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38–393 PDF 2007

H.R. 2895, THE NATIONAL AFFORDABLE

HOUSING TRUST FUND ACT OF 2007

HEARING

BEFORE THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

JULY 19, 2007

Printed for the use of the Committee on Financial Services

Serial No. 110–53

(

(II)

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

JULIA CARSON, Indiana 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin, 

LINCOLN DAVIS, Tennessee 

ALBIO SIRES, New Jersey 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

TIM MAHONEY, Florida 

CHARLES WILSON, Ohio 

ED PERLMUTTER, Colorado 

CHRISTOPHER S. MURPHY, Connecticut 

JOE DONNELLY, Indiana 

ROBERT WEXLER, Florida 

JIM MARSHALL, Georgia 

DAN BOREN, Oklahoma 

SPENCER BACHUS, Alabama 

RICHARD H. BAKER, Louisiana 

DEBORAH PRYCE, Ohio 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

PAUL E. GILLMOR, Ohio 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

JIM GERLACH, Pennsylvania 

STEVAN PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

GEOFF DAVIS, Kentucky 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MICHELE BACHMANN, Minnesota 

PETER J. ROSKAM, Illinois 

KENNY MARCHANT, Texas 

THADDEUS G. McCOTTER, Michigan

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

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C O N T E N T S 

Page 

Hearing held on: 

July 19, 2007 ..................................................................................................... 1

Appendix: 

July 19, 2007 ..................................................................................................... 71

WITNESSES 

THURSDAY, JULY 19, 2007

Alberghini, Lisa B., Director, Planning Office for Urban Affairs, Archdiocese 

of Boston ............................................................................................................... 47

Cisneros, Henry, Executive Chairman, CityView ................................................. 41

Crowley, Sheila, President, National Low Income Housing Coalition ................ 43

Euille, Hon. William D., Mayor, Alexandria, Virginia, on behalf of the U.S. 

Conference of Mayors ........................................................................................... 45

Montgomery, Hon. Brian D., Assistant Secretary for Housing-Federal Housing 

Commissioner, U.S. Department of Housing and Urban Development ........... 13

Myer, Joe L., Executive Director, NCALL Research, Inc., on behalf of the 

National Rural Housing Coalition ...................................................................... 68

Poole, JoAnne, Broker/Owner, Poole Realty, on behalf of the National Association of Realtors ..................................................................................................... 49

Roberts, David I., Chief Executive Officer and President of Lutheran Homes 

Society ................................................................................................................... 61

Sandel, Dr. Megan, Assistant Professor of Pediatrics, Boston University 

School of Medicine ................................................................................................ 66

Shelton, Hilary O., Director, Washington Bureau, National Association for 

the Advancement of Colored People ................................................................... 64

Thompson, Barbara, Executive Director, National Council of State Housing 

Agencies ................................................................................................................ 62

APPENDIX 

Prepared statements: 

Brown-Waite, Hon. Ginny ................................................................................ 72

Gillmor, Hon. Paul E. ....................................................................................... 73

Alberghini, Lisa B. ........................................................................................... 74

Cisneros, Henry ................................................................................................ 80

Crowley, Sheila ................................................................................................. 87

Euille, Hon. William D. .................................................................................... 96

Montgomery, Hon. Brian D. ............................................................................ 109

Myer, Joe L. ...................................................................................................... 113

Poole, JoAnne .................................................................................................... 119

Roberts, David I. ............................................................................................... 126

Sandel, Dr. Megan ............................................................................................ 138

Shelton, Hilary O. ............................................................................................. 143

Thompson, Barbara .......................................................................................... 146

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Frank, Hon. Barney: 

Statement of Habitat for Humanity ................................................................ 151

Letter from the Mortgage Bankers Association ............................................. 155

Statement of the National Association of Home Builders ............................. 157

New York Times editorial ................................................................................ 166

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H.R. 2895, THE NATIONAL AFFORDABLE 

HOUSING TRUST FUND ACT OF 2007

Thursday, July 19, 2007

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The committee met, pursuant to notice, at 10:04 a.m., in room 

2128, Rayburn House Office Building, Hon. Barney Frank [chairman of the committee] presiding. 

Present: Representatives Frank, Waters, Velazquez, Watt, Moore 

of Kansas, Capuano, McCarthy, Baca, Lynch, Green, Cleaver, 

Sires, Ellison, Klein, Boren; Bachus, Castle, Royce, Gillmor, 

Biggert, Shays, Miller of California, Feeney, Hensarling, Garrett, 

McHenry, and Bachmann. 

The CHAIRMAN. This hearing of the Financial Services Committee will come to order. For those of you who were paying attention to yesterday’s hearing, I’m going to deviate from the precedent 

set yesterday, and wait for the opening statements before I ask my 

first question. That will be a change from yesterday’s procedure. 

In fact, I may not even be here for the first question because this 

is an issue, the National Housing Trust Fund, on which the gentlewoman from California, the chairwoman of the Housing and Community Opportunity Subcommittee, and I have been very much engaged in an equal partnership, and she will be presiding over the 

hearing. 

I will in fact be going over to stop in at the press conference 

being held by the Homeless Coalition, which recognizes this bill as 

an important part of their program since the main cure for homelessness is a home, the absence of which is hard to overcome. 

I do want to say that this bill is, in my mind, one of the most 

important we will be considering. I think expanding the Children’s 

Health Insurance Program is the single greatest contribution this 

Congress can make to improving the quality of life for some of our 

fellow citizens who are most in need of compassionate assistance. 

But I believe if we get this bill done it will be the second most important institutional response. 

In any one year, the number of units may not look huge, but 

housing units, as well-constructed as we believe they will be under 

this program, will last for 30 and 40 and 50 years so that at the 

end of a dozen or 15 years this bill will have made a significant 

contribution to alleviating one of the great shortages in this country, which is affordable housing. 

I will leave all the details for later. I do want to acknowledge 

Commissioner Montgomery, and he is the appointee of an AdminisVerDate 0ct 09 2002 17:30 Dec 12, 2007 Jkt 038393 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 K:\DOCS\38393.TXT HFIN PsN: TERRIE
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tration with whom we have some philosophical differences. Within 

that framework we have been able to cooperate with the Commissioner in ways that I think have been mutually beneficial. I want 

to acknowledge the assistance he has given, and I want to say that 

even on areas where I know we might have had some ultimate policy disagreement, we’ve been able to trust fully what he told us, 

and we appreciate that. 

I do want to comment on one point which is that some have suggested that one of the contributions to the fund—and let me just 

talk about the money for the fund, not from appropriations, but 

from other housing related activities, some of it comes from Fannie 

Mae and Freddie Mac. Now I do find a great inconsistency on the 

part of some who have been arguing for years that Federal legislation gives Fannie Mae and Freddie Mac an undue advantage, that 

they are able to borrow cheaply in the marketplace because of this 

perception of a Federal backup that I think is an inaccurate perception, and that Fannie and Freddie benefit too much from this 

and don’t do enough for the public. 

Agreeing with that, we responded by saying, yes, we will take a 

small percentage of the money that they make, far less than they 

get from these advantages, and require it to go to affordable housing. Having done that, some of the same people who told us we 

were letting Fannie and Freddie get away with murder now say we 

are being unfair to the murderers. 

Somehow it is no longer a case of Fannie and Freddie getting too 

much from these advantages, but us preying on these poor, 

unsuspecting private corporations. They are not wholly private corporations. They are quasi-public entities and we think that the alternative of reducing the advantages they get and diminishing the 

amount of money that’s available for housing is not a good one. The 

other choice, of course, is to leave the status quo in which they get 

more benefit than they should and that they pay back. 

And we’ve taken what we think is the middle course. We leave 

the benefits, although with greatly increased regulation, but we use 

some of that money for good public purpose. Similarly with the 

FHA, our bill, contrary to suggestions that it’s going to lead to FHA 

fee increases, in the bill that our committee passed we seek to prevent the Bush Administration from increasing FHA fees not because there is a need to do that to do FHA business but to help 

benefit the general Treasury. 

And section 30 of the bill would prohibit HUD from increasing 

any FHA premium above the level that was in effect at the beginning of this fiscal year unless the Secretary shows that in the absence of an increase the program would require a subsidy from the 

Congress. So we, in fact, strengthen the resistance to FHA fee increases, and that applies to what we’re doing here. 

If anything in this legislation that we have passed on the FHA 

that would get incorporated here were to cause a fee increase that 

would kick in. So we in fact prohibit fee increases. In fact our bill 

says no money goes to the housing fund if it were threatened, a fee 

increase. So the truth is that the bill that we passed already on the 

FHA, and it’s all part of one package conceptually, prevents a fee 

increase that is being contemplated. 

3

And I will say, and I don’t ask for any comment on this, that my 

sense is that the desire for this fee increase did not come from the 

FHA and that it did not come from HUD, but it came from OMB. 

That is to be the FHA’s contribution to the war in Iraq. And we 

make it very clear that the FHA fee should increase only if there 

was a need to do that for FHA business. 

With that, I am going to move on. I do want to say that I can 

appreciate that within these differences we’ve been able to work 

with the Commissioner. I am sorry that I will have to miss our 

former Secretary, Secretary Cisneros. I had a privilege of working 

as a committee member under the regime of the two Henrys, 

Henry B and Henry C; Henry B. Gonzalez, who is up here, and 

Henry Cisneros, our two Texas housing champions, whose very 

fruitful collaboration continues to benefit this country today. 

I thank the witnesses in advance for all that they have done, and 

I will now turn the hearing over to the gentlewoman from California. First, I’ll recognize the gentleman from Alabama. 

Mr. BACHUS. Thank you, Mr. Chairman, for holding today’s hearing on your legislation to establish a National Affordable Housing 

Trust Fund. We truly do have an all-star lineup of witnesses, and 

expect this to be a very good hearing. This is not the first time that 

this committee has had occasion to consider creating a National Affordable Housing Trust Fund. 

Our other hearings on that matter—and I want to say again 

today, no one questions the chairman’s commitment, nor the majority or members of the minority’s commitment to affordable housing 

needs of low-income Americans. I certainly share the chairman’s 

belief that for many of our citizens those needs are going unmet 

currently. 

In our debates on creating a National Housing Fund in the past, 

in those debates—we had them when the GSE reform bill came before us, which included creating a National Affordable Housing 

Fund. When the FHA modernization legislation came before us it 

also had provisions creating a National Affordable Housing Fund. 

During those debates members on this side of the aisle questioned the wisdom of diverting resources from middle-class homeowners and from the surplus generated by FHA programs to fund 

other housing needs. And while these arguments certainly apply to 

the legislation that is the subject of today’s hearing, I want to direct my concerns on this legislation to a different set of concerns. 

The chairman and I do not differ on outcomes. We both—as I 

said earlier in my statement, and I think the FHA and most of the 

witnesses, we all agreed that the needs of low-income housing citizens need to be addressed, and in some cases they are unmet. But 

what the chairman and many of the majority and those of us on 

this side of the aisle—and there are those with different opinions. 

We have some on this side of the aisle who are actually cosponsors 

of the chairman’s legislation but many of us—we don’t differ on the 

outcome or the goal, what we differ on is the means of achieving 

the goal, of meeting the needs of our low-income citizens. 

Rather than creating yet another housing bureaucracy or another 

housing program, I believe that our focus ought to be on increasing 

the efficiency of the existing programs. In this regard it is worth 

remembering that HUD already administers over 30 separate FedVerDate 0ct 09 2002 17:30 Dec 12, 2007 Jkt 038393 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\38393.TXT HFIN PsN: TERRIE
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eral programs designed to promote affordable housing opportunities 

for lower-income Americans and that these programs consumed the 

bulk of HUD’s $35 billion budget during the last fiscal year. 

Indeed, the Affordable Housing Trust Fund outlined in Chairman 

Frank’s bill is modeled to a great degree on one of those HUD initiatives, the Home Investment Partnership Program. 

The latest Federal Block Grant for States—I mean, I’m sorry, the 

largest Federal Block Grant for State and local government, HOME 

is designed to create affordable housing for low-income households. 

It is a successful program. It has a proven track record. 

Establishing another, a new housing trust fund, separate and 

apart from HOME and promulgating new regulations and rules at 

HUD could take months or years to properly implement. HOME is 

already up and running with 50 States, 585 local governments, and 

four insular areas presently administering the existing successful 

program. 

Rather than reinventing the wheel, I believe a better approach 

would be to take this opportunity to make an already successful 

Federal program work better by using HOME to increase production and preservation of mixed income and rental housing affordable to very-low and extremely-low-income families. 

Mr. Chairman, members of the committee, let me conclude by 

once again reiterating that I believe most of the members of this 

committee, both Republican and Democrat, are committed to finding resources to help low- and very-low-income families. However 

the difference is in whether we create a new program or utilize an 

existing program. I thank the chairman and the subcommittee 

chairman for holding this hearing, I thank our witnesses for taking 

time to be with us this morning, and I look forward to your testimony. 

Ms. WATERS. [presiding] Thank you very much. I will recognize 

myself for 5 minutes. 

I’d first like to thank Mr. Barney Frank for holding this hearing 

and for all of his work on this critical piece of legislation. It is truly 

his vision that has brought us to this point. What Mr. Frank has 

done in bringing this bill to the House and to the Congress of the 

United States has opened up new opportunities to increase the 

housing stock for low- and moderate-income people, and I’m very 

grateful for his vision, his leadership, and the opportunity to work 

with him. 

I want to mention briefly the event I just came from because it 

is relevant to the hearing today. Over in the Cannon Building, a 

few of us joined national homeless organizations and some formerly 

homeless individuals helped by the programs of the McKinneyVento Homeless Assistance Act, an event marking the 25th anniversary of that bill’s enactment in July of 1987. 

I say the event marked the 20th anniversary of the McKinneyVento Act because this is hardly a birthday that calls for celebration. Indeed there is more stinging indictment of recent Federal 

housing policy than the fact that widespread homelessness persists 

in the wealthiest nation on the planet 20 years after the Federal 

Government officially recognized its first reoccurrence since the 

Great Depression. 

5

I don’t mean to suggest that no progress has been made in addressing homelessness in the last 2 decades, as we will explore in 

depth in a series of Housing Subcommittee hearings on homelessness, which I will convene after Congress returns from the August 

recess. We know much more about the how to meet the needs of 

various homeless households with different needs. We will build on 

that knowledge in the subcommittee. 

But the bottom line on homelessness is the bottom line, which is 

that we haven’t made demonstrable progress in reducing the number of households experiencing homelessness nationwide since 

1987. Indeed, despite lots of heartwarming individual success stories and a dedicated nonprofit field across the country, we may 

very well have lost ground. 

Homeless people are notoriously difficult to count for obvious reasons but there is little evidence that the 800,000 or so people whom 

we know pretty reliably to be homeless on any given night, over 10 

percent of them in Los Angeles alone, are a lower number than the 

day the McKinney-Vento Act was past. And it’s almost certainly 

not a reduction compared to the first rigorous national homeless 

count conducted in 1996. 

Sadly one reason for this is easy to identify. While some homeless people face personal challenges like mental illness, HIV/AIDS, 

or histories of trauma that require social services, health, or other 

support, every homeless individual and family shares one need in 

common, housing they can afford, and there simply is not enough 

of it right now. 

To give one example, there are 9 million renter households who 

earn less than 30 percent of area median income, but only 7.2 million affordable units are available to them. You don’t need to have 

the math skills of Federal Reserve Chairman Bernanke, who joined 

us yesterday, to know that the inevitable results of subtracting 

these figures is widespread homelessness. 

For too long, the Federal Government has abdicated this responsibility to close this gap. I’m going to read to you a sentence from 

the Congressional Record, a quote, ‘‘If we in Congress had not succumbed to the administration’s efforts to slash, cut and terminate 

our assisted housing programs many of the people on our streets 

today would not be there.’’ 

This might well have been plucked randomly from most of the 

homelessness and housing hearings over the past 7 years. In fact, 

it is a quote from the late Housing Subcommittee and later full 

committee chair, Henry Gonzales, rising on the House Floor on 

March 5, 1987, to speak in support of the bill that would become 

the McKinney-Vento Homeless Assistance Act. 

He goes on to call for the Federal Government to couple emergency homeless assistance with restoration of cuts to major Federal 

housing production programs. To all of the members who are 

present today, I think we should all really thank Chairman Frank 

for introducing legislation that finally gets the Federal Government 

back in the affordable housing production business. 

And I share the chairman’s insistence that we invest in affordable housing stock creation and not simply more demand-side or 

tenant-based subsidies. As badly needed as such subsidies are, they 

just don’t get the job done alone, especially in tight rental markets 

6

like Los Angeles. In such places, it is difficult to get private landlords to accept vouchers at HUD’s fair market rent, particularly if 

you’re someone with a troubled housing credit or other history as 

many homeless individuals and families are. These households 

need access to housing specifically targeted to them, and the only 

way for that to happen is to have cities, States, and nonprofits develop it. 

Like the chairman, I recognize that the bill merits further conversation, and I look forward to hearing from our panels of witnesses. A lot of thought has already gone into balancing priorities 

and its targeting of resources, eligible uses, control over distribution, and other heavily discussed provisions. But I’m very interested in the witnesses’ perspectives. 

I do though want to make sure that we keep our eye on the ball. 

Simply put, if the Federal Government does not reengage on affordable housing at the scale of the National Affordable Housing Trust 

Fund and more, one of my successes as Housing Subcommittee 

Chair will be attending an event marking the 40th anniversary of 

the McKinney-Vento Act in 2027. 

I yield 5 minutes to Representative Biggert, the ranking member 

of the Subcommittee on Housing and Community Opportunity. 

Mrs. BIGGERT. Thank you Chairwoman Waters, and thanks to 

Chairman Frank for holding this hearing today. Madam Chairwoman, as you’ll recall from the number of hearings this committee 

held earlier this year on H.R. 1427, the Federal Housing Finance 

Reform Act, and H.R. 1852, the Expanding American Homeownership Act, I have a number of concerns with the creation of a National Housing Trust Fund. 

While I commend this committee’s goal of increasing the amount 

of available, affordable housing, I do not believe that H.R. 2895 is 

an efficient means to achieve it. And I’ll make three quick points 

to expand on this. First, because the trust fund is financed through 

self-defeating provisions in both the GSE reform bill and the FHA 

reauthorization bill, low- and middle-income Americans, including 

the elderly, will have to foot the bill. 

Specifically, it’s estimated that Fannie Mae and Freddie Mac, 

two entities that purchased or securitized almost 80 percent of 

American families’ mortgages, will be taxed more than $3 billion 

over a 5-year period to help pay for the trust fund. As publicly 

traded companies accountable to their shareholders, Fannie Mae 

and Freddie Mac will inevitably seek to pass along these new assessments to their customers, America’s low- and middle-income 

homeowners. 

This is unacceptable and will result in what amounts to a mortgage tax on these hardworking low- and middle-income Americans 

seeking to secure, maintain, or refinance their home mortgages. To 

me, it’s robbing Peter to save Paul. 

And then second, CBO has estimated that FHA reauthorization 

bill could result in a $370 million surplus in 2008 and a $2.1 billion 

surplus over the 2008 to 2012 period. Now normally we would say 

that the surplus is a good thing, but not in this case. In this case 

the surplus would come through overcharging seniors on their reverse mortgages, and I don’t think that’s right. 

7

By far the majority of this FHA surplus would come from reverse 

mortgages premiums paid by our seniors, suggesting that they 

have been overcharged. As you know I have supported the ideas 

aimed at giving the surplus back to our seniors in the form of reduced premiums, which this committee rejected. By using the reverse mortgage product as a moneymaker to finance a National 

Housing Trust Fund, this bill instead instructs FHA to continue 

overcharging and essentially taxing our seniors. Our seniors deserve better. 

At the same time, this bill removes all surplus funds out of FHA, 

which I believe threatens the solvency of the FHA fund and its 

ability to pay out on insurance claims. 

Third, a National Housing Trust Fund unnecessarily adds another Federal housing program to the over 100 programs that already exist. The National Low Income Housing Coalition cites 

nearly 600 housing trust funds that have been created in cities, 

counties, and States of this country generating more than $1.6 billion per year to support housing needs. 

For example, the Affordable Housing Trust Fund in Illinois allo- cates approximately $16 million to $20 million each year to benefit 

low- and very-low-income households. Additionally, the Illinois 

Rental Housing Support Program provides rent subsidies for an estimated 4,000 rent burdened households. 

I think that these regionally tailored programs work best because 

they allow funds to be tailored to localized housing and community 

development needs. Also, to the extent that Federal programs fall 

short in some way, I must point out the existing federally administered program designed to serve the housing needs of low-income 

Americans, the Home Investment Partnership Program. This program already has the personnel, systems, and regulatory oversight 

in place to accomplish the same objectives as the National Housing 

Trust Fund. 

Rather than create a new Federal bureaucracy to address low-income housing availability, we should instead focus our efforts on 

improving the HOME program. 

Madam Chairwoman, again, thank you for holding this hearing. 

I am pleased that we are finally holding a hearing on this matter 

even though the committee has twice already, preemptively, moved 

legislation on the issue, and I look forward to hearing from today’s 

witnesses and thank them for their time and expertise. I yield 

back. 

Ms. WATERS. Thank you very much. I will recognize the gentleman from Texas, Mr. Green, for 3 minutes. 

Mr. GREEN. Thank you, Madam Chairwoman and I thank the 

chair of the full committee for his outstanding efforts. I’m also honored to welcome again Mr. Montgomery, who has been a real 

friend, and been very helpful to us, as well as Secretary Cisneros, 

always good to be in his company, and of course Hilary Shelton 

with the NAACP. 

Madam Chairwoman, it is my belief that the greatness of a country will not hinge on how a country builds skyscrapers, but rather 

on how it shelters people. It won’t be measured by how many tractors it constructs or how many farmers in the field but how many 

people it will feed. 

8

The greatness of a country will be measured by how it treats the 

least, the last, and the lost, not by how it treats the well-off, the 

well-heeled, and the well-to-do. The well-off, the well-heeled, and 

the well-to-do will always fare well. It is those who are in the 

streets of life that we have a duty to help. 

So I understand and I sympathize greatly with a lot of what has 

been said, but I also understand that right now we have 141,000 

homeless veterans, and there’s a proposal to cut $450 million from 

public housing. We have 170,000 homeless children and there’s a 

proposal to cut Section 8 vouchers by $500 million. We have 

754,000 homeless sheltered and unsheltered people, and there’s a 

proposal to cut CDBG by $736 million. We have 189,000 disabled 

homeless people, and there’s a proposal to cut Section 811, disabled 

housing, by $112 million. 

We are the richest country in the world. One out of every 110 Americans is a millionaire. We spend $329 million not per year, not 

per month, not per week, but per day on the war. We can afford 

to help the least, the last, and the lost. That is what this bill proposes to do. 

