WASHINGTON – Today, U.S. Treasury Secretary Janet L. Yellen announced new housing initiatives aimed at increasing the supply of affordable housing, part of the Biden Administration’s broader effort to reduce housing costs. Speaking at the recently completed Family Housing Expansion Project in Minneapolis, Yellen emphasized the need for continued action to tackle the housing crisis.
The new initiatives include:
A Treasury Program by the CDFI Fund: This program will provide an additional $100 million over the next three years to finance affordable housing. The goal is to significantly increase the availability of housing for low- and moderate-income households.
Interest Rate Predictability for Housing Finance Agencies: Efforts will be made to provide more predictable interest rates for state and local housing finance agencies borrowing from the Federal Financing Bank. This move aims to support new housing developments.
Call for Increased Spending by Federal Home Loan Banks: Secretary Yellen urged the 11 Federal Home Loan Banks to increase their spending on housing programs from 15 percent to at least 20 percent of their net income, focusing on new construction.
A "How-To Guide" for Using Recovery Funds: A new guide will help state and local governments use recovery funds from the Treasury to construct housing. This is part of an effort to use remaining funds to address housing needs, including those of essential workers.
Updates to the Capital Magnet Fund: The fund will be updated to provide more flexibility to CDFIs and non-profits financing affordable housing, aiming to reduce administrative burdens and support more housing projects.
These initiatives build on previous efforts by the Treasury Department during the pandemic, which included the Emergency Rental Assistance program and the Homeowner Assistance Fund. These programs have distributed over $40 billion in assistance, helping millions of households avoid foreclosure and eviction.
Earlier this year, Treasury and the Department of Housing and Urban Development announced an indefinite extension of the Federal Financing Bank's support for a risk-sharing initiative. This program allows housing finance agencies to borrow funds at low rates, expected to create or preserve around 38,000 rental homes over the next decade.
Secretary Yellen also highlighted the need for Congress to pass bipartisan legislation to expand the Low-Income Housing Tax Credit, which is part of the Biden-Harris Administration’s proposal to build and preserve over 2 million homes. She also called for additional state and local actions to remove legal barriers to housing development.
In a roundtable discussion with Senator Tina Smith (D-MN) and housing stakeholders, Yellen discussed the importance of these new initiatives. The Family Housing Expansion Project, where the announcements were made, will provide 84 units for households earning at or below 30% of the Area Median Income, financed partly by $4 million in State and Local Fiscal Recovery Funds provided by the Treasury.
The Treasury Department’s blog post today underscored the importance of increasing the nation’s housing supply to address long-term rising housing costs. These new measures aim to build on the pandemic-era programs that kept Americans in their homes and contributed to a stable foundation for economic growth and low unemployment rates.
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