Cuomo Says Bill Winning Final Passage in Senate Today Will Increase Homeownersh

WASHINGTON - Housing and Urban Development Secretary = Andrew Cuomo=20 said a bill that won final legislative approval in the = Senate today=20 on a 96-1 vote "is an important victory for President = Clinton's=20 policies to increase homeownership, expand the supply of = affordable=20 housing and transform public housing."=20

The legislation is part of a larger bill that includes = HUD's=20 $24.5 billion budget. The bill, passed by the House Tuesday, = now=20 goes to President Clinton. Key provisions would:=20

• Increase homeownership by raising the limit = on home=20 mortgages insured by the Federal Housing Administration = from the=20 current range of $86,317 in low-cost housing areas to = $170,362=20 in high-cost areas. The bill increases the loan limits = to a=20 range of $109,032 in low-cost areas to $197,621 in = high-cost=20 areas. The higher ceiling on FHA-insured home mortgages = opens=20 the door of homeownership to thousands of families = needing FHA=20 insurance to get mortgages, but locked out now because = the=20 current ceilings have not kept pace with rising home = prices.=20

• Expand the supply of affordable housing by = enabling=20 90,000 more families to get Section 8 rental assistance = vouchers=20 that will subsidize their rents in privately owned = apartments -=20 the first increase in vouchers in four years.=20

• Transform public housing by reducing = segregation by=20 race and income, encouraging and rewarding work, = bringing more=20 working families into public housing, and increasing the = availability of subsidized housing for very poor = families. In=20 addition, the bill improves living conditions in public = housing,=20 gives the poorest families neighbors who will be role = models of=20 working families, and reduces crime. The bill also = allows HUD to=20 continue to tear down the largest failed public housing = projects=20 and replace them with new townhouse-style = developments.

President Clinton said: "I am pleased that my = Administration=20 has agreed with the Congress on a bipartisan housing bill = that=20 incorporates all of the essential principles for which we = have=20 fought during the long, difficult negotiations that led to = this=20 agreement.... This legislation will put America back in the = business=20 of providing new affordable housing, will transform public = housing,=20 and will increase homeownership opportunities.... I thank = HUD=20 Secretary Andrew Cuomo for his extraordinary work on this=20 legislation and the many Democrats who worked tirelessly to = make=20 significant progress in our housing policies, and I commend = those=20 Republicans who cooperated in our efforts to transform = public=20 housing. "=20

"I must note, however, that this legislation is = contained=20 within the Fiscal Year 1999 Appropriations bill for VA, HUD = and=20 other Independent Agencies - and that I remain concerned = about the=20 funding levels provided for certain environmental and = economic=20 development programs in that bill," the President said. =

Funding for HUD's key programs and renewals of Section 8 = rental=20 assistance is increased by a total of about $2.7 billion in = the=20 budget over 1998 levels (about $1.3 billion in increased = program=20 spending and about $1.4 billion more for Section 8 = renewals).=20 Spending wasn't cut in any programs.=20

"The higher FHA loan limits will help transform=20 homeownership from a distant dream into a sweet reality for = more=20 hard-working middle-class families," Cuomo said. = "This=20 will return FHA to its historic role as the driving force = for=20 homeownership across the nation."=20

"As a result of President Clinton's successful = economic=20 policies and homeownership strategy, our nation's = homeownership rate=20 stands at 66 percent -- the highest level in American = history,"=20 Cuomo said. "Nearly 68 million American families now = own their=20 homes -- 6 million more than when President Clinton took = office.=20 The* approval of higher FHA loan limits, which President = Clinton=20 proposed, will drive the homeownership rate even higher in = the years=20 ahead. "=20

Addressing the public housing reforms, Cuomo said: = "The=20 bipartisan legislation implements President Clinton's = visionary=20 plans to transform public housing from segregated ghettos of = poverty=20 and despair into economically integrated communities of = opportunity.=20 I would especially like to thank Senator Paul Sarbanes and=20 Congressman Joseph Kennedy for their effective work to win = approval=20 of this important legislation."=20

Here are more details of the legislation:=20

FHA LOAN LIMITS=20

The higher loan limits will not cost the government any = money,=20 because FHA insurance is funded by premiums paid by = borrowers.=20

