The National Association of Local Housing Finance Agencies sent an “urgent appeal” to the Obama administration last week asking it to quickly announce a long-expected $35 billion bond purchase and liquidity program, warning that a rapidly approaching deadline could drastically limit the program’s effectiveness if it is not unveiled soon.
In a two-page letter sent to the president last week, NALHFA said that time is quickly running out for housing agencies to take advantage of the bond purchase component of the program, under which the Treasury Department would create a market for tax-exempt multifamily and single-family HFA bonds by purchasing up to $20 billion of them through government-sponsored enterprises Fannie Mae and Freddie Mac.
The administration also would provide up to $15 billion of liquidity to help HFAs remarket their variable-rate debt obligations.
“Time is of the essence in announcing the bond purchase program and liquidity facility,” John Murphy, executive director of association, said in the letter. “NALHFA members respectively urge you to take the appropriate action to see that the program is implemented immediately.”
Housing finance agencies would have to act quickly to access the program once it is unveiled because a provision of the Housing and Economic Recovery Act of 2008 requires that any HFA bonds the Treasury purchases through the GSEs be issued by Dec. 31, 2009.
Although sources and media reports indicated that the program could have been announced as early as Sept. 29, it remains under wraps.
Murphy said Friday that although his group is trying to prepare local HFAs as much as it can to quickly issue bonds for the program, it can only do so much without knowing specifics.
“It needs to happen now,” he said.
Congress tried to provide relief for the HFAs under housing recovery act by giving them the authority to issue an additional $11 billion of new bonds through 2010 to finance affordable single- and multifamily mortgages. It also provided alternative minimum tax relief for housing bonds and granted states a 10% increase in housing credit authority in 2008 and 2009 to produce affordable rental housing.
Nonetheless, Murphy told the White House that there has been “essentially no private market” for tax-exempt housing bonds over the last 18 months, preventing HFAs from taking advantage of that $11 billion boost and the AMT break.