments.

“States and localities would be able to choose housing programs that work for their communities,” said Don Campbell, a housing expert and aide to Cranston.

Campbell said that the program would get the Department of Housing and Urban Development effectively “out of the business of making project-by-project decisions.”

The home investment program is expected to provide housing to about 240,000 families.

Officials estimate that some 1 million people are now on waiting lists for public housing and another 1 million are waiting for rental assistance.

The bill clearly falls short of providing help to everyone who needs it but it authorizes $9.56 billion in rental assistance and other programs whose funding was due to expire.

Another key proposal calls for the government to help residents of low-income housing to stay in their homes when landlords with expiring HUD mortgages seek to cash in their holdings.

Under existing law, landlords with HUD mortgages are allowed to sell their buildings after 20 years--a move that likely would cause rents to rise and perhaps force out low-income tenants.

The compromise agreement would force owners seeking to sell their buildings to demonstrate to HUD that government programs do not make it practical for them to continue renting to low-income families.

“This proposal honors the contractual agreement between the federal government and low-income housing owners,” said Rep. Esteban E. Torres (D-La Puente), a member of the conference committee. “It calls for the preservation of the more than 300,000 units of affordable, low-income housing in America.”

In an effort to retain the solvency of the FHA mortgage insurance program, the conferees agreed to increase the amount of up-front costs paid by borrowers. Under the existing FHA program, which was enacted in 1934 to boost private ownership of housing, home buyers must provide only a 3% down payment and can finance all of their closing costs on the first $25,000 of a mortgage and 5% on the balance.

The conferees agreed, however, that borrowers would be required to provide at least 43% of their closing costs in cash, effectively raising the amount of money needed to qualify for the government loans. For example, a family purchasing a $65,000 home under the program would have to have about $3,639 in cash, or about $800 more than the current program requires.

The lawmakers raised the stakes for homeowners participating in the FHA program after learning last June that the government-backed program faced potential insolvency.