Affordable Housing

The COVID-19 pandemic has left many citizens without stable employment income. As a result, millions of U.S. homeowners and renters have experienced challenges making mortgage and rental payments. To assist homeowners, Congress and federal agencies placed a moratorium on foreclosures and provided borrowers with options to temporarily suspend their mortgage payments. To assist renters, Congress and the Centers for Disease Control and Prevention ordered moratoriums on residential evictions, and Congress appropriated $25 billion for emergency rental assistance.

But the United States has had longstanding affordable housing issues. Following the 2007-2009 financial crisis, housing affordability in the United States worsened as homeownership declined and renting became more prevalent. To support affordable rental housing, federal agencies administer more than a dozen different programs that provide rental assistance payments, grants, loan guarantees, and tax incentives—such as the Department of Housing and Urban Development’s (HUD) Housing Choice Voucher. The government also supports homeownership by providing mortgage insurance, loan guarantees, direct loans for homeowners, and grants or loans for home repairs.

However, federal agencies could improve their efforts to support affordable housing. (In fact, there are a number of priority recommendations for HUD regarding affordable housing.)

For instance:

• HUD is responsible for ensuring that housing units provided under its rental assistance programs are safe and sanitary. For its Project-Based Rental Assistance Program, HUD monitors lead paint risks through management reviews and periodic physical inspections. But HUD has not conducted a comprehensive risk assessment to identify properties posing the greatest risk to children under the age of 6.

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• An experimental HUD program, the Moving to Work demonstration, gave 39 participating public housing agencies the flexibility to use HUD funding for purposes other than housing assistance—such as developing affordable housing and imposing work requirements and time limits on tenants. However, HUD’s oversight of this program has been limited, particularly in terms of collecting and analyzing information on what the program has accomplished and its effects on tenants. 
• Developers can apply for federal Low-Income Housing Tax Credits to help them build affordable housing projects. The amount of credit depends largely on project costs. However, project costs vary widely and federal oversight of costs is limited. The Internal Revenue Service and the Treasury should use data on variables that affect cost—such as square footage and building type—to better monitor this tax credit.
• USDA’s Rural Housing Service (RHS) provides mortgages to support affordable rental units for low-income tenants through its Rural Rental Housing Program. When these mortgages reach the end of their terms (mature), property owners may exit the program—and current law does not allow RHS to continue providing rental assistance when this occurs. As a result, tenants in properties with mortgages that are maturing may face rent increases or lose their housing altogether. Congress should consider granting RHS the authority to continue providing rental assistance to tenants in properties with maturing mortgages. RHS should also comprehensively plan for keeping properties with maturing mortgages in this program.

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