In a media release issued on May 13, HUD’s Office of Community Planning and Development (CPD) announced that $382 million in 2023 national Housing Trust Fund (HTF) dollars will be allocated to states, the District of Columbia, Puerto Rico, and U.S. territories. The 2023 HTF allocation is a significant reduction from the 2022 allocation of $749 million, probably due to a significant drop in single-family mortgage loan and refinancing purchases by the Government Sponsored Entities (GSEs) in 2022 as a result of the Federal Reserve Board’s decision to raise interest rates repeatedly in 2022 to fight inflation.
The total HTF allocation of $382 million differs from the $354 million allocation announced by the Federal Housing Finance Agency (FHFA) (see Memo, 3/6) for three reasons. First, because the formula allocated relatively little to the Insular Areas, they declined their grants. Second, when states failed to meet a previous year’s fund commitment and/or expenditure requirements before the deadline, the amount left unexpended was “de-obligated” and added back to the total available for reallocation in the following year. Third, due to a quirk in the” Housing and Economic Recovery Act of 2008” (HERA), a certain amount of funding must be held back every year and then restored the following year.
Created through HERA and overseen by HUD’s Office of Affordable Housing Programs (OAHP) within 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 (ELI) households – those with income less than 30% of the area median income (AMI) or with income less than the federal poverty line. Nationally, there is a shortage of 7.3 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 the GSEs’ 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 goes 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 income 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 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), $740 million (in 2022), and $382 million (in 2023).
Read HUD’s media release on the allocation at: https://bit.ly/3NWmTnR
Find HUD’s HTF website at: https://www.hudexchange.info/programs/htf