If we did not need it, the statistical information and empirical 

data would not indicate that we have this homeless problem in this 

country as well as a problem with affordable housing, so I’m honored to support this legislation because I believe in the final analysis, on the infinite continuum that we know as time, we will each 

have to give an accounting for the time that we spent on this island that we know as earth. And I want to say that I was there 

for the least, the last, and the lost. I thank you and I yield back 

my time. 

Ms. WATERS. Thank you. I will now recognize the gentleman 

from California, Representative Royce, for 3 minutes. 

Mr. ROYCE. Thank you, Madam Chairwoman. Madam Chairwoman, I must again express my adamant opposition to this legislation and the idea here of creating what is called the Affordable 

Housing Fund. As I have expressed since its inception, this fund 

is straight out of Central Planning 101. This is really a step in the 

wrong direction. 

There appears here to be a clear conflict of vision. I think past 

government housing programs have actually done very little, if you 

look at the record, to increase homeownership levels in this country. We do not have much to show for the tens of billions of dollars 

we spent on housing through HUD and FHA, but there is a way 

to improve homeownership rates. 

They improve when real interest rates are low and when consumer incomes are high. Under that kind of an environment people 

can afford to frankly get into a position where they can buy their 

own home. I believe limited government and free market policies 

will generate these results; creeping socialism will not. It will work 

more as an anchor on the economy and prosperity. It will keep the 

private sector from becoming as vibrant and creating the opportunities for people so that they can move up. 

This fund will waste resources. It’s going to provide false hope 

for those who wish to increase homeownership. Additionally this 

fund will create a terrible precedent, a terrible, terrible precedent 

for other industries in this country. As I said during the GSE and 

9

FHA debates, I hope that other financial institutions are watching 

this debate because you’re going to be the next targets. 

Proponents of this concept are not going to stop at just assessing 

or taxing GSEs and the Federal Housing Administration. They’re 

going to try to confiscate money once they set up this fund from 

any source they can get it. 

So again, thank you for holding this hearing, and I yield back the 

balance of my time, Madam Chairwoman. 

Ms. WATERS. Thank you very much. I recognize the gentleman 

from New Jersey, Mr. Sires, for 2 minutes. 

Mr. SIRES. Thank you, Madam Chairwoman. I’m here in support 

of this legislation. As a former mayor of a community where about 

73 percent of the student body fell below the poverty level, one of 

the biggest issues I confronted in my 12 years as mayor was affordable housing. And it’s beyond me how people in Washington keep 

insisting on cutting programs for the people who need it the most. 

I don’t know where they get their information, but not necessarily 

everybody wants to be a homeowner. All these people need is a 

helping hand so their children can get educated in a decent home. 

And I don’t know who advises this Administration on cuts of Section 8 on affordable housing, but the problems that I confronted 

certainly had to do with affordable housing. And I certainly think 

that as the richest country in the world, we could do a little bit 

more than we’ve been doing. All they need is a helping hand to access the American dream, and this is why I’m supporting so strongly this legislation. 

Thank you, Madam Chairwoman. 

Ms. WATERS. Thank you very much. Now I will recognize the 

gentleman from Delaware, Representative Castle, for 2 minutes. 

Mr. CASTLE. Thank you, Madam Chairwoman. I’m pleased also 

to be here and pleased to see us taking up this legislation, the concept of which I certainly favor. I, too, am somewhat concerned 

about existing programs and other things that may need to be 

straightened out, and I’m delighted that we have the various witnesses and panels that we have here today, you know, the balance 

of rental versus ownership, and a variety of other things that need 

to be answered. 

I’ve looked at the panels, and there are three panels. I’ve looked 

at my schedule. I’m not sure I’m going to be here the entire time, 

so I’d like to talk about Joe Myer, on the last panel, who is from 

Delaware. I worked with Joe on housing issues for many, many 

years in a variety of capacities, and he is the executive director of 

the National Council on Agricultural Life and Labor Research 

(NCALL). He was one of the founders of that organization in 1976, 

and for the last 30 years since then, he has provided financial and 

technical assistance for nonprofit housing developers in the Delmarva Peninsula. Under his direction, NCALL has assisted 6,000 

first-time home buyers in mortgage closings in Delaware through 

homeownership education and counseling, leveraging $581 million 

in attractive mortgages and assistance and apartment communities 

as well. 

Joe is a very important player, and he and I have cut a lot of 

ribbons together and done a lot of things of that nature. He is an 

extremely significant player in this whole business of dealing with 

10

housing. And if anyone believes that the Federal Government or 

State governments or local governments can really make the difference in housing, they don’t understand the importance of the 

role of the nonprofit agencies and the difference they have made in 

terms of low-income housing and needed housing throughout our 

country. 

I think Joe represents those interests as well as anybody, and I 

hope when it’s time for Joe to testify that people will listen carefully to what their needs are and what they have to do. We have 

to make our programs tie into programs such as that, which have 

worked so extremely well. So we welcome Joe here, and I’m delighted to be able to participate to the extent that I can today. And 

I yield back, Madam Chairwoman. 

Ms. WATERS. Thank you very much. I recognize the gentleman 

from Missouri, Mr. Cleaver, for 3 minutes. 

Mr. CLEAVER. Thank you, Madam Chairwoman. I won’t take 3 

minutes. I would like to express my appreciation to you, and of 

course to the chairman, Mr. Frank, and I think our ranking member, Mrs. Biggert, has been very cooperative even if we have some 

disagreements. I think this committee has perhaps been the busiest of any of the committees in Congress, and it’s because we’re trying to deal with issues of importance to the people in this country 

who need it the most. 

A couple of years ago, I think most observers of our society would 

have said that we’re having one of the greatest housing booms 

ever. But as is always the case, that has dropped. We are now looking at an alarming drop in the number of homes purchased by citizens of our country. And of course the poor are always going to suffer the most. I am very, very supportive of the affordable housing 

fund, like my colleague, having served as Mayor of Kansas City, 

Missouri, one of the things I wanted to have as a legacy was the 

creation of housing so that people who grew up like I did in public 

housing would have the opportunity to live in a single family dwelling and become a part of the American dream. 

This housing fund is not perfect. The only thing I’ve seen perfect 

is Dick Clark’s hair. But I am absolutely convinced that it is in the 

right direction and there is not—and we need to stop doing this in 

Congress because it hurts the body. There is no underlying scheme. 

There is no plan to bring in other funds. That is not on the table. 

Nobody is discussing that in the dark rooms of Congress. 

I think this is a good opportunity. If someone has an amendment 

to make it better, I will certainly support it. Thank you to Mr. 

Montgomery. We appreciate your spirit and, as we have been working with this, and, of course, my former colleague and Secretary, 

Mr. Cisneros, thank you. 

Ms. WATERS. I will now recognize the gentleman from California 

for 2 minutes, Representative Miller. 

Mr. MILLER OF CALIFORNIA. Thank you, Madam Chairwoman. 

Many hardworking families are unable to find decent affordable 

housing in communities where they work today. We need to consider new approaches to revitalizing neighborhoods so that working 

families can find affordable rental and homeownership opportunities in the communities where they’re employed. 

11

If the Federal Government does not provide positive solutions to 

the lack of affordable housing opportunities the waiting list for Section 8 housing assistance will continue to grow. While I might not 

agree with 100 percent of the policy that has been proposed, Chairman Frank and Ranking Member Bachus have brokered compromise on many occasions and have produced legislation that 

Democrats and Republicans alike have ultimately strongly supported. 

I know there is a strong feeling on both sides of this housing 

trust fund legislation that we are here to consider today. As a fiscal 

conservative, I welcome ideas to promote affordable housing in 

ways that do not increase spending and that effectively leverage 

scarce Federal dollars for billions of private dollars. 

To be clear, the bill before us today is not about funding sources. 

The sources of GSE and FHA funds have been dedicated in previous legislation and have been considered in the past. 

The GSE bill passed the committee and the full House by a 

strong bipartisan vote. The FHA bill also passed in this committee 

by a strong bipartisan vote. It is no secret that I opposed the affordable trust fund in the GSE bill, but at the end of the day the 

fund was supported by a majority of my colleagues. 

It is also no secret that I supported the FHA bill to create the 

fund. I only supported this bill after an amendment I offered was 

accepted by the committee that essentially says that HUD must ensure FHA insurance premiums are as low as possible, that the insurance fund is solvent, and that any FHA needs are met before 

the excess dollars are sent to the housing fund. 

After that I firmly believe that the FHA fund should be used and 

dedicated to housing. We did this with the highway trust fund. We 

should also do it for FHA. The FHA money we are talking about 

is money that currently is going to the Treasury. So while I oppose 

the GSE fund, but support the FHA fund, the debate of whether 

we should set aside funds to create a national affordable housing 

trust fund is over for this committee. 

Today we are at this hearing to discuss how to allocate those dollars that will be set aside by the housing GSE and excess FHA 

funds. What we must now decide is how to allocate the dollars that 

have been set aside for affordable housing. Just as we offered 

amendments to both the GSE bill and the FHA bill to change the 

way housing fund dollars in this bill were distributed or how they 

were used, the bill before us today proposes solutions to those very 

questions. 

I must say that I strongly believe that we must ensure that this 

fund is geared towards development of quality mixed-income communities. We must target not only low-income families but moderate-income working families as well. 

I also firmly support the concept that we can help limited funds 

go further to help complete neighborhood revitalization efforts if we 

pursue a public-private partnership approach in this effort. 

We have an opportunity today to work together as Republicans 

and Democrats and hopefully the outcome of this legislation will 

benefit those in this country who have housing needs. I yield back 

the balance of my time. 

12

Ms. WATERS. Thank you very much. I now recognize the gentleman from Texas, Mr. Hensarling, for 3 minutes. 

Mr. HENSARLING. Thank you, Madam Chairwoman. In a little 

over 10 years, Federal housing assistance has almost doubled from 

$15.4 billion in 1995 to more recently $30 billion in 2007. The rate 

of increase is higher than the Federal commitment that we have 

seen to veterans, education, energy, transportation, international 

affairs, or even Social Security over the same period. 

The Federal Government runs, I believe, over 80 different housing and community development programs through HUD, as our 

ranking member said, over 30 specifically geared towards affordable housing programs. 

And so today our committee response is not necessarily to improve or reform the old programs but instead to create a new program on top of the 80 that already exist. The second response of 

this committee apparently is to raise taxes on hardworking American people. Make no mistake about it. This bill would impose a 

very creative de facto mortgage tax on hardworking Americans trying to pay for their homes. 

Although I do not question people’s motives and I believe their 

hearts and motives are pure, many on this committee with their 

votes have made housing less affordable. If we truly want to make 

housing more affordable, we need to realize there is no greater 

housing program in American than a good job. And since we have 

enacted pro-growth tax policies in 2003, we have had 8.2 million 

new jobs created. And yet many in this House and many on the 

committee want the tax relief to go away. And, as you take away 

the tax relief, you begin to take away the jobs. 

Secondly, if we truly care about affordable housing, we need to 

realize how the single largest tax increase in American history contained within the Democrat budget resolution, how that impacts 

families who are trying to make their homes affordable. 

I hear from constituents in my district. I hear from the Brucker 

Family in Wills Point who writes, ‘‘No increase in taxes. My family 

is only one breath away from losing our home as it is.’’ 

I hear from the Stevens Family in Forney, Texas, ‘‘If our taxes 

increased $2,755, we would not be able to pay our mortgage.’’ And 

the list goes on and on and on. We need to realize that more spending fuels more taxes which makes homes less affordable. 

Third, it seems ironic to me that we would increase taxes on 

some, make housing less affordable for many low- and middle-income Americans because we know that Fannie Mae and Freddie 

Mac are an effectively a government protected duopoly. They have 

great economic power to simply pass along these fees or taxes, if 

you will, ultimately to the consumer. And so this is a mortgage tax, 

pure and simple. 

And last but not least—I have to have 10 more seconds to close. 

Although I suspect we disagree on many issues, as a former resident of San Antonio, as a Texan, and as a fellow Texas Aggie, I 

did want to wish a very sincere welcome to former Secretary 

Cisneros. 

With that, I yield back. 

Ms. WATERS. Thank you very much. Having exhausted the opening statements, I will now move to our first panel. And I would like 

13

to introduce our first panelist, Mr. Brian Montgomery, Assistant 

Secretary for Housing and the Federal Housing Commissioner at 

HUD. 

I would like to welcome you to the committee, Mr. Montgomery, 

and you will be recognized for 5 minutes for an oral summary of 

your written testimony to the committee which will be made part 

of the hearing record in its entirety. Let me just say that I would 

like to thank you for the tremendous cooperation that you have exhibited as you have worked with my subcommittee on the FHA 

Housing Reform Bill, on our Section 8 work that we have done, and 

I am particularly pleased about the hearing that we had in New 

York on the Starrett Housing Development and the decision that 

was made by the HUD Secretary and you to help save that development. 

Having said all of that, I am not so sure we are going to remain 

friends for long, because while we welcome all of your cooperation, 

I am just afraid you are going to say something that is going to 

displease me today but if you do, you will know it. Thank you. 

With that, I would like to call on the Secretary for his 5-minute 

statement. Thank you. 

STATEMENT OF THE HONORABLE BRIAN D. MONTGOMERY, 

ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING 

COMMISSIONER, U.S. DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

Mr. MONTGOMERY. Well, thank you for that kind introduction, I 

hope. Madam Chairwoman, Ranking Member Bachus, and distinguished members of this committee, thank you for inviting me to 

testify on H.R. 2895. It is a pleasure to be with you this morning. 

I want to state at the outset that Secretary Jackson and I share 

your strong commitment to providing families with safe, decent, 

and affordable housing. That is why I am going to begin my testimony this morning by reminding the members of this committee 

that HUD, as you know, already has a number of programs aimed 

at providing affordable rental housing as well as homeownership 

opportunities. 

As you mentioned, Madam Chairwoman, I appeared before your 

field hearing in Brooklyn, New York, last week. By working together, we helped preserve the 16,000 units of housing occupied 

there at Starrett City. As you may recall, in my testimony I 

discussd the importance of preservation in general, and specifically, 

HUD’s mark-to-market program which, as you know, has preserved 

more than 125,000 units of housing to date. And with the 5-year 

reauthorization passed by Congress earlier this year and signed 

into law by the President, we expect to preserve an additional 

50,000 units of housing. I do want to thank the members of this 

committee, in particular, Congresswoman Waters and Congressman Price, as well as Chairman Frank, for supporting this legislation. 

In addition to preserving the existing affordable housing projects, 

the Department is committed to increasing the supply of new affordable housing. The majority of affordable housing projects today 

are built in part through the Low Income Housing Tax Credit. We 

have begun an initiative to identify and address ways in which 

14

HUD’s financing programs including FHA 202 and 811, can work 

more effectively and more efficiently with the Tax Credit program. 

We are streamlining our subsidy layering and processing procedures to improve the timing of HUD approvals so we can better 

meet the tax credit deadlines. And I am pleased to report to the 

committee that we will soon be releasing this updated document 

that has gone from 100 pages written in 1995, to just 7 pages 

today. 

We are also committed to funding the HOME Investment Part- nership Program. Each year HOME allocates approximately $2 billion in grants that allow communities, often in partnership with 

local groups, to fund a wide range of activities that build, buy and/

or rehabilitate affordable housing for rent or home ownership as 

well as directing rental assistance to low-income families. Our Fiscal Year 2008 budget asks for $1.97 billion, which is a $200 million increase over the current year. The American Dream 

Downpayment Program is another successful initiative and I hope 

this committee continues its support for this program which has 

helped 24,000 low-income families purchase their first home. 

I mention all of the above programs because in addition to duplicating many of the services they provide, the trust fund under consideration today would actually compete. Let me stress, it would 

actually compete with our existing efforts to secure scarce resources. 

As you know, the trust fund would derive its funding from two 

sources. The first is the GSE bill passed by the House. The other 

is the pending FHA bill. As FHA Commissioner, I have to admit 

that I am a bit selfish and therefore I am very concerned about the 

latter. 

The FHA Modernization Bill authorizes appropriations equal to 

the sum, and I quote, ‘‘The net increase in the negative credit subsidy for the mortgage insurance programs.’’ This means that the 

source of funding would not be dedicated but rather subject to the 

regular appropriations process and all its competing demands and 

offsets. In other words, yes, I fear that we would be robbing Peter 

to pay Paul. 

You see, FHA receipts are already credited toward HUD appropriations and by authorizing a new program, you would be creating 

competition with other discretionary programs. Any deposits to the 

trust fund would have to be offset. And under H.R. 2895, we could 

find ourselves in the position where the affordable housing trust 

fund is funded but other higher priority programs including 

Project-based Section 8 might be cut. 

I mentioned the HOME program before and I want to come back 

to it for just a minute. They say imitation is the sincerest form of 

flattery because H.R. 2895 is clearly modeled after HOME. And I 

think a review of HOME’s history and what it has produced might 

be instructive. 

In the 15-plus years of the HOME program, participating jurisdictions have expended $18.7 billion of $24 billion appropriated to 

date and produced more than 780,000 units of housing as well as 

assisting 165,000 families with tenant-base rental assistance. Now 

I do applaud the goal of this legislation. I have to say that with 

lower income funding levels, deeper income targeting, and longer 

15

affordability periods, I think it is unlikely that the trust fund 

would come close to producing 1.5 million units of affordable housing. 

I want to conclude my testimony by saying that almost all housing programs are discretionary. Short of creating a new entitlement 

program, we are all left only with the difficult choices of allocating 

scarce funding for many worthy programs. I know that is not an 

easy task. 

As the committee looks for ways to address the issue of affordable housing, as you know, we could immediately address and help 

millions of people without any additional cost to the taxpayers 

through the FHA Modernization bill, which this committee has 

done excellent work on. Thank you again for inviting me to testify 

here today. I will be happy to try to answer any questions you may 

have. 

[The prepared statement of Assistant Secretary Montgomery can 

be found on page 109 of the appendix.] 

Ms. WATERS. Mr. Montgomery, without objection, your written 

statement will be made a part of the hearing record. I will now recognize myself for 5 minutes for questions. 

Let me start with your concerns about our GSEs. Help me to better understand your concerns about using funds generated under 

H.R. 1427 and H.R. 1852 to provide deposits to the trust fund. Why 

should we worry that the affordable housing fund in H.R. 1427 is 

tied to the GSE’s mortgage portfolio? Is it not the case that H.R. 

1427 and an incentive counterpart will set portfolio limits based on 

some public policy concerns quite apart from the affordable housing 

fund provisions? 

Mr. MONTGOMERY. I will speak to the GSE portion first. Again, 

I share some of the concerns that would put downward pressure on 

both of these entities. And I might be fearful they would move beyond their mission. These are private corporations with shareholders and stock, and I think there would be, again, downward 

pressure put on them to produce. They have to find that money 

somewhere. 

As you know, we are conducting a financial activity review that 

we will be sharing soon, and we remain concerned. Getting back to 

the FHA for a second, again, while I laud the goals of this fund, 

I have to be a little selfish in saying those receipts offset HUD programs. 

If you look in the budget, you will clearly see that there is a 

bracket whereby FHA receipts are used to offset that. I just do not 

want to face the prospect where I am looking at taking funds from 

Section 8 or another program to fund an affordable housing fund. 

Ms. WATERS. So you basically argue that to tie deposits to the 

trust fund to FHA’s negative credit subsidy in part because this 

might create an incentive for FHA to overcharge its traditional customers higher premiums than is prudent. At the same time you 

argue that FHA receipts are critical to funding other HUD programs in the appropriations process, programs you say might be 

higher priority than a trust fund. 

Do not public policymakers already face whatever incentive they 

may have to overcharge FHA bars just in order to plug holes in 

each fiscal year’s HUD budget? 

16

Mr. MONTGOMERY. Well, speaking of FHA receipts, again this 

committee has done great work on the FHA bill and I appreciate 

it, but as it stands today, no FHA bill, I am looking at being $143 

million in the red for the first time in FHA’s history in Fiscal Year 

2008. Now we all know why that has happened. That die was cast 

many years ago and I know this committee is trying to fix it. 

Ms. WATERS. No, we do not. Would you explain that? 

Mr. MONTGOMERY. Well, it is due in part to the Gift Downpayment programs which I know we had previous discussion about 

that are 2.3 times more likely to fail. And because a lot of hardworking families who have trouble saving money for a downpayment have to rely on that so-called gift downpayment, many families find themselves in a position of negative equity in their homes. 

And the truth is GAO has recognized that they are far more risky 

whereas an FHA product obviously with what the bill would offer 

with some downpayment assistance would not put families in that 

position. 

Ms. WATERS. Your ‘‘no downpayment’’ aspect of the FHA program would not be synonymous to the gift downpayment? 

Mr. MONTGOMERY. Not, not at all. 

Ms. WATERS. Why not? 

Mr. MONTGOMERY. Well, for one, the Gift Downpayment programs, unlike those last go-around, have an IRS Revenue ruling 

hanging over their heads. You do not have to take what I say about 

it, but the IRS has said these so-called gifts violate the detached 

and disinterested clause. When all of us write a check to charity, 

whether it is the American Cancer Society or the Girl Scouts, we 

do not expect anything in return except a good feeling. And it is 

clear through the IRS that these gift downpayments violate that 

detached and disinterested clause because there is obviously an expectation in there. 

Ms. WATERS. What percentage of your portfolio came from those 

programs? 

Mr. MONTGOMERY. Well, about 30 percent of our current borrowers rely on some assistance for downpayment through a government program or through a family member, but about 25 percent 

are through these gift downpayments which again for the need that 

some people need some assistance on the downpayment again 

which this committee recognizes and has supported. 

Ms. WATERS. Do you not have the ability to either support or not 

support the programs that you are referring to that make up 25 

percent of your portfolio? The gift downpayment? I mean there is 

nothing in law or regulation that would force you to accept their 

participation. Is that right? 

Mr. MONTGOMERY. Well, there is—we have to go through rulemaking. As you know, I cannot just withdraw a rule overnight. 

These gift downpayment programs have been around for 10 years. 

Ms. WATERS. Yes, but you have been using them. They have been 

utilizing FHA. 

Mr. MONTGOMERY. Our law clearly states that our downpayment 

assistance has to involve nonprofits. Until the point in time that 

the IRS determines that ‘‘XYZ’’ foundation is not a bona fide 

501(c)(3), then we have to continue to accept that at this time. 

17

Ms. WATERS. I do not think there is anything in the law that 

would have prohibited you from not involving them, but you readily 

accept their participation, and they make up 25 percent of your 

portfolio. So what has caused you to change direction? 

Mr. MONTGOMERY. Well, again, getting to the point of the IRS 

Revenue ruling, and if they are not a bona fide 501(c)(3) at what 

point in time, then we can no longer accept that form of assistance. 

HUD has previously tried to move to, during the previous Administration, move toward rulemaking to not accept that sort of assistance but was not successful. 

Ms. WATERS. Thank you very much. We will talk about that 

some more a little bit later on. I would now like to recognize Ranking Member Bachus for questions. 

