Housing and Urban Development Act of 1968

The Housing and Urban Development Act of 1968 (Pub. L. 90-448) represented a landmark piece of federal housing legislation. Broadly expanding earlier housing legislation, this act declared a numerical national goal of constructing or rehabilitating 26 million housing units over a 10-year period with 6 million of the units devoted to low- and moderate-income families—a goal recommended by the President's Committee on Urban Housing (the Kaiser Commission). President Lyndon Johnson, after signing the act on August 1, 1968, proclaimed it as the “Magna Carta to liberate our cities.”

The Housing and Urban Development Act of 1968 contained a wide array of programs designed to help lower income families obtain decent housing. Congress recognized that the Housing Act of 1949's broad national goal of “a decent home and suitable living environment for every American family” (Martinez, 2000, p. 467) had not been realized. Under Section 2, Congress also indicated that this failure to achieve the goal “is a matter of grave national concern; and that there exist in the public and private sectors of the economy the resources and capabilities necessary to the full realization of this goal.” The act contained 17 titles: lower income families, rental housing for lower income families, Federal Housing Administration insurance operations, new community land development, urban renewal, urban planning and facilities, urban mass transportation, secondary mortgage market, national housing partnerships, rural housing, urban property protection and reinsurance, District of Columbia Placement Act, national flood insurance, interstate land sales, nonprofit hospitals, mortgage insurance, a 10-year housing goal, and miscellaneous activities.

[Page 339]Two housing assistance programs were established under the legislation. A Section 235 program was established to help low- and moderate-income families achieve homeownership by providing them with an interest rate subsidy. The federal government would share the burden if a low-income family could not afford the full cost of buying a home. The program would work hand in hand with achieving the national goal of 6 million low- and moderate-income family housing units. A rental assistance program, Section 236, was created that provided subsidies for the construction or rehabilitation of rental and cooperative housing.

The legislation also encouraged the development of entire new towns or new communities. Among the activities authorized under the legislation included the ability of the secretary of the Department of Housing and Urban Development to guarantee various financial obligations to help finance new town development and grants to assist new communities in financing basic infrastructure projects.

Urban renewal activity funding increased under the legislation. Funding was also authorized for neighborhood development programs, urban renewal projects in model cities areas, and projects to demolish nonresidential structures infested with rats.

Title VIII of the legislation separated the Federal National Mortgage Association into two corporations: The Government National Mortgage Association (GNMA) and the Federal National Mortgage Association (FNMA). GNMA, a government corporation within HUD, supports programs that add liquidity to the secondary mortgage market, thus making more money available for new mortgages. FNMA, a government-sponsored private corporation, also performs in the secondary mortgage market by purchasing government-insured or government-guaranteed mortgages and later reselling them as the demand for mortgages decreases.

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