The Housing Trust Fund: Background and Issues

Katie Jones
Analyst in Housing Policy


On July 30, 2008, President Bush signed into law the Housing and Economic Recovery Act of 2008 (P.L. 110-289), which created a national Housing Trust Fund. In general, affordable housing trust funds provide dedicated, permanent sources of funding for affordable housing that do not require annual appropriations. Several states and many localities across the United States already have their own affordable housing trust funds, and for years affordable housing advocates had worked to get such a fund created on a national level. Opponents of a national affordable housing trust fund argued that it would be duplicative of other affordable housing programs. 

The Housing Trust Fund created by P.L. 110-289 would provide formula-based grants to states to use for affordable housing activities. Ninety percent of the funding would have to be used for rental housing, while the remaining 10% could be used for homeownership activities. Furthermore, all of the funds would have to benefit very low- or extremely low-income households, with at least 75% of the funding for rental housing being used exclusively for the benefit of extremely low-income households. 

P.L. 110-289 directed Fannie Mae and Freddie Mac to contribute a percentage of their new business purchases to the Housing Trust Fund as the fund's dedicated funding source. However, the law also gave the director of the Federal Housing Finance Agency (FHFA), Fannie and Freddie's regulator, the authority to suspend those contributions if he determined that they were contributing to financial trouble at the agencies. On September 7, 2008, Fannie and Freddie were placed in conservatorship, and in November 2008, the director of FHFA suspended their contributions to the Housing Trust Fund. The Fund had not yet received any funding at the time the contributions were suspended. 

It is unclear whether contributions from Fannie Mae and Freddie Mac to the Housing Trust Fund will ever be reinstated. Advocates have begun searching for a new source of funds for the program. On December 16, 2009, the House of Representatives passed the Jobs for Main Street Act of 2009 as a substitute amendment to H.R. 2847. This bill would provide over $1 billion for the Housing Trust Fund. 

This report describes the Housing Trust Fund and discusses potential funding sources. It will be updated as events warrant.


Date of Report: December 18, 2009
Number of Pages: 13
Order Number: R40781
Price: $29.95

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