* Administration also extends mortgage modification program
* Treasury seeks comments on ways to bring private capital
back to market
(Adds dollar amount expected in FFB funding)
By Elvina Nawaguna
WASHINGTON, June 26 The Obama administration
said on Thursday it would tap Treasury funds to bolster the
construction of affordable rental housing and extend the life of
a program aimed at helping homeowners avoid foreclosure.
The announcement by Treasury Secretary Jacob Lew was timed
to coincide with the fifth anniversary of the Making Home
Affordable program, an Obama administration initiative launched
at the height of the economic crisis in 2009 to revitalize the
housing sector and curb runaway foreclosures.
He said the program would be extended through December 2016.
"We need to continue to be there for homeowners who are
facing foreclosure, those who are struggling with increasing
interest rates on their modified mortgages, and those whose
homes are caught underwater," Lew said at an event to mark the
According to Treasury Department, more than 1.3 million
homeowners have modified their mortgages under the program,
reducing monthly payments by about $540 a month.
Although nationwide foreclosure rates have started dropping,
millions of families are still struggling. Different estimates
of underwater households range from 6.5 million to 9.7 million
at the end of 2013.
Lew also said the administration would use money from the
Treasury Department's Federal Financing Bank to help housing
finance agencies fund the construction of more affordable rental
The collapse of the housing market created a spike in demand
for rental housing, which has driven up costs. Many Americans
are renting because they lost their homes, are afraid to buy a
home, or cannot access mortgage credit.
The Obama administration has called on Congress to allow
Ginnie Mae, a government-sponsored enterprise, to securitize
loans made under the Federal Housing Administration risk-sharing
program, but so far lawmakers have not acted.
The risk-sharing program allows state housing finance
agencies to underwrite multifamily FHA loans while agreeing to
share the risk of losses on those loans.
Lew said that until Congress acts, the administration was
directing the Federal Financing Bank to fund FHA-insured
mortgages. Under the new plan, the Federal Financing Bank could
provide $500 million to $1 billion in annual funding for rental
Allowing Ginnie Mae to securitize those loans would lower
the interest rates and bring down the cost of financing rental
Lew said the administration was also looking for ways to
attract more private capital to the housing market, which is
dominated by government-controlled mortgage finance firms Fannie
Mae and Freddie Mac.
The Treasury Department is seeking public comments on what
it can do to foster a more robust private-sector mortgage
securitization market with the hope of making loans more
"I have directed my team to bring investors and securitizers
together in the months ahead so we can uncover new paths to
increase private investment," Lew said.
(Reporting by Elvina Nawaguna; Editing by Paul Simao, Toni