Mr. BACHUS. Thank you, Madam Chairwoman. Commissioner, 

you—in my opening statement I talked about reservations about 

creating a program very similar to the HOME program. But as I 

understand it the program that is now before us would actually 

target or tend to go—have more emphasis on affordable rental 

property for the lowest income Americans. It sort of moves the target down; is that your analysis? 

Mr. MONTGOMERY. Yes, this bill, as I understand it, would target 

75 percent at 30 percent of AMFI and below. And HOME, while not 

having any written targeting, currently 40 percent of HOME funds 

go toward 30 percent of AMFI and below. 

Mr. BACHUS. We talk about, you know, Federal housing programs. We talk about where the need is. One thing that I am 

struck by from time-to-time we do talk about programs for low-income Americans is that I have a home in Birmingham that’s worth 

well over half-a-million dollars, and I have a home up here that’s 

worth about half-a-million dollars, and I do receive a pretty hefty 

tax deduction on my home mortgage interest, so it’s not as if even 

higher income Americans are not receiving what some could call a 

subsidy or a tax break. 

My concern is truly for the lowest income Americans, so—and I 

believe I can say that as a conservative. I think there’s a debate 

among conservatives as to this whole question, but I make no apology for being both conservative and saying that if we’re going to—

if we’re going to have Federal housing programs, we have all sorts 

of programs to create homeownership, but I think maybe what 

we’ve even found with some of the subprime situation is that not 

every American is suited or even wishes to own their own home. 

And I think the greatest need is in rental income for a rental housing, for extremely-low-income families. How can we do a better job 

on that or do you think it’s necessary? 

Mr. MONTGOMERY. Yes, I do think it’s necessary. In fact, I will 

say up front that HUD’s own worst case housing needs analysis 

shows that the number of low-income—and many of the families 

who will be targeted by this fund, the number of families who need 

that sort of assistance has gone up. 

Sadly that has gone up by 800,000 families between 2003 and 

2005. It’s one of the reasons why we have proposed as part of our 

2008 budget a demonstration program at least in the case of lowincome seniors and persons with disabilities, the way that we can 

leverage our limited resources through tax credits and private acVerDate 0ct 09 2002 17:30 Dec 12, 2007 Jkt 038393 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 K:\DOCS\38393.TXT HFIN PsN: TERRIE
18

tivity bonds to use those funds, to spread them out perhaps as 

bridge funds so HUD is not the only funding source impossible. 

One of the areas that again is of most concern to me is housing 

for seniors and for persons with disabilities, and I do share in that 

goal of what the fund would try to do, and that is to help more 

families at the extremely-low-income figure, at 30 percent and 

below. 

Mr. BACHUS. Did you say the elderly and disabled are particularly two groups that—if anyone is deserving of Federal assistance 

or subsidy it would be those and very-low-income Americans, who 

often have large families. We do have a situation in this country 

that we’d all be blind if we didn’t know that we can’t have working 

households with two wage earners and they’re still struggling to 

survive and to provide shelter for their children. 

I would say that with all the programs that the government 

funds, many of them are not directed at low-income Americans. 

Many of them benefit very high-income Americans, in fact. We 

should come together and try to find long-term solutions, long-term 

funding solutions for rental income, for extremely-low-income 

American families. 

Thank you, sir. 

The CHAIRMAN. Let me just ask on that, Mr. Montgomery, for 

families—I know we have some money for the elderly and some 

money for the disabled in terms of housing. I would note that the 

President has proposed to reduce those amounts every year from 

year-to-year; Congress has resisted that. So over the President’s objection there has been more money for the disabled and elderly programs. But how much money is available annually—do you have 

a sense of this, if not you can get it to me later—for housing for 

families in which nobody is disabled? That would include single 

parents and children. How much Federal assistance is available for 

the construction, not Section 8, year-by-year vouchers, for the construction of housing for families who would be, say, at 50 percent 

of the median and below? Do you have any top-of-the-head notion? 

Mr. MONTGOMERY. You said other than the 202 and 811 programs? 

The CHAIRMAN. Right, I’m talking about for families without any 

disabled persons. 

Mr. MONTGOMERY. Which is about a billion. 

The CHAIRMAN. Those are—yes, thanks to Congress. And the Administration has tried to cut those and we’ve resisted that. But 

how much is available for construction for families other than the 

elderly and the disabled? 

Mr. MONTGOMERY. From Federal sources outside of tax credits, 

from pure production, as you know there’s very little, if any, Federal commitment towards producing construction of affordable 

housing. 

The CHAIRMAN. Whatever you can kind of get out of the home, 

maybe. So I think that’s the point we make is that when there’s 

virtually no construction money for family housing available and 

even the tax credit as you know—and I was glad to see in your 

statement that we’re working on parallel paths here, I’ve been 

working with the chairman of the Ways and Means Committee, by 

making the Low Income Housing Tax Credit Program interoperable 

19

easily with the appropriations-based programs. We can do a lot of 

good, save a lot of time and money, and get housing without any 

budget hit. We’re both working on that 

But in my part of the country and many others, unaided, 

unsupplemented by another program, the Low Income Housing Tax 

Credit is not going to get rental levels down low enough for that 

segment of the population. So we are talking about in this bill 

whether or not the Federal Government ought to get back in the 

business of helping build affordable units for family rentals. 

But let me ask you a couple of other questions. One of the issues 

here is that while we might be causing the FHA fees to increase 

and I know you have not, but I assume you haven’t accused us of 

that—statement because as you’re aware the Administration has 

asked us, has announced, not even asked us that they’re going to 

use the existing authority to raise the FHA fees. Would you describe the pending proposal to raise FHA fees and give us the rationale for it, since my understanding is that the FHA is already 

now generating a surplus for the Treasury. So what is the pending 

proposal to raise FHA fees and what’s the rationale? 

Mr. MONTGOMERY. Are you referring to the single family FHA 

fees? 

The CHAIRMAN. Yes. 

Mr. MONTGOMERY. Well, our premiums right now are the same; 

we’re at 11⁄2 percent. 

The CHAIRMAN. Is there not a proposal pending to raise them? 

Mr. MONTGOMERY. Well, the 2008 budget—so we can prevent 

from going positive on our credit subsidy—does note that we need 

a modest increase in premiums. 

The CHAIRMAN. You’re acting like this is a surprise, Mr. Montgomery. You know what we’re talking about. 

Mr. MONTGOMERY. It’s not a surprise. I’ve been talking about 

this a lot. 

The CHAIRMAN. What’s the current request by the Administration for an increase? It’s only for single-family, you’re not asking 

for a multi-family increase? 

Mr. MONTGOMERY. Let me address the single-family, 1.5 percent. 

We would increase it to 1.66 so we don’t go positive on the credit 

subsidy, which none of us want. Let me speak to what that dollar 

amount represents. Our average mortgage is about $129,000. That 

.66 increase is about $7 a month. 

The CHAIRMAN. All right. So you—is that something you’re asking us to legislate or that you can do on your own? 

Mr. MONTGOMERY. Well, the statutory cap for the premium is 

21⁄4 percent. Two predecessors ago, Mr. Abgar, right before he actually left office, lowered the premium to 1.5 percent, which the Commissioner can do, and it has stayed at 1.5 percent since October of 

2000. 

The CHAIRMAN. So you are not asking Congress to do this. This 

is something that the Administration proposes to do to undo this? 

Mr. MONTGOMERY. The Commissioner has the authority to raise 

that premium— 

The CHAIRMAN. I understand, but can we get a little more direct 

in our answers here? 

Mr. MONTGOMERY. That was pretty direct. 

20

The CHAIRMAN. Are you planning to do it? 

Mr. MONTGOMERY. Sir, I have made a commitment, not before 

this committee but before the Senate Appropriations and House 

Appropriations Committees that the fund will not go positive under 

my watch. When it comes time— 

The CHAIRMAN. That may seem direct to you, but it doesn’t to 

me. Are you planning in the near term to increase the FHA single 

family premium? 

Mr. MONTGOMERY. So I don’t have to ask Congress for $143 million in appropriation. Yes, sir. That’s what— 

The CHAIRMAN. You are planning to raise it? Okay. I cite that 

because we talk about where the fee increases. How about multifamily? 

Mr. MONTGOMERY. Again, as part of the 2007 budget as well, a 

proposed increase on some multifamily programs. As you know, 

that rule was withdrawn. It came back. Some of the programs that 

would have been part of the original rule, as you know, were no 

longer part of the second. 

The CHAIRMAN. So what is the current status now of that proposal? It came back, that’s an interesting sort of— 

Mr. MONTGOMERY. Yes, it walked its way back— 

The CHAIRMAN. Yes. We have rules, we have autonomous rules, 

apparently. They walk, they talk, they feed. They come back, nobody—we’ll do a movie now of the rule that walked and came back 

to us. What is that rule proposing itself to do right now? 

Mr. MONTGOMERY. Well, the rule right now which is actually not 

out for public comment yet but will be soon— 

The CHAIRMAN. It’s a shy rule. 

Mr. MONTGOMERY. Yes, sir. It is, but it will appear before the 

end of the fiscal year. The increase would be for 221 D–3s and 221 

D–4s; it would exempt tax credits in hospitals. 

The CHAIRMAN. And how much of an increase would you be talking? 

Mr. MONTGOMERY. Well, the proposal last year, as you know, was 

32 basis points. This year it is half of that. It would only be 16 

basis points. But sir, I just want to make sure as last year there 

will be plenty of time for public comment. 

The CHAIRMAN. There is nothing pending on that now. All right, 

I appreciate it. 

Mr. MONTGOMERY. That has not gone into effect, sir. 

The CHAIRMAN. I appreciate that. So we do have a potential for 

that to come forward. The next is Mr. Miller, a nice segue to Mr. 

Miller on the subject— 

Mr. MILLER OF CALIFORNIA. Just to follow up on that because, 

Commissioner, the budget proposal that you’re requesting is 35 

percent on most of the multi-family housing programs. I mean 

that’s what your budget proposal requests—a 35 percent increase. 

Mr. MONTGOMERY. OMB subsequently issued an errata sheet 

which corrected that. 

Mr. MILLER OF CALIFORNIA. Was that after 100 of us mailed you 

guys a letter saying it is ridiculous that you guys make a profit 

every year? Was it maybe— 

Mr. MONTGOMERY. Well, I just want to make sure you understand the proposal. 

21

Mr. MILLER OF CALIFORNIA. You cut it from 35 percent of what, 

35 percent of what, how low did you— 

Mr. MONTGOMERY. Two years ago, it was 32 basis points. We 

withdrew that. In 2008 the proposal is 16 basis points. 

Mr. MILLER OF CALIFORNIA. Okay. So now it’s going to be half 

of 35 percent, let’s say 17.5 percent. And yet you’re making a profit. 

Now I know that in your testimony you’re concerned about pressure on FHA premiums to provide money for the affordable housing 

fund, but you’re wanting the 17.5 percent increase on the multifamily, which is increasing it, and yet every year FHA makes a 

profit and it goes to the Treasury basically. 

I guess one problem I have is—I’m not arguing but I have a real 

problem with the comment you made on the downpayment assistance program that it’s very risky, and that’s the private sector 

helping with downpayment assistance for an individual. Yet the 

American Dream Downpayment Assistance Act, which is the government giving people for a downpayment is good. 

It seems like if you use the same underwriting criteria that you 

would use for zero downpayment or the American Dream Downpayment Act, same criteria. Why would one be more risky than the 

other if the underwriting criteria is equal? 

Mr. MONTGOMERY. Sir, there’s a difference between apples and 

pineapples. 

Mr. MILLER OF CALIFORNIA. Well, no. The difference between the 

downpayment assistance program in the private sector that they 

currently face is that HUD changed the ruling on what was considered a charity. Prior to HUD changing that ruling— 

Mr. MONTGOMERY. It was the IRS. 

Mr. MILLER OF CALIFORNIA. Well, the IRS had no problem with 

them prior to you guys changing the ruling, but once you changed 

the ruling that they were not a charity, per se, then they were in 

violation of the law and the IRS. But the point is that if you have 

$5,000 or $3,000 given to an individual from the government for 

downpayment assistance or you have $5,000 from the private sector given to an individual for downpayment assistance, what’s the 

difference? 

Mr. MONTGOMERY. First and foremost, in the so-called gift downpayment programs, you repay that gift. The cost of that downpayment is put on your note. Sometimes it’s done and families don’t 

even know it. And a lot of those gifts are used in stagnating or declining markets where there’s very little house appreciation. And as 

a result of that— 

Mr. MILLER OF CALIFORNIA. Well, I know many of the—the committee, those were gifts, those were not put on somebody’s notes, 

and nobody had an argument with that. 

Mr. MONTGOMERY. I think the proof is in the pudding how those 

loans perform and they are almost 21⁄2 times more likely to fail. 

Mr. MILLER OF CALIFORNIA. But why? 

Mr. MONTGOMERY. And that is one of the reasons that we are 

forced to raise our premiums. 

Mr. MILLER OF CALIFORNIA. Please answer me. Why? Are you applying the same underwriting criteria? If you apply the same underwriting criteria on a $100,000 house if somebody got a $3,000 

downpayment to buy, so they owe $97,000, versus somebody who 

22

bought through a zero downpayment, and they owe $100,000, if you 

apply the identical underwriting criteria, how can you convince us 

that somebody is better off owing $100,000 than they are owing 

$97,000 if the same underwriting criteria has been applied? You’re 

skirting my—I’m not arguing; you’re skirting my question. 

Mr. MONTGOMERY. No, I’m not, sir. I’m just saying it’s—in the 

case for that downpayment, the gift downpayment I only use the 

term ‘‘gift’’ because it’s descriptive, is paid back, and a lot of families don’t know that. Again, they’re in stagnant or declining markets. They’re in a negative equity position, and they’re repaying it. 

Mr. MILLER OF CALIFORNIA. So they’re in the same position 

somebody with a zero downpayment is in? 

Mr. MONTGOMERY. I’m sorry, sir? 

Mr. MILLER OF CALIFORNIA. Are they in the same position as 

somebody with a zero downpayment? 

Mr. MONTGOMERY. No, because it is clearly known at the outset 

that the family is in a certain equity position. The family may or 

may not elect to do that. Certainly the underwriting is there, but 

the truth is that a lot of families don’t realize that they are paying 

this gift back. They thought it was, in fact, a gift. And sir, that is 

why the proof is in how they perform, and they fail 21⁄2 times more 

often than the non-gift downpayment programs, and that is why I 

have to raise premiums. 

Mr. MILLER OF CALIFORNIA. We’ll continue to debate that. On 

targeting, where are most HUD funds currently targeted? To lowincome or moderate-income families? 

Mr. MONTGOMERY. Are you talking about FHA or all of it? 

Mr. MILLER OF CALIFORNIA. Yes, HUD funds in general. 

Mr. MONTGOMERY. It would depend on the program, but most of 

them are at 80 percent of AMFI and below. 

Mr. MILLER OF CALIFORNIA. Most of them are low? 

Mr. MONTGOMERY. The vast majority of them are. 

Mr. MILLER OF CALIFORNIA. Do you see success in pursuing 

mixed income developments as might be proposed in this legislation? 

Mr. MONTGOMERY. Oh, I think mixed-income developments have 

a place, dependent on the community and certain other demographics. 

Mr. MILLER OF CALIFORNIA. Do you think that this fund should 

be mainly targeted heavily to low-income or give existing HUD programs that deal with it or should we maybe look at this program 

to service more the needs of even moderate-income working families if we’re going to have a program? 

Mr. MONTGOMERY. Well, as I mentioned previously, I think the 

goal of the fund, to help more families at 30 percent of AMFI and 

below, is a very good goal. Again my problem is just in the case 

that I now have to help fund that fund but I’m facing the prospect 

of whether I fund Section 8 or I fund an Affordable Housing Trust 

Fund, and that’s a difficult decision. 

Mr. MILLER OF CALIFORNIA. You mean you’re funding it through 

the FHA excess premiums? 

Mr. MONTGOMERY. All FHA receipts are credited toward HUD, 

but that’s the point— 

23

Mr. MILLER OF CALIFORNIA. Where do the excess premiums go 

today? 

Mr. MONTGOMERY. They go to offsetting HUD’s budget, every 

penny of them. 

Mr. MILLER OF CALIFORNIA. And the language we’ve included in 

the bill allows that—but it says the excess funds, above solvency 

and those types of things that normally would go to the Treasury 

would go to this fund. But the appropriators use that excess and 

they credit it to our budget. 

Mr. MONTGOMERY. Well, it would be either through—it would be 

us or Transportation. But the point, sir, is that since they credit 

those funds toward our budget, toward HUD’s budget that we 

would face the prospect, do I fund Section 8, HOME, or do I give 

the funds to a trust fund? And as I reference in my remarks, I 

would selfishly want to fund HUD’s programs first, and I would 

hope that everybody on this committee would share in that. 

I can make one last point. I think the reason State housing trust 

funds work well—some would say they refer to them as sort of benign revenue sources, but that’s the coin of the realm of making 

trust funds work. States use document recording fees. They use 

real estate transfer taxes. They use interest from escrow accounts 

that have been returned to a State entity. That’s a big jump from 

now taking on a Federal level, the possibility of taking funds out 

of a housing agency to go fund a housing trust fund. 

And again, I just want to be selfish that I am going to try to protect HUD’s resources first. I would hope people would expect me to 

do that, and that’s what I referred to earlier. 

Mr. MILLER OF CALIFORNIA. Thank you very much. 

The CHAIRMAN. I recognize the gentleman from New York and I 

say we certainly are glad to work with you to protect HUD’s resources, and the next time OMB comes calling, we’ll be there. 

The gentlewoman from New York. 

Mrs. MCCARTHY. Thank you, Mr. Chairman. I guess the questions that I basically want to ask is what is HUD’s—what are you 

looking at to the future? We are talking about housing for certainly 

the lowest of the incomes, those with disabilities, and our seniors. 

I happen to agree that we have a lot of middle-low-income families on Long Island. The problem is the jurisdiction on Long Island. 

Nobody wants low-income families in their neighborhoods, which is 

really a shame. 

I do not want to see warehousing of the lowest incomes into one 

area either, which I already have. I have a 23 percent minority 

area. I will be very honest with you. On the rentals in one of my 

areas, I would not put anybody in that. Those are Section 8 housing. I would not put anybody in those homes, in those particular 

apartment rentals. Looking at New York State, we have a shortage 

of 336,000 units of rental. 

Is HUD looking to the future with a bill like this that we could 

have like almost mixed rentals, where you would have young middle-income families or low-middle-income families with seniors, and 

people with disabilities, so there is a mixed community in one 

building? 

It seemed to work 20 or 30 years ago, versus what we are seeing 

today, warehousing the poorest of the poor in one area. 

24

Would that be more acceptable to say my villages, my towns? 

Mr. MONTGOMERY. That is one of the primary goals of the demonstration program I referenced earlier with our Section 202 and 

811 programs. By blending them with the tax credit program, 

which is targeted at 80 percent of AMFI and below, using the 

economies of scale, we can better spread out our resources, combine 

them with State and local resources, whether it be a mixed income, 

as long as it is below that certain AMFI number, then we can 

produce more housing. 

I know it is a tough budget environment. That is one of the reasons that we moved to offer these two demonstration programs, 

which I want to add many of the folks who were here in this room 

today have helped us draft that pilot program, and I appreciate 

their effort. 

Again, Congresswoman, that is one of the goals of the program. 

Mrs. MCCARTHY. One of the concerns I have, my working poor, 

because they live on Long Island, I will even speak for myself, our 

utilities, our taxes, are extremely high. Even though the county has 

started helping with $10,000 downpayments—I think we have renovated maybe five or six homes in the last 5 or 6 years. We pick 

one house a year, renovate it, and hopefully get a family in it. We 

work with our local groups that are trying to educate them. 

They can find the money for the downpayment on the homes, but 

then they find they cannot afford the taxes and they cannot afford 

the utilities. That is a problem. 

Yet with the rental apartments, which we do not have—Nassau 

County is one of the oldest counties in the country, and unfortunately there was no planning going back when we all started. 

Even to try to build the building and then have the community 

accept it, I will go back to should HUD also consider the percentage 

of affordable housing units in a jurisdiction when developing the 

formula for allowing the funding? 

Mr. MONTGOMERY. That is some of what States do through their 

consolidated plans that help guide obviously where HOME funds 

go. Actually that is a lot of the goal of what the HOME program 

does. While I am sure there could be improvement in it, a lot of 

States are doing that currently as part of their consolidated plans. 

Mrs. MCCARTHY. I can see in my area also maybe you could build 

one building for what it would cost to put that building up versus 

in other parts of the country where they might be able to put up 

three or four buildings. 

It just seems that we always get caught not getting any, or as 

I said before, we are 336,000 units short. I am sure Long Island 

has a large proportion of that, even being close to New York City. 

I think we have to start thinking outside the box on how we are 

actually going to deal with high cost areas: California; Texas is certainly short of housing; and Florida comes in fourth. 

I think with everything that we have seen and certainly in my 

11 years of trying to find housing for those who need it, even our 

young people when they first get out and have a job and it is a lowpaying job, whether as a teacher or a nurse, they cannot stay on 

Long Island, and that is not good for the economy to keep the economy going on Long Island. 

25

I support this bill. I am just concerned about whether it is going 

to help an area like mine. Is it going to help areas that have a 

higher income which make false readings as far as I am concerned 

for some of my minority areas. 

Mr. MONTGOMERY. Again, it targets most of the funds toward 30 

percent of AMFI or below. What you have described to me, it could 

be difficult, although I think we all agree that is a good goal, which 

is what we try to do under the HOME program as well. 

Mrs. MCCARTHY. I yield back the balance of the time. 

The CHAIRMAN. The gentlewoman from Minnesota. 

Mrs. BACHMANN. Mr. Chairman, thank you for the opportunity 

to ask a question of the witness. I appreciate it and I thank you 

so much, Mr. Montgomery, for being here today. I appreciate it. It 

is an important issue that we are dealing with, affordable housing. 

The goal is worthy of the chairman’s bill, and that is to construct 

and rehab and preserve 1.5 million dwelling units over the next 10 

years. It is an ambitious goal. 

I am just wondering from your perspective—I was not here earlier and I apologize for that—do you think this is an achievable 

goal, first of all? I have other questions. 

Mr. MONTGOMERY. We do have a good yardstick of comparison, 

the HOME program, which this is nearly identical to. Since 1990, 

it has produced about 787,000 units of housing, another 165,000 

families have been assisted through tenant abates rental assistance, and that is about $18 billion of about $24 billion that has 

been appropriated, by the way. I would say that while it is a worthy goal, using the HOME program as a basis of comparison, it 

might be difficult. 

Mrs. BACHMANN. I appreciate your answer. You are right. I see 

there is a very strong similarity between the program that is now 

being proposed and the current HOME program. That is nearly a 

doubling of what we have seen in terms of a goal. I was wondering 

how reachable you thought that is. Thank you for that background. 

