Treasury Eyes Program For State Housing Finance Agencies

Posted by Orb Staff on September 28, 2009 No Comments
Categories : Residential Mortgage

The Obama administration is eyeing a three-year bond-purchase program meant to shore up liquidity for state housing finance agencies, Bloomberg reports.

U.S. Treasury Department officials indicate the program would carry a $35 billion price tag. The Treasury would provide up to $15 billion in liquidity over three years and buy up to $20 billion in state agency bonds by the end of this year. Freddie Mac and Fannie Mae would administer the program.

In a Sept. 18 letter to the Federal Housing Finance Agency, National Council of State Housing Agencies' director of housing advocacy and strategic initiatives, Garth B. Rieman, encouraged the agency to go "above and beyond" the government-sponsored enterprises' (GSEs) stated affordable housing goals.

"Though we recognize the GSEs' current economic condition has reduced their incentive to purchase tax-exempt housing bonds and housing credits, such purchases would be very helpful in addressing the needs of underserved markets and should be reinstated and expanded as soon as possible," Rieman wrote.

The program needs the approval of Treasury Secretary Tim Geithner, a Wall Street Journal report says. Bloomberg reports that the program could be announced as early as Wednesday.

At least one lawmaker has voiced the opinion that such an initiative would run counter to the goal of reducing the government's role in the housing sector.

‘I don't know that we can continue this pattern of having the federal government being the lender of last resort,’ Rep. Scott Garrett, R-N.J., told the WSJ. ‘Most people are calling on the government to lay out an exit strategy. This just gets us further into the quagmire.’

SOURCES: Bloomberg, Wall Street Journal, National Council of State Housing Agencies

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