The House Financial Services Committee yesterday approved a bill that would provide $15 billion of federal loans and grants to help states and municipalities deal with housing woes created by the subprime mortgage crisis.
The Neighborhood Stabilization Act of 2008, sponsored by housing subcommittee chairwoman Maxine Waters, D-Calif., would provide $7.5 billion of loans and $7.5 billion of grants to states under a Department of Housing and Urban Development program to help purchase and rehabilitate owner-vacated, foreclosed homes with the goal of stabilizing and occupying them as soon as possible, either through resale or rental to qualified families.
The bill, approved by a 38-to-26 vote, would allow states to allocate money to government entities, such as housing agencies and nonprofit organizations. Committee chairman Barney Frank, D-Mass., said he expects the bill to be debated by the full House the first week of May.
The House action comes after the Senate passed a housing bill on April 10 that would provide $4 billion of community development block grants that could be used to purchase and refurbish foreclosed homes. CDBG provides grants to state and local governments to fund economic development projects and can be used in projects financed by municipal bonds.
"I think [the Waters bill] is similar to proposals that have suggested using the CDBG program," said Garth Rieman, director of policy and government affairs at the National Council of State Housing Agencies. "This would be an alternative. It would be similar, in that the states and localities would be getting money that they could spend under fairly flexible terms for eligible activities to acquire and rehabilitate foreclosed properties."
John Murphy, executive director of the National Association of Local Housing Finance Agencies, said the $15 billion is a complement to other parts of the emerging stimulus package.
However, the Bush administration has opposed the CDBG provision in the Senate bill, calling it "extremely costly" and a "bailout" for lenders and speculators. The committee's ranking minority member Spencer Bachus, R-Ala., made clear he opposed the bill yesterday before the vote, echoing the administration's complaints.