Statement of Administration Policy: S. 2507 - Housing Act of 1986

(Revision)
(Senate)
(Garn (R) Utah)

The Administration strongly opposes S. 2507 because it would reverse the course of Federal housing policies which Congress and the Administration have adopted since 1981. If S. 2507 were to reach the President's desk in its present form, his senior advisers would recommend disapproval.

The five-year cost of the bill is estimated to be $91 billion, $30 billion more than the President's budget. In FY 1987, additional outlays would be approximately $2.8 billion.

Instead of S. 2507, the Administration recommends enactment of the housing proposals in the President's 1987 budget which would:

— more effectively target Federal Housing Administration (FHA) mortgage insurance to borrowers whose needs cannot be fully served by private mortgage insurers;

— authorize public housing comprehensive grants, and free-standing housing vouchers; and

— repeal the Urban Development Action Grant (UDAG), Farmers Home Administration rural housing programs, rental housing development grant (HoDAG), Section 108 loan guaranty, Section 312 rehabilitation loan, and Section 8 moderate rehabilitation programs.

The most objectionable features of S. 2507 are:

— creating a new Federal subsidy for middle-income homeownership, which would be feasible only in a few large cities, contains hidden costs, and targets funds to middle-income homebuyers at a time when most middle-income families are able to qualify for conventional or FHA mortgage financing;

— extending programs which should be terminated, such as UDAG, Section 312 Rehabilitation Loans, and Rental Housing Development Grants (HoDAG);

— prohibiting the establishment of, or increases in, housing credit user fees for the Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, Government National Mortgage Association, and Federal Housing Administration;

— restricting HUD's ability to use a competitive auction to allocate commitment authority in the Government National Mortgage Association's mortgage-backed securities program; and

— increasing the fees paid to public housing authorities for administering the Section 8 existing and housing voucher programs at the expense of assistance to poor tenants.