FHFA Announces $711 Million for National Housing Trust Fund

The Federal Housing Finance Agency (FHFA) announced a 2021 allocation of $711 million for the national Housing Trust Fund (HTF) – more than double last year’s allocation. After a sequestration factor is applied to the HTF, approximately $689.7 million will be available for states and territories for 2021.

The statute creating the HTF specifies an initial dedicated source of revenue to come from an assessment of 4.2 basis points (0.042%) on the new business of Fannie Mae and Freddie Mac (this is unrelated to profits). The HTF receives 65% of the assessment, and the Capital Magnet Fund (CMF) receives 35%. The assessment is collected from calendar year 2020 and distributed for use in 2021. HUD administers the HTF and the Department of the Treasury administers the CMF.

Because the HTF is on the “mandatory” side of the federal budget, the Office of Management and Budget has determined that a “sequestration factor” has to be applied. However, the amount sequestered from the year before is added back in the following year. This year’s sequestration factor is 5.7%, reducing the $711 million to about $670.4 million, which is then increased by last year’s sequestration amount of about $19.3 million ($326.4 million times last year’s sequester factor of 5.9%), resulting in approximately $689.7 million for this year.

The primary purpose of the HTF is to close the gap between the number of extremely low-income renter households and the number of homes renting at prices they can afford. NLIHC interprets the statute as requiring at least 90% of the funds to be used to build, rehabilitate, preserve, or operate rental housing (HUD guidance sets the minimum at 80%). In addition, at least 75% of the funds used for rental housing must benefit extremely low-income households. Because there is still less than $1billion in the HTF, 100% of the funds must benefit extremely low-income (ELI) households, those with income less than 30% of the area median income (AMI) or the federal poverty level.

NLIHC has created a table showing estimates of the amount each state might receive. HUD will eventually release actual amounts in a Federal Register notice.

“This year’s allocation to the national Housing Trust Fund will provide critically needed resources to help build and preserve homes affordable to people most severely impacted by America’s rental housing crisis,” said Diane Yentel, president and CEO of the National Low Income Housing Coalition. “This funding is a vital step in the right direction, though far more is needed. The pandemic has made clear that housing is healthcare, and that the federal government must address the systemic, structural reasons millions of America’s lowest-income and most marginalized renters are just one financial shock away from falling behind on their rent, facing eviction, and in worst cases, experiencing homelessness. To ensure long-term housing stability for people with the greatest, clearest needs, Congress must invest in the Housing Trust Fund and other proven solutions at the scale necessary.”

The FHFA announcement is at: https://bit.ly/3e8gRON

NLIHC’S table showing estimates of the amount each state might receive is at: https://bit.ly/3kXmqRO

More information about the national Housing Trust Fund is on page 3-1 of NLIHC’s 2020 Advocates’ Guide.