FHFA’s Otting authorizes GSE affordable housing payments
WASHINGTON — Acting Federal Housing Finance Agency Director Joseph Otting has authorized Fannie Mae and Freddie Mac to contribute to the National Housing Trust Fund and Capital Magnet Fund, ending a delay in transferring funds that worried affordable housing advocates.
In a letter sent Wednesday to Fannie CEO Hugh Frater and Freddie CEO Donald Layton, Otting directed the government-sponsored enterprises to transmit “as soon as possible" the funds totaling $376 million that the companies had set aside at the end of last year for affordable housing initiatives.
“On reviewing 2018 year-end financials, transfer of funds allocated and set aside in 2018 would not cause the Enterprise to make a draw on the Treasury Department under the Senior Preferred Stock Purchase Agreement,” Otting said in both his letter to Frater and Layton.
Between 2015 and 2018, the two mortgage giants transferred funds annually to the National Housing Trust Fund and the Capital Magnet Fund at the beginning of every March. They were instructed to make the contributions yearly by March 1 in a formal memo from formal Director Mel Watt, who stepped down in January.
But Otting had sent no such memo until Wednesday, leaving Fannie and Freddie's 2019 contribution in limbo even though the two mortgage giants had already designated the money for the two housing funds. An FHFA spokesperson had previously told American Banker that it was “under advisement” whether the agency would continue to require Fannie and Freddie to fund the housing programs.
Affordable housing groups had said that the delay or potential suspension of the funds would have significant consequences for pending affordable housing projects.