The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury have announced an indefinite extension of the Section 542(c) Housing Finance Agency Risk-Sharing Initiative. This initiative, offered through HUD’s Federal Housing Administration (FHA) and Treasury’s Federal Financing Bank (FFB), aims to finance the construction and rehabilitation of affordable rental homes for low-income families.
The Risk Sharing Initiative provides cost-effective capital for state and local housing finance agencies (HFAs) to support the creation and preservation of affordable rental homes. Since its restart in 2021, the program has facilitated access to nearly $2 billion in financing, resulting in the development or substantial rehabilitation of approximately 12,000 affordable rental homes for low-income families, seniors, and persons with disabilities.
With the extension of the initiative, HUD anticipates that an additional 38,000 affordable rental homes will be created or preserved over the next ten years. The program allows eligible housing finance agencies to receive credit enhancement through FHA mortgage insurance, while the Federal Financing Bank purchases the FHA-insured mortgages.
Previously, the initiative was set to stop accepting applications in September 2024. However, the recent agreement provides a pathway for housing finance agencies to continue submitting applications to FHA for mortgage insurance on an ongoing basis.
HUD Deputy Secretary Adrianne Todman emphasized the importance of addressing the housing supply shortage, stating that HUD is utilizing all available tools to ensure affordable homes are accessible to the families they serve. Deputy Secretary of the Treasury Wally Adeyemo highlighted the progress made in expanding access to affordable housing under President Biden’s Investing in America agenda.
The Risk Sharing Initiative has proven to be a crucial source of financing for state and local housing finance agencies, contributing to the nation’s affordable housing supply. The collaboration between HUD and the Department of the Treasury aims to further increase the availability of affordable rental units for those in need.
