Proposal on Affordable Housing Under Fire

A coalition of nonprofit and faith-based housing developers are fighting a proposal they say would prevent them from receiving millions of dollars from an affordable-housing fund to be financed by Fannie Mae and Freddie Mac.

The skirmish is part of a larger battle over a House bill intended to strengthen regulation of the two housing-finance companies following their multibillion-dollar accounting scandals.

The bill, sponsored by House Financial Services Committee Chairman Michael G. Oxley (R-Ohio) and Rep. Richard H. Baker (R-La.), has been stalled since May because of the proposed affordable-housing fund. The stalemate appeared to have been broken two weeks ago, when the bill's sponsors agreed to add a provision that would ban funds from going to groups that in the past year had engaged in voter-registration or get-out-the-vote efforts or that affiliated with groups that did.

Oxley and Baker agreed to the changes to satisfy conservative critics who said they feared the money would go to political allies of Fannie Mae and Freddie Mac. Supporters estimated that the fund, derived from Fannie Mae and Freddie Mac's profits, could reach $1 billion in two years. During the first two years, Gulf Coast projects would get priority.

But several nonprofit organizations, including the Child Welfare League of America and Volunteers of America, said yesterday at a news conference that development of affordable housing is driven by nonprofit groups and that the restrictions could cut them off from a much-needed new source of financing. Get-out-the-vote efforts, they said, are often an important part of their mission.

The proposed requirements "would force Catholic agencies to choose between participating in Affordable Housing Fund programs or engaging in . . . voter registration . . . with their own funds," wrote the United States Conference of Catholic Bishops in a letter to House Speaker J. Dennis Hastert (R-Ill.).

Other organizations that don't develop housing also oppose the restrictions, asserting that they would violate First Amendment rights.

Opponents of the provision plan to ask House leaders to allow lawmakers to vote on the proposed restrictions separately from the larger bill. "We will be seeking to knock out that part that says groups that engage in voter-registration and get-out-the-vote activities are not eligible," said Rep. Barney Frank, (D-Mass.).

Some analysts said this latest argument may derail the bill again. "On all fronts, the bill appears to be far from being greased for passage," said Bert Ely, a financial consultant and longtime critic of Fannie Mae and Freddie Mac, adding that lawmakers have yet to agree on even more contentious issues, such as whether to force the companies to scale back in size.

However, the bill's sponsors said they were confident the House would vote on the bill as early as next week.