Details of the plan – such as the amount available to CHFA and groups like [...]]]> Share/Bookmark

The Colorado Housing and Finance Authority will be getting additional help from Uncle Sam to help low-and moderate income home buyers get mortgages and provide more affordable rental housing in the state, under a plan unveiled today by the Obama Administration.

Details of the plan – such as the amount available to CHFA and groups like it – and the exact number of people it could help in Colorado, are not yet known.

Nationally, the program unveiled today by the Treasury Department will allow Housing Finance Authorities, or HFAs (including  CHFA), to make hundreds of thousands of new mortgages and renovate tens of thousands of apartment units. CHFA and agencies like it will be required to pay a fee to participate in the program, which the Obama Administration said will be structured to minimize risk to taxpayers.

“We are very excited about the announcement, but are still learning the details about the plan,” said CHFA spokeswoman Jerilynn Martinez. “Treasury has stated that more information is forthcoming over the next few weeks.”

She noted that no funding details, either for the entire country or for individual states, have yet to be released.

“We understand that over the next several weeks Treasury will be working with individual HFAs to identify our needs from the bottom up,” Marinez said. “These conversations will drive more program details and determine what we can ultimately request. We look forward to accessing this program to benefit Colorado.”

The Obama Administration said as  part of its comprehensive plan to stabilize the U.S. housing market, the new initiative for for state and local housing finance agencies that will help support low mortgage rates and expand resources for low- and middle- income borrowers to purchase or rent homes that are affordable over the long term.

Following up on the intent to support HFAs first outlined in February under the Homeowner Affordability and Stability Plan, the administration’s initiative has two parts: a new bond purchase program to support new lending by HFAs and a temporary credit and liquidity program to improve the access of HFAs to liquidity for outstanding HFA bonds.

The HFA Initiative using authority provided to Treasury by the Housing and Economic Recovery

Act of 2008,  or HERA,  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, the Treasury Department said. 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.

“This initiative is critical to helping working families maintain access to affordable rental housing

and homeownership in tough economic times,” said Treasury Secretary Tim Geithner.

“Through the years, many low and moderate income Americans have been well served by state and local HFAs, but the housing downturn has hit these organizations too,” Geithner continued. “Through this initiative, the Administration aims to help HFAs jumpstart new lending to borrowers who might not otherwise be served and to better support the financing costs of their current programs – key components in stabilizing the housing market overall.”

“Housing Finance Agencies are critical partners to helping American families through this tough

economic time,” Department of Housing and Urban Development  Secretary Shaun Donovan said. “Today’s announcement makes clear this Administration’s commitment to providing responsible homeownership opportunities, affordable rental homes and getting our housing market back on track.”

“FHFA supports this initiative and the important role Fannie Mae and Freddie Mac will play in

implementing it,” said Federal Housing Finance Agency  Acting Director Edward J.

DeMarco. “The HFA program has been structured to be on commercially reasonable terms for the Enterprises, to be carried out by the Enterprises in a safe and sound manner, and to support market liquidity, stability, and affordable housing. I wish to thank FHFA, HUD, Enterprise and Treasury staff for their hard work and leadership in developing this program.”

The Department of the Treasury and HUD, together with the FHFA, Fannie Mae, and Freddie Mac, have developed this initiative to maintain the viability of HFA lending programs and infrastructure.

The key parts of the new initiative are:

New Issue Bond Program  The NIBP will provide temporary financing for HFAs to

issue new mortgage revenue bonds. Using authority under the Housing and Economic

Recovery Act of 2008, Treasury will purchase securities of Fannie Mae and

Freddie Mac backed by these new mortgage revenue bonds.

The program can support several hundred thousand new mortgages to first-time homebuyers this coming year, as well as refinancing opportunities to put at-risk but responsible and performing borrowers into more sustainable mortgages. The new bond issuance will also support development of tens of thousands of new rental housing units for working families.

Fannie Mae and Freddie Mac will provide replacement credit and liquidity facilities available to HFAs that will help reduce the costs of maintaining existing financing for the HFAs. The agreements will serve to help relieve financial strains experienced by HFAs and enable them to continue their important work. Treasury will backstop the GSE replacement credit and liquidity facilities for the HFAs by purchasing an interest in them using HERA authority.

HFAs will pay a fee to have access to both programs under the HFA Initiative.

These fees have been designed to cover expected costs to the Treasury Department and the taxpayer. The fee for the TCLP will also increase over time to encourage HFAs to find private alternatives as quickly as possible. The HFA Initiative has also been designed to include other features that minimize risk to the taxpayer, such as requiring HFAs that issue new bonds under this program to also prove their ability to issue bonds to private investors.

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.

After today, each HFA that desires to participate will be asked to develop a program participation request in consultation with Treasury, Fannie Mae, and Freddie Mac, indicating its desired level of participation in either the new bond or liquidity program.

