NCSHA Applauds the Biden-Harris Administration for Helpful Changes to the FHA-HFA Risk-Sharing Program

WASHINGTON, DC — The National Council of State Housing Agencies thanks the Biden-Harris Administration for helping state housing finance agencies (HFAs) produce and preserve more affordable housing by providing more interest rate certainty under the Federal Housing Administration’s risk-sharing program. The improvements HUD Acting Secretary Todman announced today in how the Federal Financing Bank will finance risk-sharing loans will allow HFAs to predict long-term financing costs with more certainty, enabling them to finance new construction and other affordable housing projects more easily.

“Today’s action, combined with the many other efforts this Administration has made to support affordable housing development, will lead to the production and preservation of crucially needed rental housing throughout the country,” said NCSHA Executive Director Stockton Williams. “We thank HUD, Treasury, and the rest of the Administration officials who worked on this for their support of HFAs and the risk-sharing program.”

FHA and the Federal Financing Bank will implement a floor and a cap, called an interest rate “collar,” on the benchmark Treasury rate used to calculate the all-in rate provided to housing finance agencies. This update to the Section 542(c) Housing Finance Agency Risk-Sharing Initiative will make it easier to use the program, thereby increasing the number of new affordable multifamily properties that can be developed using risk-sharing program financing.

Since the Biden-Harris Administration re-started the Risk-Sharing Initiative in 2021, the program already has enabled access to more than $2.7 billion in financing for the development or substantial rehabilitation of more than 16,200 affordable rental homes for low-income families, seniors, and persons with disabilities. In February 2024, FHA and the Federal Financing Bank announced they were extending the program’s availability indefinitely. FHA anticipates approximately 38,000 additional affordable rental homes will be created or preserved through the initiative over the next 10 years alone.

The Section 542(c) Housing Finance Agency Risk-Sharing Initiative allows eligible HFAs to enter into contracts with the U.S. Department of Housing and Urban Development through which FHA insures multifamily mortgages originated by an HFA that are used to finance construction or rehabilitation of properties with affordable housing units. Under these contracts, HUD and the HFA share the risk of any potential loss resulting from a default of the insured mortgage. With the FHA insurance credit enhancement in place, the Federal Financing Bank will purchase the mortgage, enabling the HFA to recoup its capital and make other investments in its communities.

About the National Council of State Housing Agencies

For more than 50 years, state housing finance agencies (HFAs) have played a central role in the nation’s affordable housing system, delivering financing to make possible the purchase, development, and rehabilitation of affordable homes and rental apartments for low- and middle-income households.

The National Council of State Housing Agencies is a nonprofit, nonpartisan organization created 50 years ago to advance, through advocacy and education, the efforts of the nation’s state HFAs and their partners to provide affordable housing to those who need it. NCSHA’s vision: An affordably housed nation. Learn more at www.ncsha.org.

MEDIA CONTACT: Lisa Bowman, Director of Marketing and Communications