It’s been five years since the National Housing Trust Fund was created to provide grants to states to invest in affordable rental housing for extremely low-income families. In that time, low-income renters and housing rights groups say the fund has failed at its stated goal. And they blame Ed DeMarco, the acting director of the Federal Housing Finance Agency, which was tasked with overseeing contributions, for starving it of more than $382 million the fund was entitled to under federal law.
Now three low-income tenants, along with the Washington, D.C.-based National Low Income Housing Coalition and the Right to the City Alliance are suing DeMarco for suspending payments to the National Housing Trust Fund.
The National Housing Trust Fund was established as a provision of the Housing and Economic Recovery Act of 2008, the President George W. Bush-era bill that attempted to stem the fallout from the nation’s housing crisis. Soon after, the Federal Housing Finance Agency was mandated to oversee the mortgage finance giants Fannie Mae and Freddie Mac.
As part of this power, the agency would direct a percentage of the profits of Fannie Mae and Freddie Mac into the National Housing Trust Fund. But the FHFA under DeMarco, as conservator of Fannie Mae and Freddie Mac, cut off contributions from the mortgage giants to the fund, saying that Fannie Mae and Freddie Mac were “undercapitalized,” or just didn’t have the money to give.
The Federal Housing Finance Agency did not respond to repeated requests for comment.
The result has been a continuing shortage in rental housing for the low income, according to a press release by the plaintiffs. The lawsuit tells the story of Danielle Stelluto, of The Bronx, N.Y., is a part-time home health aide and mother of two who moved into a homeless shelter with her children on March 16, 2012, after several unsuccessful attempts to find affordable housing.
Illinois would have received $18.25 million from the National Housing Trust Fund if the fund had been adequately funded, according to Bob Palmer, policy director of Housing Action Illinois, a Chicago-based housing advocacy group.
This isn’t the first time the Federal Housing Finance Agency, and DeMarco along with it, have come under fire. The Federal Housing Finance Agency’s reluctance to do loan modifications and principal write downs for people facing foreclosure to help homeowners cope with their mortgages drew the ire of groups like Palmer’s. The Federal Housing Finance Agency also challenged Chicago’s vacant property ordinance in court in December 2011, arguing that the ordinance encroaches upon the agency’s role. The case is still ongoing.
“The FHFA’s refusal to make payments to the National Housing Trust Fund is part of a pattern by Ed DeMarco of only being focused on conserving the assets of Fannie Mae and Freddie Mac,” said Nelson, “and not allowing those agencies to help support recovery of the housing market and the larger economy.”
Read the lawsuit below:
Filed under: Housing
Tags: affordable housing, Bob Palmer, Chicago Muckrakers, Chicago Reporter, contributions, Ed DeMarco, Fannie Mae, Freddie Mac, grant, Housing Action Illinois, Housing and Economic Recovery Act of 2008, National Housing Trust Fund, National Low Income Housing Coalition, vacant property ordinance, Yana Kunichoff