The Department of Housing and Urban Development (HUD) has announced a series of actions aimed at assisting in the Biden Administrations goal of creating, preserving, and selling about 100,000 affordable houses over the next three years.
The following are the main features of the multi-agency effort.
- Restarting the FHA's Section 542 (c)Housing Finance Agency Risk-Sharing Program's partnership with theDepartment of Treasury's Federal Financing Bank (FFB Risk-Sharing which was suspended in 2019. This will provide low-cost, Ginnie Mae- comparable rates to HFAs that finance affordable housing development.
- Raising Fannie Mae's and Freddie Mac's (the GSEs') equity cap for the Low-Income Housing Tax Credit (LIHTC). Each GSE's annual investment in affordable housing development and preservation through these credits is capped at $500 million. That cap will increase to $850 million each. The Federal Housing Finance Agency (FHFA) will also increase the Duty to Serve (DTS) rural/targeted investment requirement from 40 percent to 50 percent of each GSE's total LIHTC investment capacity, or $425 million in targeted investment and $425 million in unrestricted investment.
- Actions will be taken to expand the supply of manufactured housing and 2-4 unit properties through additional Freddie Mac financing.
- Assistance will be provided to state and local governments to boost housing supply by leveraging existing federal funds to reduce exclusionary zoning.
- The Treasury Department will be issuing a notice of funding availability for the Capital Magnet Fund (CMF), including changes to strongly encourage affordable housing production. The CMF is a competitive grant program for Community Development Financial Institutions (CDFIs) and non-profit housing groups funded by the GSEs. Funds must be used to leverage housing and economic development investments at least ten times the size of the award amount. This year's historic pool of $383 million in available funding will facilitate the production of affordable housing units throughout the country. FHFA is also making more funding available to Community Development Finance Institutions (CDFIs) and non-profit housing groups for affordable housing production under the CMF.
HUD Secretary Marcia L. Fudge said, "These actions will expand access to critical capital for state Housing Finance Agencies, empower local communities to build more affordable housing using the historic investments contained in the American Rescue Plan, and advance equitable housing policies such as inclusionary zoning practices."
The Mortgage Bankers Association (MBA) released the following statement from its president and CEO Bob Broeksmit in support of the initiatives.
"MBA strongly supports the administration's efforts to increase the housing supply by encouraging the construction and rehabilitation of affordable apartments and homes for renters and first-time buyers.
"The lack of supply is a huge problem, and HUD and FHFA should do what they can administratively while Congress considers more significant initiatives. MBA looks forward to continuing to work with the administration, Congress, and all other stakeholders on ways to address supply constraints and ensure government programs appropriately complement private capital to help both renters and homeowners."