Treasury Grants $486 Million for Affordable Housing
The Treasury Department kicks off Friday with some good news, as the department distributes $486m in American Recovery and Reinvestment Act funding for job creation and the promotion of affordable housing. "Today's announcement of housing funds demonstrates how the Recovery Act is putting our nation on the path to economic stability, one community at a time," says Treasury deputy secretary Neal Wolin in a statement. "This initiative will help spur construction and development, create much needed jobs, and increase the availability of affordable housing for families around the country." Friday's distributions to state housing agencies come as the fourth round of funds within a program designed to jump start the development or renovation of qualified affordable housing across the country. Under the program, state housing agencies that meet certain eligibility requirements will receive funding to construct affordable housing developments. The Treasury distributed: $36m in Alabama; $29m in Arkansas; $34m in Connecticut; $76m in Georgia; $114m in Louisiana; $44m in Maryland; $51m in Massachusetts; $16m in Montana; $17m in New Hampshire; $38m in New Mexico; $20m to the Virgin Islands; and $10m to Vermont. The downturn in the US housing market necessitated the program, Treasury said. The department noted that the US labor and housing crises show an historic link. Housing starts fell nearly 80% from their peak level at the beginning of 2006, which in turn has led to severe job losses in the residential building, according to the department. "Such losses not only indicate significant problems in the residential construction sector, but also suggest that the need for affordable housing has risen markedly during the recession," Treasury said. Another important link between unemployment and the housing market, noted in a July securitization report out of Deutsche Bank, sees unemployment spike along with rising mortgage delinquencies and plunging home prices. The Deutsche report notes that, while mortgage delinquencies and particularly subprime delinequencies began increasing in early 2006 due to factors other than unemployment (loose underwriting standards, fraud, etc.), the deterioration in the labor markets furthered hampered recovery in mortgage credit performance. Write to Diana Golobay.