White House Continues Affordable Housing Push With $350M In Initiatives

The White House is rolling out three new initiatives, including $350M in spending, to support its ongoing effort to increase the country’s affordable housing stock. 

The initiatives announced Tuesday include $250M in low-interest loans for new construction and renovation, $100M in grant funding aimed at streamlining the development approval process and a plan to limit fluctuations in mortgage interest rates from federally backed lenders.

“Let’s face it — we don’t have enough affordable homes,” Adrianne Todman, acting secretary at the Department of Housing and Urban Development, said in a statement. “Here at HUD, we are making changes to build new, quality, affordable homes like never before.”

The largest initiative announced Tuesday is HUD’s $250M Legacy Challenge, which will provide low interest rate loans to state and local governments to help fund more affordable housing. 

Loans will be available not only for the construction of new housing but also for adaptive reuse, like an office-to-residential conversion, the preservation and renovation of existing affordable housing, the installation of utilities and a revolving loan pool supporting local developers. 

“I’m challenging our nation’s mayors and governors to use this unique funding mechanism to build new housing,” Todman said. 

HUD also announced $100M in additional funding for a competitive grant program called the Pathways to Removing Obstacles to Housing, or PRO Housing. It’s designed to pay for initiatives that help streamline approvals for affordable housing development.

The program provides local governments and affiliated entities with between $1M and $7M to advance initiatives that tackle restrictive land zoning, facilitate the construction of new homes and cut energy costs. 

In a fact sheet released with the announcement, the White House said the grants will help streamline requirements for transit-oriented developments and accelerate federal historic preservation board reviews, along with less specific commitments to reducing barriers to affordable housing. 

It’s the second round of grants offered as part of the program. HUD previously awarded $85M in grants earlier this summer to communities in 19 states and Washington, D.C.

“Round two of the competition prioritizes communities with acute need for affordable housing that have already demonstrated a commitment to overcoming local barriers, primarily by having enacted improved laws and regulations,” Marion McFadden, principal deputy assistant secretary for community planning and development at HUD, said in a statement.

HUD also teamed up on Tuesday with the U.S. Department of Treasury to announce an initiative aimed at lessening interest rate volatility for loans from government-backed lenders like Fannie Mae and Freddie Mac.

The Federal Housing Administration will work with the Federal Financing Bank to introduce a floor and ceiling to the benchmark Treasury rate used to calculate overall lending interest rates.

The rate collar, as officials have described it, is only available for sponsors building or renovating affordable or low-income housing. President Joe Biden’s administration is aiming to provide a more stabilized rate environment that will lure developers into the affordable space.

“The Treasury-HUD rate collar initiative will help reduce the cost to construct more affordable housing that is so urgently needed in neighborhoods across the country,” U.S. Deputy Secretary of the Treasury Wally Adeyemo said in a statement. “Treasury will continue to do everything in our power to make housing more affordable.”

Biden and Vice President Kamala Harris, the presumptive Democratic nominee for president, have made housing affordability a cornerstone of their policy initiatives this year.

Last month, Biden announced a proposal to incentivize landlords to cap rent increases at 5% per year, following an April announcement that new regulations would cap annual rent increases at 10% for properties funded by the Low-Income Housing Tax Credit program.

Biden announced an initiative to promote the production of manufactured housing in March, the same month of the State of the Union, where Biden referenced the Department of Justice’s lawsuit against RealPage for allegedly inflating rents.

“For millions of renters, we’re cracking down on big landlords who break antitrust laws by price-fixing and driving up rents," Biden said during his speech.