WASHINGTON Shaun Donovan, the secretary for the Department of Housing and Urban Development, is calling for a housing trust fund that can support up to $5 billion a year in affordable housing production.
In a speech Monday, Donovan stressed that Congress must include such a fund in reform legislation that would wind down Fannie Mae and Freddie Mac.
The transition to a new housing finance system "requires an expansion of the housing trust fund and the capital magnet fund so that the new system explicitly supports more affordable housing initiatives," Donovan said at a National Association of Hispanic Real Estate Professionals meeting in Washington.
A housing finance reform bill sponsored by Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va., includes a 5 to 10 basis-point fee on mortgage-backed securities transactions to partially support affordable housing. But the bipartisan bill also places other demands on that revenue and falls short of the $5 billion the HUD secretary is seeking.
Donovan's speech drew a warm reception from consumer groups, who have argued that Corker-Warner does not do enough for affordable housing.
The National Low Income Housing Coalition "completely and totally" supports Donovan's efforts, said Sheila Crowley, the group's president.
Congress passed legislation in 2008 that created a new regulator for the GSEs and also formed the National Housing Trust Fund, which drew on money from the enterprises.
Although the fund was designed to increase and preserve the supply of rental housing for low-income families, the GSEs' conservatorship in 2008 meant that it was never actually given any money. It remains in limbo still.
New Federal Housing Finance Agency Director Mel Watt is under pressure from Democrats to start funding the trust fund now that Fannie and Freddie are profitable again. But the GSEs on their own could not support $5 billion in affordable housing initiatives.