States will receive $174 million in funds to put toward affordable housing, courtesy of Fannie Mae and Freddie Mac.
The Department of Housing and Urban Development announced Wednesday morning that it was allocating the money to the 50 states out of the affordable housing trust fund, the first such payment ever made.
HUD Secretary Julian Castro said the money would be used to “confront a growing affordable rental housing crisis in this country.”
“The Housing Trust Fund will be an enduring resource designed to produce more housing that is affordable to our most vulnerable neighbors,” Castro said.
The trust fund, which is automatically filled by a cut of fees earned by Fannie and Freddie on insurance for mortgage-backed securities they sell to investors, is favored by affordable housing advocates because it represents a pool of money outside of the congressional appropriations process.
On the other hand, it has been criticized by Republicans, who have argued that it is a slush fund for left-leaning groups and constituencies.
The trust fund was established in 2008 but never funded as Fannie and Freddie were caught up in the subprime crisis and taken into government custody. In late 2014, however, with the two companies still in government hands and returning to positive cash flow, Federal Housing Finance Agency Director Mel Watt made the decision to begin funding the trust fund.
Each state will receive at least $3 million, with some territories getting less. California will get more than $10 million of funds, the largest such grant. Big states such as Florida, New York and Texas will receive larger amounts.
