The FY17 budget proposed by President Barack Obama cites $182 million as the amount that Fannie Mae and Freddie Mac will provide for the National Housing Trust Fund (NHTF) in 2016. This is substantially more than the $120 million that was estimated in the FY16 budget, but less than the unofficial estimate of $196 million that NLIHC received in mid-2015 from Treasury officials.
The precise amount that will be available for the NHTF in calendar year 2016 will be determined when Fannie Mae and Freddie transfer to the Treasury the required assessment for the NHTF and the Capital Magnet Fund (CMF) no later than February 29, 2016. The President’s budget projects that the amount available for the CMF in 2016 will be $98 million.
Under any circumstances, the amount for the NHTF will be sufficient to distribute to the states, DC, and the territories using the formula derived from the factors prescribed by statute. The statute also sets a “small state” minimum of $3 million. If the total amount had fallen below what is needed to honor the small state minimum, HUD had indicated that it would have to propose a different distribution formula.
The NHTF interim rule requires HUD to publish the state allocations in the Federal Register within 60 days after the funds are transferred from Fannie Mae and Freddie Mac. NLIHC will estimate and publish the state allocations immediately after the precise amount is known. NLIHC’s estimated allocation based on a total of $250 million can be found at http://nlihc.org/sites/default/files/StateAllocations_2015.pdf.
The current funding for the NHTF and the Capital Magnet Fund is based on an annual assessment of 4.2 basis points on the annual volume of business of Fannie Mae and Freddie Mac. In 2014, bipartisan legislation, S. 1217, passed the Senate Banking Committee that would wind down Fannie and Freddie and replace them with a Federal Mortgage Insurance Corporation (see Memo, 5/16/2014). That bill imposes a 10 basis point fee on all transactions to support affordable housing, which was estimated to generate $5 billion a year. Three-quarters or $3.75 billion a year would have gone to the NHTF. In its FY17 budget, the Obama Administration indicates that it continues to support the approach to housing finance report as found in that bipartisan agreement.