I am also wondering when we create a new program like this, it 

will necessitate that we create an entirely new bureaucracy, and 

that could take months, maybe even years to bring the necessary 

rules and regulations on line to put this program into practice. 

What I am wondering is, if the existing HOME program could 

supplement the existing trust funds without creating a new bureaucracy? Could we do more with what we have by tweaking and 

fine tuning the program that we now have so that we could be 

more ambitious in reaching greater goals so we could take care of 

the needs of more people, disabled people, low-income people? 

Mr. MONTGOMERY. As a Commissioner, I used to work at a State 

housing finance agency in Texas, which by the way, we tried to get 

more funding for our State housing trust fund back then. 

I am fearful that some State housing finance agencies with a 

new program, as we would expect, it would take them a while to 

figure it out, so to speak. I think some States would go full speed 

ahead and spend it and hope for the best, relative to the compliance period and the monitoring of how the funds are spent. 

I think other States on the other hand would say wait a minute, 

we are not quite sure how to go into this, and do the opposite 

thing, be very hesitant to spend the funds. 

26

I suspect some States would say, is this not the HOME program? 

Again, recognizing the difference, which I want to be very careful 

to point out, between the target income levels. 

I think you will have States doing all sorts of different things, 

but again, it gets back to my point—I do not want to take more 

of your time. 

Mrs. BACHMANN. That is fine. If you would like to finish, that is 

fine. I have one more question. 

Mr. MONTGOMERY. Go ahead. 

Mrs. BACHMANN. One study that I was curious about, and I do 

not know if you are familiar with it, from the Reason Foundation, 

and they found that oftentimes programs like the one that is being 

proposed actually fail. I am wondering what your response is. 

They said the reason why is not despite the housing trust fund’s 

resources, it will fail because they said State and local land use restrictions result in less space and higher costs to build new units, 

which means that supply cannot meet demand. 

What I am wondering is, do you see in the current legislation 

that is being proposed before this committee, incentives for the 

State and for the local governments that you just referred to, to reduce the amount of regulation that it then imposes on the housing 

construction? 

Mr. MONTGOMERY. I think there is a proposal for States that 

lower some of the regulatory barriers to waive some match provisions and things of that nature, which I think is good. I am not 

familiar with that particular study that you are referencing, so I 

cannot really comment on that. 

My own personal experience again with the Texas housing trust 

fund, which had an altogether different source of funding, that is 

the coin of the realm, where do you get the money, I think it was 

a successful program. 

Mrs. BACHMANN. Do you think that is part of the reason for the 

success, the source of that funding, which is different from this proposal? 

Mr. MONTGOMERY. Unfortunately, whether it is a State budget or 

Federal budget, there is no free lunch. To agree there is a—and I 

will use the term ‘‘benign,’’ for lack of better—funding source, since 

everybody has to answer to the appropriators and to the authorizers, if they can find that source, which many States have done, 

Florida has been able to raise $200- to $300 million through a real 

estate transfer tax, and some other States you will hear from later 

have done a wonderful job through document recording fees and 

other sources. 

I think it is very key. I think we all share in the goal of what 

the fund would do and what HUD does, but again, the key is what 

is the funding source. 

Mrs. BACHMANN. Ten years from now if we all gather again for 

a reunion in this room, as we go review and do an audit of this 

bill, what are we going to find? Are we going to be talking about 

a success story? 

Mr. MONTGOMERY. I do not know what is going to happen to the 

bill. That is not my job. I do not vote here. I would hope— 

Mrs. BACHMANN. Based upon your experience with what you 

have done in the past, what do you foresee with what your knowlVerDate 0ct 09 2002 17:30 Dec 12, 2007 Jkt 038393 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 K:\DOCS\38393.TXT HFIN PsN: TERRIE
27

edge is, how would you apply that to what you think the true success of this bill will be? 

Mr. MONTGOMERY. I would say to the degree that it is HUD, 

State trust funds, or if there is a national housing trust, I would 

hope that at the end of the day, we are helping more people than 

we are today. 

Mrs. BACHMANN. Could you be more responsive to my question? 

Do you foresee success or not? 

Mr. MONTGOMERY. It is hard to say since this is just a proposal. 

Again, I would say since the bill does much of what is already in 

the HOME program, putting the funding issue aside, yes, I do 

think there would be some States that would do well, and other 

States that would not. You just cannot escape the argument that 

I made earlier, having us as a funding source, we are facing a difficult decision. Do we fund HUD programs or do we fund the trust 

fund? 

Mrs. BACHMANN. Thank you, sir. Thank you, Mr. Chairman. 

The CHAIRMAN. The gentlewoman from New York. 

Ms. VELAZQUEZ. Thank you, Mr. Chairman. 

Assistant Secretary Montgomery, first and foremost, let me 

thank you for coming to New York, and the fact that you were 

there 2 weeks ago shows that we are facing a crisis when it comes 

to the shortage of affordable housing in New York City. 

Members of Congress, every time we go to our districts, we become case workers or we go policing to see what is going on. 

This last Saturday, I just held a housing town meeting, and more 

than 600 people showed up. It tells you that people are very concerned about the fact that we do not have affordable housing. 

You come here and you praise the goals of H.R. 2895 but also 

you raise concerns about the proposal under consideration. I would 

like to ask you to give us specific recommendations of how can we 

make the housing trust fund a workable project. 

Mr. MONTGOMERY. Since it mirrors much of what you see in the HOME program, which our Administration asked for $200 million 

more this year than last year, I would say beefing up the HOME 

program would be a good step. 

I do not know— 

Ms. VELAZQUEZ. How would you accomplish that? 

Mr. MONTGOMERY. If I had a magic wand, it would be one thing. 

None of us do. There is a need for more funds for the HOME program. 

Ms. VELAZQUEZ. Did the Administration request more funds? 

Mr. MONTGOMERY. We did request more, which the House Appropriations Committee cut $200 million from our request, unfortunately, last week. 

As far as how I would look at funding it, that is the problem. The 

States have sources that are not available at the Federal level and 

States have figured it out on their own and many have done a very 

good job funding housing trust funds. 

Ms. VELAZQUEZ. The difference is that unlike the Federal Government, States must pass a balanced budget, which will increase 

the possibility of instability to these funds. 

If the States have been able to manage the funds in that fiscal 

environment, why cannot we in the Federal Government do it? 

28

Mr. MONTGOMERY. Again, it gets back to the point of what is the 

source of the funds. Someone just threw an idea out at me. The 

Federal Government settles lawsuits all the time. That revenue 

goes right back to the Treasury. Why could we not use that as a 

source? 

I said, well, I guess that is something you could look at, but 

again, it gets back to the source of since there is no free lunch here 

and every penny of the budget and then some is spoken for, where 

do the funds come from. 

Ms. VELAZQUEZ. H.R. 2895 clearly provides the source for the 

funds. That is why we should be supporting it. 

Thank you very much. 

Mr. MONTGOMERY. Other than the fact that it takes the funds 

from HUD. 

The CHAIRMAN. I am going to recognize myself. What funds is 

HUD now getting in the absence of this FHA and housing trust 

fund bill that you would lose? Please identify them for me. 

Mr. MONTGOMERY. We keep back a certain amount of receipts 

which by the way, I have no receipts for next year, as it— 

The CHAIRMAN. You are not answering my question and I am 

going to ask it again. How much are you now getting that you 

think this will take away from you and tell me where. 

Mr. MONTGOMERY. If you look at the budget, receipts of about 

$700 million from this year are used to offset HUD— 

The CHAIRMAN. You are getting $700 million this year, you said, 

right? 

Mr. MONTGOMERY. Every penny of it offsets HUD’s budget. 

The CHAIRMAN. The bill that we passed, the combination of the 

FHA bill and the housing trust fund bill, how much of that $700 

million would it take away from you? You said it would take money 

away from you. Would it take any of that money away from you? 

Mr. MONTGOMERY. Well— 

The CHAIRMAN. It is a fairly straightforward question. 

Mr. MONTGOMERY. It would take money away from HUD because 

every penny— 

The CHAIRMAN. Commissioner, please, you know better than 

that. I am asking you a straightforward question. The $700 million 

you cited, would anything we are doing reduce that? 

Mr. MONTGOMERY. Every penny of our receipts— 

The CHAIRMAN. Can you give me a straight answer? 

Mr. MONTGOMERY. I am trying to. 

The CHAIRMAN. No, you are not. You are trying to evade it. You 

said you are getting $700 million now. What are we doing that—

would anything we are doing diminish that current flow of funds? 

Mr. MONTGOMERY. Maybe I am not understanding the question. 

The CHAIRMAN. Sure, you are. 

Mr. MONTGOMERY. But every— 

The CHAIRMAN. In the bill, what would diminish the current flow 

of funds? What in the FHA bill— 

Mr. MONTGOMERY. Because it has to be covered via the appropriation process. 

The CHAIRMAN. What has to be covered? The bill says, the FHA 

bill, that we increase revenues by raising the level of housing price 

29

you can go to and we take the capital off the HECMs. That would 

generate some additional revenue. 

It certainly does not affect any existing revenue. Does anything 

that is being contemplated—if we were not to pass either bill, you 

do not lose anything, do you? 

Mr. MONTGOMERY. Sir, the point I was trying to make earlier— 

The CHAIRMAN. I understand the point, you are trying to evade. 

Mr. MONTGOMERY. The appropriators— 

The CHAIRMAN. Excuse me, Commissioner. 

Mr. MONTGOMERY. The HUD budget is those receipts, and that 

is the point I was trying to make earlier; there is no excess. 

The CHAIRMAN. In the first place, that is a fiction, when they do 

the appropriation. Secondly, the question is we are talking about 

generating additional revenues for the FHA. 

I really am disappointed that you evaded the question. I take it 

nothing we are doing would diminish your current flow of funds. 

Are you confident that if we were in fact to go ahead with these 

increased revenue sources for the FHA through taking a cap off 

home equity mortgages and raising the amount of mortgages you 

can insure, that the Administration would ask that all of that be 

credited to the FHA? 

Mr. MONTGOMERY. Sir, I am sorry. 

The CHAIRMAN. No, I want an answer to that question. 

Mr. MONTGOMERY. I think I understand your question now, sir, 

I am sorry. Yes. We have— 

The CHAIRMAN. Answer the question I just asked you. If we were 

to generate the new revenues that are in the bill and did not assign 

them to the housing trust fund, are you confident the Administration would ask they go to the FHA? 

Mr. MONTGOMERY. Sir, we hold back what we need. 

The CHAIRMAN. Excuse me, Commissioner. You understand that 

is not an answer to the question I asked. You really do. 

Mr. MONTGOMERY. No, I do not understand, sir. I am trying to 

answer your question here. Sir, my point is— 

The CHAIRMAN. No, you are not. This is disappointing to me. 

Mr. MONTGOMERY. We hold back what we need to cover claims 

which vary year-to-year, the gift downpayment programs I referenced earlier. 

The CHAIRMAN. I am talking about HUD. You know you are 

switching ground. You said HUD gets credit—you keep switching 

between the FHA and HUD in general, for purposes of obfuscation, 

which disappoints me. 

You said that HUD gets credit for the additional revenues that 

the FHA generates, correct? You did say that? 

Mr. MONTGOMERY. Yes. 

The CHAIRMAN. The legislation we are talking about doing would 

generate additional revenues for the FHA. You are aware of that? 

Mr. MONTGOMERY. Yes. The point is that— 

The CHAIRMAN. No. 

Mr. MONTGOMERY. They would have to go back to the HUD 

budget from the appropriators which is what they have always 

done. 

The CHAIRMAN. Yes. I have asked you this question which you 

pretend not to understand. Are you confident that if we were to 

30

generate these additional revenues by taking the cap off the home 

equity mortgages and raising the amount of mortgage you could insure, that the Administration would ask that HUD get the credit 

for that in its appropriation and that the appropriated amounts for 

HUD would increase? 

Mr. MONTGOMERY. Sir, that, I do not know. 

The CHAIRMAN. You know the answer is no. 

Mr. MONTGOMERY. I would say give it to the HOME program. 

The CHAIRMAN. I did not ask you what you would say. Again, you 

know you are deliberately not answering. I did not ask you what 

you would say. The point is this, what we have are constraints on 

the HUD budget and the notion that if we were to increase money 

for the FHA, that would be additive to the HUD budget, is not 

true. I believe you know it is not true. I am disappointed that you 

would even pretend that it might be the case. 

The HUD budget is constrained by other factors. In fact, it is the 

Administration that is trying to raise the FHA fees. We have legislation to prevent you from raising them. The legislation we are 

talking about says that if any of these revenue diversions were to 

jeopardize the FHA solvency and require more money from the appropriators, it would not go into effect. 

Your notion is that we would get a total additional for HUD, that 

HUD would get the credit for any additional FHA money, and that 

simply has not been the case. During your tenure, has that been 

the case? Has the HUD budget overall increased proportionately? 

Have FHA surpluses gone up? 

Mr. MONTGOMERY. About $1.6 billion this year from the previous 

year. 

The CHAIRMAN. Did it go up proportionately because of the FHA 

getting more funds? 

Mr. MONTGOMERY. The FHA is self-sufficient, sir. 

The CHAIRMAN. Commissioner, please, stop that. You said that 

the HUD gets— 

Mr. MONTGOMERY. We are in the hole right now, sir. We are in 

the hole. I do not have any money. 

The CHAIRMAN. In the past, throughout your tenure, has the 

FHA been losing money? 

Mr. MONTGOMERY. Sir, as you know, we are trying to fix FHA 

from being in the hole but it was not too long ago, including under 

Secretary Cisneros, FHA was generating a lot of money. That is not 

the case today. As we all know, and this committee was great in 

helping us get the FHA bill through— 

The CHAIRMAN. I agree with that. The point is there has been no 

correlation between the FHA surplus or deficit and the HUD budget. Here is your argument, that we should not take additional revenues we generate for the FHA and put them into affordable housing because otherwise it would have gone to the HUD budget. I do 

not think anybody in the world believes that is true. I am disappointed to hear you say it. 

Mr. MONTGOMERY. Sir, I am just looking at the budget we publish every year, and it clearly has a credit for our receipts under 

the HUD budget. I know what you are trying to say, sir. Looking 

at what it has on our budget books— 

31

The CHAIRMAN. You said the FHA has been losing money recently. 

Mr. MONTGOMERY. I am sorry, sir? 

The CHAIRMAN. It has been losing money, correct? 

Mr. MONTGOMERY. We will start losing money in about 2 months, 

sir. 

The CHAIRMAN. You told me you are losing money now. You said 

you were in the hole. 

Mr. MONTGOMERY. The die has been cast, that we are not producing— 

The CHAIRMAN. You just said—Commissioner, I have never been 

more disappointed in somebody’s testimony than yours. The notion 

that the HUD budget goes up, that there is a causal link between 

increased FHA revenues—of course, as my colleagues point out, 

this Administration keeps trying to cut the budget. We have been 

able to stop some of that. 

The notion that the additional FHA money would translate into 

additional funding for HOME or CDBG, if that is the argument 

against this bill, I look forward to the debate. 

I now recognize the gentleman from Connecticut. 

Mr. SHAYS. Mr. Chairman, thank you for waking all of us up 

here. I was happy to let this go on, because frankly I did not hear 

a straightforward answer candidly. 

I would like not to use my time right now, since I just got here, 

and let other members who have been waiting longer go, and then 

I would like to ask some questions. 

Who is next, Mr. Chairman? I need to wake you up. 

The CHAIRMAN. Are you finished? 

Mr. SHAYS. I am not going to use my time now. I would like to 

wait and let members who have been here a while ask questions. 

The CHAIRMAN. I apologize. We will recognize the gentleman 

from North Carolina. 

Mr. WATT. Thank you, Mr. Chairman. 

Mr. Montgomery, let me approach this a slightly different way 

because in reading your testimony and hearing the exchange that 

has taken place, it seems to me that what you are saying is that 

HUD has a certain budget and if we make more money available, 

that money is not likely to be used for this purpose. It is just going 

to be used as a substitute. 

Is that what you are saying? 

Mr. MONTGOMERY. That is what the appropriators do. 

Mr. SHAYS. Say ‘‘yes.’’ 

Mr. WATT. If that is what you are saying. 

Mr. MONTGOMERY. Yes. 

Mr. WATT. It seems to me that the logical consequence of what 

you are saying is under those circumstances what we are doing will 

not inure to the purpose that we intend for it to inure to because 

the money is coming to HUD and consequently the inappropriate 

place to send the money is to HUD because if you send it to HUD, 

there is going to be a substitution for what HUD is already doing. 

I am not wedded to sending this money to HUD. I think the trust 

fund could be set up someplace else and the money sent someplace 

else if you are concerned about this money being substituted for 

money that HUD is already getting. 

32

The question I want to ask is, since you do not seem to think 

HUD ought to get this money under these circumstances, who 

would be the appropriate alternative beneficiaries to administer 

the housing trust fund other than HUD, since under your analysis, 

HUD ought not be getting it because it will just be a substitute for 

what you are already doing? 

Mr. MONTGOMERY. Sir, my point was that I think HUD should. 

Mr. WATT. I did not ask you what your point was. You have 

made your point. I am trying to make my point now. 

Mr. MONTGOMERY. Yes, sir. 

Mr. WATT. My point is who would be the other alternative beneficiaries to administer the housing trust fund other than HUD? You 

have obviously eliminated HUD now as an appropriate beneficiary 

of the funds, under your analysis. 

Who would be the other appropriate beneficiaries to administer 

a housing trust fund since the official position of HUD seems to be 

that you do not want it over there because it will conflict with 

other things? 

What are the alternatives that we have as to where to send this 

money? 

Mr. MONTGOMERY. Sir, actually, I did want HUD to keep the 

funds, as they do now. That was a point I made in my remarks, 

which you missed, sir. 

Mr. WATT. I missed those remarks. In the exchange you just had, 

it sounded to me like you were saying, do not send this money over 

here. 

Mr. MONTGOMERY. No, sir. 

Mr. WATT. Because it will be used for the purposes we are already achieving. If you want to add to those purposes, you need to 

send it somewhere else. 

Let’s assume that is what you were saying because I think everybody in the room heard those conflicting things that you were saying, what would be some of the alternative places to send the 

money other than HUD? 

Mr. MONTGOMERY. In the hypothetical sense, sir? 

Mr. WATT. In the hypothetical sense. 

Mr. MONTGOMERY. I think some States are doing some wonderful 

jobs with their housing trust funds. 

Mr. WATT. If we set up a mechanism that said States do not substitute this for what you are already doing, put it on top, which is 

what Mr. Frank says we were going to do for HUD, you think the 

States would be able to apply that standard better than HUD 

would be able to apply it? 

Mr. MONTGOMERY. The States could decide they want to use it 

for their HOME funds. 

Mr. WATT. No. 

Mr. MONTGOMERY. Hypothetically, sir. 

Mr. WATT. We would tell them no, you cannot do that. 

Mr. MONTGOMERY. Hypothetically, as well. Thinking hypothetically. 

Mr. WATT. We were trying to tell you no, you cannot do it. You 

cannot substitute it for HOME funds either. You are saying that 

we can tell the States that, but we cannot tell HUD that? 

33

Mr. MONTGOMERY. Sir, that would obviously be a decision for 

you, but back to my point, I think States, whether it augments 

their trust fund, again hypothetically, I think many States are set 

up to do that right now. Some of them are testifying here later 

today. I think they would tell you. 

Mr. WATT. I am sure they are going to say yes, send the money 

to us. HUD is about the only place I know of that says, do not send 

money over here because it might substitute for some money we already have, which is what you seem to be saying. 

Mr. MONTGOMERY. No, we would take any extra money obviously 

that the appropriators would give us, but in the case that we offset 

our budget with my receipts, that money would have to come from 

somewhere else if I did not offset that budget. That was the point 

I was trying to make earlier, sir. Thank you. 

Mr. WATT. I do not understand what you are saying. 

The CHAIRMAN. I have been working on HUD budgets for 27 

years. It has never been the position of the appropriators that the 

amount appropriated to HUD would rise or fall according to FHA 

receipts. It is a bookkeeping matter whereby FHA receipts are entered into the general fund, but no one has ever suggested that the 

budget of HUD goes up or down in any way dependent on net receipts and losses from the FHA. I have been working on HUD 

budgets since coming here. 

The gentleman from Missouri. 

Mr. CLAY. No questions. 

The CHAIRMAN. The gentleman from Texas. 

Mr. GREEN. Thank you, Mr. Chairman. Earlier, I did not thank 

the ranking member of the full committee and the ranking member 

of the subcommittee, so I thank them at this time. 

Mr. Montgomery, thank you for some of the things you have done 

to be of assistance to us in Texas, and I thank the Secretary also 

for some things he has done to be of assistance to us. 

Mr. Montgomery, currently, we have as you have indicated, a 

number of programs. Let me just quickly ask you, is there a trust 

fund for the HOME program? 

Mr. MONTGOMERY. You mean is there currently a trust fund 

within the HOME program? 

Mr. GREEN. Yes, sir. 

Mr. MONTGOMERY. It is out of my purview at HUD, but I do not 

believe there is a trust fund, per se. 

Mr. GREEN. I will take that to mean, ‘‘no.’’ 

Mr. MONTGOMERY. Yes, sir. Given my familiarity, because it is 

not under my purview at HUD. 

Mr. GREEN. Is there a trust fund for CDBG? 

Mr. MONTGOMERY. Not that I am aware of, sir. 

Mr. GREEN. I will take that to mean, ‘‘no.’’ 

Mr. Montgomery, let me ask you this. Are you in a position to 

know whether there is a trust fund for CDBG? 

Mr. MONTGOMERY. It is not under my purview at HUD, but I am 

not aware that there is. 

Mr. GREEN. Are you in a position—you are a high official in HUD 

and you do not know whether there is a trust fund for CDBG? Mr. 

Montgomery, this is not necessary. 

Mr. MONTGOMERY. I agree, sir. 

34

Mr. GREEN. You are putting yourself in an awkward position if 

you persist with this. You really are. 

Mr. Montgomery, what is your title? 

Mr. MONTGOMERY. I am the Assistant Secretary for Housing at 

the U.S. Department of Housing and Urban Development. 

Mr. GREEN. Mr. Montgomery, is it not true that in your official 

capacity, you work not only in the Office of HUD but you work directly with the Secretary; is that true? 

Mr. MONTGOMERY. Yes, sir, that is true. 

Mr. GREEN. Is it not true that most of the business of HUD 

comes through that office such that you are familiar with it? 

Mr. MONTGOMERY. Are you saying in working with the Secretary? 

Mr. GREEN. Yes, sir. 

Mr. MONTGOMERY. Yes, sir, like all Cabinet agencies. 

Mr. GREEN. Is CDBG a program that is administered by HUD? 

Mr. MONTGOMERY. Yes, sir. I just do not administer it. Pardon 

my ignorance on it. I do not administer it. 

