The Housing Trust Fund: An Overview
Updated December 20, 2021
Congressional Research Service
https://crsreports.congress.gov
R40781

The Housing Trust Fund: An Overview

Summary
The Housing Trust Fund (HTF) was established by the Housing and Economic Recovery Act of
2008 (HERA, P.L. 110-289) to provide funds to states to use for affordable housing activities,
with a primary focus on the production, preservation, and rehabilitation of rental housing for
extremely low-income households. It is administered by the Department of Housing and Urban
Development (HUD) and is funded through contributions from two government-sponsored
enterprises, Fannie Mae and Freddie Mac, rather than through appropriations. Fannie Mae and
Freddie Mac purchase mortgages made by private lenders and sell mortgage-backed securities to
investors, providing investors with a guarantee of timely payments of principal and interest in
exchange for a guarantee fee. Their contributions to the HTF come from their earnings.
In general, affordable housing trust funds provide dedicated, permanent sources of funding for
affordable housing that do not require annual appropriations. Many states and localities across the
United States have their own affordable housing trust funds, and affordable housing advocates
had worked to get such a fund created on a national level for years before the HTF was
established. Housing advocates cite the persistent shortage of rental housing that is affordable and
available for the lowest income households as a reason that such a fund is needed. Others have
criticized the HTF, arguing that it should be subject to the appropriations process and that it is
duplicative of other affordable housing programs.
The HTF provides funding for formula-based grants to states to use for affordable housing
activities. By statute, most of the funding must be used for rental housing; states can use up to
10% of their grants for certain homeownership activities (and up to 10% for administrative
expenses). Furthermore, all of the funds must benefit very low- or extremely low-income
households, and at least 75% of the funds used for rental housing must benefit extremely low-
income households (defined as households with incomes that do not exceed 30% of area median
income) or households with incomes no greater than the federal poverty line.
In September 2008, due to concerns about their financial status, Fannie Mae and Freddie Mac
entered voluntary conservatorship overseen by their regulator, the Federal Housing Finance
Agency (FHFA). Shortly thereafter, FHFA exercised its authority to suspend Fannie Mae’s and
Freddie Mac’s contributions to the HTF in light of their financial position at the time. This
suspension took effect before Fannie Mae and Freddie Mac had made any contributions to the
HTF, and it continued for several years. In late 2014, FHFA directed Fannie Mae and Freddie
Mac to begin setting aside contributions for the HTF during 2015. Those first funds were
transferred to HUD early in 2016, and HUD made the first HTF allocations to states later that
year. As of the cover date of this report, Fannie Mae’s and Freddie Mac’s contributions to the
HTF have continued in every year since.

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Introduction
The Housing Trust Fund (HTF), administered by the Department of Housing and Urban
Development (HUD), provides formula funds to states to use for certain affordable housing
activities. The HTF was established by the Housing and Economic Recovery Act of 2008 (HERA,
P.L. 110-289), which contained a wide range of housing-related provisions.1 Some of the key
features of the HTF include the following:
 It is intended to be primarily a rental housing production program. Most funds
must be used to produce, preserve, rehabilitate, or (up to a limit) operate rental
housing, while a limited amount can be used to support homeownership for
certain first-time homebuyers.
 A majority of funds must be used to benefit extremely low-income households,
and all funds must be used for extremely low- or very low-income households.
 Rather than being funded through appropriations, the HTF (along with the
Capital Magnet Fund, another affordable housing fund established by HERA) is
funded through contributions from two government-sponsored enterprises
(GSEs), Fannie Mae and Freddie Mac.
As used in this report, the term extremely low-income means households with incomes no higher
than 30% of area median income, very low-income means households with incomes no higher
than 50% of area median income, and low-income means households with incomes no higher than
80% of area median income.
This report provides background on the HTF, including its funding mechanism and key
programmatic features.
Background on the Housing Trust Fund’s Creation
Many states and localities across the nation have created housing trust funds, which provide
dedicated sources of state or local funding for affordable housing activities. In general, affordable
housing trust funds are permanent funding streams that are not reliant on annual appropriations
and are dedicated to affordable housing activities for low-income households. For example,
various types of real estate transaction fees are a common source of funding for state or local trust
funds.2 According to the Center for Community Change, an advocacy group, over 800 state, city,
and county housing trust funds have been established in 49 states across the nation.3
For several years prior to the establishment of the federal Housing Trust Fund in 2008, a coalition
of low-income housing advocacy organizations led by the National Low Income Housing
Coalition advocated for the establishment of an affordable housing trust fund at the national level.
(Appendix A provides a brief overview of earlier legislative proposals to create a national
housing trust fund.) Advocates wanted a national housing trust fund to be capitalized with new

1 For more information on the Housing and Economic Recovery Act, see archived CRS Report RL34623, Housing and
Economic Recovery Act of 2008.
2 For a brief overview of some common revenue sources for state and local housing trust funds, see National Low
Income Housing Coalition, Advocates Guide 2021: A Primer on Federal Affordable Housing & Community
Development Programs & Policies, “State and Local Housing Trust Funds,” pp. 5-40 and 5-41, https://nlihc.org/
explore-issues/publications-research/advocates-guide.
3 See the Center for Community Change’s website at http://housingtrustfundproject.org/housing-trust-funds/.
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resources devoted to affordable housing activities, rather than resources diverted from other
federal affordable housing programs. A dedicated source of funding would allow the program to
avoid the uncertainties of the annual appropriations process, and would mean that the program
would not be in competition with other housing priorities for appropriated funds.
In arguing for the need for the HTF, advocates note that there is a persistent shortage of rental
housing that is affordable and available to those with the lowest incomes.4 In 2019, for example,
for every 100 extremely low-income renters, 36 physically adequate housing units were both
affordable and available to that population.5 They argue that there is a particular need for funding
targeted specifically to the production of rental housing units for extremely low-income renter
households.6 Much federal housing assistance funding is largely aimed at making existing
housing more affordable to low-income households, such as by providing rental assistance, rather
than producing or rehabilitating additional housing units that are affordable to low-income
households.7 Current funding for these federal rental assistance programs is not sufficient to serve
all eligible households, however, and the majority of eligible households do not receive
assistance.8 While some federal programs do support the production of new affordable housing—
including the Low Income Housing Tax Credit and the HOME Investment Partnerships
Program—these programs may not always reach those who are extremely low-income (rather
than low- or very low-income). Furthermore, in the case of flexible funding like HOME, the
production of rental housing may compete with other eligible uses of the funds.
While housing advocates argue for the need for a national housing trust fund, there has also been
opposition to the concept of a national housing trust fund in general and the Housing Trust Fund
as established by HERA in particular. Among other criticisms, some argue that the HTF is
duplicative of other federal affordable housing programs, and HOME in particular, because the
activities that it funds are also eligible uses of other sources of federal funds.9 Some also argue
that any funding for affordable rental housing activities should go through the regular
appropriations process, thereby giving Congress the oversight opportunities that the
appropriations process provides.10

