In 2008 HERA created the Housing Trust but also allowed for the suspensions of payments to it from the GSE's via edict from FHFA under the following conditions:
HERA authorizes the Director of the Federal Housing Finance Agency (FHFA) to suspend these allocations temporarily upon a finding by the Director that such allocations (1) are contributing, or would contribute, to the financial instability of Fannie Mae; (2) are causing, or would cause, Fannie Mae to be classified as undercapitalized;
In July 2013 FHFA said when housing groups sued FHFA for the non-payments:
FHFA spokesperson said agency officials are reviewing the lawsuit. “But it is important to note that in 2008 when the Affordable Housing Trust Fund payments were suspended, in line with governing law, the financial viability and future of Fannie Mae and Freddie Mac was uncertain; that remains the case today,” the FHFA spokesperson said.
Today director Watt has directed the GSE's to resume payments because:
1) The Director of FI-WA had the authority to temporarily suspend the set aside and allocations under Section 4567(b) and exercised his discretion to do so temporarily under the circumstances that existed at that time. However, circumstances have changed and the temporary suspension is no longer justified;
2) The set aside and allocation would not contribute to the financial instability of Fannie Mae as provided in Section 4567(b)(l) in that the financial operations of Fannie Mae have stabilized to a sufficient level. This is evidenced by the fact that Fannie Mae has not required a draw from the Department of the Treasury under the SPSPA since the fourth quarter of 2011 and since 2013 Fannie Mae has paid approximately $99 billion in dividends to the Treasury Department. This determination relates solely to whether contributions to these Funds would cause financial instability and is not a finding for any other purpose;
Now, of course the last sentence there is directed at those wanting the GSE's out of conservatorship. But it is a hollow sentence in that the entities cannot now be in a “safe and solvent condition” for one purpose and not for another. They either are or they aren't. Let's go to the FHFA's own words to determine when the conservatorship should end:
