Some good news, at long last, for the future of affordable housing.
After years of delays, it has been reported that both Fannie Mae and Freddie Mac are ready to begin funding the National Housing Trust Fund. After improving their financial footing following the recession, the U.S. Federal Housing Finance Agency (FHFA) Director Mel Watt told them to begin setting money aside for the low-income housing initiative. This is excellent news for first-time home buyers qualifying for help under the program, and also for businesses who need financial help to build affordable housing.
The funds, which are distributed as grants to the states, are allocated to nonprofit and private businesses to undertake housing projects, and must be used within two years. The money can be used for grants for construction, rehabilitation, preservation of living spaces, and more. The fund also promotes home ownership by helping first-time homebuyers with their down payment or closing costs.
The National Housing Trust Fund was supposed to have been capitalized by Fannie Mae and Freddie Mac years ago. However, the FHFA did not allow the agencies to fund the endeavor because, at the time, they were not profitable. Because of the ban on funding, the National Low Income Housing Coalition actually sued the FHFA in federal court last year, unsuccessfully, arguing that the ban violated the law created by the trust. (The trust stated that Fannie and Freddie must provide a percentage of the value of new business to the fund.)
Representative Maxine Waters, a Democrat from California, welcomed the good news. “By allocating a tiny percentage of Fannie Mae and Freddie Mac’s profits to these funds, we have the chance to improve the lives of millions of American children, families, people with disabilities and the elderly,” she said.