The world credit crisis has badly affected the agencies that operate the country's state loan programmes. They claim they are not getting a look-in in terms of the economic bail out.
As Obama now gets together his team to put policies in place for when he takes over as the 44th US president early next year, the finance agencies are asking him not to forget their plight and make them part of his economic policy.
'The banks are getting all this money and we don't have access to anything,' said Ken Giebel, spokesman for the California Housing Finance Agency. 'The people who were the cause of this problem are getting support and being bailed out and we aren't,' he added.
At the heart of the problem is bond sales. The housing agencies sell bonds at affordable interest rates to get the money to lend to borrowers. But the finance crisis means it is virtually impossible to sell bonds, especially those associated with mortgages.
California has had to temporarily suspended two of its long term loan programmes and removed two payments assistance programmes. Ohio has cancelled a $150 million bond loan, Wisconsin has suspended its entire loan programme and West Virginia and Illionois have stopped bond sales.
As the markets have opened up, some sales are possible but at higher interest rates, which mean higher costs to taxpayers. New York's housing finance agency sold $110 million in bonds a week ago, for example, but at more than a full percentage point higher than earlier this year.
The squeeze on credit is also coming at a time when unemployment is rising and revenue from property, sales and other taxes is falling – in some cases sharply.
State HFAs helped finance 119,920 mortgages in 2006, according to the most recent data and represents an important segment of the housing market in terms of first-time homeowners who may not be wealthy but have money for down payments and good credit histories.
The agencies offer only traditional, fixed-interest, long-term mortgages and often require home buyers to undergo counselling about home buying before receiving a loan. They also play a role alleviating part of the foreclosure problem, since many people taking out loans use them to buy foreclosed properties.
Getting the housing finance agencies back on their feet is crucial to restarting the housing market, according to Pat Begg, of Huntington Bancshares. 'To get the housing market off the ground you've got to get the first-time buyer off the fence and back into the market,' Begg said.
