In the FY16 proposed budget submitted to Congress on February 2, the Obama Administration estimates that $120 million will be available for distribution for the NHTF and $64 million for the Capital Magnet Fund in early 2016.
Another $61 million is set aside for the Hope Reserve Fund, set up in the Housing and Economic Act of 2008 (HERA) to cover potential losses from the Hope for Homeowners program, also created in HERA. No additional loans can be made under the Hope for Homeowners program and the program has had minimal losses to date. It is expected that payments to the Hope Reserve Fund will be minimal or non-existent in subsequent years.
The total for the three funds equals $245 million. This is the Administration’s estimate of the value of 4.2 basis points of Fannie Mae and Freddie Mac’s volume of business in 2015. As directed by the Federal Housing Finance Agency last December, Fannie and Freddie are to set aside 4.2 basis points of their 2015 volume of business and make it available 60 days into 2016 for distribution toHUD for distribution of NHTF funds to the states and to Treasury for the CMF.
NLIHC and others think the Administration’s estimate is too conservative given the current and projected state of the housing market in 2015. Based on Fannie and Freddie’s total purchases in 2014, 4.2 basis points last year would have been $385 million. Their volume of business is expected to be higher in 2015 than it was in 2014.
The Administration’s figures are just estimates and the final numbers will not be known until early in 2016.
To read the description of the NHTF in the budget, go to http://portal.hud.gov/hudportal/documents/huddoc?id=23-FY16CJ-HTrustFund.pdf.