Mr. GREEN. I understand. Is it the case that you are not mindful 

of what is happening to the extent that a reasonable and prudent 

person should be? Would you not agree that a secretary in your position ought to know? 

Mr. MONTGOMERY. Whether or not there is a trust fund? 

Mr. GREEN. Yes, for CDBG. 

Mr. MONTGOMERY. If you are implying my lack of sophistication 

on the subject, sir, I am sorry. 

Mr. GREEN. I believe you know there is not one. Is there a trust 

fund for the Section 515 rental housing program? 

Mr. MONTGOMERY. That is at the U.S. Department of Agriculture. I do not believe there is, sir. 

Mr. GREEN. Is there a trust fund for Section 811 for the disabled? 

Mr. MONTGOMERY. Again, sir, no, there is not. 

Mr. GREEN. 202 for the elderly? 

Mr. MONTGOMERY. No, there is not a trust fund. 

Mr. GREEN. The truth of the matter is this will be the very first 

national affordable housing trust fund that you are aware of, true? 

Mr. MONTGOMERY. Yes, sir. That is true. 

Mr. GREEN. Mr. Montgomery, it would seem to me that people 

who want persons to have affordable housing, who want housing 

preserved, housing rehabilitated, and housing produced, would say 

that happy days are here. We finally have a trust fund for housing. 

It would just seem to me that people would want to have parades 

and roll out a red carpet, sound the trumpets, go tell it on high, 

that we finally have a trust fund for housing. 

It just makes so much sense that somebody ought to be appreciated for this. It really does. I marvel at how we demean what is 

about to become a monumental accomplishment for the least, the 

last, the lost, for persons who cannot afford even affordable housing. It really is a marvelous circumstance that we are witnessing. 

It really is. 

My final comment is this, Mr. Montgomery. I think that some of 

us do not appreciate a very basic premise that impacts all of us, 

and this is the premise. No one deserves a status in life to which 

35

he or she is born. I am going to repeat that. No one deserves the 

status in life to which he or she is born. 

We are here today in these environments because we have just 

been blessed. There are others who are not so fortunate. This fund, 

this trust fund, is there for them. 

I thank Mr. Frank, Ms. Waters, and all who have supported this. 

Prior to my coming, I understand something similar was introduced. They deserve expressions of great appreciation for what 

they have been trying to do. 

I thank you for your efforts. Mr. Chairman, I thank you, and I 

yield back the balance of my time. 

Mr. MONTGOMERY. It is for the reasons that you have articulated, 

Congressman, that I am working very hard to improve FHA. I am 

working very hard to get more funds for 202 and 811. It is why I 

publicly say we have a production problem in this country, developing affordable housing. I have said it in many cases, and I will 

continue to say it. 

Mr. GREEN. I want to reclaim my time. Have you worked to establish a trust fund? 

Mr. MONTGOMERY. Sir, I am working hard to keep what HUD 

has or to use as an offset towards our budget. I am working very 

hard to get more funds in my realm within HUD. 

Mr. GREEN. Do you believe that a trust fund would benefit poor 

people in this country? 

Mr. MONTGOMERY. Absolutely, sir. 

Mr. GREEN. Thank you. 

Mr. MONTGOMERY. Absolutely. 

The CHAIRMAN. Mr. Montgomery, while I continue to be somewhat frustrated by our previous exchange, I do want to acknowledge that yes, in our dealings together, your efforts within the constraints that you have have been ones that we appreciate. 

We have a disagreement here, but I think it is reasonable to stipulate that it does not extend to other areas where we have been 

and will continue to be cooperative. I do acknowledge that what 

you said has been accurate about your efforts. I recognize that you 

are here as a representative of the Administration. 

At this point, I want to insert into the record an editorial from 

the New York Times dated July 3rd, endorsing this idea; the testimony submitted by Jonathan Reckford, who is chief executive officer for Habitat for Humanity in support of the trust fund; and the 

statement of the National Association of Home Builders in favor of 

this trust fund. 

I ask if there is no objection, that all these be made part of the 

record. 

The CHAIRMAN. We will now go to Mr. Cleaver. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

Mr. Montgomery, sing with me, ‘‘Kum Ba Ya’’. You do not want 

to hear me sing. Sorry. 

The CHAIRMAN. The gentleman from Missouri can meet with the 

recorder later to make sure that is accurately transcribed. 

[Laughter] 

Mr. CLEAVER. Mr. Montgomery, in November, I will be speaking 

to the mayors in Seattle at their conference. One of the things that 

36

mayors are always concerned about is whether Washington listens 

to them; I know this from experience. 

One of the things that has occurred to me is whether or not you 

can reconcile HUD’s position with the position of the U.S. Conference of Mayors, Republicans and Democrats, who are on the 

ground every day, who support this legislation. 

Is there a way that you can reconcile HUD’s position with their 

position, also with the position of the NAACP, which has provided 

a statement that I would like to have entered into the record as 

well. 

The CHAIRMAN. Without objection, it will be made part of the 

record. The NAACP will also be testifying. 

Mr. MONTGOMERY. I think, at last count, because of Sheila 

Crowley’s great efforts, that you have 5,495 supporters. I think you 

have the 37 States who have housing trust funds supporting the 

legislation. Again, the goals of what they are trying to accomplish, 

I support. So I do not cover old ground, in the interest of time, I 

just reference my concerns relative to the funding. 

Mr. CLEAVER. So you cannot reconcile HUD’s position with the 

position of the mayors? 

Mr. MONTGOMERY. I have not read their official statement, but 

I know— 

Mr. CLEAVER. They support it. 

Mr. MONTGOMERY. Yes, sir. I am aware of that. 

Mr. CLEAVER. They are on the ground. They are there every day 

on the ground. 

Mr. MONTGOMERY. I visited with them in Los Angeles last 

month, sir. 

Mr. CLEAVER. Can you reconcile HUD’s—what is it that the mayors see that you cannot see? 

Mr. MONTGOMERY. Again, sir, not to cover old ground in the interest of time, just my concern with the funding and how it would 

impact our budget, sir. 

Mr. CLEAVER. Thank you. 

Mr. MONTGOMERY. That is plain and simple. 

Mr. CLEAVER. You said if we set up this fund, it would duplicate 

other programs. 

Mr. MONTGOMERY. Yes. 

Mr. CLEAVER. If that is true, are we saying the programs that 

are already in existence are ineffective? There must be a declaration at the same time that these programs are ineffective or we 

would not see a rise in the number of the homeless, and there 

would be no push to try to establish a housing trust fund. 

If those programs are effective, why are mayors confused? Why 

are people around the country confused who deal with the issues 

related to the homeless? 

Are those programs effective that you are concerned about duplicating? 

Mr. MONTGOMERY. The HOME program is a very effective tool, 

sir. Again, I do want to support one of the goals in particular that 

this fund would do, and that would increase the level of funds that 

go to families at 30 percent of AMFI and below, above what the 

HOME program does. 

37

If we can find sources for that within HUD, I would support that 

100 percent. I do not want you to think I do not support a lot of 

what this fund does. Quite the contrary, I do. 

Mr. CLEAVER. The point I am trying to make, and perhaps poorly, is that if there are existing programs that this fund is going to 

duplicate, and the people who deal with the issues regarding this 

fund all believe we need it, then maybe the programs we have in 

HUD are ineffective. 

Mr. MONTGOMERY. Sir, I do not think you will hear from States 

that they think the HOME program is ineffective. I think you 

would probably hear that they need more money. 

Mr. CLEAVER. You disagree or agree with them declaring that 

they need more money? 

Mr. MONTGOMERY. No, sir. I do not disagree that the States 

would need more money at all. 

Mr. CLEAVER. You do support this bill? 

Mr. MONTGOMERY. I support increasing affordable housing to the 

degree that it does not impact my budget, which unfortunately it 

does. 

Mr. CLEAVER. I am going to sing ‘‘Kum Ba Ya’’ again. 

Mr. MONTGOMERY. I am not trying to be difficult, sir, I promise 

you. I really am not. 

Mr. CLEAVER. I give up. 

[Laughter] 

The CHAIRMAN. I remind people and again I want to say the gentlewoman from California and I have had a good working relationship with the Commissioner as he said, and we believe that he has 

been a diligent and compassionate supporter. There are constraints 

as to what he can and cannot say. Things do tend, as we said earlier with the rules, the rules do tend to walk into policy positions, 

things happen. 

The gentleman from Connecticut. 

Mr. SHAYS. Thank you very much. Mr. Montgomery, Chairman 

Frank asked you a question to which he did not think you were responsive. 

I am curious to know what your answer was going to be even 

though it was not responsive. I am just curious to know what you 

wanted to put on the record and then from that, I may ask another 

question. 

First off, tell me this. Tell me what you thought he asked you 

and then tell me what you wanted to say. I will not interrupt you. 

Mr. MONTGOMERY. As I recall, he asked me do we have any excess receipts, do those go to the Treasury, do they go to HUD? I 

do not want to get into how the appropriating process works. I do 

know that when we have a budget that we submit, it is very clear 

they are offsetting the budget or the FHA receipts that go to pay 

other HUD programs. In the world of the appropriators, those receipts go to HUD and they are spoken for. 

Mr. SHAYS. I understand what you wanted to put on the record. 

He was not asking you what appropriators want to do. 

What I want to do is put it in my own words because I think you 

had a question that followed, he was trying to help you out, and 

you were not allowing him to help you out. 

38

Does this get to the issue of opportunity costs, that there is only 

so much money that HUD is going to be allowed to have, and 

therefore, you were saying if you give us more money here, appropriators are going to take it away somewhere else? Is that what 

you were basically trying to say? 

Mr. MONTGOMERY. Historically, yes, sir. I think that is the case. 

Mr. SHAYS. In my judgment, that is something you should put on 

the record. It is our judgment as to what they will do. It is very 

clear to me that appropriators, whether they are Republicans or 

Democrats, if they see a department get more money in one place, 

they may take it out somewhere else because there is only so much 

they are going to allow HUD to have or any other department. 

I think it is fair to say with a Democratic Congress, you are 

going to see more money going to HUD. This, to me, seems like an 

opportunity for you to say you know, we would love this money, so 

long as you do not take it away from us somewhere else. That is 

kind of the way I would have answered it because the way you answered, it gives the impression that you do not want extra money. 

Mr. MONTGOMERY. I am sorry if I left the committee with that 

impression. It was not my intent. 

Mr. SHAYS. That is the impression that you kind of left. I will 

give you a good example. This Congress decided, rightfully so, that 

it needed to put more money into the Department of State, but that 

in the foreign affairs budget, it wanted to put more money. 

What it did was it took a program dealing with Africa and the 

AIDS program and took some of that money out of the NIH budget. 

It looked like we were putting more into the NIH budget but we 

took $200 million out and gave it to a very worthy program that 

used to be in another department. 

We were struck by the fact that it looked like we were adding 

more to NIH and we were adding some more but not as much in 

reality because we were taking some of that and putting it into another program unrelated to the NIH budget. 

If your answer is that you feel this adds more money to HUD, 

it does, does it not? 

Mr. MONTGOMERY. I am sorry. Are you talking about the trust 

fund? 

Mr. SHAYS. Yes. The housing trust fund gives more money to 

housing, correct? So long as Congress does not take it away somewhere else, is that not correct? 

Mr. MONTGOMERY. I am a little foggy on what you are saying, 

sir. For purposes of time, I will agree with what you are saying. 

I am sorry. 

Mr. SHAYS. Tell me why you are foggy. 

Mr. MONTGOMERY. Any receipts that I have beyond what I need 

to pay claims and things of that sort, again, we give back to the 

Treasury. Those funds are then credited toward HUD’s budget, I 

should say. If that did not happen, which is the case for next year, 

the funds have to come from somewhere. 

Mr. SHAYS. If in fact that is correct, then you have the opportunity to say to Congress that we will only get extra money if you 

make sure that we are credited and they do not debit our account 

more as a result. 

39

Mr. MONTGOMERY. Yes, sir, if I follow your line of reasoning, yes, 

sir. 

Mr. SHAYS. I am not saying it as well as I would like to, so I do 

understand a little of your confusion. 

The bottom line is that there is a solution to the problem that 

you may fear and that the best way, it seems to me, for you to deal 

with it is to say that so long as these things happen, we will be 

okay, but if Congress takes the money for other reasons, and does 

not let us realize this extra money for housing, it will just be something we do not benefit from. 

At any rate, that was my best attempt. 

Mr. MONTGOMERY. Thank you, sir. 

The CHAIRMAN. By the way, less than half of the money in the 

trust fund comes from the FHA. The largest share comes from the 

GSEs and no one can argue that would go to HUD under any circumstances. That goes to the shareholders of Fannie Mae and 

Freddie Mac. 

Mr. SHAYS. Do you agree with that? 

Mr. MONTGOMERY. I was not referencing— 

Mr. SHAYS. Do you agree with what Mr. Frank just said? 

Mr. MONTGOMERY. If you could repeat it, sir. I am sorry. 

The CHAIRMAN. As we have the trust fund bill now, there are two 

revenue sources, much more than half would come from the GSEs, 

and no one could argue that any of that money would otherwise go 

to HUD. That is money from Fannie Mae and Freddie Mac’s shareholders. 

Mr. MONTGOMERY. I do not believe that is envisioned in the statutes, so I would agree. I do want to point out— 

The CHAIRMAN. I am sorry. You do not believe what? 

Mr. MONTGOMERY. Were you talking about any excess from the 

GSEs that would go to HUD? I am not aware of that, sir. 

The CHAIRMAN. I said that in the trust fund bill, the larger share 

of the revenues that would go to the trust fund come from Fannie 

Mae and Freddie Mac. 

Mr. MONTGOMERY. Yes, sir. That is absolutely correct. 

The CHAIRMAN. No one has argued that in the absence of the 

trust fund bill, any of that would go to HUD. 

Mr. MONTGOMERY. Yes, sir. That is correct. I am sorry I misunderstood your question. 

The CHAIRMAN. Thank you. The gentleman from Oklahoma. 

Mr. BOREN. Thank you, Mr. Chairman. It is a real pleasure to 

watch my colleague, Mr. Green, from Texas and another friend 

from Texas here—from an Oklahoma perspective, it is always nice 

to watch two Texans go after each other. We do that in October at 

the Cotton Bowl and it is a lot of fun to watch. 

I am going to have to step out before our next panel but I do 

want to thank Secretary Cisneros for being here. He is a great family friend and a great public servant to San Antonio, the State of 

Texas, and our country. Thank you for being here. 

I have one question. I am going to be very brief. Going back to 

the actual legislation and not going into the budgets and everything else, the paperwork that I have before me, the prohibited 

uses of the funds that would be in this trust fund in H.R. 2895 

would be the bill includes prohibitions against any funds being 

40

used for administrative costs or expenses, political activities, advocacy lobbying, of course, I think that is a good thing. 

What we have seen with NAHASDA and what we have seen with 

some of the other pieces of housing legislation since I have been on 

this committee for just a short time, the impact on Native Americans. 

I represent eastern Oklahoma, 25 counties. We have 39 federally 

recognized tribes. Tribes are not all alike. The Chickasaw Nation 

is different from the Choctaw Nation, different from the Miami 

tribe, different from the Wyandotte’s. The Choctaw’s and Chickasaw’s have done very well from gaming. Some of the tribes in the 

northeastern part of my district have not done so well. Some do not 

have sources of funds from gaming. Some do. Smaller tribes like 

the Quapaws and other tribes, they have a very limited budget. 

My question to you is, this provision within the trust fund or any 

other pieces of legislation that deal with housing, do you think it 

is appropriate for any of these trust funds or any other funding 

mechanisms to go towards maybe smaller tribes so they can actually administer these funds? We have a real debt of home ownership in places like rural Oklahoma. 

Mr. MONTGOMERY. I do know there is a set aside within H.R. 

2895 for tribes and other areas. I am not sure of the breakdown 

by the size of the tribes. I am sorry. I just do not know what that 

number would be. 

Mr. BOREN. The funding is great. We are talking about very 

rural areas and maybe within a tribe, there might be one or two 

people who can carry out these programs. The tribe might not have 

the necessary funding so they can carry these programs out. 

Do you think it would be within the bounds of legislation—not 

just this piece of legislation, which I am very supportive of the 

chairman on—any other legislation, do you think it would be appropriate for funding to go to smaller tribes, to hire one or two people to administer housing programs? Let’s just take it generally. 

Mr. MONTGOMERY. Sir, in concept, I agree with what you are saying. Again, I am just not that familiar with that portion of the bill 

and the breakdown. I am sorry. I am not that familiar. In concept, 

I do agree with what you are saying. 

Mr. BOREN. In the interest of time, I am going to yield back to 

the chairman. Thank you so much. Again, I thank all my Texas 

friends. 

The CHAIRMAN. The gentleman has yielded back. The gentleman 

from Connecticut has been very helpful in keeping me focused 

today—very unusual. 

Thank you, Commissioner. I know you have been here as a proxy 

for the Administration. We understand that. You have done your 

job as you were supposed to. 

We will call forward the next panel. 

Mr. MONTGOMERY. Thank you, sir. 

The CHAIRMAN. Please be seated. The next panel consists of: the 

Honorable Henry Cisneros, former Mayor of San Antonio and Secretary of the Department of Housing and Urban Development; 

Sheila Crowley, president of the National Low Income Housing Coalition—the single most vigorous force behind this fund; the Honorable William Euille, Mayor of Alexandria, our neighbor, who is 

41

here on behalf of the U.S. Conference of Mayors—I guess the conference budget was tight, they did not want to pay a lot of airfare, 

so they gave him his Metro card and here he is—we are delighted 

to have the Mayor of our important neighbor here; Lisa Alberghini, 

whom I will note is the director of the Planning Office for Urban 

Affairs of the Archdiocese of Boston and the Archdiocese of Boston 

has been a great builder of housing, affordable housing, for many 

years—for anybody who decided they needed something called a 

‘‘faith based program,’’ I have been working with the Archdiocese 

and Office of Urban Affairs with Ms. Alberghini and her predecessor; and finally, JoAnne Poole, who is the owner of Poole Realty, 

and she is here importantly on behalf of one of our strong advocates for a good housing program, the National Association of Realtors. 

We will begin with Secretary Cisneros. 

STATEMENT OF HENRY CISNEROS, EXECUTIVE CHAIRMAN, 

CITYVIEW 

Mr. CISNEROS. Mr. Chairman, thank you very much. Members of 

the committee, thank you for giving me the opportunity to come in 

and support H.R. 2895, the National Affordable Housing Trust 

Fund Act of 2007. 

Thank you, more importantly, for your leadership to organize the 

content of this bill, and your legislative skills to manage the 

strongest chance ever to create a national housing trust fund. 

I would like to acknowledge the long term advocacy and solid creative work done by many, many outside organizations, including 

the National Low Income Housing Coalition, the Center for Community Change, the Housing Trust Fund Project, the NAACP, and 

many others. 

I will use my time to make four succinct points. First, the national housing trust fund is important because it is such a focused 

tool. Across the entire spectrum of housing, starting with housing 

shelters and supportive housing and subsidized rentals and public 

housing, market rentals, entry level home ownership and move up 

housing across that entire continuum, the greatest need, the greatest suffering is among families, individuals, and households below 

30 percent of median income, the extremely-low-income families of 

our country. 

To address their needs, to produce housing that touches the entire first part of this continuum, from homelessness through these 

various first steps, we need units, production, and housing stock, 

that low-income people can access. 

We need units so that homeless people can access the Housing 

First concept. We have to have housing units for them to be able 

to move out of homelessness. 

We need supportive housing with services. We need low-income 

rental stock. I am in the home ownership business personally, but 

I acknowledge the absolute most pressing need before the country 

in housing is the lowest income rental stock. 

We need housing that works with other programs, such as public 

housing, and we need housing that works in conjunction with market housing, so that flexibility is possible to take something like 

42

this fund and match it to market housing, 20 percent or 25 percent 

of a market development. 

There is no Federal program today targeted precisely in this way 

or on this scale. We need this focused new production program. 

Point one. 

Point two. We can see from local housing trust funds that the 

concept works. There are over 600 local or State housing trust 

funds today. In big cities, such as New York City, the effort is underway to try to create or preserve 4,300 units with a trust fund. 

In Chicago, the goal is 5,500 rental subsidized units, not over 30 

percent of median income, to meet the city-wide goal of producing 

affordable housing. 

In smaller communities, many that are in high-cost areas, such 

as Boulder, Colorado, the explicit goal of the City is to use a housing trust fund to make sure that 10 percent of the housing stock 

is permanently affordable. In Boulder, that amounts to 2,700 units 

of which 2,100 would be rental, and 600 would be ownership. 

In another high-cost area, Mountain View, California, they are 

using the housing trust fund of Santa Clara County there where 

Catholic Charities just produced an award winning single room occupancy facility for people earning between $15,000 and $30,000 a 

year. That is 20 percent of average median income, using the flexibility that only a housing trust fund makes possible. 

At the State level, Washington State is considered as one of the 

most effective State housing trust funds. They have over the years 

amassed $500 million and leveraged $2 billion in 32,000 units, 

mostly rental. 

The point is that housing trust funds work. The corollary point 

is that at the local level, they are symptomatic of why a national 

fund is needed. State and local housing trust funds exist because 

the stress of housing affordability is so great that existing programs cannot meet the need. There is a crisis. 

It is also true that they are patched together with chewing gum 

and baling wire in many places. Real estate transfer taxes, document reporting fees, linkage fees, unclaimed property funds, the 

need is great, the revenue base is inadequate, and the scale is not 

adequate. 

A national trust fund is needed. 

Third point quickly. H.R. 2895 incorporates the best elements of 

what we have learned in recent years from housing programs, the 

need for rental production, to focus on the very-low-income, economic integration, proximate to economic opportunities and transit, 

incorporation of green development ideas, State, rural, and Native 

American housing, the opportunity for faith-based institutions to 

work, the prohibitions on administrative costs and travel and political activities, the matching provisions that are incentivizing to 

local governments, the local discretion that unleashes creativity as 

we have seen from nonprofit and private best practice designs, and 

the use in conjunction with market projects, integrating low-income 

units. This is a great idea and this fund uniquely will make that 

possible. 

Finally, the fourth point is you identify revenues in H.R. 2895 

from new sources, Fannie Mae, Freddie Mac, and the FHA, in such 

a way as not to cannibalize other programs, and in such a way as 

43

not to exacerbate the Federal fiscal challenge. Therefore, it can 

generate and merits bipartisan support. 

I will close by simply saying that in the last years I have collaborated with my predecessor, a Republican HUD Secretary, Jack 

Kemp, in a number of studies and books. In our last project, we 

concluded about the housing trust fund, the following: 

‘‘We recognize the need for a source of capital for the production, 

preservation and rehabilitation of housing affordable to low-income 

households. We, therefore, recommend that the Administration and 

Congress establish a national housing trust fund for this purpose. 

