FHFA Increases Investment in Affordable Housing Funds

Fannie Mae and Freddie Mac are increasing the amount of funds they are distributing to the Housing Trust Fund and Capital Magnet Fund.

Federal Housing Finance Agency acting director Sandra L. Thompson announced this week that the funds will receive a total of $1.138 billion for affordable housing initiatives from the GSEs.

This annual support of affordable housing programs from the GSEs was first established in 2008 when they were placed into conservatorship and began receiving funds in 2016. Here is what they are contributing this year: 

• The Housing Trust Fund will receive $740 million, a $29 million increase from the previous year.
• The Capital Magnet Fund will receive $398 million, a $15 million increase from the previous year.

“The Housing Trust Fund and Capital Magnet Fund are critical housing affordability tools,” National Multifamily Housing Council senior vice president of government affairs Cindy Chetti said in prepared remarks. “Given that housing demand has never been greater, these resources will prove invaluable over the coming year.”

National Apartment Association Senior Vice President of government affairs Greg Brown noted that these investments will make a tangible difference over the coming year. “These increased investments parallel our collective advocacy efforts as we work to responsibly address housing affordability,” he said in prepared remarks. 

The Housing Trust Fund is disbursed on a grant basis with allowable uses limited to supporting activities that build, preserve, repair and operate rental housing for low-and very-low-income households, with some resources set aside to aid in homeownership activities.

The Capital Magnet Fund offers competitively awarded grants to help finance affordable housing solutions and community revitalization efforts.

FHFA Backs Up Its Emphasis on Affordable

Kathryn Rock, partner, financial services, Guidehouse Consulting, tells GlobeSt.com that it’s “great” to see that not only have FHFA and other government agencies emphasized the importance of affordable housing through statements and bulletins, but they also continue to back up that emphasis with financial investments.

This investment directed by FHFA and from Fannie Mae and Freddie Mac comes on the heels of an interagency statement that reminded financial institutions of special purpose credit options, under the Equal Credit Opportunity Act (ECOA) and Regulation B, to better meet the credit needs of underserved communities, Rock said.

“It is expected the funds will be used for the production or preservation of affordable housing as well as the financing of such housing,” she said. “These actions and investments continue to emphasize the importance of working to address the nation’s affordable housing crisis.”

Jeff Taylor, managing director, Digital Risk, called the announcement, “great news” and tells GlobeSt.com that the Mortgage Bankers Association under chair Kristy Fercho has made affordable housing one of its main missions.

“The federal government and banks have all made this a priority as they see it as a path to achieving the American dream of home ownership,” Taylor said. “The challenge developers face is the prohibitive costs of land, labor and materials (which only stand to rise in the short term), resulting in a narrow profit margin. As a result, many of these grants end up being spent in existing affordable housing communities rather than expanding to new areas, and therein lies the challenge.”