Amid ongoing talks of housing finance reform, Secretary for the Department of Housing and Urban Development (HUD) Shaun Donovan is calling for a housing trust fund that can support $5 billion worth of affordable housing per year.
Housing finance reform that winds down Fannie Mae and Freddie Mac must also include a housing trust fund to increase access to affordable housing, according to remarks made Monday by Secretary Donovan at a National Association of Hispanic Real Estate Professionals event in Washington.
Ensuring that a crisis with a magnitude of the recent Recession does not happen again “requires an expansion of the housing trust fund and the capital magnet fund so that the new system explicitly supports more affordable housing initiatives,” Secretary Donovan said.
“Specifically on this last point, we’ve got to ensure that reform yields a major fund of $5 billion a year for the production of affordable housing,” he added.
This fund, Donovan suggests, can be used to support down payment assistance, the production of more affordable rental housing as well as a range of other goals.
In addition to establishing a trust fund to further more affordable housing opportunities, housing finance reform also relies heavily on the return of private capital and guaranteeing the preservation of the 30-year fixed-rate mortgage.
“That guarantee is a fundamental part of our future,” Donovan said. “It’s there to make sure that those who have too often been left out of our [housing] system can take those first steps toward homeownership.”
The Senate Banking Committee is currently working on bipartisan reform, which HUD expects to see in the next few weeks, according to Donovan.
“The longer we go, the later it gets, the more difficult it’s going to be to get this reform done and help make sure we have a rock solid foundation for housing finance,” he said.
Written by Jason Oliva