WASHINGTON — The Obama administration provided state and local housing finance agencies with a total of $23.5 billion of assistance under bond purchase and liquidity programs that have run their course, the Treasury Department announced yesterday.
The new issue bond purchase program allowed the HFAs to issue $15.3 billion of bonds that were purchased by the Treasury through Fannie Mae and Freddie Mac, and the Temporary Credit and Liquidity Programs provided the HFAs with $8.2 billion in liquidity, according to the Treasury.
The NIBP and TCLP programs were announced in October all bonds issued and liquidity agreements signed by year-end, with the Treasury working alongside the Department of Housing and Urban Development and the Federal Housing Finance Agency to provide much-needed relief to HFAs struggling to sell housing bonds in an ailing market.
“Supporting the work of state and local HFAs is critical to the administration’s broader initiative to stabilize the housing market, which is helping to keep mortgage rates low and mortgage finance flowing for American households across the country,” Treasury Secretary Tim Geithner said in a release.
“The National Association of Local Housing Finance Agencies applauds the Treasury, Federal Housing Finance Agency, and especially the Government-Sponsored Enterprises for putting together, in a nearly impossible timeframe, this vital bond purchase program and liquidity facility,” said Patricia Braynon, president of the National Association of Local Housing Finance Agencies and executive director of the Miami-Dade County Housing Finance Authority.
Over 90 state and local HFAs participated in the NIBP, under which the Treasury agreed to purchase Fannie Mae and Freddie Mac securities backed by the bonds. The program finally allowed HFAs to take advantage of the $11 billion of bonds Congress authorized in the Housing and Economic Recovery Act of 2008. The HFAs had trouble issuing those bonds because of adverse conditions in the housing market.
Proceeds of the $15.3 billion of bonds issued under the NIBP “combined with the $7.7 billion in retail housing bonds the initiative requires state HFAs to issue, will allow HFAs to finance more than 200,000 affordable homes, while generating jobs and tax revenue for the economy,” said Susan Dewey, president of the National Council of State Housing Agencies and executive director of the Virginia Housing Development Authority. “HFAs are already putting these resources to work to provide first-time home buyer mortgages and finance rental housing.”
A dozen HFAs participated in the TCLP, according to the announcement. The TCLP, administered by Fannie Mae and Freddie Mac, was designed to provide replacement credit and liquidity facilities to HFAs for existing single-family and multifamily bonds. The Treasury backstopped the replacement facilities by purchasing a participating interest in the GSE temporary credit and liquidity facilities, using its authority under the HERA.
Although housing groups praised the programs, several small local HFAs turned back allocations and declined to participate in the NIBP in December, claiming that steep fees and the Treasury’s refusal to allow escrowed bonds to be sold at a premium made it economically unworkable for them.
Both programs ended up utilizing smaller amounts than what some housing officials said would be needed. Housing sources had said before October that at least $20 billion would need to be devoted to the NIBP, with another $15 billion for Treasury-financed liquidity.