WASHINGTON – Legislation introduced in the Senate last week would establish a requirement for Fannie Mae and Freddie Mac to serve the underserved and set aside millions of dollars each year to fund housing projects for low- and moderate-income homebuyers.
Introduction of the bill comes as legislation to reform oversight of the two secondary mortgage market giants–which also would set aside millions for affordable housing–is stalled and appears to be dying.
The new bill, introduced in the Senate Banking committee, would require Fannie Mae and Freddie Mac to contribute 4.2 basis points for each dollar of unpaid balance of total new business purchases for an Affordable Housing Program. The annual amount would be between $500 million and $900 million.
In the first year, the funds would be allocated to the states to help address the subprime crisis through loan modification and refinancing. After 2008, the funding would be used by the states to develop, build and preserve housing for very low- and extremely low-income families.
The bill would create a new statutory duty for Fannie and Freddie to serve underserved markets.
