WASHINGTON — Fannie Mae and Freddie Mac gave $186 million to the National Housing Trust Fund, their first such contributions to a fund designed to provide construction and rehabilitation of rental housing for low-income families.
The fund was created in 2008, but it never got off the ground before the two government-sponsored enterprises were seized and placed into conservatorship later that year.
Department of Housing and Urban Development Secretary Julian Castro told lawmakers Thursday that some states will start submitting their requests for affordable housing funds in April.
"We expect the first allocations of the Housing Trust Fund will be made this summer," Castro told members of a Senate Appropriations subcommittee.
The National Low Income Housing Coalition have been advocating for a housing trust fund since 2000. Coalition members are already working in the states and providing training so that affordable housing advocates will be "up to speed" on the allocation process, according to the group’s president, Sheila Crowley.
The coalition has also lined up nonprofit developers who have expertise in providing housing for extremely low- and very-low-income families, including homeless families. These developers can also provide advice on financing and construction models.
"The goal is to expand the supply of affordable housing," Crowley said in an interview Friday.
Coalition members want the rollout to go smoothly so the new program can show tangible results quickly and increase congressional support for the program. "So we would really like to see a really good first year," Crowley said.
Fannie and Freddie paid a total of $382.3 million in late February to meet their affordable housing obligations. Fannie contributed $217 million and Freddie $165.3 million, according to securities filings.
But less than half of that sum is going to the Housing Trust Fund.
The first 25% of the funds will be diverted to the Treasury Department and the Hope Reserve Fund to cover losses on loan modifications made by lenders under the Hope for Homeowners program. A Treasury spokesman declined to discuss the amount of losses the loan modification program has incurred.
Of the remaining funds, 65% will be transferred to HUD for the National Housing Trust Fund and 35% will be transferred to the Treasury Department for a Capital Magnet Fund.
The capital magnet fund will be a special account within the Community Development Financial Institutions Fund that the Treasury can use to fund grants for the development, rehabilitation or purchase of affordable housing for extremely low-, very low- and low-income families.
The amount of money going to the Housing Trust Fund is "much smaller than we had hoped for" back in 2008, Crowley said. But the coalition will be working on getting more money into the fund.
Eventually, Congress will have to pass housing finance reform, Crowley said, and that would provide an opportunity to increase funding for the Housing Trust Fund. The failed Johnson-Crapo reform bill provided $3.5 billion in annual funding for the Housing Trust Fund.
The housing group also has its eye on tax reform and a potential revamp of the mortgage interest deduction.
Currently, the mortgage interest deduction subsidizes homeownership for high-income earners at the "expense of solving housing problems for the very poor," Crowley said. "That is wrong."