4 For example, see pages 2-3 of the written testimony of Sheila Crowley, then-President of the National Low Income
Housing Coalition, at a May 25, 2011, hearing before the Subcommittee on Capital Markets and Government
Sponsored Enterprises of the House Financial Services Committee, http://financialservices.house.gov/uploadedfiles/
052511crowley.pdf.
5 U.S. Department of Housing and Urban Development, Worst Case Housing Needs 2021 Report to Congress, p. 21,
https://www.huduser.gov/portal/sites/default/files/pdf/Worst-Case-Housing-Needs-2021.pdf. Units are considered to be
available to households at a certain income level if they are currently occupied by a household with an income at or
below that level or if they are vacant. Units that are affordable to lower-income households, but currently occupied by
higher-income households, are not considered to be available to lower-income households.
6 For example, see page 4 of the written testimony of Sheila Crowley, then-President of the National Low Income
Housing Coalition, at a May 25, 2011, hearing before the Subcommittee on Capital Markets and Government
Sponsored Enterprises of the House Financial Services Committee, http://financialservices.house.gov/uploadedfiles/
052511crowley.pdf.
7 See CRS Report RL34591, Overview of Federal Housing Assistance Programs and Policy for a discussion of the
evolution of federal housing programs and descriptions of current programs.
8 Center on Budget and Policy Priorities, 3 in 4 Low-Income Renters Needing Rental Assistance Do Not Receive It,
updated July 2021, https://www.cbpp.org/research/housing/three-out-of-four-low-income-at-risk-renters-do-not-
receive-federal-rental-assistance.
9 For example, see Andy Winkler, The Housing Trust Fund and Capital Magnet Fund: A Primer, American Action
Forum, February 24, 2015, https://www.americanactionforum.org/research/the-housing-trust-fund-and-capital-magnet-
fund-a-primer/.
10 Ibid.
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In July 2008, the Housing and Economic Recovery Act (HERA, P.L. 110-289) was enacted.
Among other things, it established the Housing Trust Fund, administered by the Department of
Housing and Urban Development,11 and the Capital Magnet Fund (CMF), administered by the
Department of the Treasury’s Community Development Financial Institutions Fund (CDFI
Fund).12 (See the text box below for a brief description of the CMF and how it differs from the
HTF.) Both programs were to be funded through annual contributions from Fannie Mae and
Freddie Mac. However, as discussed in more detail later in the “Funding Mechanism” section of
this report and Appendix B, these contributions were suspended for several years beginning
shortly after HERA was enacted. Fannie Mae and Freddie Mac were directed to begin setting
aside contributions for the HTF and CMF starting in 2015, and the HTF received its first funding
in 2016.
HUD initially published a proposed rule governing the allocation formula for the HTF on
December 4, 2009,13 and a proposed rule governing program requirements on October 29, 2010.14
On January 30, 2015, HUD published an interim rule governing both the HTF formula and
program requirements.15 It also indicated that it would seek public comment on the interim rule
after the HTF received funding and grantees had experience administering the program.16 In April
2021, HUD published a request for public comment seeking feedback on the interim rule as well
as certain additional questions.17

11 HERA established the Housing Trust Fund by amending the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992. The program is codified at 12 U.S.C. §4568. The GSE allocations to the Housing Trust Fund
and the Capital Magnet Fund are codified at 12 U.S.C. §4567.
12 For more information on the CDFI Fund, see CRS Report R42770, Community Development Financial Institutions
(CDFI) Fund: Programs and Policy Issues or the CDFI Fund website at https://www.cdfifund.gov/programs-training/
Programs/cmf/Pages/default.aspx.
13 Department of Housing and Urban Development, “Housing Trust Fund; Allocation Formula; Proposed Rule,” 74
Federal Register 63938-63942, December 4, 2009.
14 Department of Housing and Urban Development, “Housing Trust Fund; Proposed Rule,” 75 Federal Register 66978-
67009, October 29, 2010. This proposed rule would have created a new Subpart N to Part 92 of Title 24 of the Code of
Federal Regulations. Part 92 of Title 24 contains the regulations governing HUD’s Home Investment Partnerships
Program.
15 Department of Housing and Urban Development, “Housing Trust Fund; Interim Rule,” 80 Federal Register 5200-
5244, January 30, 2015. The interim rule creates a new Part 93 to Title 24 of the Code of Federal Regulations, rather
than putting the regulations in a new Subpart N of Part 92 as proposed in the proposed program rule.
16 80 Federal Register 5200.
17 Department of Housing and Urban Development, “Housing Trust Fund: Request for Public Comment on Prior
Interim Rule,” 86 Federal Register 21984-21985, April 26, 2021, https://www.federalregister.gov/documents/2021/04/
26/2021-08529/housing-trust-fund-request-for-public-comment-on-prior-interim-rule.
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Capital Magnet Fund
Through the Capital Magnet Fund (CMF), Treasury’s Community Development Financial Institutions (CDFI) Fund
provides competitive funding to CDFIs or qualified nonprofit organizations that have the development or
management of affordable housing as a principal purpose. The CMF is intended to leverage private capital and
support for investment in housing primarily for low-, very low-, and extremely low-income households. While the
HTF and the CMF share a similar purpose—expanding the supply of affordable housing for lower-income
households—and both are funded through contributions from Fannie Mae and Freddie Mac, there are several
differences between the two programs. Among other things, these differences include the fol owing:

How the funds are distributed: The HTF provides funds to states via formula, while the CMF provides
competitive funds to eligible CDFIs or nonprofits,

The income groups they target: Al HTF funds must benefit extremely low- or very low-income households,
while the CMF must primarily benefit households that are low-, very low-, or extremely low-income.

The degree to which they focus on rental housing or homeownership: At least 80% of HTF funds
must be used for rental housing; CMF funds can be used for rental or owner-occupied housing, with no
specific amount required to be spent on one or the other.
For more information on the CMF, see the CDFI Fund website at https://www.cdfifund.gov/programs-training/
Programs/cmf/Pages/default.aspx.
HTF Funding
Funding Mechanism
Both the HTF and the CMF are funded through contributions from Fannie Mae and Freddie Mac
rather than through appropriations. Fannie Mae and Freddie Mac are government-sponsored
enterprises (GSEs) that were chartered by Congress to provide liquidity in the mortgage market.
They do not originate mortgages, but rather purchase mortgages that meet certain standards, issue
mortgage-backed securities, and provide a guarantee (in exchange for a fee) that investors in the
securities will receive timely payment of principal and interest even if borrowers become
delinquent on the underlying mortgages.18 Their contributions to the HTF come from their
earnings.
Each year, HERA requires Fannie Mae and Freddie Mac to set aside 4.2 basis points (0.042%) for
each dollar of the unpaid principal balance of their new business purchases (basically, 0.042% of
the dollar amount of mortgages that they purchase, or 42 cents for every $1,000 of the unpaid
principal balance of mortgages they purchase). Of that amount, 65% is provided to HUD for the
HTF, and 35% is provided to Treasury for the CMF.19 Fannie Mae and Freddie Mac are prohibited
from passing the costs of the contributions on to mortgage lenders.20
HERA requires the Federal Housing Finance Agency (FHFA), Fannie Mae’s and Freddie Mac’s
regulator, to suspend the GSEs’ contributions to the affordable housing funds under certain
circumstances. Specifically, FHFA is to suspend the contributions if it finds that they (1) are
contributing or would contribute to a GSE’s financial instability, (2) are causing or would cause a

