Governors Prod Geithner On Housing Finance Agency Liquidity
02 April 2009 - 8:23AM
Dow Jones News
NEW YORK (Dow Jones--The National Governors Association
Wednesday urged Treasury Secretary Timothy Geithner to provide
federal aid to improve capital liquidity for state housing finance
agencies.
As of December 2008, the HFAs reported about $7 billion in
housing bonds ready for sale and about $9.7 billion that needed
liquidity providers, the NGA said in a letter to Geithner.
The letter, which called for help from the Treasury and Federal
Reserve, or from government-sponsored enterprises Fannie Mae (FNM)
and Freddie Mac (FRE), or from the Federal Housing Finance Agency,
was signed by four governors. They included the NGA chairman, Gov.
Ed Rendell of Pennsylvania, and the group's commerce committee
chairman, Gov. Jon Corzine of New Jersey.
State HFAs issue revenue bonds to finance multifamily housing
for low- or moderate-income families and single-family housing for
first-time home buyers, as well as housing for the aged and
veterans.
"This stalled market has forced state HFAs to curtail lending
just when citizens need them to be more active," the letter said.
"Some HFAs have shut down their single-family programs
altogether."
Passage of the Housing and Economic Recovery Act last year and
recent passage of the economic-stimulus package provide new
housing-bond and housing tax-credit tools. State HFAs may not be
able to use these tools to their best advantage without stable
sources for affordable capital, the letter continued.
It offered three ways to provide that goal.
The Treasury and Federal Reserve could establish a liquidity
facility for variable-rate debt of HFAs experiencing difficulties
with remarketing.
Fannie Mae and Freddie Mac, government-sponsored enterprises
under federal conservatorship, could be directed to buy tax-exempt
and taxable HFA bonds at favorable interest rates and provide
liquidity to support HFA lending programs.
The Federal Housing Finance Agency, through Fannie Mae, Freddie
Mac and the 12 Federal Home Loan banks, could support HFAs by
providing liquidity facilities at reasonable terms.
By Stan Rosenberg, Dow Jones Newswires, 201.938.2143;
stan.rosenberg@dowjones.com