Also in 1995, HUD established regulatory quotas requiring Fannie and Freddie to devote 40% of their funds in 1996, and 42% in 1997, to low and moderate income housing.

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"It's very disappointing, " says Michael Shea, executive director of Acorn Housing, a Chicago advocate for low- and moderate-income borrowers.

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Any remaining subsidy programs for housing should be smaller, better focused on low- and moderate-income households, on-budget (lodged in FHA), and transparent.

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