U.S. Treasury Secretary Janet Yellen outlined several new initiatives designed to increase the supply of affordable housing, noting how they align with the Biden administration’s broader efforts to lower living costs.
Speaking in Minnesota at the Family Housing Expansion Project (FHEP), the largest new-unit project developed by the Minneapolis Public Housing Authority (MPHA) in more than 20 years, Yellen highlighted the urgency of tackling housing affordability. She said the Treasury is committed to leveraging its existing authorities to meet this challenge.
“[G]iven the scale of the challenge, we must and will continue to do more,” she said.
Yellen outlined a comprehensive plan that includes a new Treasury program, managed by the Community Development Financial Institution (CDFI) Fund, which will inject an additional $100 million over the next three years to support the financing of affordable housing.
“CDFIs provide crucial support to local businesses, from financing to services such as training entrepreneurs,” Yellen said. “They are often embedded in the communities they serve, so they have a deep understanding of a community’s needs and how to meet them. During the pandemic, Treasury’s support helped keep small businesses open and Americans employed, contributing to our historic recovery. Since then, our funding and technical assistance has helped businesses grow and scale.”
She also described measures to provide greater interest rate predictability for state and local housing finance agencies borrowing from the Federal Financing Bank, aiming to stabilize and encourage new housing development. She stressed the need for the 11 Federal Home Loan Banks to increase their investment in housing programs because they play a crucial component in expanding the availability of affordable housing options.
To assist state and local governments in maximizing the use of recovery funds for housing construction, the Treasury will release a detailed how-to guide. Additionally, the Capital Magnet Fund will be updated to offer greater flexibility to CDFIs and non-profits engaged in affordable housing finance. These initiatives build upon earlier efforts announced by Deputy Secretary Wally Adeyemo in March and emphasize the critical role of increasing the housing supply to curb long-term trends of rising housing costs.
Yellen framed the new measures as a continuation of the Treasury’s actions during the pandemic including distributing more than $40 billion in rental and homeowner assistance, maintaining historically low foreclosure and eviction rates and fostering a robust economic recovery.
Yellen also emphasized the success of the Emergency Rental Assistance program and the Homeowner Assistance Fund in providing stability during the pandemic and said she is urging Congress to pass bipartisan legislation to expand the Low-Income Housing Tax Credit and help state and local governments to eliminate excessive regulatory barriers to housing development to help boost the supply and affordability of housing across the nation.