Specifically, trust funds should be used to support the production, 

preservation and rehabilitation of 1.5 million affordable housing 

units over the next 10 years.’’ A bipartisan statement, Mr. Chairman, my predecessor, Jack Kemp and I, together acknowledging 

the importance of a national bipartisan effort. 

We were able to talk about it. You thankfully are doing something about it. To answer one of the points that the Congresswoman asked earlier about what this will look like in 10 years, 

those who participate in this and support it will have been responsible and should be justifiably proud in 10 years of a major new 

productive and successful housing initiative. 

Thank you. 

[The prepared statement of Mr. Cisneros can be found on page 

80 of the appendix.] 

The CHAIRMAN. Thank you, Mr. Secretary. 

Ms. Crowley? 

STATEMENT OF SHEILA CROWLEY, PRESIDENT, NATIONAL 

LOW INCOME HOUSING COALITION 

Ms. CROWLEY. Thank you, Chairman Frank. It is a wonderful 

day that we are here today and having this opportunity to testify 

about a national housing trust fund, and it is a great honor to be 

on this panel with many fine people, but I especially want to thank 

our friend, Secretary Cisneros, for coming and making such an eloquent statement. 

The establishment of a national housing trust fund with dedicated sources of revenue for the production and preservation of affordable housing for people with the most serious housing problems 

has been the top priority of the National Low Income Housing Coalition since 2000, and in 2001, we joined with many other organizations to form the National Housing Trust Fund Campaign that is 

now over 5,600 organizations strong. 

As Ms. Waters noted earlier today, we are observing the 20th anniversary of the passage of the McKinney-Vento Homeless Assistance Act, an emergency response to the rapid growth of homelessness in the United States in the 1980’s. 

Before coming to Washington, I worked at the community level 

for 20 years. I remember when homelessness was relatively rare, 

and I remember when homelessness accelerated in the 1980’s. 

I know that homelessness grew as the supply of low-cost housing 

diminished, and as the cost of rental housing increased, and as the 

support from the Federal Government began to wane. 

I know we have no hope of ending or preventing homelessness 

in the United States until we make a serious investment in housVerDate 0ct 09 2002 17:30 Dec 12, 2007 Jkt 038393 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 K:\DOCS\38393.TXT HFIN PsN: TERRIE
44

ing that the lowest income people can afford, and that is what the 

national housing trust fund does. 

It is easy to understand the persistence of contemporary homelessness when we look at the mismatch between housing units and 

numbers of people. There are 9 million extremely-low-income 

renter households, and there are only 6.2 million rental units they 

can afford, if you use the standard of 30 percent of income for housing. Thus, we have an absolute shortage of 2.8 million rental units 

for this income population nationwide. It is the only income group 

for whom there is an absolute shortage. 

If my poster could go up, that would be really great because you 

could see it quite graphically. This is the only group where we actually have a shortage. Who are extremely-low-income households? 

The CHAIRMAN. That is the group in the red? 

Ms. CROWLEY. The group in the red; yes. Below the line. Who are 

extremely-low-income households? In Washington, D.C., they are 

families with a total income of $27,000 a year or less. In Los Angeles, it is $16,860 a year or less. These are people who earn their 

living in the low-wage workforce. They are child care providers, 

nursing home aides, hotel housekeepers, office cleaners, retail 

clerks, and receptionists. 

Extremely-low-income households are also those who are elderly 

and disabled whose income is limited to Federal SSI payments. The 

Federal SSI benefit level in 2007 for an individual is $7,476 a year. 

What happens to real people under the circumstances of scarcity 

for a need as basic as housing? The main thing that happens is 

that they end up paying way too much of their income for their 

housing; 71 percent of extremely-low-income renters spend more 

than half of their income for their housing. 

Those who have the fewest coping skills and have the weakest 

social networks are the ones that are at higher risk of becoming 

homeless under these conditions of scarcity. 

Simply put, this bill makes capital resources available to developers who are willing and able to build and operate housing that 

extremely-low-income families can afford. There is no current Federal production housing program that is specifically targeted to this 

population. 

The trust fund dollars will not be used as the sole source of capital for any project. Rather, they will add enough to bring down the 

cost for a percentage of units in any given project such that they 

become affordable to the extremely-low-income households. 

The core intent of this bill is that the funds will be used for rental housing, but the bill fully supports using resources for home 

ownership. We understand that getting extremely-low-income 

households into home ownership is a challenge and in most cases 

may not be in their best financial interest. 

We strongly believe that the best home ownership program for 

people in the low wage workforce is to increase the supply of rental 

housing they can afford so that they have a much greater chance 

of becoming successful homeowners in the future after being stable 

and successful renters who can develop a good credit history and 

might even have the opportunity to save some money for a downpayment. 

45

The goal of the national housing trust fund and H.R. 2895 is to 

produce and preserve 1.5 million homes over 10 years. This is indeed a very ambitious goal. 

The bill provides dedicated sources of funding. CBO estimates 

that the combined value of these would be no more than $1 billion 

a year, which is quite substantial, but to reach our goal, we are 

going to have to find other dedicated sources of revenue and the 

bill does allow for that, and we think there is any number of creative ways we can do that. 

Mr. Montgomery suggested one a few minutes ago. 

Let me close by saying this is one of the most important bills 

that this committee will take up in the 110th Congress and to my 

mind, the most important. We want to work with you to make it 

the best bill possible. 

I want to offer our heartfelt thanks to Chairman Frank and Mr. 

Shays and Mr. Miller and Chairwoman Waters and the other original co-sponsors of H.R. 2895 who once again have demonstrated 

that the very best low-income housing legislation is always bipartisan. 

Thank you. 

[The prepared statement of Ms. Crowley can be found on page 87 

of the appendix.] 

The CHAIRMAN. Thank you, Ms. Crowley. 

Mr. Mayor, who is the successor, not immediate, of one of our colleagues, I believe, Mr. Moran. We are glad to have you here. 

STATEMENT OF WILLIAM D. EUILLE, MAYOR, ALEXANDRIA, 

VIRGINIA, ON BEHALF OF THE U.S. CONFERENCE OF MAYORS 

Mr. EUILLE. Thank you, Mr. Chairman, and members of the committee. I am William D. Euille, the Mayor of the City of Alexandria, Virginia, a product of public housing, and a 15-year advocate 

for affordable housing. I am pleased to be here this morning to testify on behalf of the U.S. Conference of Mayors, the National Association of Counties, the National Community Development Association, the National Association of Local Housing Finance Agencies, 

and the National Association of County, Community and Economic 

Development. 

We strongly support H.R. 2895, the National Affordable Housing 

Trust Fund, and we appreciate this initiative and trust me, there 

will be parades and fireworks. 

We urge the Committee to adopt our recommendations and improve the legislation, and the U.S. House of Representatives to 

pass it. 

Over the last several years, mayors have called on Congress to 

adopt a national housing trust fund. In 2002, Boston Mayor Thomas Menino, who was then president of the Conference of Mayors, 

asked the Administration and Congress to create a national housing trust fund to meet the needs of low-income individuals and 

families through production and preservation of rental housing and 

that cities receive a direct allocation of funds. 

This policy statement was developed following a national housing 

forum convened by Mayor Menino and attended by most of the organizations supporting H.R. 2895. 

46

The Conference of Mayors also adopted a policy in 2003 calling 

for passage of a national housing trust fund, and most recently, in 

Los Angeles, in June of this year, the organization adopted a policy 

reaffirming its support of a national housing trust fund, primarily, 

but not exclusively, designed to meet the needs of the very-low-income, i.e., 30 percent of the AMFI or below, through the preservation and production of housing. 

The policy also asks that 60 percent of the national housing trust 

fund be allocated to localities. Similar policy statements have been 

adopted by the organizations that I testify on behalf of today. 

Local government interested in support for the national housing 

trust fund is based on several reasons. Mr. Chairman, some of 

these are exactly the same as those you state in purposes for the 

legislation. Local officials know firsthand that there is a lack of affordable housing for low-income families. 

Just yesterday, I met with a group of junior and senior high 

school students. One of the questions they asked me is, Mr. Mayor, 

where are we going to live once we graduate from high school? Of 

all the issues we are all concerned with as Americans, next to the 

war in Iraq, the next thing that folks are most concerned about is 

where they are going to live. 

The U.S. Conference of Mayors annual hunger and homelessness 

survey has repeatedly listed the shortage of affordable housing as 

the major cause of homelessness in America. 

We believe that you have chosen a laudable goal to construct, rehabilitate and preserve at least 1.5 million affordable housing units 

over the next 10 years. 

Just in the Washington metropolitan area, it is estimated that 

we need to build and preserve 50,000 units a year just to meet the 

needs. We can do this locally by redevelopment/development, higher density, and we can re-prioritize our efforts on home rentals. 

There are other studies and data which will be cited by others 

during this hearing which will leave no doubt that more affordable 

housing is needed. Most can cite the staggering number of unmet 

housing needs in our Nation, the difficulty that people with jobs 

have in finding affordable housing, and the fact that millions of 

low-income families must pay more than half of their income for 

housing. 

All of these offer substantial proof of the need for a national 

housing trust fund. This is about hope and prosperity for all. This 

is the American dream. 

As you know, Mr. Chairman, many localities have created their 

own housing trust fund. There is a great deal of experience across 

the Nation in cities and counties, as expressed by Secretary 

Cisneros. 

With that, first of all, I want to thank the committee for allowing 

us to be here this afternoon in support of H.R. 2895, the National 

Housing Trust Fund, and we, the Mayors of America, look forward 

to working with you for its passage. 

Thank you. 

[The prepared statement of Mayor Euille can be found on page 

96 of the appendix.] 

The CHAIRMAN. Thank you, Mr. Mayor. 

47

Next is someone with whom I have been working, working with 

the cooperation of the Archdiocese to convert a church or use of a 

church into affordable housing, Lisa Alberghini, who is executive 

director of the Planning Office for Urban Affairs, which is affiliated 

with the Boston Catholic Archdiocese. 

Ms. Alberghini? 

STATEMENT OF LISA B. ALBERGHINI, DIRECTOR, PLANNING 

OFFICE FOR URBAN AFFAIRS, ARCHDIOCESE OF BOSTON 

Ms. ALBERGHINI. Chairman Frank, and Ranking Member Bachus, thank you for the opportunity to testify on this important legislation that will bring hope and homes to so many Americans across 

the country. 

Thank you especially to Chairman Frank for your tremendous 

leadership, and to the Low Income Housing Coalition and all of the 

advocates who have worked so hard on this bill. 

I am Lisa Alberghini, executive director of the Planning Office 

for Urban Affairs. We are a self-sustaining housing and social justice ministry affiliated with the Archdiocese of Boston. 

I am here to support this legislation on behalf of our office, the 

Archdiocese of Boston, and the people we serve who are in dire 

need of affordable housing. 

H.R. 2895 is also strongly supported by the U.S. Conference of 

Catholic Bishops, Catholic Charities U.S.A., and a wide range of 

faith-based organizations of many faith traditions across this country. 

The Planning Office is a private nonprofit developer created by 

the Archdiocese in 1968 to work for housing justice on behalf of the 

Church. Since that time, we have developed more than 2,300 units 

of affordable and mixed-income housing with debt and equity financing of nearly $300 million. 

We serve working families, the homeless, frail elders, veterans, 

people living with HIV/AIDS, and disabled individuals, by creating 

mixed-income communities, where all residents are treated equally, 

and the poor are not isolated in poverty. 

The need for affordable housing is great and well-documented. 

Rather than focusing on more statistics, I would like to get right 

to giving you our perspective about how this legislation can help 

and why it is so important. 

The Planning Office is a developer and a social justice ministry. 

We are directly involved as a practitioner in building affordable 

and mixed-income housing and have extensive experience using a 

wide array of financing programs that currently exist for this purpose. We know what works and what does not work. 

H.R. 2895 is a thoughtful piece of legislation that will benefit 

people in need across America, while using an efficient and industry proven funding method to supplement private sector activity. 

The proposed trust fund is efficient, meaningful, targeted, and 

based on a proven model. It is not creating a new untested tool. It 

has been purposely structured to use a system that we know 

works, and it will support public/private sector collaboration, while 

at the same time addressing a need that the private sector cannot 

possibly respond to on its own. 

48

In our view, this Act is the best of both worlds. It provides a tool 

but not a handout, and that is the difference between charity and 

justice. Justice relies upon empowering people. This legislation 

gives us that opportunity which is why there is significant bipartisan support for this Act. 

I would like to briefly describe a few of our developments and 

how the trust fund could help. 

Rollins Square is a 184 unit development we built in the south 

end of Boston, one of the City’s highest income areas. It is very 

much the type of housing that Representative McCarthy noted as 

creating vibrant communities that we need more of. 

It includes 20 percent low-income units for families earning 30 

percent of median income which is a key policy goal of the trust 

fund, 40 percent moderate-income units for first-time home buyers, 

and 40 percent market rate units. 

All of these units are fully integrated throughout the entire property, which means there are formerly homeless people living next 

to first-time home buyers, living next to people who paid more than 

$1 million for their condominiums, for their homes, and they are 

all living literally side-by-side as neighbors who share a common 

community. 

Our office has provided a lot of information on the work that we 

have done to the committee staff today, but if you have a minute 

to look at anything, pull out the least glamorous piece in the Rollins’ package, which is just a one-page list of the profiles of the 37 

formerly homeless families who now call Rollins Square their 

home, where they can get on with the business of living their lives. How could the trust fund have helped? Rollins Square was a $67 

million deal that required 14 separate sources of funds and had 

problems closing the last financial gap, delaying the project for 18 

months, which only drove up the costs more and created a cyclical 

problem. 

It is precisely the type of development that could have been funded through this Act, particularly given its targeting. 

If there were more Federal funds available, it would have meant 

a quicker development process and ultimately more public benefit. 

Our St. John of God & St. Jean Baptiste developments, also in 

Massachusetts, are very similar. They could have used this trust 

fund enormously. 

Finally, the Saint Aidan, which is a 59 unit mixed-income development located in Brookline, Massachusetts—in Brookline, by the 

way, the median family house price for a single family home last 

year was $1 million. With prices like that, what happens is that 

the teachers, firefighters, and librarians have to enter town in the 

morning and leave town at night; the people who serve you can no 

longer afford to live in the communities with you. 

Saint Aidan’s, though, will be 60 percent affordable, and in this 

case we are fortunate enough to have had Chairman Frank as our 

Representative, with the benefit of his leadership to solve a number of problems with the project and for that, we, and the Archdiocese, are enormously grateful. 

The trust fund could have shortened a very long 7 years that it 

has taken us to get that development out of the ground, by giving 

us additional resources. 

49

Some might think that since these got built, why do we need the 

trust fund? The process took far too long, was far too inefficient, 

and offered far less public benefit than could have occurred with 

the trust fund in place. 

Most importantly, these developments represent the 1.5 million 

homes that did not get built and would be if this Act were passed. 

A couple of last comments on the big picture here. Why is this 

so important to us as a country? More than 25 years ago, the 

Catholic Bishops of the United States issued a pastoral letter 

called, ‘‘The Right to a Decent Home.’’ It described decent housing 

as a human right and said its provision involved public responsibility and the partnership between private enterprise and government. 

This fund would create that and provide that unquestionably. 

There is a very broad coalition of people with common and diverse 

interests coming together in support of this legislation. We come 

from different faiths, different beliefs, and different backgrounds, 

because housing our neighbors in need is a moral imperative and 

concern for decency and fairness is a value we all share. 

We all know that having a decent home affects every aspect of 

our lives, and not having one devastates even the strongest among 

us. 

We would like to see this passed to help address the issues facing 

the 37 million people in America who are living in poverty, and as 

Father Snyder, the president of Catholic Charities U.S.A., told us, 

and I mentioned in Washington a couple of weeks ago, poverty remains our Nation’s most serious political blind spot and a threat 

to the common good and future of our Nation; it is a human-made 

disaster, not a force of nature beyond our control, and we can make 

choices that change that. With this legislation, we will. 

Thank you, and we urge your support. 

[The prepared statement of Ms. Alberghini can be found on page 

74 of the appendix.] 

The CHAIRMAN. Thank you. Finally, JoAnne Poole, representing 

the National Association of Realtors. Please, Ms. Poole. 

STATEMENT OF JOANNE POOLE, BROKER/OWNER, POOLE REALTY, ON BEHALF OF THE NATIONAL ASSOCIATION OF REALTORS 

Ms. POOLE. Good afternoon, Chairman Frank, and members of 

the committee. I have been a Realtor for 21 years, and I am currently serving as part of the National Association of Realtors. 

We often refer to home ownership as the American dream, but 

I believe having a decent home in a suitable living environment 

should not be a dream. It is a basic need and it should be available 

to everyone. 

Every day, my fellow Realtors and I see working Americans like 

you and me who simply cannot afford a decent place to live. Less 

than half of our Nation’s minority families own a home today. That 

is 25 percentage points below the national average. 

With the rapid rise in home prices in recent years, the so-called 

home ownership gap is likely to grow as more and more people are 

finding home ownership out of reach for them. 

50

Those who do manage to purchase a home face additional struggles. Studies show that minorities are 30 percent more likely to receive a higher priced loan than white borrowers, even after accounting for risk. 

Of course, housing affordability is not just a problem for minorities. People of all backgrounds are finding it harder and harder 

than ever to pay for housing. 

According to the Joint Center for Housing Studies at Harvard 

University, more than one in seven U.S. households spend more 

than half their income on housing. 

Finding affordable rental housing is another growing problem. In 

the 10 years between 1993 and 2003, two million affordable housing units were lost. HUD estimated in 2005 that they were only 77 

units affordable and available for every 100 low-income renters. 

That means nearly a quarter of low-income families do not have 

access to decent rental housing. Whether you look at the facts or 

consider personal experiences, the conclusion is the same. Affordable housing is no longer merely a problem, it is a crisis, and we 

must all do our part to address it. 

In 2002, the National Association of Realtors created our own 

housing opportunity program. Through this program, we provide 

local and State associations and individual Realtors with the resources they need to increase housing opportunities in their communities. 

The program also provides grants to State and local associations 

to help them establish their own local housing opportunity programs. 

During the past 5 years, our State and local Realtor associations 

have developed numerous programs and affordable housing funds 

that have helped meet the housing needs of thousands more lowand moderate-income families across the nation. 

These programs have had a tremendous impact on our communities and our lives. Sadly, they are not enough to address the 

growing problem. 

We need help and we need it now. Today, Realtors are pleased 

to lend our support to H.R. 2895. We believe this legislation will 

provide significant help in the form of additional funds to meet 

America’s growing demand for affordable housing. 

We strongly support the division of funds outlined in the bill 

with 60 percent of monies going to cities and counties and the remaining 40 percent to States. 

We applaud you for allocating 25 percent of the funds for families 

who make up 80 percent of our median income, families who currently receive no Federal housing assistance. 

America’s Realtors stand ready to work with you on this bill and 

on all efforts to make home ownership and affordable housing a reality for even more Americans in the years ahead. 

As John Adams once said, if your actions inspire others to dream 

more, learn more, do more, become more, you are a leader. 

Thank you again for helping to lead this important effort and for 

inspiring all of us to do more. 

Thank you very much for the opportunity. 

[The prepared statement of Ms. Poole can be found on page 119 

of the appendix.] 

51

The CHAIRMAN. Thank you, Ms. Poole. I have found in the ability 

to work with the Realtors, that these are people who are not just 

trying to make money off housing, but they have a genuine understanding of the importance of increasing housing resources, and I 

appreciate it. 

Let me say to this panel and the next panel, it may look kind 

of routine, there are not a lot of people here, but we are building 

a record here that is very important. Frankly, this is a ‘‘no news 

is good news.’’ This is rapidly becoming less controversial than it 

used to be, but it is because of this combined support. This is very 

useful. 

Let me make explicit what many have referred to almost explicitly, the importance of a trust fund. This really will go to Commissioner Montgomery. Even to a very good level of annual appropriations, we are talking about construction. 

You simply cannot expect, and we are dealing here with the private sector, the units that are built here are not going to be built 

by any Government agency. These are going to be built by the private sector in various forms of cooperation. 

You cannot expect the private sector to build, and we cannot expect the banks to lend, on an annual appropriations basis. If you 

are talking about getting housing constructed, you need to have a 

multi-year process. 

That is why a trust fund is appropriate here when it is not for 

other aspects of Federal programs. It is like the highway trust 

fund. Construction requires there to be a certainty that the flow of 

funds will be there. People who have to borrow money. People who 

have to do plans. 

Even if it were a case of taking appropriations that would otherwise be available for an annual appropriations process, it would be 

worthwhile. It is not, I want to repeat, in the 27 years that I have 

been on this committee and focused on housing, no appropriator of 

either party has ever suggested to me that the appropriations go 

up or down depending on the receipts of the FHA. That simply has 

not been the case. 

In any case, there is a separate argument for doing it as a trust 

fund. 

Secondly, I want to say to the Mayor and also to some of the others, I appreciate your taking this serious enough to make some specific proposals for changes. We are going to be looking at these. We 

are not locked into this. 

I do make this plea. We have seen this happen, many of us. Let’s 

make sure that our agreement, in principle, transcends any specific 

differences we have about how to do it. 

Having said that, I welcome these kind of suggestions and proposals, and they come from people who are supportive, and the 

Mayors are obviously very much in the forefront, and we will be 

looking at that. 

The last point I want to make is to underline what Lisa 

Alberghini said, and let me make this very explicit again. You said, 

Ms. Alberghini, a couple of times, ‘‘to the public benefit.’’ What you 

mean is too few affordable units, correct? 

Ms. ALBERGHINI. That is right, Congressman. 

52

The CHAIRMAN. You get into a Catch-22. In the Town of Brookline, which I represent, where some of my friends and I have a disagreement over this, we now have people criticizing this project because they say there are not enough units that are affordable, and 

there are fewer affordable units than there should be or there 

would have been if we could have done it quicker. 

That is because they first succeeded in delaying it by various tactics, and delay in the housing business add costs. 

This is really people now complaining about the results of their 

own actions. To the extent that we have a trust fund, again, this 

ties into what I said, if you have a trust fund, you have a certainty 

of a flow of funds. You are not in the uncertainty period. You can 

do your construction planning thoughtfully. Stability of funds is 

very important for these private sector people. 

That is the point. It will help us maximize these units. 

I should add that we are also working closely with the chairman 

of the Ways and Means Committee and this committee on efforts 

so that the tax supported housing bonds and low-income housing 

tax credit programs will be fully interoperable with this and other 

programs, so we really think leveraging is very high. 

I am very appreciative of what you said, and of getting this 

across. We look forward to working with everybody. 

I would say to Secretary Cisneros, when you next talk to Mr. 

Kemp, tell him we are thinking of him. 

Mr. Mayor? 

Mr. EUILLE. Mr. Chairman, if I may add, in Alexandria, we have 

had a housing trust fund since 1993. Primarily, it was funded by 

developer voluntary contributions and then a few years ago, we 

dedicated one cent of our annual real estate tax rate to creating 

and continuing to fund our affordable housing trust fund. 

