HUD announced in a media release on May 17 that nearly $749 million in national Housing Trust Fund (HTF) dollars have been allocated to states, the District of Columbia, Puerto Rico, and the U.S. territories. In the same release, HUD announced allocations for each of the formula grant programs administered by its Office of Community Planning and Development (CPD): the Community Development Block Grant (CDBG), HOME Investments Partnership (HOME), Emergency Solutions Grants (ESG), and Housing Opportunities for Persons with HIV/AIDS (HOPWA) programs. The release also announced public housing Capital Funds allocations for 2,813 public housing agencies (PHAs), as well as formula allocations for the Indian Housing Block Grant (IHBG) program, both administered by HUD’s Office of Public and Indian Housing (PIH).
Fannie Mae (Fannie) and Freddie Mac (Freddie) collected $740 million in 2021 for the HTF to allocate in 2022 (see Memo, 3/7), though in its media release HUD indicated that only $738 million has been allocated. However, two factors boost the actual amount allocated to nearly $749 million. First, funds recaptured from some states that missed the statute’s requirement to commit funds within two years are being reprogrammed and added to the total transferred from Fannie and Freddie for 2022. Second, due to a rescission provision, each year a percentage of the amount received from Fannie and Freddie must be removed from the amount transferred to HUD, but the amount rescinded from the previous year is restored the following year.
Created through the “Housing and Economic Recovery Act of 2008” (HERA) and overseen by HUD’s Office of Affordable Housing Programs (OAHP) in the Office of Community Planning and Development (CPD), the HTF allocates funding annually to states to build, preserve, rehabilitate, and operate rental housing for extremely low-income households (ELI) – those with incomes less than 30% of area median income (AMI) or with incomes less than the federal poverty line. Nationally, there is a shortage of 7 million rental homes affordable and available to people with the lowest incomes.
HERA stipulated that the initial dedicated source of revenue for the HTF and the Capital Magnet Fund (CMF) was to derive from an annual set-aside of 4.2 basis points (0.042%) for each dollar of the unpaid principal on Fannie’s and Freddie’s new business purchases, which consist of single-family and multifamily mortgage loans purchased during the year, and single-family and multifamily mortgage loans underlying mortgage-backed securities issued during the year.
Funds from the HTF are awarded as block grants to states and distributed by a statutory formula based on four factors that consider renter household needs only. Seventy-five percent of the value of the formula go to two factors that reflect the needs of ELI renters. The other two factors relate to the renter needs of very low-income households – households with incomes between 31% and 50% of AMI. A state may choose to award up to 10% of its annual HTF allocation to homeowner activities, though to date no state has done so.
When it was established in 2008, the HTF was the first new housing resource since 1974 targeted to building, preserving, rehabilitating, and operating rental housing for extremely low-income people. Starting in 2000, NLIHC, its members, and other stakeholders played a critical role in pushing for the creation of the fund and continue to advocate for increases to annual HTF funding. Since 2016, when the first $174 million of HTF dollars were allocated to states, HTF allocations have grown to $219 million (in 2017), $267 million (in 2018), $248 million (in 2019), $323 million (in 2020), and $690 million (in 2021), culminating in the record $740 million allocated in 2022.
View an Excel sheet showing HTF allocations and CPD formula program allocations at: https://bit.ly/3lmQRSs
Read HUD’s media release at: https://bit.ly/3LnXTkf
View HUD’s HTF website at: https://www.hudexchange.info/programs/htf