A third of the nation's senators have sent a letter to Mel Watt, the new head of the Federal Housing Financing Agency, urging him to use funds from mortgage giants Fannie Mae and Freddie Mac to fund affordable housing.
The National Housing Trust Fund (NHTF) and the Capital Magnet Fund (CMF) were designed to send grants to states and nonprofits primarily for affordable rental housing projects, but neither has been funded in five years. The FHFA suspended allocations to both funds when Fannie and Freddie were placed in conservatorship in 2008.
But Fannie and Freddie have since become profitable and paid more than $185 billion in dividends to the U.S. Treasury.
"In light of these profits and the dramatically improved financial conditions of both enterprises, the withholding of these resources to support affordable housing can no longer be justified," Sen. Barbara Boxer, D-Calif., said in a press release. Boxer signed the letter sent to Watt, along with 32 of her colleagues.
There is currently a national shortage of nearly 5 million units that are affordable and available to extremely low-income renters, the senators said, citing research from the Harvard Joint Center for Housing Studies.
While lawmakers have been debating reforming the mortgage finance system, and Fannie and Freddie along with it, the senators said "directing much-needed funding for affordable rental housing should not wait until Congress and the president are able to agree on a new system."
The time to lift the suspension of contributions to the funds "is long overdue," they said.