Financial Reform Bill Goodie: Low Mod 25% Set Aside No Longer Requires Purchase of Abandoned or Foreclosed Homes.

This is likely one of many obscure provisions that will surface once folks look carefully at language in the Financial Services Reform Bill. 

(To see the sections I reference below, look at the bottom of PDF page 76 of the Mortgage Lending provisions in Title 14 that I recently posted HERE)

Section 1497 (b)(1)(A) of the Financial Services Reform Act appears to wipe out the current requirement that the low and moderate income 25% set aside be met ONLY through the "purchase and redevelopment of abandoned or foreclosed upon homes or residential properties that will be used to house individuals or families whose incomes do not exceed 50 percent of area median income."

Instead the new provision [42 USC 5301(f)(3)(A)(ii)] will read simply:

“(ii) not less than 25 percent of the funds appropriated or otherwise made available under this section shall be used to house individuals or families whose incomes do not exceed 50 percent of area median income.

Further, Section 1497 (b)(1)(B) appears to allow the application of this new statutory provision to any unexpended or unobligated balances for both NSP 1 and 2.

My reading: For NSP 3, and unexpected or unobligated NSP1 and NSP2 balances, there will be NO requirement that to meet the 25% low mod set aside, the funding be used to purchase and rehab foreclosed or abandoned property. MY reading is that these funds therefore MIGHT be used for ANY purpose that helps to house families with incomes at or below 50% MFI ; I could see that this MIGHT open the door to a variety of ways of assisting low mod families, including perhaps rental assistance?

Originally created and posted on the Oregon Housing Blog.