State Housing Agencies in U.S. Said Slated for Treasury Help

2009-09-28 — bloomberg.com

Sept. 28 (Bloomberg) -- State housing agencies in the U.S. that provide mortgages to low-income borrowers would get as much as $35 billion in federal aid under a new U.S. Treasury Department program, people familiar with the matter said.

The program would provide up to $15 billion in fresh funding for as long as three years and would purchase as much as $20 billion in tax-exempt mortgage bonds issued by state- sponsored housing finance agencies through the end of this year, a person familiar with the matter said. The program may be announced as early as Sept. 30, said the person, who didn’t want to be named because the plans haven’t been made public.

The Treasury effort would be administered by federally controlled mortgage-finance companies Fannie Mae and Freddie Mac, which would also purchase the bonds, the person said. Those purchases would provide enough financing to restart and to fund the state home loan programs through the end of next year, according to the person.

The California Housing Finance Agency and other state programs have suffered along with the rest of the mortgage industry with higher funding costs and restricted liquidity over the last 18 months.

‘Prime the Pump’

“The tax-exempt market for HFA bonds dried up; this will prime the pump,â€