HUD’s Office of Community Planning and Development (CPD) announced in a media release on May 7 that a total of $214 million in national Housing Trust Fund (HTF) funds will be allocated to states, the District of Columbia, Puerto Rico, and U.S. territories for the year of 2024. The 2024 HTF allocation represents a decrease from the 2023 allocation of $382 million and a significant reduction from the 2022 allocation of $749 million. The decrease is most likely due to a slowdown in single-family mortgage loan and refinancing purchases by Fannie Mae and Freddie Mac as a result of the Federal Reserve Board’s decision to maintain relatively higher interest rates in an effort to lower the rate of inflation.
CPD’s media release also describes the amount of funds each jurisdiction will receive through other CPD-administered programs, including Community Development Block Grants (CDBG), HOME Investment Partnerships (HOME), Emergency Solutions Grants (ESG), Housing Assistance for Persons with HIV/AIDS (HOPWA), and the Recovery Housing Program (RHP).
The total HTF allocation of $214 million differs from the amount announced by the Federal Housing Finance Agency (FHFA) – $196 million (see Memo, 3/4) – for three reasons. The primary reason involves a quirk in the “Housing and Economic Recovery Act of 2008” (HERA), which each year requires CPD to hold back an amount that is then restored the following year. Another reason is that if a state fails to meet a previous year’s fund commitment and/or expenditure requirements before deadlines, that amount is “de-obligated” and added back to the total available for reallocation in the following year. The last reason is that the formula allocates relatively little to the Insular Areas, and these Areas declined their 2023 grants, which were rolled into the 2024 overall allocation.
Created through HERA and overseen by HUD’s Office of Affordable Housing Programs (OAHP) within the Office of Community Planning and Development (CPD), the HTF allocates funding annually to states to build, preserve, rehabilitate, and operate rental housing for extremely low-income households (ELI) – those with income less than 30% of the area median income (AMI) or with income less than the federal poverty line (whichever is greater). Nationally, there is a shortage of 7.3 million rental homes affordable and available to people with the lowest incomes.
HERA stipulated that the initial dedicated source of revenue for the HTF and the Capital Magnet Fund (CMF) was to derive from an annual set-aside of 4.2 basis points (0.042%) for each dollar of the unpaid principal on Fannie Mae’s and Freddie Mac’s new business purchases, which consist of single-family and multifamily mortgage loans purchased during the year, and single-family and multifamily mortgage loans underlying mortgage-backed securities issued during the year.
Funds from the HTF are awarded as block grants to states and distributed by a statutory formula based on four factors that consider renter household needs only. Seventy-five percent of the value of the formula goes to two factors that reflect the needs of ELI renters. The other two factors relate to the needs of very low-income renter households – households with income between 31% and 50% of AMI. A state may choose to award up to 10% of its annual HTF allocation to homeowner activities, though to date no state has done so.
When it was established in 2008, the HTF was the first new housing resource since 1974 targeted to building, preserving, rehabilitating, and operating rental housing for extremely low-income people. Starting in 2000, NLIHC, its members, and other stakeholders played a critical role in the creation of the fund and continue to advocate for increases to annual HTF funding. Since 2016, when the first $174 million of HTF dollars were allocated to states, HTF allocations have been: $219 million (in 2017), $267 million (in 2018), $248 million (in 2019), $323 million (in 2020), $690 million (in 2021), $740 million (in 2022), $382 million (in 2023), and $214 million (in 2024).
Read HUD’s media release at: https://tinyurl.com/2vbpzhe4
Read more about the HTF on page 3-1 of NLIHC’s 2024 Advocates’ Guide, and on NLIHC’s two HTF webpages, one providing basic information, and another providing state-specific information.
NLIHC has produced reports summarizing how the 2018, 2017, and 2016, (2016 supplement) HTF allocations were used. Similar reports summarizing 2019 and 2020 HTF allocations are in the works and will be published later in the year.
Find HUD’s HTF website at: https://www.hudexchange.info/programs/htf