18 For more information on Fannie Mae and Freddie Mac and the role that they play in the mortgage market, see CRS
Report R42995, An Overview of the Housing Finance System in the United States.
19 12 U.S.C. §4567(e). By statute, the first 25% of the annual contributions was to be diverted to pay for any ongoing
costs of the Hope for Homeowners program, a temporary foreclosure prevention program that began in 2008 and ended
in 2011. No funds have been diverted for that purpose since 2017 (from funds set aside in 2016).
20 See 12 U.S.C. §4567(c) and Federal Housing Finance Agency, “Housing Trust Fund,” 79 Federal Register 74595-
74597, December 16, 2014.
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GSE to be classified as undercapitalized, or (3) are preventing or would prevent a GSE from
successfully completing a capital restoration plan.21 In September 2008, a little over a month after
HERA was enacted, Fannie Mae’s and Freddie Mac’s financial condition was deteriorating as the
financial crisis unfolded. They agreed to enter voluntary conservatorship, and FHFA took control
of the companies from their stockholders and management. (They remain in conservatorship as of
the cover date of this report.22) Shortly after Fannie Mae and Freddie Mac entered
conservatorship, FHFA exercised its authority to suspend the contributions to the HTF and the
CMF before any contributions had been made.
At the end of 2014, after the GSEs’ financial positions had improved, FHFA directed Fannie Mae
and Freddie Mac to begin making the contributions.23 Fannie Mae and Freddie Mac began setting
funds aside in 2015 and the first funds were transferred to the HTF in 2016. As of the cover date
of this report, they have made contributions in every year since. For more details on the
suspension and ultimate beginning of the contributions, see Appendix B.
HTF Formula
On an annual basis, the GSE contributions designated for the Housing Trust Fund are transferred
to HUD, which administers the program. Through the HTF, HUD provides formula grants to the
50 states, the District of Columbia, and Puerto Rico. Four insular areas—the Northern Mariana
Islands, Guam, the Virgin Islands, and American Samoa—are also eligible for funding.
HTF funds are allocated among the 50 states, the District of Columbia, and Puerto Rico by
formula. (Funding for the four insular areas is allocated by a different formula.24) By statute, the
formula for allocating funds to states is based on the following factors:
 the ratio of the shortage of standard rental units affordable and available to
extremely low-income renter households in a given state to the aggregate shortage
of such rental units in all states (this factor is given “priority emphasis”);
 the ratio of the shortage of standard rental units affordable and available to very
low-income renter households in a given state to the aggregate shortage of such
rental units in all states;
 the ratio of extremely low-income renter households living with incomplete
kitchen or plumbing facilities, more than one person per room, or spending more
than 50% of income on housing costs in a given state to the aggregate number of
such households in all states; and

21 12 U.S.C. §4567(b).
22 As of the cover date of this report, Fannie Mae and Freddie Mac remain in conservatorship and subject to agreements
with Treasury (which have been amended multiple times over the years). Under these agreements, Treasury provided
financial support to both Fannie Mae and Freddie Mac, and Fannie Mae and Freddie Mac paid dividends to Treasury in
exchange for that support. Neither Fannie nor Freddie has required additional support from Treasury for several years.
For more information on the conservatorship and support that Fannie Mae and Freddie Mac have received from
Treasury, see CRS Report R44525, Fannie Mae and Freddie Mac in Conservatorship: Frequently Asked Questions.
23 FHFA’s letters to Fannie Mae and Freddie Mac directing them to begin the contributions, and its justification for
lifting the suspension, are available at https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Statement-on-the-
Housing-Trust-Fund-and-Capital-Magnet-Fund.aspx.
24 24 C.F.R. §93.50(c) provides that funding for the four insular areas will be based on the ratio of renter households in
each insular area to the total number of renter households in the 50 states, DC, Puerto Rico, and the insular areas.
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 the ratio of very low-income renter households spending more than 50% of
income on rent in a given state to the aggregate number of such households in
all states.
The sum of these factors is multiplied by the relative cost of construction in the state (compared
to the national cost of construction) and applied to the overall amount of funding available to
arrive at a grant amount.
While the formula factors are specified by statute, HUD has discretion to choose how to weight
each factor (with the additional limitation that the first factor is to be given “priority emphasis”).
In its interim rule, HUD chose to weight the formula factors in a way that prioritizes the need for
housing for extremely low-income households. The highest weight is given to the first formula
factor (50%), followed by the third formula factor (25%). The second and fourth factors are given
the lowest weights (12.5% each).25
The statute specifies that each of the 50 states and the District of Columbia (DC) are to receive a
minimum annual grant of $3 million.26 In its interim rule, HUD stated that, in the event that HTF
funding in a given year is not sufficient to award each state and DC a minimum grant amount of
$3 million, HUD will publish an alternative method for allocating the funds in the Federal
Register with an opportunity for public comment.27
Annual HTF Funding and FY2021 Allocations
The GSEs first set aside contributions for the HTF during 2015, and transferred the first funding
to the HTF in early 2016. HUD announced the first formula allocations—totaling nearly $174
million—in May 2016.28 The majority of states (plus DC) received the minimum allocation of $3
million. (The minimum allocation applies to the 50 states and DC, but not Puerto Rico and the
insular areas, which received smaller amounts of funding.) Fifteen states received allocations
higher than the minimum in 2016.
The HTF has continued to receive funding in subsequent years. The amount of annual funding
provided to the HTF has increased since 2016, and the funding available for allocation in 2021
(nearly $693 million) was more than twice the amount available in 2020 (nearly $323 million).
The increase in HTF funding in 2021 reflected an increase in the dollar amount of mortgages that
Fannie Mae and Freddie Mac had purchased in 2020 compared to 2019.29As noted previously,
Fannie Mae and Freddie Mac are required to contribute 4.2 basis points for each dollar of the
unpaid principal balance of their new business purchases to the HTF and the CMF. (Of that

25 80 Federal Register 5206 and 24 C.F.R. §93.50(d)(2)(ii).
26 12 U.S.C. §4568(c)(4)(C).
27 80 Federal Register 5207 and 24 C.F.R. §93.52(b).
28 Department of Housing and Urban Development, “HUD Makes $174 Million Available through New Housing Trust
Fund,” press release, April 4, 2016, http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/
2016/HUDNo_16-042.
29 Fannie Mae reported new business purchases of $1.4 trillion in 2020, compared to about $667 billion in 2019. See
Fannie Mae 2020 Form 10-K, p. 223, https://www.fanniemae.com/media/38271/display and Fannie Mae 2019 Form
10-K, pp. 65-66, https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/ir/pdf/
quarterly-annual-results/2019/q42019.pdf. Similarly, Freddie Mac reported $1.2 trillion in new business purchases in
2020, compared to about $529 billion in 2019. See Freddie Mac 2020 Form 10-K, p. 148, http://www.freddiemac.com/
investors/financials/pdf/10k_021121.pdf and Freddie Mac 2019 Form 10-K, p. 130, http://www.freddiemac.com/
investors/financials/pdf/10k_021320.pdf.
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amount, 65% is allocated to the HTF.) Therefore, a higher dollar volume of mortgages purchased
results in a higher amount of funding for the HTF.
Table 1 shows the amount of HTF funding that HUD has allocated to states in each year from
2016 through 2021.30
Table 1. Amount of HTF Funds Allocated by HUD
(Dollars in millions)
Fiscal Year
Amount
2016
$173.6
2017
$219.2
2018
$266.8
2019
$247.7
2020
$322.6
2021
$692.9
Source: Table created by CRS based on Federal Register notices announcing HTF allocations amounts.

