WASHINGTON — It remains unclear whether the economic model used by state and local housing finance agencies is viable in a post-recession economy, a senior administration official said Monday.
Mary Miller, the Treasury Department’s undersecretary of domestic finance, told housing officials meeting here that the expiration of temporary federal programs aimed at bolstering HFAs during the recession raises questions about the ability of agencies to operate on their own.
Miller made the remarks to some 200 attendees at the National Council of State Housing Agencies 2012 Legislative Conference here.
She said federal funding of HFAs through programs such as the New Issue Bond Program and Temporary Credit and Liquidity Program, as well as the Hardest Hit Fund, were temporary and were “designed to address short-term market failures in the traditional HFA business model.”
“Almost three years into these programs ... we face the question of whether the current outlook for HFAs still represents a temporary disruption, or a new equilibrium that will require HFAs to change their business model,” said Miller.
“We all need to think critically about this subject and the future of HFAs,” she told the group.
Barbara Thompson, NCSHA executive director, said, “Determining when the market will improve is difficult,” but she remains hopeful that it will be in the near-term.
Because the economy remains shaky, she said, the NCSHA is working with the Treasury Department on developing other programs to support HFAs. However, she said those programs remain in the conceptual stage.
“We don’t want to send the message that the bond market won’t return but it’s important that we have a variety of options,” she said.
The NIBP and TCLP programs were announced by the Obama administration in October 2009 to provide relief to HFAs struggling to sell housing bonds in an ailing market. Under the NIBP, the agencies could issue $15.3 billion of bonds that were purchased by the Treasury through Fannie Mae and Freddie Mac. The TLCP provided the HFAs with $8.2 billion in liquidity.
Miller’s comments come at the start of a week when NCSHA members will be meeting with lawmakers here and urging them to support measures such as the low income housing credit, Section 8 rental assistance, the Housing Trust Fund, and the tax-exempt status of housing bonds.
“While housing is on the comeback, we have a long way to go,” NSCHA board president Gerald Hunter told the group’s members. “The last thing we want to see is housing resources cut.”