New Housing Law Helps Low Income Renters

A $550 million trust fund, created under the nation’s new housing law, is the first concentrated effort to establish affordable housing for renters in the lowest income brackets since the formation of Section 8 housing in 1974, experts say.

“This is the first real bricks and mortar type of program since Section 8,” said Greg White, a policy analyst with the National Low Income Housing Coalition. “It’s really targeting a group that has been neglected.”

Section 8 is a federal housing program that subsidizes housing costs for low income renters.

Under the new trust, at least 75 percent of the money will go to extremely low income families, those that live below 30 percent of the median income of a state or below the national poverty line.

According to the housing coalition at least 90 percent of the funds must be used to create, preserve, rehabilitate and operate rental housing units. The other 10 percent will be available for first time home owner activities, including assistance with down payments and closing costs.

The trust will be financed through annual payments made by Fannie Mae and Freddie Mac, based on a percentage of their new business. Using the formula in the bill, the housing coalition estimates that Frannie and Freddie contributions would have meant over a half a billion dollars last year. Money for the trust fund will not be available until 2010.

Peter Tatian, senior research associate for the Urban Institute, said that the demand for affordable housing has never wavered, even if Congress hasn’t kept pace with the need.

“The housing crisis has shed light on this problem,” Tatian said. “The need has always been there and this is coming at a time when we need more affordable rental housing.”

Under the new law, each state is to receive a minimum of $3 million dollars annually. The formula for divvying up the money among states has yet to be decided, but it will be disbursed to agencies that are equipped to handle the creation of affordable housing units.