Housing secretary Shaun Donovan is calling for a housing trust fund that can support up to $5 billion in affordable housing production a year.
In a speech Monday, the HUD secretary stressed that Congress must include a housing trust fund in GSE 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 basis point to 10 basis point fee on MBS transactions to support affordable housing. But the bipartisan bill places other demands on those MBS transaction revenues and falls short of the $5 billion the HUD secretary is seeking.
The National Low Income Housing Coalition “completely and totally” supports the secretary’s efforts to raise at least $5 billion a year for the housing trust fund, according to NLIHC president and chief executive Sheila Crowley.
Congress passed legislation in 2008 to create a national housing trust fund and a capital magnet fund that would be funded by the GSEs. The NHTF would increase and preserve the supply of rental housing for extremely low-income families.
Shortly after the 2008 legislation was signed into law, Fannie and Freddie were placed in conservatorship where they reside today. The housing trust fund was never funded and remains in limbo.
The new Federal Housing Finance Agency director Mel Watt is under pressure from Democratic constituencies 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.