U.S. Treasury launches initiatives to boost housing supply

By Housing News

The
Biden
administration,
through
the


U.S.
Department
of
the
Treasury
,
announced
the
launch
of
multiple
initiatives
on
Monday
to
increase
funding
sources
for
housing
production.
The
announcement
comes
as
high

mortgage
rates

and
a
lack
of
supply
have
created

affordability
challenges
.

In
a
speech
in
Minneapolis,
Treasury
Secretary
Janet
Yellen
will
announce
the
new
funding
sources
for
housing
production.
She
will
also
urge
further
action
by
states
and
Congress,
including
the
passage
of
bipartisan
legislation
to
expand
the
Low-Income
Housing
Tax
Credit
(LIHTC)
program.
The

Biden
administration

estimates
that
the
bill
would
collectively
build
and
preserve
over
2
million
homes.

“There
will
not
be
a
quick
fix
to
the
long-term
rise
in
housing
costs.
But
the
Federal
and
state
and
local
governments
play
an
important
role
in
ensuring
that
all
Americans
have
affordable
and
safe
homes,”
the
Treasury
wrote
in
a

blog
post
.
“The
actions
taken
now
are
an
important
start,
and
the
Administration
is
prioritizing
laying
the
groundwork
for
larger
legislative
action
when
Congress
is
ready
to
act.”

The
Treasury
is
allocating
$100
million
by
2027
to
finance
affordable
housing
in
a
new
program
administered
by
the
Community
Development
Financial
Institutions
(CDFI)
Fund.
The
resources
are
the
return
from
investments
made
by
the
fund
during
the
COVID-19
pandemic
to
help
community
lenders
support
small
businesses,
consumers
and

affordable
housing

projects. 

Another
initiative
includes
providing
greater
interest
rate
predictability
to
state
and
local
housing
finance
agencies
that
borrow
from
the
Federal
Financing
Bank
(FFB)
to
support
new
housing
development.
If
implemented,
the
initiative
would
lead
to
thousands
of
additional
housing
units
in
the
coming
years,
Treasury
said.

The
Treasury
also
calls
on
the
11
Federal
Home
Loan
Banks
(FHLBs)
to
increase
their
support
for
housing
programs
that
are
focused
on
new
construction
to
20%
of
their
net
income.
By
law,
they
are
required
to
devote
at
least
10%.
Voluntarily,
the
FHLBs
have
already
increased
their
commitment
to
15%.

According
to
the
Treasury
estimates,
if
the
20%
level
“had
been
in
place
over
the
past
five
years,
the
FHLBs
would
have
contributed
nearly
$2
billion
more
to
housing
programs
than
was
required
by
law.” 

Yellen’s
announcement
includes
a
new
“how-to
guide”
for
state
and
local
governments
using
Treasury
recovery
funds
to
construct
housing,
as
well
as
an
update
to
the
Capital
Magnet
Fund
that
allows
flexibility
to
CDFIs
and
nonprofits
that
finance
affordable
housing.

 

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