White House Releases Fact Sheet on Increasing Affordable Housing
On Sept. 1, the White House released a fact sheet on the Biden administration’s efforts to increase the affordable housing supply. The plan is to create 100,000 additional affordable homes for homeowners and renters over the next three years, with an emphasis on the lower and middle segments of the market.
To boost the supply of affordable rental units, the administration stated it planned to relaunch the Federal Financing Bank (FFB) and HUD Risk Sharing Program, increase Fannie Mae and Freddie Mac’s Low-Income Housing Tax Credit Investment cap by $700 million, and make funding available for affordable housing production under the capital magnet fund.
In response to the plan, HUD announced what it is doing in its administrative capacity to support the plan and create additional affordable housing supply for lower income segments of the market.
Risk-Sharing Program
The FFB risk-sharing program was suspended in 2019 by the Trump administration. The program provides low-cost capital needed to spur development of rental housing in cooperation with state housing finance agencies. Housing finance agencies can apply for mortgage insurance through this program through September 2024.
Under the program, the housing finance agencies enter into contracts with HUD that provide FHA insurance on multifamily mortgages for sites with affordable housing units underwritten by a housing finance agency, and where HUD and the housing finance agency share the risk of any potential loss if the mortgage defaults.
With the FHA insurance credit enhancement, the Federal Financing Bank will purchase the mortgage, generating capital funds for the housing finance agency to lend to private developers building or rehabilitating multifamily sites that provide affordable rental units. Based on past performance, HUD is anticipating that the program will create or preserve approximately 20,000 affordable rental units through 2027.
Future Home Sales
HUD said that it would make more single-family homes available to individuals, families, and nonprofit organizations in the future by prioritizing homeownership and limiting the sale to large investors of certain FHA-insured and HUD-owned properties. HUD also will expand and create exclusivity periods in which only governmental entities, owner occupants, and qualified nonprofit organizations are able to bid on certain FHA-insured properties.
Toolkits and Strategies
HUD’s Community Development and Planning (CPD) arm announced it’s creating a new toolkit with guidance to support HUD grantees by providing easy-to-implement strategies to deploy resources to address housing supply and affordability challenges that have deepened during the pandemic.
And HUD’s Policy Development and Research (PD&R) team will release its latest research on innovative strategies being pursued by state and local governments to remove regulatory barriers to affordable housing and increase housing supply. These lessons will be incorporated into HUD’s Regulatory Barriers Clearinghouse, which contains over 4,800 barriers and solutions and provides a catalog of information that spans all 50 states and over 460 cities and counties.