| WASHINGTON, July 9
WASHINGTON, July 9 Two non-profit housing
advocacy groups on Tuesday sued the regulator of Fannie Mae
and Freddie Mac for prohibiting the
government-run companies to finance a federal affordable-housing
trust fund established by Congress.
The National Housing Trust Fund, set up in 2008, has never
received contributions from Fannie Mae or Freddie Mac, as
originally intended by Congress. The fund, which aims to provide
subsidies to rehabilitate and fund low-income housing, hasn't
been capitalized because the regulator has kept Fannie and
Freddie from contributing since the height of the financial
crisis when the two companies crashed.
Now that the two mortgage finance companies have returned to
profitability, housing advocates want to see the trust fund
restored. The conditions that prompted the Federal Housing
Finance Agency, which oversees Fannie Mae and Freddie Mac, to
suspend payments in 2008 no longer exist, the groups claim.
Sheila Crowley, president of the National Low Income Housing
Coalition, said the FHFA was dragging its feet in not allowing
Fannie Mae and Freddie Mac to support the fund.
"The delay caused by the Federal Housing Finance Agency is
unconscionable, given the growing shortage of housing that is
affordable for the lowest income Americans," said Crowley, whose
organization is one of the plaintiffs.
The group filed the suit, along with four individuals and
the Right to the City Alliance, in the U.S. District Court for
the Southern District of Florida. They are seeking to force
Fannie Mae and Freddie Mac to make payments into the trust fund.
Since they were taken over by the government in 2008, Fannie
Mae and Freddie Mac have drawn $187.5 billion in taxpayer aid.
By the end of June, they have paid about $132 billion in
dividends to taxpayers for the support.
The advocacy groups estimate that FHFA has kept Fannie and
Freddie from making $382 million in payments to the
The improved financial footing of the companies has prompted
various stakeholders to attempt to take hold of their profits.
On Sunday, a hedge fund filed a lawsuit against both the
U.S. Treasury and the FHFA alleging they violated the 2008 law
that put Fannie Mae and Freddie Mac into conservatorship.
Perry Capital, which began investing in both firms in 2010,
claimed in the lawsuit that shareholder value was impaired when
the government instituted new terms on the bailout agreement
Under the new terms, Fannie and Freddie must turn over most
of their profits to the government. Previously they had been
required to pay a quarterly dividend of only 10 percent on the
government's nearly 80 percent stake.