FHFA disburses nearly $1.14 billion to affordable housing funds

The amount the Federal Housing Finance Agency will disburse to Housing Trust and Capital Magnet for 2022 is the largest ever — even though it represents one of the smallest gains seen in recent years.

Almost $1.14 billion will go to the two funds, up roughly 4.4% from $1.09 billion the previous year. In comparison, the amount doubled in 2021, was up nearly 34% in 2020, and rose more than 57.5% in 2019.

The numbers are largely a reflection of the two banner years the mortgage market recently enjoyed despite concern that 2020’s unusually low interest rates would make it a tough act to follow. Funds come from a set-aside of 4.2 basis-points from each dollar of the unpaid principal balance of loans at the FHFA’s charges, government-sponsored enterprises Fannie Mae and Freddie Mac. The provision for those funds has been in place since 2015.

“Addressing our nation’s affordable housing crisis is critical to FHA’s mission,” said Sandra Thompson, acting director of the FHFA, in a press release. “Today’s announcement of record funding for additional housing production will help increase access to affordable, sustainable housing options.”

The Housing Trust Fund, which goes to states and their designated entities, will receive $740 million this year, an increase of $29 million from 2021’s total. New construction or renovation projects involving non-luxury housing can be funded with this money. The Department of Housing and Urban Development manages this fund.

The Capital Magnet Fund overseen by the Treasury will get $398 million this year, representing a $15 million increase from a year ago. That fund competitively awards money that can be used for economic development or community service facilities in addition to affordable housing.