Senate Transportation Bill Would Rescind Hardest Hit Funds
Last night, the Senate voted 62-36 to begin consideration of the DRIVE Act (H.R. 22), which would reauthorize the federal Highway Trust Fund and other surface transportation programs for six years. To pay for the reauthorization, the bill includes several provisions that impact HFAs and the housing market.
Most notably, the bill would rescind all unobligated Hardest Hit Fund Program (HHF) funds, even those that already have been allocated to participating state HFAs. HHF was established by the U.S. Treasury Department through the Troubled Asset Relief Program (TARP) to help those states most impacted by the housing downturn and economic crisis.
Through HHF, HFAs from 18 states and the District of Columbia have funded a number of critical foreclosure prevention and neighborhood stabilization programs. By the end of the first quarter of 2015, HFAs had provided assistance to over 226,000 struggling homeowners through HHF. HFAs also had also funded over $300 million for other initiatives designed to restore hard hit communities such as blight elimination and targeted down payment assistance.
The provision would effectively prevent HFAs from spending any funds that they have not already obligated, putting an end to any future activities under the program. Treasury would be tasked with calculating how much each HFA would have to return to Treasury, after which HFAs would have 30 days to transfer back the funds.
While the HFAs participating in HHF have worked to utilize the nearly $7.6 billion in combined funding that was allocated to them through HHF, Treasury estimates that nearly $2.4 billion remains uncommitted. All but two state HFAs participating in the HHF program still have unobligated funds.
The bill also includes an offset that would extend an across the board 10-basis point increase on the guarantee fees charged by Fannie Mae and Freddie Mac for four additional years, from 2021 to 2025. Congress first enacted the fee increase in 2011 to help pay for an extension of the payroll tax cut.
While the DRIVE Act was able to secure enough votes to advance to the Senate floor, its future remain uncertain. Many Senate Democrats, and some Republicans, have expressed various concerns about the bill. In addition, House Republican leaders, including Kevin McCarthy (CA), the House Majority Leader, and Bill Shuster (PA), the Chair of the House Transportation and Infrastructure Committee, have also expressed reservations.
The Senate is expected to resume consideration of the DRIVE Act later today. NCSHA will continue to reach out to Senators to express our strong opposition to the provision rescinding HHF funds and to ask that it be removed from the bill.