At the end of last year, a little-noticed announcement came out of the Federal Housing Finance Agency (FHFA): it has allowed Fannie Mae and Freddie Mac to contribute funds to the National Housing Trust Fund.
It may sound small and unimportant. But the National Housing Trust Fund was created by Congress in 2008 to fund affordable housing projects across the country. Yet its coffers have stood empty ever since — until now.
The news that the FHFA has found Fannie and Freddie to be financially fit enough to put money into the fund is like “turning on the spigot,” Rachael Myers, executive director of the Washington Low Income Housing Alliance, told ThinkProgress. She estimates it will mean about $325 million doled out to states as a block grant starting in 2016.
That figure, of course, is dwarfed by the need for affordable housing. As of 2009, there was a 5.5 million shortfall in affordable housing units compared to the poor renters who need them. That shortage is a big reason why we see mass homelessness today, given that it’s a relatively recent phenomenon; in 1970, there was actually a 300,000 surplus. The new funding is “a really needed resource, but it certainly does not solve the problem” of homelessness, Myers noted. Her own state will probably get about $7.5 million in the first year, which would create about 200 homes. Those kind of figures won’t “actually make a dent in homelessness,” she said.
Still, the good news is that 75 percent of the money has to be spent serving people who are at 35 percent of median income or lower, “those at risk of homelessness or just leaving homelessness,” she pointed out.
And it marks a change in the federal government’s relationship with affordable housing. Federal spending on assistance fell by 50 percent between 1976 and 2002, and it has done little to boost the creation of affordable units. But putting money into the trust fund is “a glimmer of hope,” Myers said. “It does feel like the first step in moving the debate and moving the national government back into the business of creating affordable homes for extremely low-income people.”
If the trust fund were to be fully funded, it could create more than 1 million affordable housing units over 10 years. To give it such an amount, the United for Homes campaign has proposed changing the mortgage interest tax deduction, which mostly benefits the rich, and freeing up $200 billion in revenue. That would take Congressional action, however.
Meanwhile, the trickle of funding from Fannie and Freddie is expected to continue every year without any major economic changes. One thing could present an obstacle, however: House Republicans, led by Rep. Ed Royce (R-CA), plan to introduce a bill that would block Fannie and Freddie from contributing money to the trust fund, which would “turn the spigot off,” Myers noted.
Another way to end mass homelessness would be to increase rental assistance by giving it to everyone at or below 30 percent of area median income. Currently, just one in four eligible families gets assistance. While it would cost $22.5 billion, the savings from housing people compared to leaving them unsheltered far outweigh the costs.
The federal government is addressing the problem in other ways. It launched Opening Doors in 2010, a plan to prevent and end homelessness, which has set goals of ending it among veterans this year, ending chronic homelessness next year, and ending it for children, youth, and families by 2020. Since it began, veteran homelessness has fallen 33 percent and three cities have ended chronic veteran homelessness. Still, there are still more than 578,000 people across the country without a home on any given night.