(Washington, D.C.)-U.S. Senator Jeanne Shaheen announced today that the U.S. Department of Treasury will help provide state and local housing finance agencies (HFAs) with the funding they need to issue loans to working families. In March, Shaheen urged Treasury Secretary Tim Geithner to use his authority to purchase bonds from HFAs to help more families access affordable mortgages, a critical component to ending the economic crisis.
"Helping working families secure affordable mortgages is essential to ending the financial crisis and reviving the housing market," said Shaheen. "We must continue to find ways that will free up credit so that families can get the financing they need, and lenders can issue affordable mortgages. I applaud Secretary Geithner for making this necessary change that will help make home ownership a reality for families in New Hampshire."
The HFA Initiative will provide hundreds of thousands of affordable mortgages for working families and enable the development and rehabilitation of tens of thousands of affordable rental properties. It will do this at little or no cost to the taxpayer because it is paid for by the HFAs themselves and, as a temporary program, it incentivizes HFAs to transition back to market sources of capital as quickly as possible. The initiative is designed to be temporary in nature and will be available for only a short window to help bridge the transition period as the HFAs resume their activities after experiencing a number of challenges in the course of the housing downturn.
Since joining the Senate, Shaheen has fought to help working families more affordable mortgages and housing. She successfully fought to extend the first-time homebuyers tax credit in the American Recovery and Investment Act (ARRA) of 2009. In addition, she fought to ensure the ARRA increased funding for the HOME Investment Partnership Program, which provides funds to encourage the development of affordable housing. In July, Shaheen announced that nearly $27 million had been granted to the New Hampshire Housing Finance Authority to develop affordable housing.
The full text of Shaheen's letter to Geithner is as follows:
March 20, 2009
The Honorable Timothy Geithner
Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220
Dear Secretary Geithner:
I am writing to express my concern that the current economic environment is hampering the ability of moderate and low income Americans to secure loans to purchase homes. In particular, due to frozen credit markets, the country's Housing Finance Agencies (HFAs), which rely on the sale of tax-exempt mortgage revenue bonds (MRBs) to finance affordable mortgages, have become severely limited in their capacity to make loans. To alleviate this situation, I urge you to use the tools at your disposal, including authority granted under the Troubled Asset Relief Program, to purchase housing bonds directly or through the Government Sponsored Enterprises to enable HFAs to provide affordable mortgages and to reinvigorate the housing market.
HFA assistance to first-time homebuyers can and should be a critical component of our economic recovery. Borrowers are provided with safe, fixed-rate mortgage products that help them build equity and enjoy the benefits of long-term homeownership. Making homeownership an affordable and stable option through trusted lenders like HFAs should increase demand in the housing market, helping alleviate the downward spiral in home prices that has placed so many homeowners at risk.
Due to turmoil in the bond markets, however, HFAs have had great difficulty finding investors for their bonds. As a result, multiple HFAs across the nation have had to suspend or limit mortgage lending programs, and without assistance, many more will follow suit. Although Congress recently increased the volume cap of housing bonds for HFAs and expanded the use of the proceeds from the bonds to include providing assistance to borrowers at risk of foreclosure, these efforts will have been in vain unless investors begin to purchase housing bonds again.
Recently, you received a letter from Senator Christopher J. Dodd and nine of my colleagues to urge you to use your authority under Section 101 of the Emergency Economic Stabilization Act to restore more normal function of the municipal bond market. MRBs represent an especially critical class of these bonds because they directly impact the ability of HFAs to offer affordable mortgages and, in turn, the health of the housing market as a whole.
Although many mortgage programs have experienced increased delinquencies in the current economy, HFA investors have not suffered losses and HFA portfolios significantly outperform sub-prime and other non-traditional loan portfolios. HFAs are stable entities that invest directly into a state's economic development. I ask you to take immediate action to help these agencies so they may continue providing safe and affordable financing, which will help stabilize the housing market.
Thank you for considering these views.
Senator Jeanne Shaheen