The National Housing Trust Fund
The Gateway Senior Apartment project in Fremont, Michigan. The building was repurposed from an old abandoned school into affordable housing for Michigan seniors.

Part of the Housing and Economic Recovery Act, the National Housing Trust Fund (NHTF) became law on July 30, 2008. The NHTF is a federal program for collecting and distributing dedicated funds as a block grant to the states, District of Columbia, Puerto Rico and the U.S. territories. The purpose of the NHTF is to increase and preserve the supply of housing, principally rental housing for extremely low income households.

The NHTF was to receive .042% of its start up funds from Fannie Mae and Freddie Mac. However, funding was suspended when the 2008 banking crisis hit and was not lifted until January 1, 2015. On December 11, 2014, FHFA Director Mel Watt sent letters to Fannie Mae and Freddie Mac informing them he was terminating the temporary suspension of the allocation the companies are to make to the NHTF. The companies were directed to begin setting aside the required funds in FY2015 and each year thereafter.

In accordance with the NHTF formula, funds will be distributed to states based on the following:

  • Shortage of rental properties affordable and available to extremely low income (ELI) and very low income (VLI) households
    • ELI is considered to be less than 30% of area median income
    • VLI is considered to be between 30% and 50% of area median income
  • Number of ELI and VLI renter households paying more than 50% of their income for rent and utilities
  • Priority is given to ELI households

The amount of money that each states gets will depend on the individual state’s affordable rental housing market. However, each state and DC will receive a minimum of $3 million. Moreover, states must choose a state agency to administer its program, and it can be administered in the form of loans, grants, interest subsidies, and equity investment. The money must be committed within two years and spent within five.

NHTF is majorly focused on ELI households. In fact, when there is less than $1 billion in funding, 100% of the funds must benefit ELI. When there is more than $1 billion available than a minimum of 75% must benefit ELI and the other 25% can be allocated to VLI households.

NHTF law requires strict guidelines:

  • At least 90% of a state’s NHTF money be used to produce, preserve, rehabilitate, and operate rental housing
  • Up to 10% may be used for homeowner activities
  • 75% of a state’s NHTF used for rental housing benefit ELI households, or households with income below poverty level
  • Limits to 25%, the amount of a state’s NHTF used for rental housing to benefit VLI households
  • No more than 10% may be used for homeowners
  • The money may be used to help first-time homebuyers with down payment and closing cost assistance

Furthermore, households must meet the following requirements in order to be eligible for NHTF funds:

  • Household income at or below VLI
  • Be first-time homebuyer
  • Have homeownership counseling
  • Use as principal residence
  • Home must be occupied by an income-eligible for at least 30 years
  • Grantee has options if home is sold before 30 years

Allocations will be based on:

  • Geographic diversity
  • Extent rents affordability
  • The amount of time the apartment will remain affordable
  • The merit of the project
  • Applicant’s ability to obligate money and carry out projects in a timely way
  • Extent project will use non-federal funds

Generally, NHTF funds are designed to help those who are in ELI households. For more information, visit the website here.

Housing Trust Funds in Michigan

The Michigan Housing and Community Development Fund (MHCDF) was established in 2008 but it currently has no dedicated funding. One of CEDAM’s top priority policy goals is to find and secure dedicated funding for the Michigan Housing and Community Development Fund. Over the next few years, much of our energy will be devoted to developing and maintaining a stable funding source in order to allow the MHCDF to meet the housing and community economic development needs of Michigan neighborhoods and communities.

Read CEDAM’s blog post about the MHCDF: Funding Housing: A Look at the Michigan Housing Trust Fund and watch Episode 15: MHCDF of the Bright Side Television Show to understand more about how it works and some of the projects that are a direct result of the program.