WASHINGTON After a six-year delay, Fannie Mae and Freddie Mac will finally begin setting aside a portion of their revenues to fund the development of rental housing for low-income families.
On Thursday, Federal Housing Finance Agency Director Mel Watt told the two government-sponsored enterprises that they will be required to fund the National Housing Trust Fund and the Magnet Fund that were created by Congress in 2008.
Each year, the GSEs will set aside 4.2 basis points for each dollar of loans they purchase from lenders, according to a letter Watt send to the CEOs of Fannie and Freddie.
This is major victory for affordable housing advocates who urged Congress to authorize the trust funds as part the Housing Economic Recovery Act of 2008. However, the GSEs were placed in conservatorship shortly after the law's passage. Former Acting FHFA Director Edward DeMarco decided to suspend any payment to the trust funds.
"I applaud FHFA Director Mel Watt for his tremendously important decision to fund the National Housing Trust Fund and the Capital Magnet Fund, which will ensure a steady, dedicated source of funding for crucial affordable housing programs," said Rep. Carolyn Maloney, D-N.Y., in a press release. "As our country has climbed out of the Great Recession, finding affordable housing remains a huge problem for families, young adults, and seniors across the country and especially in New York City. Thanks to this action, millions of sorely needed dollars will now be available to tackle this pressing national problem."
Affordable housing advocates estimate the GSEs will provide somewhere between $300 million to $700 million a year for the funds. The National Housing Trust Fund will fund the development and preservation of affordable rental housing and the Magnet Fund will provide grants to Community Development Financial Institutions to support affordable housing.