Housing Trust Fund and Capital Magnet Fund: 2016 Update, Look Ahead at 2017

Published by Peter Lawrence on Friday, May 13, 2016 - 12:00am

On May 4, the U.S. Department of Housing and Urban Development (HUD) announced $174 million for the inaugural round of Housing Trust Fund (HTF) allocations in 2016 and simultaneously announced allocations for each state and territory.

Blog Graph Housing Trust Fund Update: 2016 HUD/Treasury Reported Amounts
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Blog Chart Housing Trust Fund Update: State-Level HTF Allocations
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Blog Chart Housing Trust Fund Update: 2016 State Allocations
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Each state must submit by the end of June a HTF allocation plan, which is expected to be similar to a low-income housing tax credit (LIHTC) qualified allocation plan (QAP). The plans must conform the requirements of the HTF statute and interim regulations. After the plan is submitted a state can make HTF grant awards to specific developments.

In related news, applications were due March 30 for the Capital Magnet Fund’s $93.5 million available for 2016. The Community Development Financial Institutions (CDFI) Fund received 125 applications requesting $609 million in awards. The award announcement is expected in the coming weeks.

Meanwhile, Fannie Mae and Freddie Mac filed their 10-Q statements for the first quarter of 2016 with the U.S. Securities and Exchange Commission. Those filings indicated that Fannie set aside $48 million for the Housing Trust Fund ($31.2 million) and Capital Magnet Fund ($16.8 million) and Freddie $36 million for both funds ($23.4 million and $12.6 million, respectively). But, those funds won’t be transferred to HUD and Treasury until early 2017.

Based on this first quarter information, and assuming sequestration continues to apply to both funds, Novogradac & Company projects in 2017 the Housing Trust Fund will receive $229 million and the Capital Magnet Fund will receive $123 million.

Blog Graph Housing Trust Fund Update: Preliminary 2017 Estimate Using 1st Quarter of 2016 10-Q Filings from Fannie/Freddie

 

Assuming that the factors in the HTF allocation formula do not change substantially, Novogradac projects the following 2017 state allocations:

Blog Chart Housing Trust Fund Update: State-Level HTF Allocations
Blog Chart Housing Trust Fund: Estimated 2017 State Allocations

It’s interesting to note that the projected 2017 HTF funding levels are higher than the amounts allocated 2016, even though they are based on a lower projected business volume for Fannie and Freddie because the 2016 HTF allocations were reduced by a one-time 25 percent diversion to the HOPE Reserve Fund.