The independent regulator for Fannie Mae and Freddie Mac should force the government-run companies to finance a federal affordable housing trust fund established by Congress six year ago, the Obama administration said yesterday.US president Barack Obama's fiscal 2015 budget proposal again calls for a US$1 billion appropriation to capitalise the fund.If carried out, it would be the first contributions from the two mortgage finance firms since the National Housing Trust Fund was set up in 2008.
Over time, the White House predicted the money would provide for 16,000 affordable units using a mix of funding sources, including other public funds, tax credits and private debt.Under the legislation that established the affordable housing fund, the companies were meant to be the source of capital. However, the previous head of the Federal Housing Finance Agency, Edward DeMarco, kept them from paying into the fund after they were bailed out by taxpayers at the height of the financial crisis.
Many housing advocates argue the conditions that prompted the regulatory agency to suspend payments in 2008 no longer exist.A new regulator, Melvin Watt, took charge of the agency in January, but he has yet to say whether the companies should now move to capitalise the fund after a group of more than 30 Democrats in the US Senate earlier this year called on him to do so.
Fannie Mae and Freddie Mac, which own or guarantee 60 per cent of all US home loans, were seized by the government in 2008 as mortgage losses threatened their solvency.But they have since return to profitability, and by the end of March will have sent taxpayers US$202.9 billion for their support, US$15.4 billion more than the US$187.5 billion they received bailout funds.
Reuters