On December 11, Mel Watt, the Director of the Federal Housing Finance Agency (FHFA) lifted the suspension on Fannie Mae and Freddie Mac’s obligation to contribute to the National Housing Trust Fund (NHTF) and the Capital Magnet Fund(CMF). This is a significant victory for the affordable housing community and one that CHC has been working toward for several years as part of our federal advocacy efforts.
The Housing and Economic Recovery Act of 2008 (HERA) authorized the FHFA to allow transfers to fund the NHTF to support of activities to preserve and grow the affordable housing supply for extremely low- and very low-income households. HERA requires Fannie Mae and Freddie Mac to transfer up to 1% of their new business revenues to finance the fund. However, soon after the bill passed, the financial crisis hit and the Federal Housing Finance Agency suspended any payments to the Trust Fund.
In letters addressed to Fannie Mae and Freddie Mac today, Watt stated, “circumstances have changed” and the suspension of payments to the funds are “no longer justifiable.” Following the government takeover and $187.5 billion bailout, the GSEs have returned to profitability, sending $225.5 billion in revenue back to the U.S. Treasury.
The funds will be capitalized through an assessment of .042 percent on the Enterprises’ new business purchases. Sixty-five percent of the revenue will go to the NHTF, with the remaining 35 percent directed towards the CMF. Under HUD’s Proposed Rule for the Housing Trust Fund Allocation Formula, California would receive an estimated $889,400,000 for every $5 billion invested in the Trust Fund.
CHC will continue to work hard on the implementation and protection of the NHTF in the year to come.