The completion of all transactions under the recently-introduced state and local Housing Finance Agency (HFA) Initiative was announced Wednesday by the Department of Treasury, together with HUD and the Federal Housing Finance Agency (FHFA).

The HFA Initiative, expected to come at no cost to taxpayers, is a key element of the Obama administration’s Homeowner Affordability and Stability Plan. With these transactions, the administration helps support low mortgage rates and expands resources for low- and middle-income borrowers to purchase or rent homes considered affordable over the long-term. According to the administration, the initiative has two parts. The New Issue Bond Program is meant to support new lending by HFAs, and the Temporary Credit and Liquidity Program (TCLP) is intended to improve HFAs’ access to liquidity for outstanding HFA bonds.

“The assistance provided under the HFA Initiative will help maintain the viability of state and local HFAs which play key roles in HUD’s efforts to promote expanded access to affordable rental housing and serve as important players in making homeownership possible for hardworking Americans who otherwise would not be able to purchase or remain in their homes,” said Shaun Donovan, HUD secretary.

The HFA initiative was originally announced on October 19, 2009, and Fannie Mae and Freddie Mac played a central role in both the design and transaction execution process. Michael J. Williams, Fannie Mae president and CEO, said the enterprise’s long-standing partnership with state and local HFAs helped Fannie Mae move quickly to support the administration’s initiative. By creating $23 billion in much-needed, new housing capital for the housing finance system, Williams said this initiative will enable HFAs to return to the level of market liquidity historically provided by these associations.

“Working together, we were able to address the stresses on HFAs created by the housing market turmoil,” said FHFA Acting Director Edward J. DeMarco. “The Enterprises played a critical role, consistent with their mission and on commercially reasonable terms. Their successful execution of over 125 separate transactions, all in the final month of 2009, was an impressive achievement.”

Through more than 90 participating HFAs, the HFA Initiative will make affordable financing available to hundreds of thousands of new homebuyers and existing homeowners, as well as support the development and rehabilitation of multi-family rental properties. Mortgages can be used to purchase or rehabilitate homes or to refinance existing mortgages at more affordable rates. In addition, participating HFAs are expected to provide affordable multi-family loans in order to keep rents affordable for tens of thousands of renters. Participating state and local agencies have already begun providing affordable mortgages financed through the HFA Initiative.

“Supporting the work of state and local HFAs is critical to the administration’s broader initiative to stabilize the housing market, which is helping to keep mortgage rates low and mortgage finance flowing for American households across the country,” said Treasury Secretary Tim Geithner.

Support of the HFA Initiative was echoed across the country. Brian Hudson, executive director of the Pennsylvania Housing Finance Agency said the initiative will provide loans to approximately 11,000 home buyers in Pennsylvania, and it will help put home builders in the area back to work. In addition, Gerald Hunter, president and executive director of the Idaho housing and finance association said many prospective home buyers will be able to purchase homes because of this financing opportunity, which comes at a time when the economy needs all the assistance it can get.

“These bond proceeds, combined with the $7.7 billion in retail housing bonds the Initiative requires state HFAs to issue, will allow HFAs to finance more than 200,000 affordable homes, while generating jobs and tax revenue for the economy,” said Susan Dewey, president of the National Council of State Housing Agencies and executive director of the Virginia Housing Development Authority.