The Center for American Progress (CAP) and the National Council of La Raza (NCLR) released the report “Making the Mortgage Market Work for America’s Families,” on June 5. The report offers a blueprint for reform of the housing finance system. Funding for the National Housing Trust Fund (NHTF) is in the recommendations. With respect to affordable rental housing in the context of housing finance reform, the authors argue “Government should encourage whatever secondary market entities emerge to devote a portion of their activities to rental housing, ideally with an aim to creating profitable, self-sustaining business lines that finance affordable rental housing. Activities of the National Housing Trust Fund and Capital Magnet Fund are also important components of the secondary market, and neither should substitute for the other.”Specifically, the authors proposed the creation of a “Market Access Fund” (MAF) to promote access to mortgage credit, and support affordable housing activities. The proposed funding source for the MAF would be an assessment on all securitized mortgages. A specific number is not proposed, but the authors suggest that the assessment would be a fraction of a cent per dollar. The proposed MAF would have four functions:
- Supply grants and loans for “research, development, and pilot testing of innovations in prepurchase preparation, product, underwriting, and servicing that expand the market for sustainable homeownership and for unsubsidized affordable rental.
- Provide limited credit enhancement and other credit support for “products that increase sustainable homeownership and affordable rental but that could not otherwise be piloted at sufficient scale to determine viability in the private market.”
- Capitalize the National Housing Trust Fund (NHTF), which was authorized in the 2008 Housing and Economic Recovery Act (HERA).
- Capitalize the Capital Magnet Fund, which was also authorized under HERA.
The report does not provide a recommendation on the percentage of MAF funds that should go to each of the four purposes. The MAF is the subject of one of five sections of the report. The others are: The need for increased access to affordable homeownership, the secondary mortgage market’s role in supporting access and affordability, rental housing’s connection to the secondary mortgage market, and strategic plans and evaluation.The report was launched at an event at CAP on June 5. Panelists at the CAP event, including Janis Bowdler of NCLR and Julia Gordon of CAP, argued that pressure must be applied on the Federal Housing Finance Agency (FHFA), which acts as GSEs’ conservator, to advance some of the goals outlined in the report. Ms. Bowdler noted that now that the GSEs are once again making profits, contributions to the NHTF should start immediately. NLIHC has called upon FHFA Acting Director Ed DeMarco to require Fannie Mae and Freddie Mac to make contributions to the NHTF retroactive to the first quarter of 2012.Read the full report at: http://bit.ly/11rHRN0