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Wednesday, February 2, 2011

Overview of Federal Housing Assistance Programs and Policy

Maggie McCarty
Specialist in Housing Policy

Libby Perl
Specialist in Housing Policy

Bruce E. Foote
Analyst in Housing Policy

Katie Jones
Analyst in Housing Policy

Meredith Peterson
Information Research Specialist

The federal government has been involved in providing housing assistance to lower-income households since the 1930s. In the beginning, the federal government was involved in supporting the mortgage market (through establishment of the Federal Housing Administration (FHA) and the government-sponsored enterprises) and in promoting construction of low-rent public housing for lower-income families through local public housing authorities (PHAs). Over time, the role of the federal government has shifted away from providing construction-based subsidies to providing rental subsidies; private developers and property owners now play a larger role; and more federal funding has been provided to states and localities.

Today’s federal housing assistance programs fall into three main categories: rental housing assistance, assistance to state and local governments, and assistance for homeowners. Most of these programs are administered by the Department of Housing and Urban Development (HUD). Current housing assistance programs include Section 8 vouchers and project-based rental assistance, public housing, housing for the elderly (Section 202), housing for persons with disabilities (Section 811), rural rental assistance (Section 515 and 521), Community Development Block Grants (CDBG), HOME Investment Partnerships Block Grants, Low-Income Housing Tax Credits (LIHTC), homeless assistance programs, FHA and Veterans’ Administration mortgage insurance, and the mortgage interest deduction in the tax code.

Most of the federal housing assistance programs are aimed at making housing affordable for lowincome families. Housing affordability—housing that costs no more than 30% of family income—is considered the largest housing problem today. Rental assistance programs, which are the largest source of direct housing assistance for low-income families, all allow families to pay affordable, income-based rents; however, different forms of assistance target different types of households, including the elderly, persons with disabilities, and families with children. Several trends in federal housing policy have emerged in recent decades. As the focus of federal housing assistance has shifted away from construction-based subsidies to rental assistance, block grants, and LIHTC, state and local governments have had greater access to federal resources to fund local housing and community development priorities. This shift in federal funding has also led affordable housing developers to pursue mixed financing: the use of multiple streams of federal funding, state, and local funding, or private financing. Lagging homeownership rates among lowincome and minority households have prompted the past several Presidents to promote homeownership-based housing policies; however, given the recent severe downturn in U.S. housing markets, it is unclear whether that focus will continue.

This report provides an overview of the history and evolution of federal housing assistance programs and policy, information about the main programs, and a discussion of recent issues and trends. It is an expanded version of the Federal Housing Assistance section originally prepared for the 2008 edition of the Committee on Ways and Means publication, “Background Material and Data on the Programs within the Jurisdiction of the Committee on Ways and Means” (informally known as the Green Book).

Date of Report: January 10, 2011
Number of Pages: 42
Order Number: RL34591
Price: $29.95

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