NCSHA Summary of Housing Trust Fund Proposed Rule

On October 29, HUD published in the Federal Register a Proposed Rule establishing program rules for the Housing Trust Fund (HTF), which was authorized in the Housing and Economic Recovery Act of 2008 (HERA) but has not been funded to date. NCSHA’s detailed summary of the Proposed Rule is now available. NCSHA provided an overview of the Rule in a November 1 blog.

The HTF allocates formula-determined grants to states to provide rental housing and homeownership opportunities for very low-income (VLI) families, defined as those with incomes equal to 50 percent of area median income (AMI) or less, and extremely low-income (ELI) families, defined as those with incomes of 30 percent of AMI or less. The Proposed Rule directs that 100 percent of HTF funds, in the first year funds are available, be used to provide rental and homeownership housing for ELI households.

Up to 10 percent of the grant may be used for homeownership and up to 10 percent may be used for administrative costs. Not more than 20 percent of the grant can be used for operating cost assistance.

Maximum rent, including utilities, is set at 30 percent of the annual income of a family whose income equals 30 percent of AMI or 30 percent of the poverty line, whichever is greater. The affordability period for both rental and homeownership HTF-assisted units must be at least 30 years.

Each state must include its HTF allocation plan in its consolidated plan and action plan. The action plan must also include the state’s decision to distribute HTF funds through grants to subgrantees and/or to eligible recipients. The allocation plan must provide priority to projects that have federal, state, or local project-based rental assistance, and take into consideration the duration of the HTF-assisted units’ affordability period.

HERA directed Fannie Mae and Freddie Mac to provide assessment-based contributions to the HTF, but the Federal Housing Finance Agency, acting as conservator for Fannie Mae and Freddie Mac, suspended their contributions to the HTF indefinitely. One billion dollars to capitalize the HTF and $65 million to provide project-based Section 8 vouchers for HTF-financed units is included in Job Creation and Tax Cuts Act of 2010, S. 3793, currently pending in the Senate.

Comments on the Proposed Rule are due to HUD by December 28. NCSHA will submit comments on behalf of all HFAs. To inform our submission and include your comments in it, please send NCSHA’s Mindy La Branche your comments by December 6.