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HUD Posts Interim Trust Fund Rule

The Housing Trust Fund (HTF), was enacted under the Housing and Economic Recovery Act of 2008 (HERA).  The  HTF was sought by many housing advocates and had strong backing of then  House Financial Services Chairman Barney Frank (D. Mass). The HTF was to be funded from what can be called Fannie Mae and Freddie Mac profits.  More precisely, the HTF would receive a portion of a set aside consisting of 4.2 basis points of Fannie's and Freddie's new mortgage purchases. But as you may recall, the Great Recession intervened and Fannie and Freddie had no profits.  Indeed, they were, basically, taken over by the federal government.  Well, the federal oversight has been productive, and the economy has recovered.  Fannie and Freddie are not only paying the Treasury back for various advances to cover losses during the Great Recession, but they are, basically, making money.  What to do when things work out, even in unexpected ways? 

 

​​​The Federal Housing Finance Agency (FHFA) last December issued letters directing Fannie Mae and Freddie Mac to begin setting aside and allocating funds to the HTF, and the Capital Magnet Fund under HERA.  The Interim Rule sets out regulations governing the HTF and how funds will be distributed to eligible States and State-designated grantees. Annual grants must be 80 percent  to rental housing, 10 percent homeownership, and 10 percent grantee eligible costs.  Funds can be used for production or preservation of eligible non-luxury rental housing, including acquisition and rehabilitation. The primary benefits are expected to be similar to the Section 8 housing choice voucher program.

The Interim Rule largely adopts the previous 2009 Proposed Rule, with certain modifications. The Interim Rule is modified to sync with the HOME final rule published on 2013. HUD also removed Energy Star requirements, certain transit-oriented criteria, and adds  grant award criteria, among other changes.

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