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The National Housing Trust Fund is funded!

Friday, December 12, 2014

December 11, 2014 was an extremely important day for everyone who works on affordable housing policy for the most vulnerable populations. The Federal Housing Finance Agency (FHFA) announced that it has directed the Government Sponsored Enterprises Fannie Mae and Freddie Mac (the GSEs) to begin setting aside and allocating funds to the National Housing Trust Fund (NHTF) - a federally funded housing program primarily dedicated to expanding affordable rental housing for Extremely Low Income (ELI) households with incomes between 0 and 30% of Area Median Income.[1] This action means that in early January of 2016, state housing agencies will - for the first time - receive an allocation of these funds from the U.S. Department of Housing and Urban Development (HUD). 

Authorized by Congress in 2008, the NHTF is a visionary federal ELI housing policy championed by the National Low Income Housing Coalition (NLIHC) and its advocacy partners. TAC is extremely pleased to have worked closely with NLIHC on this issue for the past 14 years, and extends congratulations to President Sheila Crowley and her NLIHC colleagues for this significant achievement in federal ELI housing policy. The NHTF was designed to trigger a paradigm shift in the affordable housing mission and policy of the states to incorporate the development of new ELI rental housing. Because of this targeting, the NHTF has the potential to stimulate innovative "best practice" ELI initiatives in the states targeted to people with disabilities who are homeless, institutionalized, or most at risk of these conditions - including new Permanent Supportive Housing units.

The most important features of the NHTF program are the following:

  • It is a permanent program on the mandatory side of the federal budget with dedicated sources of funding that are not subject to the annual appropriations process;
  • Contributions from Fannie Mae and Freddie Mac were authorized by Congress as the initial dedicated sources, but were suspended by FHFA shortly after the program was enacted in 2008. That suspension was lifted yesterday;
  • At least 90% of the funding must be directed to the production, preservation, rehabilitation, and operation of rental housing. Up to 10% of the funding may be spent on homeownership activities;
  • At least 75% of the rental funds must benefit ELI households; and
  • The NHTF statute authorizes both capital and operating subsidy approaches to achieve deep levels of housing affordability and has the potential to stimulate state-level policies and innovations in ELI housing finance that can be implemented at scale.

HUD announced yesterday that it will soon publish a Final Rule that will govern the implementation of the NHTF by the states. Among the issues covered within that regulation will be how states are to prepare NHTF Allocation Plans - which must be approved by HUD before funds can be released. The amount of funding states are allocated in 2016 will depend on the level of GSE business activity for their Fiscal Year 2015, which begins on January 1, 2015. Under the law authorizing the NHTF (as well as a separate Capital Magnet Fund operated by the U.S. Treasury), the GSEs are required to set-aside an amount equal to 4.2 basis points of each dollar of unpaid balance of total new business purchases, with 65% of these funds dedicated to the NHTF. The minimum amount of NHTF resources that can be allocated to each state per year is $3 million.

Because of the enormous unmet need for housing affordable to ELI households, NLIHC and its NHTF partners will continue to advocate for additional sources of funding to support NHTF activities in the states.

For up-to-date information on the NHTF, visit:

[1] Until yesterday's action by FHFA, these payments had been suspended because of the financial problems associated with the GSEs.