Because FHA loan limits have failed to keep up with = rising home=20 values, the agency's share of home mortgage volume has = declined=20 dramatically over the years. In 1970, FHA accounted for 24 = percent=20 of home mortgage volume, but by 1996 FHA's share had = plummeted to=20 just 10 percent.=20

FHA's single-family home mortgage insurance program has = been one=20 of the most successful public-private partnerships in = history. Over=20 its six-decade history, the FHA has made homeownership = available to=20 about 24 million families.=20

FHA does not make mortgage loans directly, but rather = insures=20 loans made by private lenders to homebuyers. The FHA = insurance=20 guarantees the lender timely payment of principal and = interest, in=20 the event the homebuyer defaults on the loan.=20

Because the FHA mortgage insurance protects lenders from = losses,=20 it enables millions of Americans who would otherwise have = been=20 locked out of the mortgage market and homeownership to = qualify for=20 mortgages. Cuomo said the higher loan limits will = particularly=20 benefit first-time homebuyers, who receive over 70 percent = of=20 FHA-insured home loans.=20

NEW SECTION 8 VOUCHERS=20

After a four-year hiatus, the new HUD budget puts America = back in=20 the housing business for 90,000 more families this year = through the=20 Section 8 rental assistance program, which helps pay the = rent of=20 people with low-and moderate-incomes in privately owned = affordable=20 housing.=20

50,000 new vouchers would be created for families moving = from=20 welfare to work, and 40,000 vouchers would be made available = by=20 eliminating a mandatory three-month waiting period to = reissue=20 vouchers that go from one family to another. In addition, = the bill=20 authorizes another 200,000 vouchers - 100,000 in the year = 2000 and=20 an additional 100,000 in the year 2001.=20

PUBLIC HOUSING AND SECTION 8 REFORMS=20

Under the bill, more moderate-income working families can = be=20 admitted to public housing where the poorest residents on = welfare=20 are now concentrated. At the same time, apartments in public = housing=20 are reserved for the poorest families with the greatest = need, and=20 more rental assistance vouchers under the Section 8 program = will go=20 to the poorest families.=20

Cuomo said that as important as what the legislation = contains are=20 the provisions that were scrapped from inclusion in the = bill. He=20 said the legislation does not contain sections of a public = housing=20 bill passed earlier by the House that "repeal" the = 1937=20 Housing Act, or harmful income eligibility provisions, or a = punitive=20 mandatory work provision for public housing residents that = some=20 members of Congress wanted. The House replaced the old = version of=20 the bill on Tuesday with the version approved today by the = Senate.=20

To promote access by the poorest families to public and = assisted=20 housing where families with relatively higher incomes live, = the=20 final legislation provides that at least 75 percent of = Section 8=20 vouchers go to families with incomes below 30 percent of the = area=20 median income - compared with just 40 percent in the earlier = version=20 of the bill passed by the House.=20

In public housing, the final bill says that at least 40 = percent=20 of newly available public housing units will go to the = poorest=20 households (with limited exceptions) - compared with only 35 = percent=20 (with broad exceptions) under the original House bill. = Median family=20 income varies from city to city. Nationally, it stands at = $45,300.=20 Housing authorities would have to adopt admission plans = consistent=20 with these goals of access for the poorest families.=20

The legislation also implements long-pending public = housing=20 reforms that were proposed by the Clinton Administration to = require=20 improved public housing management and increased program = efficiency.=20 These include: mandatory court-ordered receiverships for = housing=20 authorities that perform poorly for two years, requirements = that=20 housing authorities spend funds to assist residents more = quickly,=20 and consolidation of several programs to make them easier to = administer and monitor.=20

The bill also allows well-run housing authorities to = operate with=20 less HUD oversight and more flexibility, as the Clinton=20 Administration proposed. This will enable housing = authorities=20 performing acceptably to devote less time and resources to = reporting=20 to HUD and to focus on delivering good housing.=20

In addition, the bill limits a House "home = rule"=20 provision that would have allowed cities to take over even=20 well-managed public housing authorities and would have = allowed the=20 cities to take away significant resident protections. The = number of=20 cities chosen, and any waiver of current protections, would = be left=20 to HUD. Over five years, cities could take over no more than = 100=20 housing authorities with performance problems.=20

Last = revised:=20 October 08, 1998=20 =