HUD announced the 2021 allocations from the HTF in April 2021. (These allocations are from
the funds that were set aside by Fannie Mae and Freddie Mac during calendar year 2020.) State
allocation amounts are shown in Table 2. All states received allocations above the minimum state
allocation amount of $3 million in FY2021: the smallest state allocation was slightly over $3.1
million, which was received by 13 states and DC. The highest allocation was California’s, at
almost $127 million, followed by New York at $73 million. The median HTF grant amount
(including the 50 states, the DC, and Puerto Rico, but not the other insular areas) was $7.3
million, and the mean was $13.3 million.
State allocations from the HTF in previous years are available on HUD’s website.31
Table 2. FY2021 HTF Allocations to States
(Dollars in millions)
State
Allocation
Alabama
$6.69
Alaska
$3.10
Arizona
$11.48
Arkansas
$4.12
California
$126.58
Colorado
$10.03

30 The amount allocated by HUD may be more or less than the amount transferred from Fannie Mae and Freddie Mac
in a given year for a variety of reasons. For example, the 2016 allocations were lower because of a required
sequestration of mandatory spending, while the 2017 allocations were higher because unobligated 2016 funds were
included in the allocation amount.
31 State allocations for formula grants administered by HUD’s Office of Community Planning and Development are
available on HUD’s website at https://www.hud.gov/program_offices/comm_planning/about/budget or on the HUD
Exchange website at https://www.hudexchange.info/grantees/allocations-awards/.
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State
Allocation
Connecticut
$8.45
Delaware
$3.10
District of Columbia
$3.10
Florida
$35.07
Georgia
$17.46
Hawaii
$3.48
Idaho
$3.10
Il inois
$30.70
Indiana
$10.67
Iowa
$4.36
Kansas
$4.21
Kentucky
$6.72
Louisiana
$8.12
Maine
$3.10
Maryland
$9.98
Massachusetts
$16.99
Michigan
$17.16
Minnesota
$9.25
Mississippi
$4.01
Missouri
$10.54
Montana
$3.10
Nebraska
$3.10
Nevada
$6.75
New Hampshire
$3.10
New Jersey
$24.35
New Mexico
$3.19
New York
$73.38
North Carolina
$17.49
North Dakota
$3.10
Ohio
$21.19
Oklahoma
$5.25
Oregon
$9.82
Pennsylvania
$24.13
Rhode Island
$3.10
South Carolina
$7.76
South Dakota
$3.10
Tennessee
$9.74
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State
Allocation
Texas
$41.75
Utah
$3.27
Vermont
$3.10
Virginia
$14.34
Washington
$15.69
West Virginia
$3.10
Wisconsin
$11.16
Wyoming
$3.10
American Samoa
$0.04
Guam
$0.34
Northern Mariana Islands
$0.19
Puerto Rico
$3.20
Virgin Islands
$0.37
Total
$692.90
Source: U.S. Department of Housing and Urban Development, “Housing Trust Fund Federal Register Allocation
Notice; Fiscal Year 2021,” 86 Federal Register 20515, April 20, 2021, https://www.federalregister.gov/documents/
2021/04/20/2021-08022/housing-trust-fund-federal-register-allocation-notice-fiscal-year-2021.
Program Requirements
HUD awards grants from the HTF to states based on the formula described above. States
designate an entity to administer the funds, such as a housing finance agency, housing and
community development agency, or another “qualified instrumentality of the state.”32 The state-
designated entity can administer the grant itself, or it can allow subgrantees to administer some or
all of the funds. Subgrantees can be state agencies, or they can be units of local government that
receive other HUD block grant funds and have submitted Consolidated Plans to HUD.33
Grantees (the state-designated entities that administer the funds) and any subgrantees must submit
plans to HUD that describe how they will distribute HTF funds, including both geographic
priorities and any priority housing needs they plan to address with the funds. These plans are
discussed in more detail in the “Planning” section.
Grantees and subgrantees ultimately provide funds to recipients, which are for-profit or nonprofit
entities that receive HTF funds as owners or developers of affordable housing. Recipients of HTF
grant amounts must have relevant experience. More specifically, an organization receiving
funding for a rental housing project must have experience owning, constructing, rehabilitating,
managing, or operating affordable multifamily rental projects. An organization receiving funding

32 The definition of a state-designated entity is at 24 C.F.R. §93.2. A list of the entities that states have designated to
administer their HTF programs is available at https://www.hudexchange.info/programs/htf/grantees/.
33 HUD requires states and local jurisdictions to submit a Consolidated Plan in order to receive funds from its block
grant programs, such as the Community Development Block Grant (CDBG) program and the HOME Investment
Partnerships Program. The Consolidated Plan describes a jurisdiction’s affordable housing needs and explains how
HUD funds and other resources will help address those needs.
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for homeownership activities is required to have experience in designing, constructing,
rehabilitating, or marketing affordable homeownership housing, or in providing assistance with
down payments, closing costs, or interest rate subsidies. Recipients also have to demonstrate
general financial experience and expertise and familiarity with the requirements of any related
federal, state, or local housing programs that will be used in conjunction with grants from the
HTF.34
This section provides an overview of some of the key requirements governing the HTF based on
the HTF statute and HUD’s implementing regulations.
Eligible Uses of Funding
States must use most of their grant amounts from the HTF to support rental housing, although
they can use a portion of their funding to assist certain first-time homebuyers. Similarly, most of
the funding is required to be used to benefit extremely low-income families or families with
incomes below the poverty line, but some funding can be used to benefit very low-income
families as well. Funds can be used to provide a variety of different types of assistance, including
grants, equity investments, and interest-bearing or non-interest bearing loans.35
Housing assisted with HTF funds must meet certain property standards that address various
requirements related to housing quality, accessibility, and energy efficiency, among other things.
Different standards apply depending on whether HTF funds are used to construct, rehabilitate, or
acquire housing, and, in some cases, whether the funds are used for rental or owner-occupied
housing.36
Rental Housing Activities
Grants from the HTF can be used for the production, preservation, rehabilitation, or operation of
rental housing. By law, at least 80% of HTF funds must be used for rental housing activities. (Up
to 10% can be used for certain homebuyer activities, and up to 10% can be used for
administrative purposes.)
HUD’s interim rule specifies that a state grantee may use no more than one-third of its annual
grant for operating assistance.37 (Operating assistance refers to using funds for the ongoing costs
of operating rental housing, such as paying for utilities, maintenance, insurance, or other similar
expenses.) Some housing advocates have argued that more funds should be allowed to be used for
operating assistance. However, HUD has expressed concern that allowing more funds to be used
for such purposes could eventually result in most HTF funds being used for operating assistance
rather than being used for rental housing production.38 Grantees can choose whether they will
allow each recipient to use up to one-third of its funding for operating costs, or whether they will
allow some recipients to use more and others to use less so that no more than one-third of the
total grant is used for operating assistance.

