Report: Federal government spent nearly $250 billion on housing sector subsidies in 2009

About $171 billion, or 70 percent, of the total $244 billion in housing grants and tax expenditures went to programs that primarily supported homeownership, whereas 24 percent, or $58 billion, went to rental housing programs and 6 percent went to programs that support both.

Of the $185 billion in housing tax expenditures in fiscal year 2009, about 8 percent, or $14 billion, went to rental activities. In contrast, $43 billion of the $59 billion in housing grants, or about 73 percent, was for rental activities. The remaining funding was for programs that support homeownership, or a mix of homeownership and rental activities.

The mortgage-interest deduction for homeowners, the largest tax subsidy in the sector, totaled $79.4 billion in 2009, according to the analysis.

Federal support for rental activities is conveyed primarily through grant programs, while support for homeownership is funded largely through the tax code and other avenues, such as loans and loan guarantees, the analysis found.

The Pew project includes data of federal housing grants and non-competed contracts on the housing sector, compiled in a searchable database.

Notably, the government took conservatorship over Fannie Mae and Freddie Mac, into which it has poured about $150 billion that the Obama administration and congressional lawmakers are aiming to pare back, reducing the involvement of the federal government in the mortgage loan process. 

The Pew report found that subsidy estimates for Fannie and Freddie vary based on whether the entities are considered to be on- or off-budget. 

“The subsidy costs of housing loans and guarantee programs are uncertain and likely underestimates, and costs for Fannie Mae and Freddie Mac vary widely,” the report said. Therefore, Subsidyscope does not add them to grants and tax expenditures.

House Republicans are planning to move a comprehensive bill winding down Fannie Mae and Freddie Mac within a few years before acting on several smaller, more targeted housing bills.

House Financial Services Chairman Spencer Bachus (R-Ala.) said Thursday that although Republicans on his committee are slated to mark up a package of eight small bills on April 5 at the subcommittee level, Republicans will push for one large bill first. 

House Republicans have voted to end the Emergency Homeowners’ Loan Program, which is part of the Dodd-Frank financial law and is expected to start this spring. The program provides zero-interest loans to unemployed homeowners to make their mortgage payments. 

The House voted on Monday to eliminate the Home Affordable Modification Program (HAMP), which pays banks and mortgage servicers to modify monthly payments for delinquent borrowers.

While HAMP has come under criticism for not helping enough homeowners, an OCC and OTS Mortgage Metrics Report for the fourth quarter of 2010 released on Thursday showed that mortgages modified through HAMP fell into delinquency at about half the rate as those in other plans. The government reduces payments by an average of $587 (35.9 percent), compared with a payment reduction of $351 (21.6 percent) from other modifications.

The report provides data on first-lien residential mortgages serviced by selected national banks and federally regulated thrifts, comprising 63 percent of all mortgages — 32.9 million loans totaling $5.7 trillion in principal balances.

Overall, the credit quality of the mortgages improved slightly during the fourth quarter of 2010, according to the report.