By Renae Merle
Washington Post Staff Writer
Tuesday, November 17, 2009
A Treasury Department program aimed at propping up local housing finance agencies will help inject $29 billion into these groups over the next year, according to government data scheduled to be released Tuesday.
The program focuses on state and local housing finance agencies, which provide loans to low- and moderate-income borrowers and have struggled in the past year as investors shied away from buying their debt. Under the program, Treasury, along with mortgage financiers Fannie Mae and Freddie Mac, will buy bonds used by housing finance agencies to fund mortgages.
Many of the state agencies received less than they had hoped for under the program. Overall, the program will cover $18.5 billion of the $22 billion in bonds that local agencies sought to sell through the program. Another $10.5 billion in support will be provided to these agencies under a separate temporary liquidity program. The allocations to local agencies were based on the value of bonds previously sold by the agencies, according to Treasury.
California's Housing Finance Agency received the largest allocation by far, nearly $1.6 billion of the $1.7 billion in bond help it requested.
The D.C. Housing Finance Agency requested that $283 million worth of its bonds be purchased under the program, but Treasury scaled that back to $193 million. Virginia's Housing Development Authority will receive $482 million of the $850 million in help it requested.
"We are very pleased with what we received," said Susan Dewey, executive director of the Virginia Housing Development Authority. "It was a fair process."
In Maryland, three local agencies requested help through the program. The largest allocation will go to the Maryland Department of Housing and Community Development, which requested that $350 million of its bonds be purchased under the program. That was scaled back to $246 million.
Treasury has said the program will help stabilize the housing sector, providing another avenue for borrowers to secure cheap loans. But some economists have questioned whether the program will help enough homeowners to make a significant impact. The National Council of State Housing Agencies has said that these local agencies typically help about 100,000 borrowers a year.
"This is a recognition from Treasury that we are key partners in the housing recovery," said Dewey, who is also president of the National Council of State Housing Agencies.