Fannie Mae Allots $50 Billion to Ease Area’s Housing Crunch
Mortgage investment giant Fannie Mae announced Friday it will commit $50 billion over five years to help finance affordable housing in Los Angeles and Orange counties, pledging to assist 250,000 families in improving their housing conditions.
Housing advocates welcomed the massive cash and credit infusion, but said it will not relieve the pressure on Los Angeles and other cities to expand the region’s limited stock of affordable houses and apartments.
“It is historic, it is important, but by itself, it does not replace our need,” said Los Angeles City Councilman Eric Garcetti, who has been pushing the city to expand its nascent housing trust fund.
The Fannie Mae program is part of the mortgage lender’s 10-year, $2-trillion “American Dream Commitment,” an effort to make homes more affordable to minorities, new immigrants, young families and those in low-income communities.
The agency--the largest provider of home mortgages in the country--has promised to dedicate $50 billion over the next five years to targeted financing and mortgage loans for existing homes, as well as capital to build rental units and single-family homes in the two counties.
“In case you don’t know how many zeros that is, it’s a lot,” Barbara Zeidman, director of the Fannie Mae office coordinating the regional effort, told an assembly of city officials, housing developers and real estate agents gathered at Olvera Street for the announcement Friday morning.
About one-third of that money is expected to assist residents and projects in the city of Los Angeles, Zeidman said.
Los Angeles Mayor James K. Hahn said the initiative will supplement city efforts to build up a $100-million housing trust fund to build housing for low- and moderate-income residents.
“Today is just a huge step in marshaling the resources we need to make homes affordable,” Hahn said.
In Los Angeles, less than 48% of residents own their homes, compared with a nationwide rate of 67%, the mayor said.
“For our city and our region to grow and prosper, we’ve got to ensure that people who work here, that their families can live here, as well,” Hahn added.
The city created a housing trust fund last year to subsidize affordable housing development, but it has been allocated only about $10 million so far from city coffers. Advocates say the fund should have at least 10 times that amount to meet the demand for the nearly 4,000 new housing units in the city each year.
Agency’s Assistance to Boost City Housing Fund
During the recent mayoral campaign, Hahn promised he would make the housing trust fund one of his top priorities, and said he would aggressively lobby federal and state officials for funding.
But the mounting costs and weakened economy that have followed the Sept. 11 terrorist attacks drastically curtailed the availability of federal funds and further taxed the city’s budget, dimming hopes of building the housing fund.
Former U.S. Housing and Urban Development Secretary Henry Cisneros praised the Fannie Mae program as “very significant,” but urged that the city continue to aggressively seek a way to create a robust trust fund.
“Hopefully it is not allowed to relieve the need for the local government to do what needs to be done in the housing and community development arena,” said Cisneros, who now develops affordable housing and is working with Fannie Mae on some of his projects.
“Yes, Sept. 11 makes things tougher,” Cisneros said. “But this is not a time for retrenchment. . . . There are few places in America where the needs are more acute than right here in Los Angeles.”
Lez Trujillo, who works for a community housing counseling organization, said the program does not address the immediate need for more housing units.
“I think it will be a great opportunity for people to take advantage of better loans on the market,” said Trujillo, state director for a loan counseling program run by the Assn. of Community Organizations for Reform Now Housing Corp. “[But] we have to find a way to solve the immediate crisis.”
Los Angeles City Councilman Mark Ridley-Thomas, who has been searching for a way to finance the city trust fund, said the lack of housing demands as many different resources as possible.
“The need is terrible, and the more we do, the better off families, neighborhoods and communities will be,” he said.
Teachers, Police Officers, Firefighters May Benefit
Fannie Mae officials said the agency will work with local lenders, municipal housing departments and community organizations to provide several new programs as part of its $50-billion initiative.
The investment plan includes a special mortgage for teachers, featuring $500 down payments, as well as initiatives to help police officers and firefighters afford homes; low-cost financing for people with past credit problems; and a bilingual campaign targeting recent immigrants.
Fannie Mae will use some of the money to buy bonds from city governments, which then can provide low-interest housing loans. The program will also provide equity and debt financing for mixed-income housing developments and leverage financing to help preserve historic residential buildings.
“This business of talking about getting people into homes with just $500 down, that’s almost revolutionary, you know,” said Rep. Maxine Waters (D-Los Angeles), who attended the announcement.