These requests for new issuance should generally not exceed what the HFA would have received in allocation from Congress for a similar period through 2010 and will generally follow the allocation formula established for 2008 by HERA.

If program demand is smaller than these guidelines would allow, the total program size will be capped at a lower amount. This bottom-up review is being used to prudently shepherd taxpayer resources, and the program will not be sized any larger than needed to meet specific demand.

Pricing under the program will reflect both the cost of any financing required by Treasury as well as a fee designed to cover any risk posed by the HFA.

While there is risk that losses could exceed estimates, the fee schedule Treasury has adopted is designed to cover net losses under most stressed conditions and thus would minimize risk to the taxpayer.

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The Wall Street Journal reported on Monday that the Obama administration is close to committing as much as $35 billion to state and local [...]]]> Share/Bookmark

The Colorado Housing and Finance Authority could learn as early as this week if it will be receiving millions of dollars to revive efforts to fund mortgages for low-and moderate-income home buyers.

The Wall Street Journal reported on Monday that the Obama administration is close to committing as much as $35 billion to state and local housing agencies such as CHFA in yet another effort to prop up the struggling housing market.

“We have not seen any of the details yet,” said Rachel Basye, marketing and strategic development director for CHFA. Although she said they don’t how much of the $35 billion that CHFA would receive, it is a fair assumption that it would be many millions – possibly tens of millions – of dollars.

For her part, she doesn’t even want to guess, since every federal program has a different formula for distributing the funds.

The Wall Street Journal article wasn’t a complete surprise to Basye.

“We have been following the discussions at the federal level for a while,” Basye told me. “Our national trade organization has been working on this since last fall, when the bond market kind of collapsed.”

Last year, CHFA issued $349 million in single-family home bonds. So far this year, it has issued $90 million in bonds.

“We have changed our business model completely; we’re basically just not issuing bonds right now -or at least no where near the same capacity as in the past,” Basye said.

CHFA does not distribute the bond proceeds directly to home buyers. But qualified borrowers, through lenders that participate in the programs, typically get below-market rate financing through the bond issues.

Basye said the $35 billion funding would be “extremely welcome. We will certainly be interested in seeing the details of the plan.”

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CHFA estimates the funding  will help finance the construction of 1,800 affordable rental units and create nearly 750 new jobs.

The funds are part of the Tax Credit [...]]]> Share/Bookmark

The U.S. Department of Housing and Urban Development and the U.S. Department of Treasury have awarded Colorado Housing and Finance Authority  a total of $45.1 million in stimulus funds.

CHFA estimates the funding  will help finance the construction of 1,800 affordable rental units and create nearly 750 new jobs.

The funds are part of the Tax Credit Assistance Program(TCAP)  and Tax Credit Exchange Program (TCEP) , both established in the American Recovery and Reinvestment Act to ensure housing for the nation’s lowest income residents.

CHFA will award the funds in the form of loans or grants to eligible affordable housing developers beginning in August. A complete list of eligible projects, program eligibility requirements, and application forms may be downloaded at www.chfainfo.com.

CHFA will triage developments requesting assistance to ensure the projects most prepared to move forward immediately are able to secure their assistance as soon as practical.

According to the program’s guidelines, CHFA must award 75 percent of the TCAP funds by Feb. 2010, and 100 percent of the TCEP funds by Dec. 2010.

Both programs were designed to assist developers participating in the Low Income Housing Tax Credit program, which has been negatively impacted from the overall economic decline.

Originally created by Congress in 1986, the Low Income Housing Tax Credit program is considered one of the most successful affordable housing programs in the country, generating equity to support nearly 1.7 million affordable rental housing units nationwide and almost 37,000 units in Colo.

The average in-state Low Income Housing Tax Credit development serves households earning 33 percent Area Median Income , which for a family of four equates to approximately $21,540 annually in the Denver metro area, or $16,500 annually in western Colorado.

The Low Income Housing Tax Credit program has struggled over the past two years, as fewer investors are in need of tax credits to mitigate federal tax liabilities and developers who were expecting to earn $0.85 cents for each $1 tax credit sold are now earning $0.70 or less.

“The sharp decline in equity pricing has created significant gaps for developers recently awarded the credits; putting completion of their housing projects at risk,” said Jamie Gomez, CHFA Director of Commercial Lending. ” Funding from the stimulus bill is intended to restore financial feasibility to these projects resulting in much needed housing for the state’s residents, along with creating new jobs generated from the construction and management of the units.”

For more information about the Tax Credit Assistance Program (TCAP), Tax Credit Exchange Program (TCEP), or the Low Income Housing Tax Credit program:t www.chfainfo.com or call CHFA’s Denver office at 1-800-877-2432, ext. 429. For the West Slope: 970-241-2341.

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