The senators focused on two unused funds that Congress established
in 2008 to finance low-income housing with a portion of Fannie Mae
and Freddie Mac's revenue. The Federal Housing Finance Agency, the
companies' regulator, suspended payments into the funds in November
of that year, after the government seized the companies as mortgage
After suffering huge losses, the companies have turned the corner
and are now seeing record profits. The 33 lawmakers, led by
Democrats Jack Reed of Rhode Island and Elizabeth Warren of
Massachusetts and independent Bernie Sanders of Vermont, want the
agency to resume contributing to the fund to help ameliorate a
shortage of affordable housing for low-income Americans.
"The time is long overdue to lift the current suspension of
contributions, and we ask your full and fair consideration of our
request," the letter to newly installed FHFA Director Mel Watt said.
Fannie Mae and Freddie Mac have taken $187.5 billion in U.S. aid
since they became state wards in September 2008. They have since
paid about $185.2 billion in dividends to the government, thanks to a
surge in the U.S. housing market.
Congress created the two housing trust funds to build a revenue
source for low-income housing. The trust funds provide funds to
finance new rental housing or rehabilitate existing units for
families with very low incomes.
The group of Democrats cited a study from the Harvard Joint Center
for Housing Studies that found many renters remain caught in a pinch
due to falling wages and rising rents. According to the study, the
country faces a shortage of nearly 5 million units that are
affordable and available for extremely low-income renters.
Using the trust funds "would help ameliorate this crisis," the
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President Barack Obama and lawmakers from both parties have said
they want to wind down the two mortgage finance giants, which own or
guarantee 60 percent of all U.S. home loans, but an overhaul process
is years off.
In the meantime, their return to profitability has led to competing
Nonprofit housing groups have sued the FHFA, challenging the
decision to suspend payments to the trust funds, while a large hedge
fund that owns preferred shares of the companies is challenging the
terms of their taxpayer bailout, which requires them to sweep most
of the profits into the U.S. Treasury.
(Reporting by Margaret Chadbourn; editing by David Gregorio)
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