The Obama administration is extending the cut-off date for the Home Affordable Modification Program from Dec. 31, 2015, to Dec. 31, 2016, and has directed the Treasury Department's Federal Financing Bank to allocate more funding for the construction of affordable rental housing.
In remarks made during the Making Home Affordable (MHA) Fifth Anniversary Summit, U.S. Treasury Secretary Jacob J. Lew spoke of a new financing partnership between the U.S. Treasury Department and the U.S. Department of Housing and Urban Development (HUD) aimed at supporting the Federal Housing Administration's (FHA) multifamily mortgage risk-sharing program.
Through this partnership, the Federal Financing Bank will use its authority to finance FHA-insured mortgages that support the construction and preservation of rental housing.
The first round of funding will go to the New York City Housing Development Corp., which will use the money to restore affordable rental housing damaged by Superstorm Sandy in Far Rockaway, Queens, N.Y.
The risk-sharing program allows state housing finance agencies to underwrite multifamily FHA loans while agreeing to share the risk of losses on those loans.
This support of the FHA's multifamily mortgage risk-sharing program, in turn, will ‘help create and preserve quality rental housing by reducing the interest rate for affordable multi-family apartment buildings,’ Lew said.
The Obama administration has been urging Congress to allow government-sponsored enterprise Ginnie Mae to securitize loans made under the new risk-sharing program, in order to reduce the cost of financing the projects, but so far lawmakers have not acted. In the interim, the administration is directing the Federal Financing Bank to fund FHA-insured mortgages, providing anywhere from $500 million to $1 billion annually for rental housing projects.
Lew also announced new efforts to help jumpstart the Private Label Securities market – starting with a series of upcoming meetings with investors and securitizers to further explore ways to increase private lending.
‘We need to attract more private capital to the housing market, and that is why I have directed my team to bring investors and securitizers together in the months ahead so we can uncover new paths to increase private investment,’ he said. ‘As part of this effort, we are posting questions on our website today intended to help us better understand what we can do to encourage a well-functioning private securitization market.’
Toward the end of his speech, Lew also urged congressional leaders to keep housing finance reform on the front burner.
‘It is time for Congress to pass housing finance reform,’ he said. ‘The work in the Senate Banking Committee was an important milestone on the road to reform, but lawmakers need to keep moving forward. We know we can create a better system that provides responsible Americans with mortgage credit while supporting affordable rentals for those who choose not to buy. We can create that system without putting taxpayers at undue risk, but we need Congress to act. Passing legislation is the only way we can achieve meaningful and sustainable housing finance reform.’
To read Lew's prepared remarks, click here.