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Summary of the National Housing Trust Fund

The National Housing Trust Fund was signed into law as part of the Housing and Economic Recovery Act of 2008 by President George W. Bush on July 20, 2008.  The Act includes funding for low-income first time homeownership that could benefit Habitat homeowners.   Current Congressional consideration of $1.065 billion in funding to capitalize the Trust Fund is supported by Habitat for Humanity International and over 260 affiliates nationwide.

The Act includes a provision requiring Fannie Mae and Freddie Mac to transfer a percentage of the balance of its new mortgages to finance the National Housing Trust.  In December of 2008 the funding for the Trust Fund was suspended when Fannie Mae and Freddie Mac were placed under conservatorship.

The Trust Fund includes money for both the production, preservation, rehabilitation or operation of rental housing and for homeownership for first-time low-income homebuyers.   The law sets the funding for rental housing at 90% of the money that is required to be diverted from Fannie Mae and Freddie Mac new mortgages.   Home ownership for households earning from 0-30% of the Area Median Income or from 30-50% of Area Median Income is set at up to 10% of the Trust Fund money.

Since December 2008, there have been several efforts to fund the Trust Fund.  President Obama placed $1 billion in funding for the Fund in his FY 2010 Budget, but money for the Fund was not included in the final appropriations for the 2010 Fiscal Year.  A renewed effort to fund the Housing Trust Fund was initiated in late 2009 and early 2010 that has continued through June 2010.

The money for homeownership in the Trust Fund could be up to 10% of the money allocated in the Housing Trust Fund—in the case of the $1 billion in Trust Fund money currently under consideration, $10 million would go to homeownership.  The funding would be allocated to states via a formula that requires that each state receive at least $3 million for the rental and homeownership money combined and allocates money above that amount based on the percentage of low and extremely low income rental units available and affordable in each state.  As a result, each state could receive at least $30,000 for home ownership through the trust fund, the average state would receive at least $200,000 for low-income first time homebuyers and high-poverty states could receive significantly larger amounts.

The funding for first-time homebuyers is a start toward direct Federal support for low-income homeownership.   Other programs such as CDBG, SHOP and Section 4 are also of benefit to Habitat affiliates.  The Trust Fund supports low-income homeownership directly at the Federal level for the first time.

When Habitat for Humanity International Chief Executive Officer, Jonathan Reckford, testified before Congress in support of the National Affordable Housing Trust Fund on July 192007, he cited the many personal and community benefits of homeownership: “There is little question that homeownership provides families and individuals with the opportunity to improve their lives and, often, to be freed from reliance on government housing subsidies for which funding is often uncertain.  By fashioning trust fund legislation in a manner that will provide increased homeownership opportunities to low-income and very low-income households, families which would not qualify for traditional mortgages will have genuine housing choice and the opportunity to enjoy the benefits of homeownership.”

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