On April 13, HUD announced in the Federal Register that approximately $120,913 in Housing Trust Fund (HTF) dollars was incorrectly allocated to grantees for fiscal year (FY) 2016. HUD first announced FY 2016 HTF formula allocations to grantees, which total about $173 million, in May 2016. HUD subsequently discovered an error it its calculations for American Samoa, Guam, the Commonwealth of Northern Marina Island, and the U.S. Virgin Islands. Accordingly, allocations for the Insular Areas have been reduced while allocations for 15 states and the Commonwealth of Puerto Rico have increased slightly.
The states receiving the largest increase under the new allocation include: California ($28,296 increase), New York ($19,961 increase), and Texas ($11,112). While Florida, Illinois, Ohio, Pennsylvania, Michigan, New Jersey, Massachusetts, Georgia, North Carolina, Washington, Virginia, and Puerto Rico each receive increases that range from $1,000 to $10,000.
In the coming weeks, HUD is expected to announce the HTF formula allocations for FY 2017. Based on Fannie Mae and Freddie Mac’s (GSEs) recent SEC filings, a boost in GSE business last year means that the HTF could be receiving about $219 million for FY 2017. While we expect FY 2017 allocations to be available this year, it is possible that some Congress members may try to introduce bills to eliminate or divert HTF funding to other programs, similar to what happened in last Congress. Further more, the Federal Housing Finance Agency (FHFA) has ultimate authority over whether the GSEs continue to set aside contributions to the HTF. If the current Obama-appointed FHFA Director Mel Watt, resigns early, or if Congress and the Administration decides to move forward on housing finance reform, the status of the HTF will come into question.