Housing Trust Fund Not Expected to Help Low-Income Housing Until 2010

By Anuradha Kher, Online News EditorWashington, D.C.–The national Housing Trust Fund is the first new federal rental housing production to specifically assist the lowest income households in the U.S. since 1974. Included in the Housing and Economic Recovery Act of 2008 that was signed into law a few weeks earlier, the fund is not expected help in construction of new affordable housing units until 2010.“The US Department of Housing and Urban Development (HUD) has 12 months to promulgate and allocate the funds, after which they have 60 days to allocate the funds to states,” Linda Couch, deputy director of the National Low Income Housing Coalition (NLIHC), which led the National Housing Trust Fund campaign, tells MHN. “In the first year, which is 2009, 100 percent of the funds will go to the Hope for Homeownership program, which is the mortgage foreclosure prevention provision of the Recovery Act.“The second year, 50 percent will go to Hope for Homeownership and in the third year, 25 percent will go to Hope for Homeownership. So we don’t expect to see any money flowing for low-income housing and rehabilitation until 2010,” says Couch.Even when it does, assuming th amount of the capital is $300 million, only 2,000 homes can be built at the cost of $150,000 per home, says Couch. “This is not a good number but at least its something. There is a dearth of 6 million homes for low-income people so we have a long way to go. The majority of the housing needs are among the extremely low-income people so this trust fund does address the problem,” says Couch.Fannie Mae and Freddie Mac are required to make annual contributions to the Housing Trust Fund, which will be administered by HUD. But the NLIHC is also trying to find other sources of money that can go into the housing trust. “We are trying to increase the size of the fund over the long-term. And we need to go beyond just increasing the new stock but also preserving and rehabilitating the existing homes and preserving public housing,” adds Couch.The money goes from HUD to the state and the state appoints an agency that will develop the housing. While organizations like NLIHC are happy about the provision, they are not quite sure why so much of the money allocated to the fund is earmarked for the Hope for Homeownership program.“We are not sure why the housing trust money had to go toward mortgage foreclosure prevention but it was a way for the bill to get passed. The fund will be around forever and this was the price that needed to be paid to get it passed. The Republicans wanted to know how the trust would be offset.”The amount in the Housing Trust Fund had it been fully implemented in 2008 is estimated to be about $300 million. This amount is expected to grow over time. The bill also allows Congress to “transfer, appropriate, or credit” other funds to the Housing Trust Fund. Sheila Crowley, president of the NLIHC, says, “This is a longstanding crisis that has been ignored by federal policy makers for too long. The enactment of the Housing Trust Fund offers these families hope for more stable homes and healthier, more productive lives.”