This morning, the Federal Housing Finance Agency (FHFA) ordered Fannie Mae and Freddie Mac to begin funding the National Housing Trust Fund and the Capital Magnet Fund, both of which support the creation and preservation of affordable housing. FHFA’s action is a major step forward for affordable housing, as each of these programs were authorized in 2008 but had yet to receive any funding from Fannie or Freddie. (The Capital Magnet Fund received one round of appropriated funds that was oversubscribed and quite successful.) It is also a much-anticipated action by FHFA Director Mel Watt reversing a decision by the previous director, Ed DeMarco.
Under DeMarco, FHFA had temporarily suspended contributions to the funds citing the financial instability of the two mortgage companies. To implement this new decision, FHFA sent letters to Fannie Mae and Freddie Mac that lifted the temporary suspension. In the letters, FHFA stated that “set aside and allocation would not contribute to the financial instability” of either company. It also stated that “the profit levels [Fannie Mae/Freddie Mac] has experienced since 2012 are not expected to be sustainable, reasonable projections indicate that [Fannie Mae/Freddie Mac] will remain profitable for the foreseeable future.” Watch NHC’s Openhouse Blog for updates on funding and implementation.