34 These requirements are included in the definition of recipient at 24 C.F.R. §93.2.
35 24 C.F.R. §93.200.
36 24 C.F.R. §93.301.
37 24 C.F.R. §93.200.
38 See 80 Federal Register 5210.
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Owner-Occupied Housing Activities
Up to 10% of a state’s grant from the HTF may be used for the production, rehabilitation, or
acquisition of owner-occupied housing, including through down payment assistance, closing cost
assistance, and interest-rate buy-downs.39 The homebuyer must use the home as a principal
residence and be a first-time homebuyer, defined as not having owned a home in the prior three
years. Homebuyers must also complete a pre-purchase financial counseling requirement.40
Any owner-occupied housing assisted with HTF funds must be modest housing, defined as having
a purchase price that is no higher than 95% of the median purchase price in the area.41 The
grantee must adopt either resale or recapture provisions for owner-occupied housing assisted
through the HTF. Resale provisions specify that, if the HTF-assisted household no longer
occupies the home as a principal residence during a specified affordability period, then the house
will be offered for sale to another income-eligible household. Recapture provisions specify that, if
the HTF-assisted household no longer occupies the home as a principal residence during a
specified affordability period, the grantee is able to recapture some or all of the HTF funds that
were provided.42
Restrictions on Eligible Activities
By statute, money from the HTF cannot be used for political activities, advocacy, lobbying,
counseling services,43 travel expenses, or preparing or providing advice on tax returns.44 HUD’s
interim rule specifies additional activities that are ineligible uses of HTF funds.45
HUD can set a limit of up to 10% of a state or state-designated entity’s HTF grant amount that
can be used for the cost of administering the programs funded by the grant; HUD has set this limit
at 10%. Using funds for other administrative costs of the grantee or funding recipient is
prohibited.
Income Targeting
All HTF funds must benefit households that qualify as extremely low-income or very low-
income.46 As noted earlier, extremely low-income (ELI) households are defined as households
with incomes that do not exceed 30% of area median income, and very low-income (VLI)

39 12 U.S.C. §4568(a)(7)(B) and 24 C.F.R. §93.200.
40 12 U.S.C. §4568(a)(7)(B).
41 24 C.F.R. §93.305. The limits by area are available at https://www.hudexchange.info/resource/4982/housing-trust-
fund-homeownership-value-limits/.
42 24 C.F.R. §93.305.
43 The costs of housing counseling for HTF-assisted households can be considered an eligible administrative expense
under 24 C.F.R. §93.202(c).
44 12 U.S.C. §4568(c)(10)(D).
45 24 C.F.R. §93.204.
46 12 U.S.C. §4568(c)(7). The specific definitions of extremely low-income and very low-income that apply are at 12
U.S.C. §4568(f) and 24 C.F.R. §93.2. The definition of very low-income family includes families in rural areas with
incomes below the poverty line for a family of the applicable size.
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households are defined as having incomes no higher than 50% of area median income.47 HUD
publishes the dollar amounts of the income limits by area on its website.48
By statute, of the funds that are used for rental housing (at least 80% of total HTF funds), at least
75% must be used to benefit ELI households or households with incomes at or below the poverty
line. In general, the remaining funds may be used to benefit VLI households.
However, in its interim rule, HUD requires that all HTF funds must benefit ELI households or
households with incomes at or below the poverty line in years when the total amount of HTF
funds available for allocation is less than $1 billion. In years when more than $1 billion in HTF
funds is available to be allocated, HUD specifies that at least 75% of a state’s grant amount must
be used to benefit ELI households or households with incomes at or below the poverty line.49
Affordability
HTF-assisted housing must meet a number of requirements to be considered affordable.50 Among
other things, these requirements include maximum rents that can be charged for HTF-assisted
rental units and affordability periods for all HTF-assisted units.
Maximum Rent
HUD’s interim rule specifies a maximum rent (including utilities) for HTF-assisted rental housing
units. For ELI households, rents in HTF-assisted units cannot exceed the greater of (1) 30% of the
income of a household that is making 30% of area median income, or (2) 30% of the federal
poverty line. For VLI households, rents cannot exceed 30% of the income of a household that is
making 50% of area median income.51 HUD annually publishes the dollar amounts of rent limits
by area.52
Some housing advocates have argued that rents in HTF-assisted units should be limited to no
more than 30% of tenants’ actual incomes, rather than 30% of a specified percentage of area
median income.53 These advocates point out that, for ELI households who are earning
significantly less than 30% of area median income (or VLI households earning significantly less
than 50% of AMI), rents that are set at 30% of 30% of AMI (or 30% of 50% of AMI) may be
unaffordable and impose a hardship on tenants. Several other federal affordable housing

