National Housing Trust Fund

July 15, 2012  |  Publications

In July 2008, the Housing and Economic Recovery Act was signed into law, establishing a National Housing Trust Fund, among other housing-related provisions. The goal of the Trust Fund is to provide ongoing, permanent, dedicated, and sufficient sources of revenue to build, rehabilitate, and preserve units of housing for the lowest-income families.

In the midst of the current economic situation, safe housing that is affordable to low-income households is a critical component to preventing and ending homelessness. The National Housing Trust Fund targets people who have extremely low incomes, a group made up largely of renters who have the greatest incidence of housing problems. There is currently no federal program that produces affordable housing for these poorest families. The National Housing Trust Fund will fill this gap and begin to help those who need assistance the most.

According to the legislation, at least 90 percent of Trust Fund resources must be used for the production, preservation, rehabilitation, or operation of rental housing. Up to 10 percent can be used for the following homeownership activities for first-time homebuyers: production, preservation, rehabilitation, down payment assistance, closing cost assistance, and assistance for interest rate buy-downs. At least 75 percent of the funds for rental housing must benefit extremely low income households (30 percent of area median income or less) or households with incomes below the federal poverty line. Under draft regulations for the Trust Fund issued in October 2010 by the U.S. Department of Housing and Urban Development (HUD), 100 percent of funds in the first year would have to benefit this group. By statute, all funds must benefit very low income households (50 percent of area median income or less).

Funding for the National Housing Trust Fund is to come from a “mandatory” budget allocation, which means it will be automatically funded without being subject to the annual appropriations process. Due to its status as mandatory, it will not compete with the other HUD programs for funding in the appropriations process.

Initially, the funding for capitalization of the National Housing Trust Fund was to come from contributions by Freddie Mac and Fannie Mae. Now that these two programs have been taken over by the Federal Housing Finance Administration, a new source of funding must be created.

Current Status

The Administration, Congress, and advocates are currently working to identify a new stream of funding to be dedicated to the Trust Fund. A range of potential funding streams are being considered. The Administration included a $1 billion mandatory allocation for the Trust Fund in its fiscal year (FY) 2013 budget proposal.

The Preserving Homes and Communities Act of 2011 (S. 489 / H.R. 1477) would provide $1 billion for the Trust Fund from profits made on the sale of warrants under the Emergency Economic Stabilization Act of 2008. In addition, legislation to fund the Trust Fund through reform to the mortgage interest deduction may be introduced in the House in the coming weeks.

At this time, none of these bills are expected to pass either the House or Senate in the coming months. However, there may be opportunities for passage after the election or in early 2013.


The Alliance strongly urges Congress to provide a $1 billion mandatory allocation for the National Housing Trust Fund and to identify additional funding sources to reach its goal of creating 1.5 million affordable housing units over the next 10 years.