White House wants $1 billion put in affordable housing fund

WASHINGTON Tue Mar 4, 2014 4:48pm EST

A youth walks past a construction site in the quickly developing Seventh Street corridor in Washington March 1, 2014. REUTERS/Jonathan Ernst

A youth walks past a construction site in the quickly developing Seventh Street corridor in Washington March 1, 2014.

Credit: Reuters/Jonathan Ernst

WASHINGTON (Reuters) - President Barack Obama proposed spending $1 billion next year for the U.S. Department of Housing and Urban Development to fund a federal affordable housing trust fund established by Congress six years ago, according to the 2015 White House budget.

The fund was originally mandated to be capitalized by government-run Fannie Mae and Freddie Mac. If given budget authority, it would be the first contribution to the National Housing Trust Fund that was set up in 2008.

Over time, the White House predicted the money would provide for 16,000 affordable units using a mix of funding sources, including other public funds, tax credits and private debt.

The housing trust fund was established to provide "grants to states to increase and preserve the supply of affordable rental housing and homeownership opportunities for extremely low- and very low-income families," the budget proposal said.

Under the legislation that established the affordable housing fund, Fannie and Freddie were meant to be the source of capital. But the previous head of the Federal Housing Finance Agency, Edward DeMarco, kept them from paying into the fund after they were bailed out by taxpayers at the height of the financial crisis.

Many housing advocates argue that the conditions that prompted the regulatory agency to suspend payments in 2008 no longer exist.

A new regulator, Melvin Watt, took charge of the agency in January, but he has yet to say whether the companies should move to capitalize the fund after a group of more than 30 Democrats in the U.S. Senate called on him earlier this year to do so.

Fannie Mae and Freddie Mac, which own or guarantee 60 percent of all U.S. home loans, were seized by the government in 2008 as mortgage losses threatened their solvency.

They have since returned to profitability, and by the end of March will have sent taxpayers $202.9 billion for their support, $15.4 billion more than the $187.5 billion they received in bailout funds.

(Reporting by Margaret Chadbourn; Editing by Susan Heavey and Peter Cooney)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (4)
agonzal0 wrote:
Here is an idea to solve the problem of affordable housing: if you can’t afford housing where you live, move to a city where you can afford housing.

Mar 04, 2014 1:32pm EST  --  Report as abuse
COindependent wrote:
Over the past 40 years, the average size of a home has increased by 1,000 sf (~2200 sf), while cities and counties have required larger lots, more open space, and increased the costs for infrastructure (water, sewer connections, etc.)

If you want to increase the affordability of homes, you need to build smaller homes on smaller lots, and reduce the connection costs for basic services. However, you have to convince buyers to live in smaller homes–and eliminate the amenities they demand. We also have to get past the idea that every child demands their own bedroom–as most of us were raised where siblings of the same sex shared a bedroom. (Apologies to the resident sociologists, but it is not detrimental to the development of a child to have to share a bedroom.)

Mar 04, 2014 3:03pm EST  --  Report as abuse
actnow wrote:
More tax payer obligations for votes. At least the President is consistent. To heck with efficiency, waste and fraud; just keep spending those tax dollars. And as for Social Security solvency twenty years for now? Just keep praying.

Mar 04, 2014 3:08pm EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

A tourist takes a plunge as she swims at Ngapali Beach, a popular tourist site, in the Thandwe township of the Rakhine state, October 6, 2013. Picture taken October 6, 2013. REUTERS/Soe Zeya Tun (MYANMAR - Tags: SOCIETY) - RTR3FOI0

Where do you want to go?

We look at when to take trips, budget considerations and the popularity of multigenerational family travel.   Video