47 Several years after the passage of the law that established the HTF, the Consolidated Appropriations Act, 2014 (P.L.
113-76) amended the definition of extremely low-income for the purposes of certain other federal housing assistance
programs to mean households with incomes that do not exceed the higher of (1) the federal poverty line or (2) 30% of
area median income. The HTF statute defines extremely low-income as households with incomes at or below 30% of
area median income, but requires that a certain amount of funds be used for the benefit of ELI households or
households with incomes below the federal poverty line.
48 The HTF income limits are available at https://www.hudexchange.info/programs/htf/htf-income-limits/.
49 24 C.F.R. §93.250.
50 See 24 C.F.R. §93.302 and §93.304.
51 24 C.F.R. §93.302(b). Under the most commonly used definition of housing affordability, housing is considered to
be affordable if a household is paying no more than 30% of its income on rent. As noted previously, ELI households
have incomes at or below 30% of area median income, and VLI households have incomes at or below 50% of area
median income. The maximum rents for the HTF are based on 30% of the incomes of households at the highest end of
these ELI and VLI income ranges.
52 The HTF rent limits are available at https://www.hudexchange.info/programs/htf/htf-rent-limits/.
53 For example, see National Low Income Housing Coalition, “NLIHC Comments on HUD’s Proposed NHTF Rule,”
press release, January 7, 2011, http://nlihc.org/article/nlihc-comments-hud-s-proposed-nhtf-rule.
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programs, such as the public housing and Section 8 programs, generally cap rents at 30% of a
tenant’s income. However, HUD notes that there is no separate source of appropriated funds for
operating assistance for HTF units to help make up the difference between tenants’ rents and the
costs of operating the housing. Although HTF funds can be used for operating assistance, that
amount is capped, and funds may not be available for operating assistance if there is no funding
for the HTF in a given year. Therefore, HUD believes that fixed rents (rather than variable rents
based on tenants’ actual incomes) are necessary for the purposes of underwriting and financing
rental developments using HTF funds.54
Affordability Periods
HTF-assisted housing must remain affordable for a specified period of time. HTF-assisted rental
housing must remain affordable for 30 years. (The grantee can choose to impose a longer
affordability period.55) HTF-assisted owner-occupied housing must remain affordable for 10, 20,
or 30 years, depending on whether resale or recapture provisions are used and the amount of HTF
assistance provided to the unit.56
Planning
HERA requires states or the state-designated entities that administer grants from the HTF to
develop allocation plans describing how the grant money will be distributed. The allocation plan
is part of the Consolidated Plan and Annual Action Plan that grantees must submit in order to
receive certain other HUD block grant funds (such as HOME and CDBG).57 Grantees’ allocation
plans must describe the state’s priority housing needs and how it plans to distribute HTF funds,
and they must include performance goals. The states and state-designated entities are to make
their allocation plans available for public comment and consider any public comments they
receive.
If the grantee will be awarding funds to recipients directly, it must describe how the funds will be
geographically distributed throughout the state, as well as describe other factors that it will
prioritize in awarding funds to projects and set certain program requirements. If the state plans to
prioritize any specific segment of the extremely low- and very low-income population, or allow
property owners to prioritize a specific population, such a preference must be described in the
allocation plan.58
If the grantee intends to provide funds to subgrantees (i.e., local governments), it must indicate
that in its allocation plan. Subgrantees that receive HTF funds from the state must submit their
own allocation plans that describe HTF requirements, priority factors for funding, and any plans
to prioritize a specific segment of the extremely low-income or very low-income population,
among other things. The subgrantee’s allocation plan must be consistent with the state’s
allocation plan.59

54 80 Federal Register 5215
55 24 C.F.R. §93.302(d).
56 24 C.F.R. §93.304(e) and §93.305(b).
57 For more information on the Consolidated Plan and Annual Action Plan, see HUD’s website at
https://www.hudexchange.info/programs/consolidated-plan/.
58 24 C.F.R. §91.320(k)(5).
59 24 C.F.R. §91.220 (l)(5).
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Oversight
Both grantees and HUD have certain oversight responsibilities for HTF funds.
The states or state-designated entities that receive grants from the HTF are responsible for
overseeing the proper use of the funds and obtaining reimbursement from recipients for
improperly used funds. Future HTF grants are to be reduced by the amount of any improperly
used HTF funds – that is, funds that are used in projects that do not meet HTF requirements or are
not completed—unless the improperly used funds are repaid to the grantee by the recipient.
Grantees must conduct inspections of HTF-assisted properties at the time of project completion,
and must conduct inspections of HTF-assisted rental housing periodically thereafter. Grantees are
also subject to recordkeeping and other requirements.
Grantees are responsible for monitoring the compliance of subgrantees. Grantees and subgrantees
are required to submit annual performance reports to HUD describing how HTF funds were used
and the extent to which they complied with the allocation plans.60
HUD is to review grantees’ performance on at least an annual basis.61 If grantees are not
complying with HTF requirements, and fail to come into compliance, HUD can take certain
actions, such as requiring the grantee to submit plans detailing how it will correct the issue.62 In
cases of substantial noncompliance, HUD can take additional actions, including preventing the
grantee from withdrawing HTF funding, restricting its activities, or terminating its HTF
assistance entirely. HUD must comply with requirements related to providing notice and an
opportunity for a hearing before taking these actions.63
Grantees must commit HTF funds within two years and spend HTF funds within five years.64 Any
funds that are not committed or spent within the time provided will be recaptured by HUD and
reallocated.
HTF Program Outcomes
The first HTF funding was allocated to states in 2016 and, as of the cover date of this report,
funding has been provided in every year since. States have two years to commit their HTF funds
and five years to spend their funds. In 2021, HUD began publishing National Production Reports
on the HTF that provide some information on funding spent and units completed.65
According to HUD’s National Production Report with data as of November 30, 2021, HTF funds
had been used in a total of 1,641 completed housing units as of that date.66 While overall data and
trends could change as more units are completed and occupied, some characteristics of these first
completed HTF units included the following:
 All of these units were rental units; none were owner-occupied.

60 24 C.F.R. §91.520.
61 24 C.F.R. §93.451.
62 24 C.F.R. §93.452.
63 24 C.F.R. §93.453.
64 24 C.F.R. §93.400.
65 The HTF National Production Reports are available on HUD’s website at https://www.hudexchange.info/programs/
htf/htf-national-production-reports/. HUD also publishes certain reports related to monitoring grantees’ activities under
the HTF, including reports on compliance with certain deadlines, open activities reports, and vacant unit reports.
66 U.S. Department of Housing and Urban Development, Housing Trust Fund National Production Report, November
30, 2021, https://files.hudexchange.info/reports/published/HTF_Prod_Natl_20211130.pdf.
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 Most units, and most funding, have been new construction (62% of units),
followed by rehabilitated units (36%). About 1.5% of units represented
acquisition.
 Nearly all funds—98%—benefitted households with incomes at or below 30% of
area median income.
 About 70% of units also received some form of rental assistance. The largest
share—41%—had project-based Section 8 assistance, and another 22% of units
had other forms of federal, state, or local project-based assistance. About 6% had
tenant-based Section 8 vouchers, while another 2% benefitted from either
HOME-funded tenant-based rental assistance or other forms of federal, state, or
local tenant-based assistance. Twenty-nine percent of units had no rental
assistance.
 In occupied units, most tenants identified as White (65%), while about 23%
identified as Black. In terms of ethnicity, about 13% of units were occupied by
tenants identifying as Hispanic or Latino.
 Some completed HTF-assisted units were designated for specific populations,
such as homeless individuals (22% of units) or homeless families (6%).
 HTF funds are generally combined with other funding sources to produce
affordable housing. For completed HTF-assisted units as of November 30, 2021,
about nine dollars in other funding was used for each dollar of HTF funding.

