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On February 5, 2007, President Bush released his FY2008 budget request, ten days before the Congress finished work on the FY2007 spending bills by approving a revised year-long continuing resolution (P.L. 110-5). The FY2007 CR funded most Department of Housing and Urban Development (HUD) programs at their FY2006 level, but with decreases for some programs, and increases for other programs. The CR provided HUD with over $36.6 billion for FY2007. The President's FY2008 budget requests about a billion dollar decrease in funding for HUD. It proposes to provide no new funding for several programs that have been targeted for elimination in recent years, but that Congress has continued to fund (HOPE VI, Rural Housing and Economic Development, Brownfields Redevelopment, and Section 108 Loan Guarantees). The President's FY2008 budget also requests decreased funding for several programs, including Section 202 Housing for the Elderly, Section 811 Housing for the Disabled, the Community Development Block Grant program, Lead Hazard Reduction, Fair Housing programs, and the Public Housing Capital Fund. Each of these programs has been targeted for decreases in past budget requests, but Congress did not approve the requested decreases. The President's budget requests funding increases for several programs, including programs for the homeless, persons with AIDS, and first-time homebuyers. The FY2008 funding debate will also be shaped by the ongoing decline in receipts from the Federal Housing Administration available to offset the cost of the budget. For FY2007, it was estimated that FHA would generate a net surplus of over $650 million that could offset the cost of the HUD budget; for FY2008, that amount is estimated to be about $250 million, although Congress may consider legislative proposals that could increase that amount. This report, which will be updated, tracks congressional appropriations for HUD and provides a detailed discussion of the funding and issues related to the majority of accounts in the Department's budget. [ABSTRACT FROM AUTHOR]

Two overarching issues can be expected to frame the housing debate in the 110th Congress. The first is the current budget environment, within which Congress and the Administration have attempted to reduce discretionary spending in recent years. The President's budget request for FY2008 proposes to hold the growth in nondefense discretionary spending to 1%, less than the rate of inflation. However, the new Congress, controlled by Democrats, might not be as likely as previous Congresses to use the President's budget as a starting point in crafting its own budget. The second overarching issue is housing affordability for both homeowners and renters. The new Democratic majority has expressed an intention to address issues of affordable housing in the 110th Congress. The 110th Congress can be expected to both carry forward housing legislation considered in the 109th Congress and to introduce new initiatives. On February 6, 2007, the House Financial Services Committee held a hearing to discuss federal housing efforts in response to Hurricane Katrina. Based on statements made at the hearing, it is possible that legislation could be introduced in the 110th Congress that would provide funds for construction of affordable rental housing. In addition, there could be congressional oversight of the Department of Housing and Urban Development (HUD) activities and states' use of funds. Another agenda item the 110th Congress could address is the governmentsponsored enterprises -- Fannie Mae and Freddie Mac -- and Federal Home Loan Banks (GSEs and FHLBs). The 109th Congress considered two bills to strengthen oversight of GSEs and FHLBs under one regulator. The legislation also included a provision to create an affordable housing fund, an issue that could be a subject of debate in the 110th Congress. Another issue that was considered in the 109th Congress and can be expected to arise in the 110th Congress is potential revisions to the Federal Housing Administration (FHA) loan insurance program. Based on statements of Members and issues raised in the 109th Congress, a number of programs within the area of assisted housing will likely receive attention in the 110th Congress. Congress could consider Section 8 voucher changes, as well as the implementation of the new public housing operating fund rule, both of which arose in the 109th Congress. Another potential issue could be the preservation of existing affordable housing, which involves efforts to ensure that assisted properties funded through HUD and the Low Income Housing Tax Credit (LIHTC) program remain available to low-income households after their initial commitments end. The 109th Congress considered legislation to reauthorize the Mark-to-Market program (a preservation tool); two bills (S. 131 and H.R. 647) have been introduced in the 110th Congress that would reauthorize the program. Additional issues that the 110th Congress may consider include the ability of assisted housing developers to combine the LIHTC program with HUD programs to create affordable housing, new initiatives to help the homeless, and efforts to curb certain subprime lending practices, sometimes characterized as predatory lending. [ABSTRACT FROM AUTHOR]