[Congressional Record Volume 144, Number 96 (Friday, July 17, 1998)]
[Extensions of Remarks]
[Pages E1343-E1344]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      AFFORDABLE HOUSING SHORTAGE AND FEDERAL MORTGAGE PREPAYMENTS

                                 ______
                                 

                         HON. MARTIN OLAV SABO

                              of minnesota

                    in the house of representatives

                         Friday, July 17, 1998

  Mr. SABO. Mr. Speaker, I rise today to express my serious concerns 
about the critical shortage of affordable housing across our country 
and its devastating impact on a growing number of people--particularly 
in my home city of Minneapolis and in the Twin Cities metropolitan 
area. The Twin Cities have a rental housing vacancy rate of less than 2 
percent--5 percent is considered full occupancy.
  The lack of sufficient new production of affordable rental housing is 
now being exacerbated by the increasing number of federally-subsidized 
mortgages that are being prepaid.

[[Page E1344]]

This privately-owned rental housing was built under the Department of 
Housing and Urban Development's section 236 and 221 programs. In 
exchange for Federal mortgage insurance or interest subsidies, owners 
agreed to restrict the rents that could be charged on units in the 
building as long as the mortgage was insured or subsidized by HUD.
  When owners choose to terminate these Federal assistance contracts, 
the tenants are faced with the prospect of losing their homes because 
their rents may soon become too expensive for them to afford. After a 
federally assisted mortgage is prepaid, residents are commonly faced 
with a dramatic increase in rent--often of $300 per month or more.
  To add further stress for tenants in this difficult situation, 
current Federal law requires that a building owner who intends to 
prepay a section 236 or 221 mortgage may provide only 30-60 days notice 
to tenants. Clearly, this is a very short period of time for anyone to 
find a new home. It is an even greater problem for low-income people 
who face an especially tight housing market. They deserve as much time 
as possible, and I believe the Federal Government should require a 1-
year notice for these prepayments. By not doing so, we jeopardize the 
already inadequate affordable housing supply in the Twin Cities and the 
nation.
  Today, Congressman Vento offered an amendment to the FY99 VA/HUD 
Appropriations bill that would have required owners who intend to 
prepay a federally-subsidized mortgage on a rental property to give 1 
year's notice to residents as well as to State and local authorities. 
Although the State of Minnesota has enacted such a requirement, it is 
pre-empted by Federal law.
  While it would not alone address the growing shortage of affordable 
housing, a 1-year notice housing requirement for Federal mortgage 
prepayments would be an important first step to help at-risk tenants 
make a difficult transition. It may even provide the time necessary for 
state, local and non-profit organizations to work with tenants and 
owners to preserve the affordable rental housing units.
  I am disappointed that Congressman Vento's amendment was not 
approved. However, I am committed to working with him and others to 
maintain and improve our country's affordable housing stock. I will 
also continue to work with my colleagues on the Appropriations 
Committee to establish a 1-year notice on Federal mortgage prepayments. 
It is a simple, but significant step in preserving affordable housing 
in Minnesota and the Nation.

                          ____________________