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 included the establishment of 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. By statute, most of the funding would have to be used for rental housing; states could use up to 10% of their grants 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 annually contribute a percentage of the dollar volume of mortgages that they purchased 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. Several pieces of legislation have been introduced in the 112th Congress that include funding for the Housing Trust Fund, and similar legislation had been introduced in previous Congresses. However, no funding has been provided to the program as of the date of this report. Legislation has also been introduced in the 112th Congress that would eliminate the Housing Trust Fund entirely.


Date of Report: January 18, 2012
Number of Pages: 13
Order Number: R40781
Price: $29.95

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