Jacob Lew
Jacob Lew

The Treasury Department and the Department of Housing and Urban Development (HUD) are teaming up to create and preserve more affordable rental housing.

“As we make it easier for responsible home buyers to get credit, we also need to make sure families who do not want to buy a home or cannot afford to buy a home have access to affordable rental housing,” said Treasury Secretary Jacob Lew last week during remarks at the Making Home Affordable Summit. “Renting is the right choice for many Americans, and there’s more we can do to support renters. We are taking an important step to increase the availability of affordable rental housing.”

Under a new partnership with HUD, Treasury will reduce the interest rate for affordable multifamily housing compared with the cost of tax-exempt bonds under current market conditions. The Federal Financing Bank will use its existing authority to finance multifamily loans under the Federal Housing Administration’s (FHA’s) risk-sharing programs.

“To help the many hard-working families who cannot find affordable rental housing, we are partnering with the Treasury Department to broaden our efforts to create and preserve safe, decent, and affordable rental housing by allowing more housing finance agencies access to the capital they need to build or maintain affordable multifamily apartment buildings,” said Carol Galante, FHA commissioner and HUD assistant secretary for housing.

Treasury and HUD are working with the New York City Housing Development Corp. (HDC) to close the first project under this initiative this fall. The project would help rehabilitate affordable rental housing in Far Rockaway, Queens, that was damaged by Superstorm Sandy.

HUD through FHA would provide mortgage insurance pursuant to a risk-sharing agreement with HDC, and the Federal Financing Bank would finance the HDC mortgage loans.

Lew also announced that the Obama administration will be extending Making Home Affordable for another year to continue to help homeowners who are facing foreclosure or are underwater.

Wrapping up his remarks, Lew urged Congress to continue its housing reform efforts.

“While we remain committed to helping secure affordable and sustainable housing for all Americans, we can not act alone. It’s time for Congress to pass housing reform legislation,” Lew said. “The work of the Senate Banking Committee was an important milestone on the road to reform, but lawmakers need to keep moving forward. We know we can create a better system that provides responsible Americans with mortgage credit while supporting affordable rentals for those who choose not to buy.”