Janet Yellen's Treasury Department on Wednesday announced new flexibility for state, local and tribal governments to use American Rescue Act funds for affordable housing. File Photo by Saul Loeb/UPI | License Photo
July 27 (UPI) -- The U.S. Treasury Department announced new guidance Wednesday to allow more flexible use of American Rescue Act funds by state, local and tribal governments to boost affordable housing.
The new guidelines make the federal funds available to finance long-term affordable housing loans among other options to ease the crunch.
High housing costs and rising interest rates are making mortgages more expensive as record inflation eats into household budgets.
"With housing construction slowing amidst inflationary pressures, economic uncertainty, and higher interest rates, both public and private sector financing will be necessary to create the supply of affordable rental housing that is needed to help ease costs for families, especially minorities and those with low and moderate incomes," Mortgage Bankers Association President and CEO Bob Broeksmit said.
The Treasury Department had previously encouraged state, local and tribal governments to dedicate a portion of the $350 billion State and Local Fiscal Recovery Funds, approved by Congress to ease the effects of the COVID-19 pandemic, for development, repair and operation of affordable housing.
Over 600 state and local governments budgeted $12.9 billion in SLFRF funds for housing needs.
"Increasing the nation's housing supply is essential to lowering shelter costs over the long term," Deputy Treasury Secretary Wally Adeyemo said in a statement, adding that the changes should help that aim.
The Treasury Department said it is also implementing additional programs to ease housing costs, including the Emergency Rental Assistance Program which has helped prevent the eviction of millions.
The Homeowner Assistance Fund also provides nearly $10 billion to support homeowners facing foreclosure.