CARH’s BROADCAST EMAIL – Regulatory and Legislative Update
February 11, 2015
Housing Trust Fund
On January 30, the Department of Housing and Urban Development published the Housing Trust Fund Interim Rule, which provides the guidelines for states to implement the Housing Trust Fund (HTF). HUD also launched an HTF Resource Page which contains the latest news and resources about the HTF.
The HTF was enacted under the Housing and Economic Recovery Act of 2008 (HERA) and was to be funded from Fannie Mae and Freddie Mac profits. More precisely, the HTF would receive a portion of a set aside consisting of 4.2 basis points of Fannie’s and Freddie’s new mortgage purchases. On September 6, 2008, the Federal Housing Finance Agency (FHFA) used its authorities to place Fannie Mae and Freddie Mac into conservatorship. This action was in response to a substantial deterioration in the housing markets that not only severely damaged Fannie Mae and Freddie Macs’ financial condition, but also left them unable to fulfill their mission without government intervention. Therefore, the HTF was not funded.
As a result of this federal oversight and recovery of the economy, Fannie and Freddie are not only paying the Treasury back for various advances to cover losses during the recession, but they are making money. ???The Federal Housing Finance Agency (FHFA) last December issued letters directing Fannie Mae and Freddie Mac to begin setting aside and allocating funds to the HTF, and the Capital Magnet Fund under HERA. The Interim Rule sets out regulations governing the HTF and how funds will be distributed to eligible states and state-designated grantees. Annual grants must be 80 percent to rental housing, 10 percent to homeownership, and 10 percent to grantee eligible costs. Funds can be used for production or preservation of eligible non-luxury rental housing, including acquisition and rehabilitation.
However, on January 27th, senior House Financial Services Committee member Ed Royce (R-CA), introduced H.R. 574, Pay Back the Taxpayers Act of 2015, that would prevent Fannie and Freddie from directing funds to the HTF and the Capital Magnet Fund while they are under conservatorship. The legislation includes a provision that requires any allocations already transferred to or set aside for the Funds to be used instead for deficit reduction. The bill has been referred to the House Financial Services for consideration. Comparable legislation has not been introduced in the Senate. CARH’s national office will continue to monitor Congressional action, in that the HTF is being viewed as a source of needed funding for preservation and new construction of affordable rural housing throughout the country.
If you have any questions, please contact the CARH national office at or 703-837-9001 or firstname.lastname@example.org.