Wednesday, December 24, 2014
Hundreds of Millions of Dollars To Be Contributed to a Federal Fund For Low-Income Housing
Hundreds of millions of dollars are expected to be contributed toward housing for low-income families, thanks to the National Affordable Housing Trust Fund. Where is the money coming from? Fannie Mae and Freddie Mac (FMCC), who are now in a position to contribute to the affordable housing fund.
How Fannie Mae and Freddie Mac will help
The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, was founded in 1938 during the Great Depression, and The Federal Home Loan Mortgage Corporation (FHLMC), known as Freddie Mac, was created in 1970. Both are public government-sponsored enterprises whose function is to expand the secondary market for mortgages. The National Affordable Housing Trust Fund was created in 2008 to help finance housing for low-income families. Both Fannie Mae and Freddie Mac have been unable to contribute to the fund since the housing bust in 2008. But things are different now.
Federal Housing Finance Agency has instructed both Fannie Mae and Freddie Mac to set aside a portion of their revenues to contribute to the National Affordable Housing Fund. Now that the two organizations are once again profitable, the money they contribute will be used to subsidize rental housing for families living in extreme poverty.
Impact expected to be significant
It may be a small percentage that each organization must contribute, but these organizations are so powerful -- they buy more than half of all new mortgages in the U.S.-- the total amount will make a significant difference in the lives of millions of Americans. As Representative Maxine Waters of California expressed it, “By allocating a tiny percentage of Fannie Mae and Freddie Mac’s profits to these funds, we have the chance to improve the lives of millions of American children, families, people with disabilities and the elderly.”
To read more about the National Affordable Housing Trust Fund, visit www.bloomberg.com/news/2014-12-11/fannie-freddie-to-start-paying-into-fund-for-low-income-housing.html