Four years after making its first and only awards, the Capital Magnet Fund (CMF) is poised to return.

The Federal Housing Finance Agency (FHFA) recently took the first step toward relaunching the program when it directed Fannie Mae and Freddie Mac to begin setting aside money for the CMF as well as the National Housing Trust Fund (NHTF). Both programs were established under the Housing and Economic Recovery Act of 2008.

They were supposed to be supported by Fannie Mae and Freddie Mac, but that never panned out. The government-sponsored enterprises (GSEs) were placed into conservatorship during the housing crisis in 2008, and any payments were suspended.

The FHFA lifted that six-year suspension in December, directing Fannie Mae and Freddie Mac to set aside an amount equal to 4.2 basis points of each dollar of unpaid principal balance of their total new business purchases.

Enterprise Community Partners estimates that $400 million to $500 million would go to the two funds. Sixty-five percent will go to the NHTF, while the remaining 35 percent will go to the CMF.

While much of the attention has gone to the larger housing trust fund, the CMF is also important to know. The two are distinct programs that could provide new opportunities for affordable housing developers.

Administered by the Department of Housing and Urban Development, the NHTF will provide block grants to the states, at least 90 percent of which must be used for the protection, preservation, rehabilitation, or operation of rental housing. No less than 75 percent of the funds for rental housing will benefit extremely low-income households with the rest benefiting those with very low incomes. Up to 10 percent of the resources may be used for homeownership activities for people with very low incomes.

Administered by the Treasury Department’s Community Development Financial Institutions (CDFI) Fund, the CMF will provide grants to CDFIs and qualified nonprofit housing organizations through a competition. The funds can be used to finance affordable housing activities as well as related economic development activities and community service facilities.

An organization can use its CMF award for a wide range of purposes, including capitalizing a revolving loan fund or an affordable housing fund. They can also provide risk-sharing loans or loan guarantees.

“The capital magnet fund is different in that it’s enterprise equity,” says Joe Neri, CEO of IFF, a CDFI headquartered in Chicago. “It’s called the Capital Magnet Fund because its whole point is it will grant dollars, but you have to use those dollars to leverage, attract, or magnet private dollars.”

In its one previous round, the program awarded $80 million to 23 organizations—13 nonprofit housing groups, nine CDFIs, and one tribal housing authority. The 2010 awardees leveraged the initial awards 12 times with other public and private investments in almost 7,000 affordable homes.

IFF, a mission-driven lender working throughout the Midwest, plans to apply for CMF funding in the next round.

Looking ahead, it’s unknown what kind of opposition the housing funds may face. U.S. Rep. Ed Royce (R-Calif.) has already expressed disappointment at FHFA’s move to relaunch the programs. “Money coming in from the GSEs should go to the taxpayers instead of a slush fund for ideological housing groups to play around with,” he said in a statement.

Supporters of both funds are optimistic.

Neri, who’s been active mostly on the CMF program, says he’s seen strong bipartisan support on Capitol Hill. “Again, because it leverages private dollars,” he says. “Two, because it is used locally to solve local problems … it’s a program that’s grounded through community-based organizations who know the challenges of rural versus urban, West Coast versus Midwest versus South, and can deploy those dollars to meet the needs on a very local basis.”

For more information about the Capital Magnet Fund and a list of the 2010 grant recipients, visit the CDFI Fund.