President Obama announced the Homeowner Affordability and Stability Plan on February 18, 2009, a comprehensive plan to stabilize the housing market by supporting low mortgage rates, providing alternatives to foreclosures, and expanding access to refinancing and loan modifications through the Making Home Affordable program. The plan is working, according to the Obama administration. Millions of Americans have refinanced to lower rates, mortgage markets are helping families buy their own homes, and Obama’s modification initiative is giving households a second chance to stay in their homes.
The Obama administration says that they need to continue the progress and provide families with access to affordable rental housing and homeownership. To achieve that continued progress, and fulfilling a part of the Homeowner Affordability and Stability Plan first outlined in February together with the Federal Housing Finance Agency (FHFA), Fannie Mae and Freddie Mac (the GSEs), announced an initiative to provide support to state and local housing finance agencies (HFAs). Using authority provided to the Treasury Department under the Housing and Economic Recovery Act of 2008 (HERA), this initiative will help support low mortgage rates and expand resources for low and middle income borrowers to purchase or rent homes that are affordable over the long term.
HFAs have historically played a central role in providing a safe, sustainable path to homeownership for working families in all 50 states and many localities across the country. Over the years, state and local HFAs have helped finance over 3 million affordable rental homes and helped over 3 million working families obtain financing for new homes.
The HFA Initiative will...
- Provide hundreds of thousands of affordable mortgages for working families
- Enable the development and rehabilitation of tens of thousands of affordable rental properties
- Provide refinancing opportunities for at-risk borrowers to convert to sustainable mortgages
- Be paid for by HFAs - not taxpayers
- Incentivize HFAs to transition back to market sources of capital as quickly as possible
- Maintain viability of HFAs to preserve important role in providing housing resources
Recently, state and local housing finance agencies have experienced a number of challenges in the course of the housing downturn that have limited their ability to continue their established role as leaders in providing affordable housing resources for working families. The HFA Initiative is designed to maintain the viability of HFA lending programs and infrastructure on a temporary basis, helping bridge this difficult transition period as HFAs resume their normal activities. Each HFA that would like to participate will be asked to develop a program participation request in consultation with Treasury, Fannie Mae, and Freddie Mac, indicating their desired level of participation in either the new bond or liquidity program. This bottom-up review will prudently shepherd program resources, so the program will not be sized any larger than needed to meet specific demand. In addition, to use the HFA Initiative programs, HFAs will pay fees set to minimize costs to the Treasury Department and to taxpayers.
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