Forty Thousand Ways to Go Wrong

Long before homelessness became a household word, the federal government provided very low mortgages and mortgage insurance to apartment owners in exchange for their promise to charge low rents for 40 years. As many as 40,000 families live in these federally subsidized apartments in Los Angeles, but their landlords may soon be able to double or triple their rents.

A controversial amendment to the omnibus housing bill would make it easier for landlords to buy their way out of the low rents by prepaying the federally subsidized mortgages without approval from the U.S. Department of Housing and Urban Development. The House should reject that amendment and adopt permanent prepayment restrictions when the measure comes up this week. At stake is housing for thousands of poor tenants.

The original housing program allowed landlords to prepay the mortgage after 20 years. That arrangement threatened nearly 1 million apartments nationally. In response, Congress tightened the restrictions on prepayment, but they are scheduled to expire in two months.

Prepayment is especially attractive in Los Angeles where a runaway real estate market has increased significantly the value of land and housing. Many subsidized apartments are located in middle-class neighborhoods, so landlords stand to make a hefty profit if they can raise the rents to market value.

Affordable housing, the major antidote to homelessness, is scarce in this region. Congress should not make it scarcer.