Affordable Housing Funding Temporarily Diverted

WASHINGTON, DC-The Federal Housing Finance Regulatory Reform Act of 2008, approved yesterday by the Senate Banking, Housing, and Urban Affairs Committee, created a permanent affordable housing trust fund. The fund is a longstanding goal of housing advocates to finance the development or rehabilitation of 1.5 million affordable homes over the course of 10 years. However, the intended financing for the fund has been temporarily diverted to pay for a plan that will offer relief for homeowners facing foreclosure, according to the National Low Income Housing Coalition, which has been advocating for this fund for several years.

Funding for the trust fund was to come from Fannie Mae and Freddie Mac and possibly the expansion of the Federal Housing Administration’s home equity conversion mortgage product, as well as any other sources that could later be identified. The national trust fund, as it is called, would reserve at least 75% of the money for households that are extremely low income, earning less than 30% of an area’s median income. Legislation to establish the trust fund, and its capital sources, passed last year in the House of Representatives.