President Obama proposed funding the United States Department of Housing and Urban Development with 1 billion dollars over the next year for the Affordable Housing Program.
The trust fund for the Affordable Housing Program was set up in 2008 and designed to be capitalized by Fannie Mae and Freddie Mac. If the budget ends up being approved it would be the first time since 2008 that the housing trust fund was funded.
What Does The Program Do?
The National Housing Trust Fund would provide money for an estimated 16,000 affordable housing units. Some of the spots have been reserved for areas which are often the most expensive real estate locations in the country such as San Francisco. Eighty percent of the funds are supposed to be used for rental housing. Another ten percent are supposed to be used for homeownership and up to ten percent are for the grantee’s administrative and planning costs.
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Under the program the funds may also be used in a variety of ways in order to create affordable housing. For example, according to the Department of Housing and Urban Development’s website, eligible expenses and activities include:
• Real property acquisition
• Site improvements and development hard costs
• Related soft costs
• Demolition
• Financing costs
• Relocation expenses
• Operating cost assistance for rental housing (not more than 20 percent of each annual grant)
• Reasonable administrative and planning costs
Consumers who are eligible can receive a wide range of assistance including:
• Equity investments
• Interest-bearing loans or advances
• Non-interest bearing loans or advances
• Interest subsidies
• Deferred payment loans
• Grants
• Other forms of assistance approved by HUD
Of course, all of this is dependent on whether or not the White House’s proposed budget for 2015 is actually able to get passed. Even though the National Housing Fund has already been created it can’t operate without any source of funding.
How Likely Is It To Be Funded?
There are number of factors that will ultimately determine whether or not the program will be funded. Any proposed budget first has to work its way through congress before it can be signed by the president into law. If history is any indication any proposed budget from the White House will have a hard time making its way through the republican lead house. There have already been numerous fights between the White House and House republicans over the budget, the last of which brought the country to the brink of default on our debt.
What makes matters even more complicated is that this is an election year. Though bipartisanship always remains a possibility it becomes more difficult when lawmakers are fighting to hold onto their jobs. Even republicans in traditionally red districts at the end of the day still must fear a primary challenge if they are perceived as being too far aligned with the White House. Only time will tell if any sort of lasting compromise can be achieved in this year’s round of budget negotiations.
