WASHINGTON, DC-Some 33 Senate Democrats sent a letter to the newly-installed director of the Federal Housing Finance Agency, urging him to renew the government’s commitment to affordable housing. Specifically they asked Mel Watt to allow funding contributions to two initiatives that have been suspended almost since their inception: the National Housing Trust Fund (NHTF) and the Capital Magnet Fund (CMF). Only the latter has seen some activity since its formation five years ago.
The National Housing Trust Fund was established in the Housing and Economic Recovery Act of 2008, signed into law by President George W. Bush. The fund will–once it is capitalized that is–provide communities with funds to build rental homes affordable for extremely and very low-income households. The affordable housing community was very excited about the legislation at the time since it was meant to be a permanent program with a dedicated source of funding not subject to the annual appropriations process.
The Capital Magnet Fund is a Treasury Department initiative under which Community Development Financial Institutions Funds and qualified nonprofit housing organizations receive grants for affordable housing projects.
The fund was authorized by Congress through the same act that authorized the National Housing Trust Fund–the Housing and Economic Recovery Act of 2008. Capital Magnet Fund dollars are awarded competitively and must be leveraged 10:1 with other funding. At the time, the fund was to have been financed via an assessment on Fannie Mae and Freddie Mac, but the GSEs were put into government conservatorship shortly after the law passed and the assessments were not collected.
In FY 2010 Congress appropriated $80 million for the fund, allowing it to make its first round of CMF grants. The affordable rental housing crisis has only gotten worse since these two funds were established, the letter said. “Directing much needed funding for affordable rental housing should not wait until Congress and the president are able to agree on a new system,” the letter said.
“The time is long overdue to lift the current suspension of contributions to the NHTF and CMF, and we ask your full and fair consideration of our request.”