On February 7, 2005, the Administration submitted a $29.1 billion FY2006 budget request for the Department of Housing and Urban Development (HUD), which would be a decrease of $2.8 billion, or almost 9%, from FY2005. At about the same time, several appropriation subcommittees were reorganized, and responsibility for the HUD budget was transferred to a new Transportation, Treasury, and Housing and Urban Development, the Judiciary, District of Columbia Subcommittee in the House, and to a new Judiciary, Housing and Urban Development, and Related Agencies Subcommittee in the Senate. The most controversial part of the proposed HUD budget, which explains much of the proposed $2.8 billion cut, would eliminate the Community Development Block Grant (CDBG) program and transfer its purposes to the Department of Commerce, combining it with 17 other programs (which collectively had $5.6 billion of appropriations in FY2005) into a new $3.7 billion Strengthening America's Communities grant program. Both the House and Senate indicated objections to this proposal in their versions of the FY2006 budget resolution (H.Con.Res. 95), and the House-passed and Senate Appropriations Committee-passed versions of the FY2006 HUD funding bill (H.R. 3058) retained funding for CDBG at HUD. The Administration has proposed a major reform of the voucher and public housing programs (introduced as S. 771 and H.R. 1999: the State and Local Housing Flexibility Act of 2005) that would change income eligibility and targeting rules and add greater flexibility for public housing authorities. The Administration has also reintroduced homeownership proposals for lower-income and minority households -- the Zero Downpayment Mortgage and the Payment Incentives initiatives. The Administration's Single Family Homeownership Tax Credit, a tax incentive for developers of affordable single-family housing, has been reintroduced (S. 859, H.R. 1549). It is estimated to cost $2.5 billion over five years. Other housing related issues before the 109th Congress include bills to address predatory lending (H.R. 200, H.R. 1182, H.R. 1643) and continuing efforts to reform the Real Estate Settlement Procedures Act. Hearings have been held on legislation to create a more aggressive regulator for Fannie Mae and Freddie Mac (H.R. 1461, S. 190), and H.R. 1461 has been approved by the House Financial Services Committee. In late August, a catastrophic hurricane hit Louisiana, Mississippi, Alabama, and Florida. While the Federal Emergency Management Agency (FEMA) is coordinating the immediate response to the disaster wrought by Katrina, Congress will likely turn to HUD and other agencies' housing and community development programs to address needs of the evacuees and impacted communities. Already, a number of Katrina bills with housing provisions have been introduced (S. 1637, S. 1765, S. 1766) and H.R. 3894, H.R. 3895, and H.R. 3896 have been passed in the House. This report will be updated as issues develop and legislation proceeds in the 109 Congress.

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