FHFA Authorizes $326.4 Million Disbursement for National Housing Trust Fund for 2020

Federal Housing Finance Agency (FHFA) Director Mark Calabria announced on February 27 that $326.4 million will be available for the national Housing Trust Fund (HTF) in 2020. HUD will now use the formula based on the HTF statute and HTF regulations to determine how much each state will have available for 2020. The HTF allocations from previous years were: $173.6 million (2016), $219.2 million (2017), $266.8 million (2018), and $247.7 million (2019). Dr. Calabria also announced that the Capital Magnet Fund, administered by the Department of Treasury, will receive $175.8 million.

The HTF was created on July 30, 2008 when the president signed into law the “Housing and Economic Recovery Act of 2008” (HERA). The statute specified 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%. During calendar year 2019, Fannie Mae and Freddie Mac set aside the required 4.2 basis points. Approximately 60 days after the close of a calendar year Fannie Mae and Freddie Mac then transfer the funds to HUD for the HTF and to the Department of the Treasury for the CMF. HUD usually announces state allocations in early May.

The HTF is a block grant to states, distributed by formula based on four factors that consider only renter household needs. Seventy-five percent of the value of the formula goes to the two factors that reflect the needs of extremely low-income (ELI) renters because the HTF statute requires the formula to give priority to ELI renters. ELI households have incomes less than the federal poverty line or 30% of the area median income (AMI), whichever is higher. The other two factors concern the renter needs of very low-income (VLI) households, which are households that have incomes between 31% and 50% of AMI.

The HTF is principally for the production, rehabilitation, preservation, and operation of rental housing for ELI households. The HTF statute requires that at least 75% of the funds provided to a state that are used for rental housing must benefit ELI households and no more than 25% may be used to benefit VLI households. For homeowner activities, the statute requires that all assisted homeowners have incomes less than 50% of AMI. When there is less than $1 billion available to the HTF in a given year, the rule requires that 100% of a state’s allocation must benefit ELI households.

The statute limits the amount of HTF used for homeownership activities to 10%, inferring that at least 90% of a state’s annual HTF allocation must be used for rental housing activities. The preamble to the interim rule interprets the law differently, however, asserting that only 80% must be used for rental activities.

The FHFA announcement is at: https://tinyurl.com/wfbaa3t

More information about the national Housing Trust Fund is on page 3-1 of NLIHC’s 2019 Advocates’ Guide.

State-specific information is on NLIHC’s HTF webpage at: https://tinyurl.com/vxkkqhs

More information about the Capital Magnet Fund is on page 8-1 of NLIHC’s 2019 Advocates’ Guide.