Last week, the U.S. House of Representatives Appropriations Subcommittee on Transportation, Housing, and Urban Development, and Related Agencies (THUD) approved an appropriations bill for the 2016 fiscal year that contains many changes to the funding of federal housing programs. Most notably, the bill directs all funding for the National Housing Trust Fund (NHTF) to be allocated instead to the HOME Program, and prevents Congress from providing new funding sources to the NHTF.
Funding the NHTF has been an uphill battle, and after seven years, funding finally began this year. The NHTF was established under Title I of the National Housing and Economic Recovery Act of 2008, but funding was delayed after the government took over Fannie Mae and Freddie Mac, the mortgage agencies and intended sources for NHTF funds. Starting on January 1 of this year, 0.042 percent of all of Fannie Mae and Freddie Mac’s new business revenue began to go into the NHTF (Learn more about the NHTF from our previous posts here and here).
No money has been distributed to the states through the NHTF yet, as states are still developing their plans and have to submit them to HUD along with their 2016 Annual Action Plans. HUD anticipates that grantees will receive their NHTF allocations by summer 2016.
Both the NHTF and the HOME Program are designed to create more affordable housing, but the majority of NHTF funds have to be used to develop housing for extremely low income families that make no more than 30 percent of the area median income. The HOME Program is designed to create housing for low income families that make no more than 50 to 60 percent of the area median income.
The HOME Program has been subjected to substantial cuts in recent years. Its funding has been cut over 50 percent since 2010, and the THUD appropriations bill would further cut HOME funding from $900 million in 2015 to $767 million in 2016. The NHTF funds would be used to make up the difference in funding.
Some members of Congress have been fighting to stop funds from going into the NHTF. After the new Federal Housing Finance Agency Director Mel Watt approved the start of payments from Fannie Mae and Freddie Mac, Financial Services Committee Chairman Jeb Hensarling of Texas called the decision “a lump of coal in the stocking of every American taxpayer.” In January, Representative Ed Royce of California introduced the Pay Back the Taxpayers Act of 2015 that would prevent the FHFA from funding the NHTF and Capital Magnet Fund. The THUD appropriations bill is NHTF opponents’ most recent attempt at changing the trust fund.
After being approved by the THUD subcommittee, the bill is now heading to the full House Appropriations Committee for consideration.