Nearly a year of inaction after his swearing in, we’re pleased to see FHFA Director Mel Watt take a stand for struggling families by directing FHFA to fund the much-needed affordable housing programs. To be funded from less than one-twentieth of a percentage point of Fannie Mae and Freddie Mac’s business purchases, the funds are expected to total between $400 and $500 million annually, amounting to a boon for low-income Latino families.
Created during the height of the housing crisis in 2008 and designed to increase the affordable housing supply at a time when families were rapidly losing their homes, the critical programs remained unfunded after Fannie Mae and Freddie Mac were placed under conservatorship in 2008.
Since the programs’ creation more than five years ago, America’s affordable housing stock for extremely low-income households has sharply declined.
With the freeing up of funds for the NHTF and the Capital Magnet Fund, this trend could soon be reversed as the programs’ provisions take effect in every U.S. state and the District of Columbia.
With full funding, the overwhelming majority of NHTF money will go toward the construction of affordable rental housing stock for extremely low-income individuals. This will greatly benefit Latino families who are struggling to get by, making 30 percent or less of the federal poverty income level.
A fully capitalized Capital Magnet Fund would also direct its funds toward the affordable housing work of registered community development financial institutions (CDFI) across America. These qualifying nonprofit organizations would be able to compete for grants to fund low-income housing developments and other projects designed to stabilize low-income communities, including workforce development, day care, and health care centers.
In deciding to direct funds toward the National Housing Trust Fund and the Capital Magnet Fund, Director Mel Watt and the FHFA have taken a powerful step toward mitigating the shortage of affordable housing in America. This is essential for the estimated 1.3 million Latinos having lost their homes between 2009 and 2012.
This holiday season, the FHFA announcement will help prevent homelessness and give Latino families the gift of basic housing security.