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Appendix A. Earlier Legislative Proposals to
Establish a National Housing Trust Fund
Prior to the enactment of HERA, legislation to establish a national affordable housing trust fund
was introduced several times, beginning in the 106th Congress. This appendix provides a brief
description of those previous legislative proposals to establish a national housing trust fund.
One major question surrounding the creation of an affordable housing trust fund was how such a
program would be funded. Early legislation proposed using a portion of receipts from the Federal
Housing Administration (FHA). However, because FHA receipts are counted as offsets to
appropriations, diverting FHA receipts to a housing trust fund would have a cost.
Later legislation proposed using contributions from Fannie Mae and Freddie Mac as a potential
funding source. Fannie Mae and Freddie Mac were chartered by Congress to ensure liquidity in
the mortgage market.67 They purchase mortgages from private lenders and package them into
mortgage-backed securities that they sell to investors with a guarantee that the investors will
receive timely principal and interest payments. Their charters give them a special relationship
with the federal government that includes both certain privileges and certain responsibilities.
They are overseen by an independent federal regulator.
Because of the GSEs’ status as government-sponsored private entities, rather than federal
agencies, contributions from Fannie Mae and Freddie Mac would not have counted as new
government spending. However, there was some disagreement over whether it was appropriate
for the government to require the GSEs to contribute to affordable housing funds. Opponents of
GSE contributions argued that the GSEs should not be asked to balance public policy objectives
against the interests of their shareholders. Proponents pointed to the special privileges that the
GSEs received, and statutory affordable housing goals that they already had, to justify their
contributions to a national housing trust fund.
In 2008, HERA created the HTF and the CMF. Both were to be funded by contributions from
Fannie Mae and Freddie Mac. Table A-1 summarizes previous legislation that had been
introduced to create a national housing trust fund, including proposed funding sources.

67 For more information on Fannie Mae and Freddie Mac, see CRS Report R44525, Fannie Mae and Freddie Mac in
Conservatorship: Frequently Asked Questions.
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Table A-1. Previously Introduced Legislation to Create a National Affordable
Housing Trust Fund
Bill
Number
Bill Title
Brief Description
Final Status
106th Congress
S. 2997
The National
This bil would have established a National
Hearings were held
Affordable
Affordable Housing Trust Fund and established
by the
Housing Trust
requirements governing the fund.
Subcommittee on
Fund Act of 2000
The dedicated funding source would have been
Housing and
revenue generated by the FHA Mutual Mortgage
Transportation of
Insurance Fund (MMI Fund) beyond the amount
the Committee on
needed to maintain a capital adequacy level of 3%, as
Banking, Housing,
well as any excess revenue generated by Ginnie Mae. and Urban Affairs.
107th Congress
S. 1248
The National
This bil would have established a National
Hearings were held
Affordable
Affordable Housing Trust Fund and established
by the
Housing Trust
requirements governing the fund.
Subcommittee on
Fund Act of 2001
The dedicated funding source would have been
Housing and
revenue generated by the FHA MMI Fund beyond
Transportation of
the amount needed to maintain a capital adequacy
the Committee on
level of 3%, as well as any excess revenue generated
Banking, Housing,
by Ginnie Mae.
and Urban Affairs.
H.R. 2349
The National
This bil would have established a National
The bil was

Affordable
Affordable Housing Trust Fund and established
referred to the
Housing Trust
requirements governing the fund.
Subcommittee on
Fund Act of 2001
The dedicated funding source would have been
Housing and
revenue generated by the FHA MMI Fund beyond
Community
the amount needed to maintain the capital adequacy
Opportunity of the
level required by statute (2%) as well as any excess
Committee on
funds from Ginnie Mae.
Financial Services.
No hearings were
held.
108th Congress
S. 1411
The National
This bil would have established a National
S. 1411 was

Affordable
Affordable Housing Trust Fund and established
referred to the
Housing Trust
requirements governing the fund.
Committee on
Fund Act of 2003
The dedicated funding source would have been
Banking, Housing,
revenue generated by the FHA MMI Fund beyond
and Urban Affairs.
the amount needed to maintain a capital adequacy
No hearings were
level of 3%, as well as any excess revenue generated
held.
by Ginnie Mae.
Reed
Amendment to
This amendment would have required Fannie Mae
This amendment to
Affordable
the Federal
and Freddie Mac to annually provide 2.5% of their
a GSE reform bil
Housing Fund Housing
pre-tax profits into a fund to provide affordable
was adopted by the
amendment
Enterprise
housing grants or other subsidies, and 2.5% of their
Senate Banking
to S. 1508
Regulatory
pre-tax profits into an underserved market fund that
Committee.

Reform Act of
would support new mortgage products or increased
The bil was
2003
flexibility to address underserved markets.
ordered reported
by the committee,
but was not
considered on the
Senate floor.
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Bill
Number
Bill Title
Brief Description
Final Status
H.R. 1102
The National
This bil would have established a National
The bil was

Affordable
Affordable Housing Trust Fund and established
referred to the
Housing Trust
requirements governing the fund.
Subcommittee on
Fund Act of 2003
The dedicated funding source would have been funds Housing and
in the FHA MMI Fund beyond those needed to
Community
maintain the capital adequacy level required by law
Opportunity of the
(2%), as well as any excess funds received by Ginnie
Committee on
Mae.
Financial Services.
No hearings were
held.
109th Congress
H.R. 1461
The Federal
This bil , as passed by the House, would have
The bil passed the
Housing Finance
required each GSE to establish and manage an
House and was
Reform Act of
affordable housing fund and established requirements referred to the
2005
for the funds.
Senate Committee
The dedicated funding source would have been
on Banking,
either 3.5% or 5% of Fannie Mae’s and Freddie Mac’s
Housing, and Urban
prior year’s after-tax income, depending on the year. Affairs
The bil included a sunset provision after five years,
after which the GSEs would no longer have been
required to make contributions.
110th Congress
H.R. 1427
The Federal
This bil , as passed by the House, would have
The bil passed the
Housing Finance
established an affordable housing fund and
House and was
Reform Act of
established requirements for the fund.
referred to the
2007
The dedicated funding source would have been 1.2
Senate Committee
basis points for each dol ar of Fannie Mae’s and
on Banking,
Freddie Mac’s average total mortgage portfolio for
Housing, and Urban
the preceding year.
Affairs.
The bil included a sunset provision after five years,
after which the GSEs would no longer have been
required to make contributions.
H.R. 1852
The Expanding
This bil , as passed by the House, would have
The bil passed the
American
authorized appropriations in an amount equal to the
House and was
Homeownership
net increase in negative credit subsidy for certain
referred to the
Act of 2007
FHA programs in each fiscal year. The appropriation
Senate Committee
would have been used for designated housing
on Banking,
activities, including grants to an affordable housing
Housing, and Urban
fund.
Affairs.
H.R. 2895
The National
This bil , as passed by the House, would have
The bil passed the
Affordable
established a National Affordable Housing Trust
House and was
Housing Trust
Fund and established requirements governing the
referred to the
Fund Act of 2007
fund.
Senate Committee
The bil did not include a permanent funding source,
on Banking,
but provided that the trust fund would include any
Housing, and Urban
amounts transferred from Fannie Mae and Freddie
Affairs.
Mac, any amounts appropriated pursuant to H.R.
1852, or any other amounts that may be
appropriated, transferred, or credited to the trust
fund.
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Bill
Number
Bill Title
Brief Description
Final Status
S. 2391
The Government
This bil would have established an affordable housing The bil was
Sponsored
block grant program and a Capital Magnet Fund and
referred to the
Enterprise
established requirements governing both programs.
Committee on
Mission
The dedicated funding source would have been GSE
Banking, Housing,
Improvement Act
contributions of 4.2 basis points for each dol ar of
and Urban Affairs.
the unpaid principal balance of their total new
No hearings were
business purchases.
held.
S. 2523
The National
This bil would have established a National
The bil was
Affordable
Affordable Housing Trust Fund and established
referred to the
Housing Trust
requirements governing the fund.
Committee on
Fund Act of 2007
The bil did not include a permanent funding source,
Banking, Housing,
but provided that the trust fund would include any
and Urban Affairs.
amounts transferred from Fannie Mae and Freddie
No hearings were
Mac, any amounts appropriated pursuant to H.R.
held.
1852, or any other amounts that may be
appropriated, transferred, or credited to the trust
fund.
H.R. 3221
The Housing and
This bil , as passed by both the House and Senate,
This bil became
Economic
established the Housing Trust Fund and the Capital
P.L. 110-289, which
Recovery Act of
Magnet Fund and established requirements governing authorized the
2008
both programs.
Housing Trust Fund
The dedicated funding source is GSE contributions
and the Capital
of 4.2 basis points for each dol ar of the unpaid
Magnet Fund and
principal balance of their total new business
identified a
purchases.
permanent funding
source.
Source: Table compiled by CRS based on information from https://www.congress.gov/.
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Appendix B. Suspension of HTF Contributions in
2008 and Subsequent Beginning of Contributions
This Appendix provides a brief timeline of the suspension of the GSEs’ contributions to the HTF
in 2008 and the subsequent lifting of the suspension.
Suspension of Contributions
In September 2008, not long after HERA was enacted, there were concerns about the financial
status of Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac entered into voluntary
conservatorship and FHFA took over their management. The Department of the Treasury agreed
to provide financial support to the GSEs through the purchase of senior preferred stock.68
In November 2008, FHFA informed Fannie Mae and Freddie Mac that they should suspend their
contributions to the affordable housing funds until further notice.69 Neither GSE had started
making contributions at the time that the contributions were suspended, and the suspension of the
contributions left the HTF without a source of funding for several years.
Beginning of Contributions
In December 2014, FHFA directed Fannie Mae and Freddie Mac to begin setting aside
contributions for the HTF and the CMF.70 In lifting the suspension, FHFA noted Fannie Mae’s
and Freddie Mac’s recent profitability. The GSEs were directed to set aside funds beginning in
calendar year 2015, with the first funds required to be transferred to the affordable housing funds
within 60 days after the end of 2015.
When FHFA directed Fannie Mae and Freddie Mac to begin their contributions to the HTF and
the CMF, some criticized the decision to require them to make these contributions while they
remain in conservatorship and subject to agreements with Treasury. They argued that the funds

