The National Housing Trust Fund, created by the Housing and Economic Recovery Act of 2008, was to provide communities with money to build, preserve, and rehabilitate rental homes that were affordable to families with extremely low income (30% of area median or less) and very low income (50% of area median or less). The fund was to have been financed through assessments on new business by Fannie Mae and Freddie Mac, however those agencies went into conservatorship before providing any money. The New York Times recently ran an editorial arguing for the new director of the Federal Housing Finance Agency, Mel Watt, to require Fannie and Freddie to start paying into the trust fund:
Representative Melvin Watt, a Democrat of North Carolina, who was confirmed earlier this month as the director of the Federal Housing Finance Agency, will need to use all of his agency’s powers to cope with a worsening affordable housing crisis that is placing poor and elderly Americans at risk of homelessness and forcing many of the nation’s 43 million renters to skimp on food and medical care to meet the rent.
One thing he can do right away is to require Fannie Mae and Freddie Mac, the federally backed mortgage companies that the agency oversees, to pay into the National Housing Trust Fund, which was created by Congress in 2008 but was never financed because the two companies were brought low by the mortgage crisis. The crisis in affordable housing was underscored in an alarming study released this month by the Joint Center for Housing Studies at Harvard. The study found that, from 2000 to 2012, renters were caught in a relentless squeeze, with falling wages on one side and rising rents on the other. Median gross rents went up by 6 percent, while the median renter’s income declined by 13 percent. Nearly half of all renters earn less than $30,000 a year. According to the report, about half of them now pay more than a third of their incomes on rent — up 12 percentage points from a decade ago. A quarter of renters pay more than 50 percent of their incomes in rent, which places them at clear risk of homelessness. Mr. Watt needs to encourage Fannie Mae and Freddie Mac to stimulate affordable housing production by purchasing and guaranteeing more multifamily mortgages. He must find ways to make home loans more affordable to moderate-income borrowers. And he should direct Fannie and Freddie, which have recovered from the mortgage crisis, to begin paying into the trust fund. The fund, modeled on successful state programs, could provide grants and loans to preserve, rehabilitate and build housing, primarily for extremely low-income families that earn 30 percent or less of median income in their areas. The fund could also be used to develop healthy, mixed-income communities; a developer who receives a subsidy would set aside a proportionate number of units for low-income families who would be charged affordable rents. Given the current crisis, programs like this are needed more than ever.