September 17, 2021

MP Now News

Mortgage News

HUD announces cross-agency efforts to increase affordable housing supply

The Ministry of Housing and Urban Development (HUD) announced on Wednesday a series of measures that it would take as part of the The Biden Harris Administration Plan To create, maintain and sell nearly 100,000 additional affordable homes for homeowners and renters across the country over the next three years. As Congress and President Biden work towards historic housing investments on the Build Back Better agenda, HUD acts in its administrative capacity to develop and create affordable housing for low-income segments of the market.

Today’s actions include a significant step in the resumption of the Federal Housing Administration’s (FHA) Section 542 (c) Risk-Sharing Program with the Department of the Treasury’s Federal Financing Bank (FFB Risk-Sharing), which provides low-cost capital that is available to the Development of rental apartments in collaboration with government housing finance agencies (HFAs). This agreement marks a renewed focus on supporting the construction and development of affordable housing in states across the country at a time when this type of capital investment is needed for the cheapest housing.

“President Biden has promised the people of America that his administration will dramatically expand our country’s supply of affordable rental housing – and the measures announced today represent a substantial down payment for that commitment,” said HUD Secretary Marcia L. Fudge. “These measures will expand access to critical capital for government housing finance agencies, empower local communities to use the historic investments of the US rescue plan to build more affordable housing, and promote equitable housing policies such as zoning. Going forward, HUD and the Biden Harris Administration will continue to take bold steps to create and maintain affordable housing for all Americans. “

Home finance agencies can apply for mortgage insurance through this program through September 2024 and Binding Authorization Letters for Federal Financing Bank purchase of FHA-insured mortgages through September 2027 to insure all eligible HFA-insured mortgages that meet the standards of the risk-sharing program.

In the future, HUD will make more single-family homes available to individuals, families, and nonprofits by prioritizing home ownership and limiting the sale of certain FHA-insured and HUD-owned properties to large investors, in addition to expanding and creating exclusivity for periods of only government entities , Owner-occupiers and qualified nonprofits can bid on certain FHA-insured properties. In addition, the HUD Community Development and Planning (CPD) division announced that it is creating a new toolkit of how-to guides to assist HUD fellows by providing easy-to-implement resource allocation strategies to address the challenges that have grown during the pandemic addressing housing supply and affordability. Finally, the HUD Policy Development and Research (PD&R) team will publish its latest research on innovative strategies being used by state and local governments to remove regulatory barriers to affordable housing and increase housing supply. These lessons will be integrated into the HUD’s Regulatory Barriers Clearinghouse, which contains over 4,800 barriers and solutions and provides a catalog of information that spans all 50 states and over 460 cities and counties. They will also incorporate the locally-driven spatial reform initiative into the President’s Build Back Better Plan.

See the steps taken by the Biden Harris administration to increase the supply of affordable housing here.

Via the risk-sharing program of the housing finance agency in accordance with Section 542 (c) with the Federal Finance Bank

The Home Financing Agency risk-sharing program under Section 542 (c) allows eligible Home Financing Agencies (HFAs) to enter into contracts with HUD that provide FHA insurance for multi-family mortgages for properties with affordable housing units that have been subscribed by an HFA and where HUD and the HFA bears the risk of possible loss if the mortgage fails. With the FHA Insurance Loan Enhancement, Federal Financing Bank will buy the mortgage and generate capital for the HFA to lend to private home developers who build or renovate apartment buildings that offer affordable rental housing, including real estate refinancing for low, very low, and low prices Extremely low income people. The FHA will continue to seek the necessary authority to further enhance the mortgage securitization program eligibility features.

The FHA encourages qualified home finance agencies across the country to apply to participate in the restart of the program. Additionally, based on program performance to date, FHA expects to create or maintain approximately 20,000 affordable rental units under the program by 2027. FHA expects new mortgage insurance applications to be received under the program this month.