The Treasury Department is expected to announce today that it will provide $30 billion to help state and local housing finance agencies that have been hit hard by the economic crisis and have had to suspend or curtail tax-exempt bond programs that allow them to provide affordable mortgages, according to knowledgeable sources.
Under the program, Treasury would purchase up to $15 billion of tax-exempt housing bonds through the government-sponsored enterprises Fannie Mae and Freddie Mac. Of that amount, $11 billion would be used for purchases of single-family housing bonds and $4 billion for multifamily housing bonds.
In addition, the department would provide up to $15 billion of liquidity to help HFAs remarket their variable rate demand obligations.
The purchase program would have an end-of-year deadline on it, because that is the expiration date for the authority the Treasury obtained by Congress, under the Housing and Economic Recovery Act, to buy securities from the GSEs. But the state HFAs would be permitted to issue short-term convertible option bonds that could be converted to long-term bonds after the end of the year, the sources said.
