The fate of low-income and minority families under housing finance reform remains at the heart of negotiations over a Senate bill, highlighting a longstanding split between advocates pushing for affordable rental options and those urging access to homeownership.

Stakeholders continue to pressure Senate Banking Committee Chairman Tim Johnson and Sen. Mike Crapo, the panel's lead Republican, to make changes to affordable housing provisions in the bill in order to win more support from key lawmakers. The two senators are hoping to expand their current coalition of 12 members to win enough support to take the legislation quickly to the Senate floor.

Yet there are significant divisions between various housing groups on whether the bill takes the right approach or goes far enough in tackling the issue.

"There's a difference between advocates who want to ameliorate the situation for people in poverty and advocates for groups that have historically faced discrimination that are trying to build wealth," said Brandon Barford, a partner at Beacon Policy Advisors. "It's using your mission to try to fix the reality on the ground at the moment versus making sure there's opportunity for future mobility down the road. Both are noble goals, but they're very different objectives."

The latest salvo came Monday when a coalition of nearly 200 housing organizations, including 33 national groups, sent a letter to the six Democrats on the committee who haven't joined the bill, urging them to do so. The banking leaders abruptly postponed an April 29 vote on the legislation, citing efforts to bring on additional support for the bill. A Banking Committee aide said on Tuesday that the markup is likely to resume next week.

The housing advocates, which include seniors and veterans groups, along with those that support the homeless and people with disabilities, say they recognize concerns about access to homeownership for minorities and other groups under the new system, but argue that the bill still goes a long way to improving funding for affordable rental options. The Johnson-Crapo plan would charge market participants a 10 basis point user fee, with the majority of the money going to the National Housing Trust Fund to support rental programs. 

"I think that there are amendments that have been proposed and there are compromises that can be worked out so that the issues that have been raised by our partners who work on homeownership issues and access to credit will be able to ultimately support the bill," said Sheila Crowley, president and chief executive of the National Low Income Housing Coalition, one of the lead sponsors on the May 5 letter. "The support around rental housing for very poor people is something we haven't seen in a very long time, and that is our number one priority. We think that makes the bill worth saving."

The push comes as other groups, including those focused on homeownership and civil rights issues, have come out against the legislation, warning that the new system would not sufficiently require fair access to credit for low-income and minority families and could make buying a house more expensive.

"There's a big division on the left, and arguably, on the right—some of us, post-crisis, have had questions about sanctity of pushing homeownership all of the time. That represents a different school of thought than those who say homeownership is great, we just did it wrong," said Mark Calabria, director of financial regulation studies at the Cato Institute.

Amidst the larger philosophical debate, it's unclear where the remaining Democrats, including Sens. Jack Reed of Rhode Island, Charles Schumer of New Yorker, Robert Menendez of New Jersey, Sherrod Brown of Ohio, Jeff Merkley of Oregon and Elizabeth Warren of Massachusetts, will come down.

The lawmakers generally hail from more populated states with large urban areas in need of more affordable rentals, but many also have strong ties to the civil rights and other groups pushing for better language around access to credit. 

"The recent letter and the fact that it was broken down listing organizations in each state gives some political cover for senators to try to 'get to yes,'" said Barford. "What it doesn't do is relieve the pressure from civil rights groups, who tend to have wider membership (and voting base) and an ability to generate negative headlines for those senators from a critical portion of the Democratic base."

Support from at least a few of the more liberal members of the committee is critical for convincing Senate leadership to take the controversial bill to the floor before the midterm elections. The Johnson-Crapo plan builds on earlier work by Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va., that won the bipartisan support of many of the more centrist members of the banking panel last summer.

Still, those in both the rental and housing camps emphasized that while they have differing priorities, the two are far from mutually exclusive.

"With so many people paying exorbitant portions of their income to housing, they have no way of imagining getting to being homeowners—and part of the problem in the housing system is the great lack of attention we've paid to rental housing over the past couple of decades," Crowley said. "There's been this push towards ownership as the preferred form of housing in a way that's diminished rental housing as a viable option. There has to be both."

But John Taylor, president and chief executive of the National Community Reinvestment Coalition, argued that homeownership is important for many low- and moderate-income families looking to build wealth.

"Homeownership is on the spectrum of poor people trying to work their way out of poverty," he said. "The problem is that the Johnson-Crapo bill has basically proposed a giant step backward—it's a step forward for very low income rental housing and a step backward for homeownership. The overwhelming majority of people build wealth and move up economic ladder through homeownership." 

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