The Biden administration announced a series of moves aimed at creating, preserving, or selling 100,000 affordable homes for homeowners and renters in the next three years.
The actions include relaunching the Federal Financing Bank (FFB) and restarting its support of the Federal Housing Administration (FHA) Section 542(c) Housing Finance Agency Risk-Sharing Program, which was suspended in 2019. The program will provide low-cost capital to spur development of rental housing in cooperation with state housing finance agencies (HFAs).
HFAs may submit applications for mortgage insurance through this program through September 2024, and for the FFB to purchase the FHA-insured mortgages through September 2027. Unlike the previous version of the program, there is no dollar cap so FHA can provide firm approval letters to insure all eligible HFA-underwritten mortgages that meet risk-sharing program standards, according to Department of Housing and Urban Development (HUD).
Restarting the program will enable state HFAs to serve smaller developments, rural areas, and other essential projects that conventional financing does not, said the National Council of State Housing Agencies (NCSHA), noting that the risk-sharing partnership financed more than 25,000 affordable apartments that otherwise wouldn’t have been built or preserved, while reducing risk and generating revenue for the federal government, over several years before being terminated by the prior administration.
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