U.S. Treasury Department Announces Plan to Boost Housing Affordability with Unspent COVID-19 Relief Funds

• Author: Bobby Kub
• Posted: 2024-07-06

The dream of homeownership is becoming increasingly elusive for many Americans amid skyrocketing real estate prices and escalating mortgage rates. However, a flicker of hope emerges as the U.S. Treasury Department unveils a plan to bolster housing affordability using unspent COVID-19 relief funds.

A New Lease on Homeownership Opportunities

In an effort to combat the housing affordability crisis, the Treasury announced that state and local governments could redirect parts of the unspent $350 billion State and Local Fiscal Recovery Fund—allocated initially for COVID-19 relief—toward housing projects. This move targets families earning up to 120% of the area’s median income, a significant leap from the previous 65%.

For those essential to our communities—teachers, firefighters, and nurses—priced out of homeownership, these funds could present a lifeline. Projects aligning with federal housing initiatives and those supported by Fannie Mae and Freddie Mac are now viable contenders for the capital infusion.

The Biden Administration’s Housing Strategy

In tackling a pivotal issue that fuels inflation and voters’ concerns over economic management, the Biden administration is taking concrete steps. With Reuters reporting an estimated $40 billion still available, this infusion from the 2021 American Rescue Plan Act is poised to make substantial inroads in alleviating housing stress.

Beyond construction, the Treasury’s plan also encompasses “pre-development” phases, including land acquisition and rehabilitation costs, particularly in low-income affordable housing projects. A substantial $6.9 billion remains from the $46 billion Emergency Rental Assistance Program and is available for reallocation to these critical areas by communities.

Extending the Reach of Federal Financing

The Federal Financing Bank is expanding its support for housing projects run by the Department of Housing and Urban Development (HUD) in collaboration with local agencies. This synergy is expected to further catalyze the creation and rehabilitation of more affordable housing units.

In responding to the housing crisis, the deployment of unspent COVID funds offers much-needed assistance. For many individuals and families, these strategic steps could pave the way to obtaining a place to call home.

For more information on how the Treasury’s initiative may affect housing affordability in your area, stay informed through your local government updates and HUD resources.

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