FHFA Invests $300M+ Into Affordable Housing

More Than $300 Million Earmarked for Affordable Housing Initiatives

The Federal Housing Finance Agency (FHFA) has announced that the Housing Trust Fund and Capital Magnet Fund will receive approximately $301 million for affordable housing initiatives from Fannie Mae and Freddie Mac (the GSEs).

“Affordable housing is one of the greatest challenges facing communities across the country today,” said FHFA Director Sandra L. Thompson. “A portion of every loan purchased by the Enterprises is allocated to the Housing Trust Fund and the Capital Magnet Fund, which provide resources that increase affordable housing options in our communities.”

A Look at the Housing Trust Fund

The Housing Trust Fund (HTF), overseen by the U.S. Department of Housing & Urban Development (HUD), will receive $196 million from the FHFA. The Housing Trust Fund allocates funding annually to states and state-designated entities to produce or preserve affordable housing through the acquisition, new construction, reconstruction, and/or rehabilitation of non-luxury housing. The HTF was established under Title I of the Housing and Economic Recovery Act of 2008 (HERA), Section 1338 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992.

Eligible activities and expenses for the HTF include:

  • Real property acquisition
  • Site improvements and development hard costs
  • Related soft costs
  • Demolition
  • Financing costs
  • Relocation assistance
  • Operating cost assistance for rental housing (up to 30% of each grant)
  • Reasonable administrative and planning costs

Attracting Private Capital Through the Capital Magnet Fund

The Capital Magnet Fund (CMF), overseen by the U.S. Department of the Treasury, will receive $105 million from the FHFA. The Capital Magnet Fund (CMF) is a competitive grant program designed to attract private capital to the development, preservation, rehabilitation, or purchase of affordable housing for low-income families. The CMF is not a block grant to state or local governments or housing authorities; the monetary awards are competitively awarded as grants to Community Development Financial Institutions (CDFIs) and nonprofit housing organizations to support financing tools, such as loan loss reserves or loan guarantees for affordable housing. Awards must be leveraged at least $10 to $1 with funding from other sources.

The CMF was enacted as part of HERA to provide flexible public funds to attract private investment into affordable housing projects through allocations from Fannie Mae and Freddie Mac based on new business purchases.

By law, amounts allocated to the HTF and CMF are based on the GSEs’ new business purchases. Market conditions in 2023, including elevated interest rates, reduced the GSEs’ total new business purchases compared to the previous year.

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Eric C. Peck

Eric C. Peck has 25-plus years’ experience covering the mortgage industry, most recently serving as Editor-in-Chief for National Mortgage Professional Magazine. He graduated from the New York Institute of Technology, where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books, and has served as Copy Editor for Entrepreneur.com.
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