NEW YORK — New federal loan guarantees for FHAs construction loan fund are helping to keep construction jobs and the economy moving, the Treasury Department said Monday.
The Treasury Department announced $20 billion in loan guarantees under the Federal Housing Finance Agency Loan Guarantee Program, which funds FHA-backed construction loan guarantees that were in place before the financial crisis.
In a statement, Treasury said the $20 million in loans will be used to build projects on sites where the Federal Deposit Insurance Corporation was already planning to start a new bank and build offices.
The Treasury said this includes FHA loans for projects that are under construction.
FHA has a $1.6 trillion construction loan program and $700 million of loan guarantees, which have been in place since the financial crash, and $350 million in loan and asset guarantees under a separate program.
Under the Treasury program, FHA guarantees cover all FHA construction loan funds that have been approved by the FHFA Board of Governors and were subject to a final approval process.
It also funds construction projects under the FHA’s construction loan programs and provides a loan guarantee for FHSAs loans under the National Housing Act.
Banking and economic recovery is expected to boost construction jobs for FHI workers, who are paid a lower wage and who are often excluded from unemployment benefits, Treasury Secretary Larry Summers said.
“These loans will make it easier for FHHAs construction workers to stay in the workforce,” Summers said in a statement.
For the first time in years, the FHI has made clear it is willing to take a new look at its construction loan policy.
The FHIA board of governors voted last month to end the construction loan guarantee program that had been in effect since 2008.
The agency said Monday that it would not be making any more announcements about the loan program until it is “better prepared to implement a new program.”
The FHA board voted to end its loan guarantee programs last month, following months of debate about the program.
FHA Board Chairman Charles F. Gormley Jr. said in December that he had concluded that the program had become unworkable, and that FHA needed to change the way it manages its funds to make sure that they are spent wisely.
On Monday, the government announced that the FHCI would not continue providing the loans and that the agency would require FHA to begin the process of selling its construction program, and then would require all other FHAs to follow suit.