More recently, again through a public/private partnership, because Alexandria is so dense, but yet we have a critical need to 

meet our affordable housing objectives, we have the opportunity to 

build for the first time in more than 30 years a new fire station 

in our City, a new development area, and one of the solutions or 

compromise with the community in terms of building this four bay 

fire station was the need to ensure that we provided affordable 

housing and workforce housing. 

For the first time, we believe we are the first community in the 

Nation, we are building a new fire station that will have 64 units 

of public housing and workforce housing built on top of the fire station in a very growing community. 

We are very proud of that fact, but again, we would not be able 

to do that without the affordable housing trust fund. 

The CHAIRMAN. In my first 2 years of graduate school, I lived 

across the street in Cambridge, Massachusetts, from a fire station. 

You do learn to sleep through. Give them hope. 

[Laughter] 

The CHAIRMAN. The gentleman from Connecticut. 

Mr. SHAYS. I will yield to Mr. Green for a second. 

Mr. GREEN. Thank you. I want to thank all of the panel members 

for coming. Mr. Chairman, I have been blessed to be appointed to 

my first conference committee, and it is about to start. I must 

53

leave. No disrespect to anyone. I really wanted to stay for the entire time. God bless you. I yield back. 

Mr. SHAYS. Thank you. First, let me say, Mr. Cisneros, I loved 

working with you when I chaired a committee that oversaw housing, and I thank you for your service to the Government and particularly as Secretary of HUD, you were very willing to work with 

both sides of the aisle, and it was a pleasure to work with you, and 

it is a pleasure to have all of you here. 

Mayor, I remember the Titans. I have to tell you it is one of the 

great movies. If 60 percent of it were true, it is a great story. I 

have a feeling that more than 60 percent—you graduated a few 

years before, right? You graduated when? 

[Laughter] 

Mr. SHAYS. Let me just ask you, Mayor, to what extent do you 

think the impediment to housing is the result of local barriers such 

as zoning development fees, permits, and so on? 

Clearly, that plays a role in housing. There is an initiative by 

this Secretary to try to deal with that. 

One, do you think it is a problem, and two, are you trying to play 

a role in dealing with that? 

Mr. EUILLE. Yes, sir. It is indeed a problem. Through housing advocacy on the part of faith-based, nonprofits and the businesses 

and citizens coming together, there has to be a constant outreach 

and education initiative underway. 

Once citizens understand that when we talk about meeting affordable housing goals and objectives we are not just talking about 

the poorest of the poor, but we are talking about pretty much all 

of us. Many of us are just a couple of paychecks away from being 

homeless. 

As a result, when we show them and can prove to them that we 

are talking about the people we need to have in our communities 

to provide the day to day services and so forth, it is wake up, now 

I understand. 

Once you educate the community to accept the fact that there is 

a crisis and we all need to be working on this together, then secondly, local governments through their planning and zoning and 

code requirements are willing to loosen up so we can again think 

out of the box a little bit more, utilize best practices, like I mentioned with this one particular project with the fire station, and we 

can do some of these things to meet these objectives. 

Mr. SHAYS. Thank you. Secretary Cisneros, tell me how did you 

react to the testimony that was provided by Mr. Montgomery? 

What were your reactions, as you listened? 

Mr. CISNEROS. I felt sorry for the man, for starters. I have been 

in that position. 

Mr. SHAYS. Because since Barney was speaking, you could not 

understand what Barney was saying? 

The CHAIRMAN. No, because he could. 

Mr. SHAYS. I know never to engage Barney in any dialogue because you always regret it, and why I did it just then, I do not understand. 

[Laughter] 

Mr. CISNEROS. Clearly, this is mostly about coming up with 

sources of revenue that provide a new entity, which has new flexiVerDate 0ct 09 2002 17:30 Dec 12, 2007 Jkt 038393 PO 00000 Frm 00057 Fmt 6633 Sfmt 6633 K:\DOCS\38393.TXT HFIN PsN: TERRIE
54

bilities, which is targeted in a way no other Federal program is 

today towards production for very-low-income persons. 

With respect to the Assistant Secretary’s points, the fact that the 

money has been identified from the GSEs is very important. We 

know it is available. We know it is not onerous. We know they can 

afford it. We know they need to be doing something like this. The 

money is not going anywhere else. 

With respect to the FHA funds, because of what has been identified, again, new money, not presently allocated for any other purpose, I think this is just a great way to fund a housing trust fund 

which the country needs and has needed for a long time. 

Mr. SHAYS. To the others on the panel, I am just going to read 

something, just so you hear the argument against, it can be a pretty boring hearing since I am a co-sponsor of the bill, we like it, but 

let me have you respond to the concerns: 

‘‘The establishment of a new housing trust fund would require 

the creation of a huge new Federal bureaucracy and would not be 

an effective means to promote home ownership for low-income families. 

The creation of such a trust fund would require HUD to devise 

and administer a new set of rules and regulations, taking resources 

and time away from its other established affordable housing programs such as HOME, Section 8 vouchers and CDBG. 

It is important that the proposal in H.R. 2895 is a model to a 

great degree on HUD’s HOME investment partnership program. 

The trust fund is so similar in its requirements, i.e., rents, income 

targeting, affordability periods, etc., to the HOME program, that it 

prompts the question why is it necessary to create a new Federal 

bureaucracy to administer essentially the same program.’’ 

Maybe one last paragraph: ‘‘Instead of establishing a national 

housing trust fund, one approach would be to fine tune the existing 

HOME program to include additional requirements for deeper targeting of the HOME program that could be used to address the 

lower income families.’’ 

Those of you whom I have not asked, maybe you could respond. 

Mr. CISNEROS. Let me just, very quickly speak to those points, 

very, very quickly. First, it does not have to be a big bureaucracy. 

This can be done very leanly. The precedent exists at the State and 

local trust funds. A trust fund is by definition a different entity 

than a standard Federal bureaucracy and it can be done using very 

entrepreneurial kind of private sector models and done very 

straightforwardly. 

The HOME program is not deep enough. It does not get to the 

30 percent in the way it is operated in most communities. It is not 

operative in that way. 

A trust fund further adds greater flexibilities than the HOME 

fund, just tweaking the HOME program is not breaking new 

ground the way a trust fund can do. That would be my response 

to those points. 

Mr. SHAYS. With your indulgence, Mr. Chairman. 

The CHAIRMAN. Yes. 

Ms. ALBERGHINI. From the perspective of a developer, I think 

they are very different things. The HOME program has an enormous level of complication in its regulations, and one of the things 

55

we appreciate Chairman Frank working on is trying to help simplify and streamline some of these regulations, but they are very 

different even with the deeper targeting in the HOME program, it 

is not nearly as flexible as the trust fund. 

The trust fund can be used for project-based rental assistance, 

for example. It can be used for a variety of different things that the 

HOME funds currently are not structured in the same way to use. 

So from a developer’s perspective, I think that it is more flexible, 

even with deeper targeting in the HOME program, there is such 

a level of complication with that at this point that I think we are 

better off starting fresh with a proven tool in a trust fund with the 

flexibility this would provide. 

Ms. CROWLEY. Actually, I was at the table when the proposal got 

developed. And I can tell you we actually did not model it on the 

HOME program. To the extent that it does resemble it, that is coincidental. 

But the thing that is different that is essential, which is what 

Mr. Frank pointed out, is that a trust fund has dedicated sources 

of revenue, and that the State and local trust funds that this actually does more closely resemble, the ones that have been the most 

successful and the ones that have been sustainable and the ones 

that have been able to really make a huge difference, are the ones 

that have dedicated sources of revenue. 

And generally, that is where folks have moved to. So we have 

just heard Mayor Euille describe what they did eventually to get 

to what it is that they are putting in there. And so that is why you 

create this and then you figure out what you are going to do with 

it. 

There are two objectives: One, getting more production dollars 

for ELI households; and two, having dedicated sources of revenue 

that we can rely on over time. 

Mr. SHAYS. Thank you very much. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. Let me just point out a couple of 

things. There is one other model that we have been using. It has 

existed at the Federal Home Loan Banks created by this committee, and that is the Affordable Housing Fund of the Home Loan 

Banks. I don’t think anybody thinks that is a big bureaucracy. 

But this, in particular, this is the most anti-bureaucratic program we have ever had. This creates no new bureaucracy, and it 

will use HUD to distribute funds, the existing HUD, to existing 

trust funds. So the bureaucracy argument is totally off the point. 

This is simply going to be a pass-through. 

The gentlewoman from New York. 

Mrs. MCCARTHY. Thank you, Mr. Frank. And thank you again 

for the testimony of all the witnesses. Now I am going to apologize 

up-front; most of us try to allot 3 to 4 hours for a hearing, but at 

1 p.m., I am supposed to be somewhere else. 

I have to say hearing from you, and I did read a lot of the testimony, and I was happy to see that you built an affordable housing 

area or rentals, anyhow, in a wealthy area because I will be very 

honest. Nassau County is an extremely unique area in many ways. 

It is probably one of the wealthiest communities in the country. 

And yet I have the poorest of the poor, and they are all segregated. And that is something that I would like to see change, 

56

only because of schooling. Where are my worst schools? They are 

in my underserved areas. And I would like to see that change over 

the years. 

But with all the affordable—that was the thing that we were trying to do on Long Island. We kept trying to sell everything as affordable housing. Of course, every community said no because they 

were looking at the old models and they didn’t want that kind of 

housing in their community. 

So we started going with workforce and tried to explain, it is 

your daughter who just graduated and can’t get a job. And I think 

that is the only way that I am going to be able to sell it to my mayors in my area, that we can bring in good housing for the new 

workforce who are coming out of the colleges, but yet take care of 

our people with disabilities, our poorest of the poor, and have a 

mixed community. 

With that being said, I tell my staff all the time, I know you can’t 

afford to buy a home. Buy a condominium. At least it is a lower 

price. You build up equity. Is there housing that will have become 

condominiums so first-time home buyers, especially those who 

would be on the lower income would be able to actually afford that? 

Could they use the vouchers for that so that they would be building 

equity in the condominium to be able to buy a home in the future? 

I am just trying to think outside the box on where we are going 

in the future. 

Mr. CISNEROS. My reading of the proposed legislation is that 

many different modes of many types of housing can be done. And 

to the extent that there will be some of this fund that could be used 

for home ownership, using it in a condominium structure makes 

more sense than single family detached homes. And then when 

matched to things like the use of vouchers for home ownership, the 

kind of thing you are suggesting is possible. 

What you are describing in Nassau is not that unique any more. 

Many, many areas of the country have this mixture of upper income and then working people who cannot afford to live there and 

who live in substandard or overcrowded conditions. We see this all 

over the country. 

One of the great things about this fund is that it will allow local 

solutions, people to come together with a project that mixes 25 percent very-low-income in a building in a community that has higher 

income. It speaks very wisely, I think, to issues like proximity, to 

economic opportunity, and income integration in projects. These are 

lessons we have learned from HOPE VI and other things in recent 

years, low-income tax credits, the way they are done. 

I think the beauty of this fund is it is going to allow for a lot 

of local innovation, a lot of local creation. Just as wise as people 

can be in designing good projects, this funding will make it possible 

to carry it out. 

Mrs. MCCARTHY. Just as the Secretary said, there is a lot of opportunity for innovation. The bill has a very specific statement 

about promoting the development of two- to four-unit owner-occupied housing. And so that is my notion of the sort of perfect elements, is if you develop a duplex that is owned by a very-low-income person who is developing equity, but that has an apartment 

in it that can be rented by an extremely-low-income person. 

57

So that person has an affordable unit and eventually could be 

able to then save up to buy the house across the street, so that you 

are maximizing all of those things, and that we are getting out 

away from the homogenized notions of what neighborhoods should 

be, and that we are creating diverse forms of housing in neighborhoods so that people at all stages of the life cycle and different incomes can all live there together. 

Ms. ALBERGHINI. Representative, one other note. The funds can 

clearly be used for downpayment and closing cost assistance for 

moderate-income first-time home buyers also. And one of the concerns that you mentioned in some of your earlier comments about 

the targeting, as a supporter of the bill still, the deepness of the 

targeting, and the targeting for the 30 percent of median income 

folks, that can happen. And you want it to happen within the context of these mixed-income communities that you describe as what 

makes a vibrant, genuine town. 

I think the key to eliminating the concentrations of poverty that 

you see, and creating a vibrant community, is to be able to take 

the funds that are targeted at those very-low-income households 

making 30 percent of median or less, and use those in developments that also have the first-time home buyers and the market 

rate condominiums, and use the pieces of the tool that are allowed, 

given its flexibility in the Trust Fund Act, for the moderate-income 

component as well—the downpayment assistance, construction 

costs. 

I mean, it is all the same development, and you can use that 

money for construction costs, for acquisition, for downpayment assistance, and for closing cost assistance. So I think there is a lot 

of attention still in the bill to helping that moderate-income group, 

but it does it in a way that you can integrate it with the very-lowincome as well. 

Mrs. MCCARTHY. Thank you. And with that, I apologize to the 

third panel. As Chairman Frank has said, we all care about this 

issue, and even when we are not here, we have been working on 

it. 

The CHAIRMAN. The gentlewoman is right. Unlike some hearings, 

I must say not this one, at which I have been present in person, 

but not in spirit. 

The gentleman from Minnesota. 

Mr. ELLISON. Mr. Chairman, thank you and all the original cosponsors. I think this is fabulous, and I am so honored to be here 

with this distinguished panel. 

Yesterday I introduced a bill to try to address predatory lending. 

But if it ever gets passed, or if any version of it does, it will help 

people going forward. What about the people who are already in 

crisis? Do you think this legislation could help prevent foreclosure 

and maybe help bail people out who are right there in the midst 

of losing their home? 

Ms. CROWLEY. The bill is very specifically dedicated to capital 

funds for construction, and so it is a production bill. There are 

some provisions for providing operating assistance, but I don’t envision it as something that could prevent foreclosure for somebody 

who is in foreclosure now. 

58

Mr. CISNEROS. I think that is right. And I would simply say that 

my admonition or counsel would be not to try to do everything with 

this trust fund. It is focused on production of units that presently 

are not being produced. I think that is its strength. And there will 

be other means to address the foreclosure issues and the predatory 

lending and the subprime issues. 

Mr. ELLISON. Well, when you talk about preservation of housing, 

do you think that that might be—would that strain the definition 

of preservation too much to say that foreclosure prevention might 

be a way to help preserve housing? Because, of course, we have 

been talking about construction, preservation, rehabilitation. 

Mr. Mayor? 

Mr. EUILLE. I was just going to add, that maybe—you could perhaps stretch it, the preservation part of the legislation, to include 

what your concerns are. But I would add that having a National 

Housing Trust Fund, again, that can help supplement what we do 

on a State and local level will afford an opportunity for localities 

then to use their own tax general revenue dollars to help meet the 

needs of those who are being affected or impacted by predatory 

lending schemes and/or foreclosure. 

So it has a lot of benefits. But perhaps this piece of legislation 

will not directly address those needs, but certainly afford an opportunity for localities to then utilize some of their own dollars. 

Mr. ELLISON. As we are trying to construct, preserve, and rehabilitate new housing, and I am so fully in favor of that, how does 

that important and noble goal square with the record losses of 

housing units we are seeing, given the foreclosure crisis? How do 

they fit together? 

I mean it seems like at one point people are losing their homes, 

on the one hand. I mean, in my own town of Minneapolis, there are 

certain neighborhoods where we have 50 percent foreclosure rates 

in certain low-income neighborhoods. Is it possible we could be 

building them on one hand and people will be losing them on the 

other? 

Mr. CISNEROS. Sure. They do absolutely fit together. 

Mr. ELLISON. Could you talk about that? 

Mr. CISNEROS. One has to think about the big picture. And different programs have different purposes. 

Mr. ELLISON. Right. 

Mr. CISNEROS. So this particular fund isn’t the answer on the 

foreclosure question. But one in making comprehensive national or 

local housing policy needs to think about sustainability in the 

home, sustainable home ownership. 

Mr. ELLISON. Right. 

Mr. CISNEROS. And the foreclosure problem, the subprime issue, 

obviously goes to that. So steps will have to be taken to help people 

at the local level. 

Mr. ELLISON. Sure. 

Mr. CISNEROS. And the GSEs, and the regulators, and perhaps 

the Congress and HUD to step in and help people to be able to stay 

in their homes. 

Mr. ELLISON. Well, thank you, Mr. Secretary. I think it is right 

that if anything, it will free up dollars that can be used from other 

sources to address that. So that is important. 

59

One of the things that concerns me a lot is how poor children do 

in school. And it seems like if they don’t have a stable housing situation, and they are having to move constantly, then they are in a 

new school district and they find themselves trying to catch up. Is 

that one of the important residual effects of trying to address this 

low-income housing crisis? 

Mr. CISNEROS. There is very solid scientific evidence that shows 

that children in stable housing do better, not just in school but psychologically and in other ways. There is actual medical evidence 

that shows health conditions improve with the decency and stability and safety of housing. Overcrowding, substandard conditions, 

unsafe housing, lead paint problems, all of those impact children. 

I think it was Sheila’s group that just published or at least published another group’s report that said that actually, among minorities, they cite the quality of their marriage is impacted first 

and foremost by the quality of housing, more than any other factor 

but how much disposable income you have. The stability of the 

family is impacted by the quality of the housing. 

Mr. ELLISON. Well, if you are giving up 50 percent of your income 

in housing, that impacts your ability to— 

Mr. CISNEROS. Afford anything else. 

The CHAIRMAN. If the gentleman would yield, let me just say he 

has been very prescient in this because on the next panel we do 

have Dr. Megan Sandel, who is an M.D., and a master of public 

health, who is specifically going to talk about the impact on children of homes as opposed to homelessness. So the gentleman has 

very correctly focused on a very important topic. 

Ms. CROWLEY. If I could just add one quick things about schools. 

You are absolutely right that the data all show that children whose 

families can’t afford basic housing are in constant motion, and so 

they are moving from school to school, which means they get further and further behind. 

But it is not just the kids who are moving that are affected. It 

is the other kids in the classroom and the teachers because when 

you have a lot of churning in schools and you have new kids coming into the classroom mid-year, two or three times a year, the 

teachers have to double back to pick those kids up, which means 

the other kids are getting less attention. 

And it ultimately means that those schools, their test scores 

don’t keep up. Their test scores go down, which means that higherincome people aren’t going to go to that school. It all has a spiraling-down effect, so I think that it is important to understand the 

systematic impact beyond the individual child to the entire educational system. And there is a fair amount of research in the education literature that really gets at all of that. 

Mr. ELLISON. Just one last question. If families are paying upwards of 50 percent of their income in housing, what happens to 

the retail sector in the neighborhoods in which they live? I mean, 

is there enough money to sustain furniture businesses in the neighborhood, or good decent grocery stores where there are good fresh 

foods? What happens to those neighborhoods where there is just 

sort of a drain on income because so much of it is going into housing? 

60

Mr. CISNEROS. Unfortunately, there is a market for payday lenders, check cashers, and other people who prey on the stressed financial circumstances that develop when people have to pay that 

much for housing. 

Ms. ALBERGHINI. I think that is another good reason also to try 

to create economic diversity in the residential communities because 

that only helps strengthen the retail sectors in the surrounding 

area. And so the notion of creating these mixed-income communities that can then support retail areas, and at the same time 

break down the concentrations of poverty, is the way to go. 

One last comment on your last point. I think that the schools 

issue is another reason to try to get homeless or formerly homeless 

people into permanent housing right away. Ultimately, we would 

have an objective to eliminate the shelter system, to be able to get 

them into permanent homes so they are not moving around. And 

that again is often something that can be accomplished in the 

mixed income model. 

Mr. ELLISON. Let me thank all the panelists very much. I just 

really want to commend everyone. Thank you very much. 

The CHAIRMAN. And one final thing. I am reminded by staff, too, 

that the gentleman from California is going to be having some 

hearings on the reauthorization of the McKinney Act, and one in 

the subcommittee will be specifically on the impact of homelessness 

on children. So again, the gentleman from Minnesota has correctly 

pointed to an issue. 

I thank all the panelists for past work, present testimony, and 

most important, future work come September when this bill comes 

to the Floor. 

We will now call up the next panel with my deep gratitude for 

their patience. Again, my reminder that their persistence is going 

to help when this bill gets passed, and I very much appreciate 

them staying. 

I now have to request that we include in the record a letter from 

the mortgage bankers. And if I don’t object, then there will be 

unanimous consent, and it will go in the record. So since I don’t 

object, it goes in the record. 

I thank the panel. We have Mr. Dave Roberts, who is the chief 

executive officer and president of the Lutheran Homes Society; 

Barbara Thompson, a frequent collaborator with this committee, 

who is the executive director of the National Council of State Housing Agencies; another very familiar face to many of us, Hilary 

Shelton, who is the director of the Washington Bureau of the 

NAACP; the aforementioned Dr. Megan Sandel, who had previously been here for a forum arranged by the Speaker on children, 

and several of us were impressed at that time by the relevance of 

her testimony to the housing issue; and Mr. Joe Myer, a very important part of our coalition. 

We always want to remind people when we talk about housing, 

yes, the cities are important, but there are other issues. And I am 

very proud of the effect of the work this committee has done on 

rural housing, Native American housing, and other kinds of housing that are sometimes left out. 

So please, Mr. Roberts, we will begin with you. And I very much 

appreciate your forbearance and patience. 

61

STATEMENT OF DAVID I. ROBERTS, CHIEF EXECUTIVE 

OFFICER AND PRESIDENT OF LUTHERAN HOMES SOCIETY 

Mr. ROBERTS. Thank you, Mr. Chairman, and members of the 

committee. I am David Roberts, president and CEO of Lutheran 

Homes Society of Southeast Michigan and Northwest Ohio. On behalf of Lutheran Services in America, Lutheran Services in America/Ohio, and Lutheran Homes Society, we would like to thank you 

for the opportunity to testify about the National Affordable Housing Trust Fund Act of 2007, H.R. 2895. We would also like to thank 

the committee for their interest in affordable housing. 

We strongly support passage of H.R. 2895. The passage of this 

bill would make a significant difference in the lives of those in need 

of affordable housing, those who have low incomes as a result of 

disability or loss of a spouse. 

I speak for Lutheran Homes Society (LHS), a 147-year-old agency 

that began serving in 1860, a year before the start of the Civil War. 

Since that time, LHS has served hundreds of thousands of youth 

and elderly in a variety of residential settings. In 2006, we provided a total of 773 individuals for our affordable housing ministry. 

I am currently president of LSA Ohio, which is a coalition of 17 

agencies serving virtually every social need. Our agencies in Ohio 

provided over 1,700 units of affordable housing in 35 locations, and 

we have a waiting list of over 1,200 people. 

These Ohio agencies are members of our national association, 

Lutheran Services of America (LSA). LSA is comprised of nearly 

300 member agencies, delivering more than 9.5 billion in services 

to six million people in the United States. LSA nationally provides 

over 16,000 units of affordable housing for low-income people. 

