3Center or American Progress | A House America Bond or State Housing Finance Agencies
has been rending upward.
Te lion’s share o his increased role in aordable housinghas allen o sae housing nance agencies.
Tese agencies are relied upon no only as an aordable-housing capial provider bualso as an adminisraor o ederal subsidy programs such as he low-income housingax credi.
Trough 2004 sae housing nance agencies unded 2.4 million aordablemorgages or low- and moderae-income rs-ime homebuyers and 687,000 aordablerenal unis using ax-exemp bonds, as well as 1.7 million aordable renal unis usinglow-income housing ax credis, or LIHCs.
Meanwhile, a heir peak public housingunis subsidized by he ederal governmen clocked in a 1.4 million unis, while 1.8million very-low-income households were able o access renal housing using housingchoice vouchers.
In he wake o he oreclosure crisis, hese agencies have played an imporan role inoreclosure prevenion and neighborhood sabilizaion as well.
How state housing finance agencies fund their activities
o und heir aciviies, sae housing nance agencies have hisorically borrowedmoney in he ax-exemp bond marke by issuing morgage revenue bonds and mul-iamily housing bonds. Morgage revenue bonds are a unique ype o privae aciviy bond issued by sae housing nance agencies o und aordable morgages or low- andmoderae-income rs-ime homebuyers.
Muliamily housing bonds are also sae housing nance agency-issued bonds and areused o nance he developmen o aparmens ha will be oered or ren a aordableraes o lower-income households.
Neiher morgage revenue bonds nor muliamily housing bonds are governmen guaraneed. Congress ses a volume cap on he numbero hese bonds ha can be issued annually.
Because he ineres income rom he bonds is exemp rom ederal income axes,individual invesors are willing o purchase he bonds a lower ineres raes. Tese lower borrowing coss allow sae housing nance agencies o use bond proceeds o makeloans or aordable housing a below-marke raes. Since heir incepion muliamily housing bonds have helped nance he creaion o nearly 1 million aordable renalunis, and morgage revenue bonds have unded low-cos morgages or approximaely 4million low-income amilies.
A small number o sae housing nance agencies have adoped a model whereby hey securiize loans ino Fannie Mae, Freddie Mac, and Ginnie Mae morgage-backedsecuriies. Ginnie Mae is he ederal naional morgage associaion, and Fannie Mae andFreddie Mac are he wo morgage nance gians now in ederal conservaorship. Te