68 For more information on the financial status of the GSEs, see CRS Report R44525, Fannie Mae and Freddie Mac in
Conservatorship: Frequently Asked Questions.
69 United States Securities and Exchange Commission filing, Form 8-K, Federal National Mortgage Association,
November 18, 2008, available at http://www.sec.gov/Archives/edgar/data/310522/000129993308005442/
htm_30041.htm; and United States Securities and Exchange Commission Filing, Form 10-Q, Federal Home Loan
Mortgage Corporation, November 14, 2008, available at http://otp.investis.com/clients/us/federal_homeloan/SEC/sec-
show.aspx?FilingId=6249253&Cik=0001026214&Type=PDF&hasPdf=1.
70 See letters dated December 11, 2014, that FHFA sent to Fannie Mae and Freddie Mac, available at
http://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Statement-on-the-Housing-Trust-Fund-and-Capital-Magnet-
Fund.aspx. The letters direct the GSEs to transfer their contributions to the HTF and the CMF within 60 days of the end
of their fiscal year. The GSEs’ fiscal year is the calendar year, so the contributions are to be transferred within 60 days
of the end of each calendar year.
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being diverted to the affordable housing funds should go to Treasury71 or to ensure Fannie’s and
Freddie’s continued financial stability.72
While reinstating the contributions, FHFA stated that Fannie Mae and Freddie Mac will not be
required to make contributions in any year during which they draw funds under the agreements
they have in place with Treasury, or if the contributions would cause them to make such a draw.73
FHFA continues to have the authority to suspend the contributions in the future if it determines
that circumstances require it.
In the fourth quarter of 2017, Fannie Mae and Freddie Mac each had to take a draw from
Treasury. These draws were due to a change in the value of deferred tax assets held by each GSE
as a result of the tax revision law that was enacted by Congress and signed by President Trump in
December 2017 (P.L. 115-97). Despite these draws, and FHFA’s statement that a draw would
result in a suspension of the contributions for that fiscal year, the Director of FHFA directed
Fannie Mae and Freddie Mac to make their contributions to the HTF as scheduled. The director’s
decision was based on his view that the draws were the result of a one-time accounting change
and that they were not indicative of broader financial instability at either of the GSEs.74

Author Information

Katie Jones

Analyst in Housing Policy

71 According to the terms of the preferred stock purchase agreements with Treasury, Fannie Mae and Freddie Mac were
required to pay quarterly dividends to Treasury; the terms of these dividend payments have been changed several times.
The dividend payments compensate Treasury for the risk it incurred in providing support for Fannie Mae and Freddie
Mac but are not technically considered repayment of the amounts that Fannie Mae and Freddie Mac received. The
GSEs have paid dividends to Treasury in an amount that exceeds what they received in support. For more information
on the terms of the agreements with Treasury and dividends paid, see CRS Report R44525, Fannie Mae and Freddie
Mac in Conservatorship: Frequently Asked Questions.
72 For example, see “FHFA Director Delivers Lump of Coal to Every Taxpayer,” press release, December 11, 2014,
https://republicans-financialservices.house.gov/news/documentsingle.aspx?DocumentID=398566, with a statement
from then-House Financial Services Committee Chairman Jeb Hensarling.
73 See the December 11, 2014, letters that FHFA sent to Fannie Mae and Freddie Mac directing them to begin making
contributions to the HTF at http://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Statement-on-the-Housing-Trust-
Fund-and-Capital-Magnet-Fund.aspx. When Fannie Mae and Freddie Mac were placed into conservatorship in 2008,
Treasury also agreed to provide financial support to Fannie Mae and Freddie Mac through purchases of senior preferred
stock. Neither Fannie nor Freddie has required support from Treasury since early 2012, but under the terms of the
agreements, they can receive additional funds from Treasury if necessary. For more information on these agreements,
see CRS Report R44525, Fannie Mae and Freddie Mac in Conservatorship: Frequently Asked Questions .
74 The February 2018 letters that the Director of FHFA sent to Fannie Mae and Freddie Mac directing them to make
their contributions as scheduled are available at https://www.fhfa.gov/Media/PublicAffairs/Documents/2-7-
18_ltr_Fannie_Mae_re_Housing_Trust_Fund.pdf and https://www.fhfa.gov/Media/PublicAffairs/Documents/2-7-
18_ltr_Freddie_Mac_re_Housing_Trust_Fund.pdf, respectively.
Congressional Research Service
21

The Housing Trust Fund: An Overview

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Congressional Research Service
R40781 · VERSION 21 · UPDATED
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