But honored members, this testimony and this legislation is not 

about LSA, LSA Ohio, or Lutheran Homes Society. It is about elders and families and people with disabilities who need a home, 

and your opportunity to give it to them through this legislation. 

Here are two examples of elderly persons whom LHS affordable 

housing has helped. Sister Agnes, aged 72, has an annual income of $4,535. She has no assets to her name. Her rental expense is $103 a month, and 

she was living in multi-family housing before coming to us. But because the rent was getting too high, Sister Agnes came to us. And 

she says that, ‘‘living here has allowed me to help in my volunteer 

services.’’ 

Helen, aged 67, has an annual income of $1,357, and pays $34 

a month in rent. She came to live at Windy Acres in New London, 

Ohio, because she had no contact with her family, was homeless, 

and was living in her car at that time. 

Lutheran Homes Society believes that the investment in and the 

development of affordable housing should be a partnership between 

government and the developer. As evidence of this commitment, 

Lutheran Homes Society, in our newest HUD 202 project in Oregon, Ohio, is including our donation of land valued at $290,000. 

This fund would help with gap financing by creating a new funding 

source for capital development and improvement. 

I commend those who conceived of and wrote this legislation because it addresses the continuum of housing needs, which includes 

rental and home ownership. It is important to remember that not 

62

everyone fits in the same mold, and people have different needs. I 

believe that the National Affordable Housing Trust Fund would address that continuum. 

Today, LHS alone has over 500 people waiting for our affordable 

housing at our various sites. Additionally, we have an interest list 

for housing that is not yet built. Here is an example of someone 

who is waiting on that list. 

Catherine is an 81-year-old widow, and although she can take 

care of herself, she is unable to maintain her home and her yard. 

The older home that she lives in is in serious need of repair, and 

she lacks the funds to do so. Since the death of her husband, Catherine has depleted her savings and barely survives on her monthly 

income of $449, which is less her Medicare deduction. 

She struggles with the necessities of life, like food and prescription co-pays. Obviously, her low income prevents her from being 

able to afford market-rate housing. Catherine is a real person, and 

unfortunately, there are so many others out there just like her who 

do not have the means to increase their income. This legislation, 

if enacted, will help Catherine and those like her by giving her a 

home that they can afford. I believe that they will, like Sister 

Agnes, help others in need. 

I would like to thank the committee, and especially Chairman 

Frank, for your legislative efforts on behalf of these low-income 

people by supporting H.R. 2895. Thank you again for this opportunity to speak with you and to bring to you these real examples 

of real people and the thousands of others who need affordable 

housing. 

[The prepared statement of Mr. Roberts can be found on page 

126 of the appendix.] 

The CHAIRMAN. Thank you, Mr. Roberts. 

Ms. Thompson? 

STATEMENT OF BARBARA THOMPSON, EXECUTIVE DIRECTOR, 

NATIONAL COUNCIL OF STATE HOUSING AGENCIES 

Ms. THOMPSON. Thank you, Chairman Frank, for the opportunity 

to testify today on behalf of the National Council of State Housing 

Agencies (NCSHA) in support of the Affordable Housing Trust 

Fund Act of 2007. 

NCSHA has long advocated for new, flexible, State-administered 

affordable housing production resources to leverage those States 

now administer, like the Low Income Housing Tax Credit, to reach 

even lower income families than those resources can reach on their 

own. 

NCSHA represents the Housing Finance Agencies (HFAs) of the 

50 States, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. HFAs allocate the Low Income Housing Tax Credit. 

They issue private activity bonds, administer home funds, operate 

Section 8 vouchers, and many of their own State funds and credits 

to support affordable housing production. 

NCSHA is very grateful to you, Mr. Frank, for your commitment 

to establishing new, reliable, dedicated sources of Federal support 

for affordable housing. We also appreciate your recognition of the 

interdependence of Federal housing programs and the importance 

of facilitating their use together. 

63

We applaud your unprecedented effort to reach across jurisdictional lines to Ways & Means Committee Chairman Rangel to work 

with him to remove barriers to the effect combination of taxed base 

housing programs like the housing credit and HUD programs. 

NCSHA strongly supports the chairman’s interest in concentrating trust fund resources on the housing needs of extremely-lowincome families. States are increasingly challenged to meet the 

needs of these families with available resources. 

And as you are acutely aware, Mr. Chairman, those resources—

the credits, HOME, and other resources that are often combined to 

reach our lowest income families, must be combined to reach our 

lowest income families—are increasingly scarce. 

To bring the full force of scarce housing trust funds and all funds 

to bear on these urgent housing programs, we do offer four general 

suggestions for the committee’s consideration: 

First, we suggest you allocate housing trust funds through the 

States as they can most effectively and efficiently leverage them 

with the housing credit and other production resources they administer in amounts sufficient to make a difference, and direct these 

resources to the greatest relative needs within their jurisdictions. 

Second, we suggest that you eliminate overly complex and unnecessary rules that will limit State flexibility, will be barriers to the 

combination of other trust funds with other housing resources, and 

add time and therefore cost to the development and compliance 

process. 

Third, we suggest to the committee that you make the match requirement sufficiently flexible that it does not deny jurisdictions 

funding they want and need by, for example, limiting it to 25 percent, as the HOME program requires, and giving States equal credit for investment of Federal and non-Federal resources in trust 

properties and programs. 

And finally, and very importantly, Mr. Chairman we suggest this 

committee and Congress create a source of long-term operating 

support for rental properties housing extremely-low-income families. This is the largest barrier to their development, and shortterm operating subsidies such as those permitted under the trust 

legislation will not overcome this barrier. 

Rents that are affordable to extremely-low-income families and 

families who are well below 30 percent of area median income simply will not be sufficient to support the continuing operation over 

the long term of these properties. 

Thank you, Mr. Chairman, for the opportunity to share our 

views. NCSHA and the Nation’s State HFAs stand with you and 

look forward to working with you to ensure that the trust fund 

lives up to its potential. 

[The prepared statement of Ms. Thompson can be found on page 

146 of the appendix.] 

The CHAIRMAN. Thank you, Ms. Thompson. 

Mr. Shelton? 

64

STATEMENT OF HILARY O. SHELTON, DIRECTOR, WASHINGTON BUREAU, NATIONAL ASSOCIATION FOR THE ADVANCEMENT OF COLORED PEOPLE 

Mr. SHELTON. Good afternoon, Mr. Chairman. My name is Hilary 

Shelton, and I am here on behalf of the NAACP, our Nation’s oldest and largest and most widely recognized grassroots-based civil 

rights organization. I serve as director of the NAACP’s Washington 

Bureau, our public policy and Federal legislative advocacy arm. 

I am here because the guarantee of safe, secure, and affordable 

housing for all Americans has long been the cornerstone of the 

NAACP’s legislative policy agenda. While we continue to struggle 

against housing discrimination, Americans are also finding it increasingly difficult to obtain affordable housing in a safe and secure community that allows us to raise our families on the modest 

income that so many hard-working Americans take home. 

This is especially true for low-income Americans and racial and 

ethnic minorities, and so our struggle continues. Before I talk 

about that, however, I would like to first thank Congressman 

Frank, you, sir, and Congresswoman Waters and the other members of this committee and this Congress who have worked so hard 

and for so long to address the critical housing shortage that is facing too many low-income people. I would also like to thank our 

partners at the National Low Income Housing Coalition and others 

who have worked diligently on behalf of the National Affordable 

Housing Trust Fund. 

The NAACP strongly supports H.R. 2895, legislation to establish 

a national housing trust fund. For close to half of all American 

families, owning an affordable home, or even finding a safe, decent 

rental unit is financially unattainable. And although to many who 

may appear to be of common sense, it bears stating here that a 

safe, secure, and affordable home, whether it be owned or rented, 

is key to a stable family life, which in turn can only benefit communities. 

Safe, secure, and affordable housing leads to, among other benefits, lower health care costs. Children who live in substandard 

housing are more likely to suffer from debilitating health conditions, including asthma and lead poisoning. 

But sadly, finding a safe and affordable home is becoming increasingly difficult for many Americans, and is proving to be especially hard for extremely-low-income Americans. Unfortunately, a 

disproportionate number of these people are African Americans and 

other racial and ethnic minorities. 

Currently only 46 percent of African Americans own their own 

homes, compared to more than 70 percent of white Americans. Perhaps more troubling than that statistic, however, is the disparate 

number of African Americans who spend too much of their income, 

which is already at the low end of the wage scale, on housing and 

utilities. 

The most current numbers we have indicate that 23 percent of 

African Americans fall into the extremely-low-income category. 

These men, women, children, and families have severe housing 

needs. In other words, they spend more than 50 percent of their income of housing and utilities. 

65

In summary, half of all African Americans live in unaffordable, 

inadequate, and/or crowded housing. But of course, this is not only 

a problem for African Americans. Seventy-one percent of Hispanic 

Americans who fall into the extremely-low-income category have 

severe housing needs, and 66 percent of extremely-low-income Caucasians pay more than 50 percent of their income to ensure they 

have a roof over their heads. All these numbers add up to one 

alarming fact: Too many Americans of all races and ethnic backgrounds are too often forced to choose between shelter over their 

heads or food on their tables. 

If these numbers do not convince you of the clear need for a National Affordable Housing Trust Fund as established in this bill, let 

me also tell you that the situation is getting worse. In 2003, the 

U.S. Department of Housing and Urban Development estimated 

that there was a deficit of two million extremely-low-income rental 

units. In 2005, that deficit had grown to four million. 

In 2003, HUD estimated that there were 44 affordable rental 

units available for every 100 extremely-low-income families. That 

number dropped to 40 units available in 2005, and the number continues to worsen. 

Unfortunately, the number of extremely-low-income households 

continues to grow as the number of affordable rental units decreases. As a matter of fact, of the 5.8 million black households reporting housing problems in 2003, 4.9 million cited housing affordability as their biggest problem. 

It is because of this growing need that the NAACP strongly supports the establishment of a National Affordable Housing Trust 

Fund, and especially one that targets the needs of extremely-lowincome Americans. I would remind you that we are talking about 

men and women who usually work at or near the minimum wage, 

or those who are on Social Security. These are the people who most 

need our help, and unfortunately are often the last to receive it. 

Under H.R. 2895, we would establish Federal housing funds to 

be used to meet the nationwide goal of producing, rehabilitating, 

and preserving at least 1.5 million units of affordable housing over 

the next 10 years. It would be based on more than 270 State and 

local trust funds across the Nation that have already produced 

hundreds of thousands of units. 

Furthermore, as a direct result of H.R. 2895, approximately 

180,000 much-needed jobs will be created to help produce, rehabilitate, and preserve this new housing. That is about $5 billion in 

wage creation which will grow about 1.7 million residual jobs. 

So, in the eyes of the NAACP, this bill is not only much-needed, 

it is a great idea. The NAACP is thus pleased to strongly support 

H.R. 2895, and I would once again like to thank all the Members 

of Congress who have worked so hard to bring us this far. The 

NAACP stands ready to make the National Affordable Housing 

Trust Fund a reality. And with that, I look forward to your questions. 

[The prepared statement of Mr. Shelton can be found on page 

143 of the appendix.] 

The CHAIRMAN. Thank you. 

Dr. Sandel. 

66

STATEMENT OF DR. MEGAN SANDEL, ASSISTANT PROFESSOR 

OF PEDIATRICS, BOSTON UNIVERSITY SCHOOL OF MEDICINE 

Dr. SANDEL. Good afternoon, Mr. Chairman, and members of the 

committee. I wanted to thank you for the invitation to speak today. 

As a pediatrician, I am not among the usual suspects to testify, 

and I wanted to say that I am here today to support H.R. 2895, 

the National Affordable Housing Trust Fund. 

I am also here today to share new evidence that shows that 

housing is the foundation to excellent child health. I hope to convince you that the best medical intervention for children is often 

finding them an affordable home, and it is within your power to 

keep kids healthy through housing. 

As many of you know, there are millions of families on affordable 

housing waiting lists. And in Boston, it is not unusual for waiting 

lists to actually close because there are so many families who are 

waiting and therefore they can’t even apply. Even families in homeless shelters are often there for over a year-and-a-half before they 

can get a home that they can afford. And often families who are 

on the waiting lists are forced to make terrible choices between 

rent and food, or settling on a home with severe housing problems 

like infestations or mold or lead paint because simply that is all 

that they can afford. 

We know from the Children’s Sentinel Nutrition Assessment Program, which is commonly known as CSNAP, that food-insecure 

children who are eligible but don’t receive housing subsidies are 

twice as likely as those who do receive housing subsidies to have 

stunted growth by WHO criteria. It is an important aspect of this 

bill because it targets the lowest income families, the ones that are 

most likely to have food-insecure children, and that by giving them 

an affordable home, you may be able to prevent stunting from occurring. 

As you know, stunting not only limits children’s physical growth 

in the short term, but it stunts their lifelong potential because we 

know that if your body is not growing, your mind is not growing 

as well. 

Because many families have very limited choices of homes that 

they can afford and have to make tradeoffs, they often live in substandard conditions. For instance, I think that the cockroach infestation is an excellent example of how that affects health. We know 

that children who have asthma who are exposed to cockroaches in 

their home and are allergic are 3 times more likely to end up in 

the hospital. 

It is also known that 30 percent of children who live in the urban 

areas are allergic, but it may be surprising to note that 20 percent 

of suburban children are also exposed and are allergic to cockroaches. And further, new data suggests that exposure to cockroaches in early life may actually cause immune system changes 

that can lead to the development of wheezing or asthma. 

Young children who live with other substandard exposures, such 

as lead paint from older homes, can also lead to problems with development, and recent estimates have estimated that this leads to 

billions of dollars in education and other costs. 

Lastly, families who have difficulty affording rent may double up 

with other families, resulting in crowding, or these families may 

67

frequently move. We know children who stay in the same home 

and do not more frequently have better child development outcomes and do better in school. 

Another aspect of the bill that I think is excellent is the local 

flexibility. From my experience working in Boston with the Boston 

Public Health Commission, local community development corporations, and some State-funded housing developments, the ability for 

State or local governments to match the best local solution to the 

greatest housing needs makes the most sense. 

In some instances, rental housing needs are the most pressing. 

In others, home ownership may be the best outcome. And research 

has consistently shown that home ownership makes housing more 

stable and is better for overall health. In pediatrics, the best therapies are often tailored, and this bill clearly accommodates that. I 

urge you to support H.R. 2895, the National Affordable Housing 

Trust Fund bill, because it can ensure that our most vulnerable 

population, our children, have safe, decent, and affordable homes. 

I leave you with the idea that a safe, decent, affordable home is 

like a vaccine. It literally prevents disease. A safe home can prevent mental health and developmental problems. A decent home 

may prevent asthma or lead poisoning. An affordable home may 

prevent stunted growth and unnecessary hospitalizations. This 

bill’s goal is 1.5 million affordable homes over the next 10 years, 

and that can mean literally 1.5 million children who are healthier. 

I would like to end with a story that drives home why I think 

housing can be a medical intervention and can make kids better 

and keep them healthy. In my pediatric practice, I take care of a 

child, Whitney, whom I met when she was 9 months old. Her family was homeless at the time because they could not afford an 

apartment. 

At the time, she was falling off her growth chart. She already 

was having trouble growing. And over the next 3 months, she literally gained less than a pound. I needed to hospitalize her because 

she had become dangerously malnourished. 

She ended up needing to be transferred to a rehabilitation hospital because she had an underlying problem with swallowing, and 

she stayed there for over a month. You can imagine the cost of that 

to insurance. When she was at the rehabilitation hospital, she was 

able to gain weight, but as soon as she went back to the shelter, 

she began to lose weight again. 

After advocating with lawyers from our medico-legal partnership 

at Boston Medical Center, Whitney and her family were finally offered an affordable home at a local public housing development. 

Once in her new apartment and she was living there, she was able 

to gain weight, and within months her developmental delays improved and she was able to thrive. I recently saw Whitney at her 

physical a few months ago, and at 4 years old, she was starting to 

learn to read. 

I tried my best to treat Whitney. I gave her all my medical expertise, including very expensive medical care during hospitalizations. But the best medical intervention for her, the one that eventually made her well, was a safe, decent, affordable home. 

It is actually Whitney’s birthday today, July 19th. And I can 

think of nothing better to help her and kids like her to stay healthy 

68

than to pass H.R. 2895, the National Affordable Housing Trust bill. 

Thank you. 

[The prepared statement of Dr. Sandel can be found on page 138 

of the appendix.] 

The CHAIRMAN. Thank you. 

Mr. Myer. 

STATEMENT OF JOE L. MYER, EXECUTIVE DIRECTOR, NCALL 

RESEARCH, INC., ON BEHALF OF THE NATIONAL RURAL 

HOUSING COALITION 

Mr. MYER. Chairman Frank, and members of the committee, my 

home State is Delaware; I want to acknowledge the introduction 

that Mike Castle gave me earlier. You should know that as Governor, Mike Castle implemented a very successful housing trust 

fund which is operating today and has done a lot of good, and he 

is a great friend of affordable housing. 

My name is Joe Myer, and I am executive director of NCALL Research and a current board member of the National Rural Housing 

Coalition. The National Rural Housing Coalition is a membership 

organization, a national one, that advocates for Federal policies 

which improve housing and community facilities in rural America. 

We appreciate the opportunity to testify today on rural housing 

issues and H.R. 2895, the National Affordable Housing Trust Fund. 

NCALL is a multi-faceted nonprofit housing operation in Dover, 

Delaware, and we offer a variety of housing development services 

to nonprofit organizations along with direct education services to 

lower income households. To that end, we have helped to develop 

45 apartment communities for families, elderly, and migrant and 

seasonal farm workers. And we also just reached a milestone of 

6,000 first-time home buyers. 

We work regularly to develop apartments serving very-low-income persons, and frankly, these require complicated patchwork 

quilts of leveraging and financing to secure low income housing tax 

credits. We believe the National Housing Trust Fund assistance to 

rural Delaware will help to provide financing leverage needed to 

access other Federal, State, and private partners. 

Rural housing need: America’s rural communities suffer from elevated poverty rates and substandard housing. Rural households on 

average are poorer, and according to the 2000 census, the poverty 

rate in rural America is 14 percent higher than the national rate. 

Likewise, Delaware’s rural counties have higher poverty rates 

than the State average, and experience similar conditions. For instance, 57 percent of all workers statewide have insufficient income 

to afford a two-bedroom apartment in their county of employment. 

There is a deficit in this small State of 12,000 affordable housing 

units for those with extremely low incomes. A majority of Delaware’s 20,000 substandard housing units in need of major repair or 

actual repayment exist in rural counties. And the median incomes 

in our rural counties are 30 percent lower than our metro county. 

In face of this need, rural housing spending for USDA programs 

has dropped 20 percent over the past 3 years. The Administration’s 

Fiscal Year 2008 budget request calls for elimination of most rural 

housing programs serving low-income households. 

69

NCALL has been directly hit with the impact of such reductions, 

which have slowed rural housing really to a trickle. Increased affordability gaps at the same time have created more demand than 

ever. 

Availability of other Federal programs for rural areas: Even 

though a disproportionate amount of the Nation’s substandard 

housing is in rural areas, they are less likely to receive government-assisted mortgages. For instance, 22 percent of the Nation’s 

population is in rural areas, but less than 7 percent of FHA assistance goes to non-metro areas. Only 10 percent of Veterans Affairs 

assistance reaches non-metro areas. Only 12 percent of Section 8 

funds go to non-metro areas. And in 2003, of the 9 million families 

assisted by Fannie Mae, only 11 percent lived in rural America. 

We are very pleased to support the National Affordable Housing 

Trust Fund Act. Reinvigoration of Federal housing policy is long 

overdue. The resources that this legislation makes available will 

definitely have a positive impact on both the quality and the quantity of affordable housing across the Nation. 

Given the high levels of housing distress in rural areas and recent reductions in Federal assistance, the National Rural Housing 

Coalition is especially pleased to endorse this legislation. The National Housing Trust Fund Act will help provide resources for affordable housing that are desperately needed to help bridge increasing affordability gaps, especially in rural areas. 

We have a few comments and recommendations regarding the 

legislation, and these are aimed at facilitating the use of the trust 

fund in rural areas. Under targeting requirements, we are pleased 

to support the targeting requirements established in legislation. 

We do want to share and make the important point that the targeting required anticipates the availability of a level of subsidy 

that we have typically not seen much of in rural America. It is extremely difficult to assemble subsidies adequate for housing extremely low-income households at 30 percent of median and below. 

We support this provision, and we hope to work with the committee 

to be sure that rural America is adequately served. 

Secondly, use of the trust fund allocations for rural areas: Currently, the provision does not provide sufficient direction to States 

or participating jurisdictions on the definition of need. As a result, 

there is no uniform standard for allocating funds to rural communities. We will be pleased to work with the committee in designing 

a formula that provides a fair share of the trust fund resources for 

rural America. 

Again, we are pleased to support this legislation, and urge the 

committee to act on it promptly. On behalf of the National Rural 

Housing Coalition and NCALL, we support H.R. 2895 and the implementation of a National Housing Trust Fund. Thank you. 

[The prepared statement of Mr. Myer can be found on page 113 

of the appendix.] 

The CHAIRMAN. Thank you all, and this has been very helpful. 

Let me just say, because we are going to be talking next week, and 

we will be talking informally with you, we do hope to vote this bill 

out of committee before we break in August and have it on the 

Floor in September. 

70

And there were some specific proposals. The mayors had some, 

the State housing authorities, and the rural people. Now, as you 

understand, they are not all obviously compatible. There are some 

conflicts there. And I begin by hoping everybody will remember 

that something is going to be better than perfection, and we will 

work on this. 

I will say, and I know again there is also some other—we are trying to maximize the funds. I am sympathetic to the matching fund 

issue. I wish we were in a situation in which I wouldn’t have to 

be as much, but there are problems in State and local areas. And 

so we will be approaching the matching fund issue. 

I will say, with regard to the rural, there are going to be limits 

on our being too prescriptive because this is an argument for passthrough, and some of this is going to have to be done at the State 

level. It is going to be hard for us to be in some ways as prescriptive as others might like. 

And then the question of the mayors versus the States and the 

others, we will work on all that and we will try to do our best. I 

will also say this. With some of these things, this is not going to 

be forever. The trust fund will be. One thing I am confident of, once 

this starts, nobody is ever going to let it go away. For one thing, 

we will have ongoing projects. At no given time, would you be able 

to stop it without the flow of funds. 

But some of the operations we will talk to, so we will be available. The staff will be available. We will working out some of the 

specifics. And we really do look forward to your help in our getting 

this bill forward. I thank you all. The testimony has been useful, 

the proposals for some changes are also useful, and we will go forward. 

The hearing is adjourned. 

[Whereupon, at 1:37 p.m., the hearing was adjourned.] 

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A P P E N D I X

July 19, 2007

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