WASHINGTON — The Biden administration on Wednesday announced several efforts across the government aimed at increasing the affordable housing supply.
The White House said the goal of the new initiatives is to make 100,000 new units available for both homeowners and renters over the next three years. The steps include more financing for manufactured homes and two-to-four unit properties, as well as working with state and local governments to reform arcane zoning restrictions.
The administration also said that nonprofits and individuals will get preference over investors in acquiring foreclosed properties that had been insured by the Federal Housing Administration.
“President Biden is committed to using every tool available in government to produce more affordable housing supply as quickly as possible, and to make supply available to families in need of affordable, quality housing — rather than to large investors,” the White House said in a press release.
In line with the administration’s announcement, the Federal Housing Finance Agency said effective immediately, Fannie Mae and Freddie Mac will be permitted to each invest up to $850 million annually in the Low-Income Housing Tax Credit market as equity investors. Previously, the government-sponsored enterprises were limited to investing $500 million each.
FHFA also said that it would lengthen the “first-look period” that gives certain parties an advantage in buying foreclosed properties backed by Fannie and Freddie. The period during which occupants, public entities and nonprofits can purchase real-estate-owned properties will be extended from 20 to 30 days. After that period, those properties are available for investors to purchase. The FHA will also extend its first-look period to 30 days.
"Extending the amount of time owner occupants have to bid on a REO property, without competition is especially important for neighborhood preservation while the supply of homes for sale is severely limited," said Sandra Thompson, the acting director of the FHFA, in a statement.
The Department of Housing and Urban Development will also launch efforts to expand its outreach to nonprofits and local governments to “further educate” them on the process for bidding on real-estate-owned properties.
As part of the Biden administration’s efforts, the Treasury Department will also issue “a notice of funding availability” for the Capital Magnet Fund, a program financed through contributions from Fannie and Freddie that makes grants available to nonprofits and community development financial institutions to facilitate the production of affordable housing.
That notice from Treasury will also “include changes to strongly encourage affordable housing production,” the White House said.
Treasury will also restart the partnership between its Federal Financing Bank and HUD's risk sharing program, which was suspended in 2019. That partnership will allow state housing finance agencies to offer low-cost capital for affordable housing production, the White House said.
The administration also announced several strategies to combat exclusionary zoning, which many stakeholders have long-argued is the number one barrier to building affordable housing. As part of that endeavor, FHFA is preparing a report on how concentrated Fannie and Freddie’s mortgage purchases are in areas with exclusionary zoning policies. That study will also offer data on the demographic characteristics of borrowers whose loans are backed by the GSEs.
HUD is also creating a “housing supply toolkit” that will offer strategies for successfully deploying grants in order to address housing affordability challenges.
“Moving forward, HUD and the Biden-Harris Administration will continue to pursue bold actions to create and preserve affordable homes for all Americans,” said HUD Secretary Marcia Fudge in a statement.
Additionally, the Biden administration said it would conduct “peer learning and listening sessions” in conjunction with HUD and FHFA to “allow for the exchange of best practices” on zoning reform to combat housing supply and affordability challenges.
“The sessions will also identify the obstacles to implementation that remain, which the president’s Build Back Better Agenda and potentially federal administrative action, can help address,” the White House said.
