The Federal Housing Finance Agency (FHFA) yesterday issued a directive to Fannie Mae and Freddie Mac to provide funding to the Housing Trust Fund and the Capital Magnet Fund, respectively. Each Fund was established through the Housing and Economic Recovery Act of 2008 (also known as HERA), but funding has effectively been suspended since nearly inception, when Fannie and Freddie were placed into government conservatorship. This new directive would send 4.2 basis points of every dollar in home loans these agencies purchase from lenders and securitize and send over to the respective funds. This is a big win for affordable housing, as these funds were needed in 2008 and could be put to good use in light of the tight federal budget.
However, House Financial Services Committee Chairman Jeb Hensarling (R-TX) was quoted by POLITICO yesterday, shortly after the announcement, calling the directive a “grave mistake” and that the funds were a “slush fund”. Chairman Hensarling was reported to be planning to call FHFA Director, and former Congressman, Mel Watt, to testify about the directive.