Housing and Urban Development Act of 1968

Housing and Urban Development Act of 1968 was a landmark piece of Congressional legislation signed into law by President Lyndon B. Johnson on August 1, 1968. Enacted during a period of significant urban unrest and following the Kerner Commission Report, it represented a major expansion of federal housing policy aimed at fostering homeownership and revitalizing cities. The act created several enduring programs, most notably the Section 235 and Section 236 housing subsidies, and established the Government National Mortgage Association (Ginnie Mae). It is widely regarded as the most ambitious federal housing initiative since the Housing Act of 1949.

Background and legislative history

The impetus for the act stemmed from the intersecting crises of urban decay, racial inequality, and a severe shortage of adequate housing for low-income Americans. The findings of the Kerner Commission, which warned of a nation moving toward “two societies, one black, one white—separate and unequal,” provided a urgent political backdrop. The legislation was shepherded through Congress by key figures including Senator John Sparkman of the Senate Banking Committee and Representative William A. Barrett of the House Banking Committee. President Lyndon B. Johnson, seeking to build on his Great Society legacy amid the escalating Vietnam War, championed the bill as part of a broader strategy to address urban poverty and fulfill goals set by earlier acts like the Housing and Urban Development Act of 1965.

Major provisions and programs

The act’s core was the creation of two major subsidy programs to make housing more affordable. The Section 235 program provided interest-rate subsidies to encourage homeownership for low- and moderate-income families, akin to a federal version of the GI Bill’s housing benefits. The Section 236 program offered similar subsidies for developers of multi-family rental projects, aiming to increase the stock of affordable apartments. A pivotal financial component was the establishment of Ginnie Mae within the Department of Housing and Urban Development (HUD) to guarantee mortgage-backed securities, thus increasing capital for lenders. Other significant titles authorized federal insurance for flood insurance through the National Flood Insurance Program, provided grants for Model Cities planning, and funded new community development initiatives.

Impact and implementation

Initially, the programs led to a substantial increase in housing production and homeownership rates among previously underserved populations. However, implementation was plagued by problems including fraud, speculation, and poor construction quality in some developments, particularly under the Section 235 program. These issues were exacerbated by lax oversight from FHA and HUD, and were starkly documented by investigations like the Senate Banking Committee’s “FHA and HUD Scandals” hearings. While the act succeeded in expanding the physical housing stock, its management failures contributed to accelerated white flight and disinvestment in some urban neighborhoods, contrary to its stated goals of stable integration.

Legacy and subsequent developments

The act’s troubled legacy directly influenced subsequent housing policy. Its shortcomings informed the design of the Housing and Community Development Act of 1974, which replaced categorical grants with block grants and created the Section 8 rental assistance program. The Ginnie Mae model proved enduring and successful, paving the way for later entities like the Freddie Mac. Critiques of the act’s market-oriented subsidies also bolstered support for non-profit and community development corporation approaches. The law remains a critical case study in the complexities of federal intervention in housing markets, reflecting both the aspirations of the Great Society and the profound challenges of administering large-scale social programs.

Category:1968 in American law Category:United States federal housing legislation Category:Great Society programs Category:90th United States Congress