Fannie Mae, Freddie Mac Re-enter the Low Income Housing Tax Credit Market

Filed in Housing Finance by on November 16, 2017 0 Comments

house and financeIn a positive development that should help boost the affordable housing market, the Federal Housing Finance Agency (FHFA) announced today that Fannie Mae and Freddie Mac will be allowed limited re-entry into the Low-Income Housing Tax Credit (LIHTC) market as equity investors, effective immediately.

The LIHTC is the most successful affordable rental housing program in the nation’s history. Since its inception, the program has produced and financed more than 2 million affordable apartments and currently produces approximately 75,000 new apartment homes annually.

In a press release announcing this development, FHFA said that Fannie Mae and Freddie Mac will each be subject to an annual investment limit of $500 million, and that any investments above $300 million in a given year are required to be in areas that have been identified by FHFA as markets that have difficulty attracting investors.

“This decision demonstrates our commitment to supporting affordable rental housing in a controlled and thoughtful manner intended to stabilize the market and not to compete with private investors,” said FHFA Director Mel Watt.

Fannie Mae and Freddie Mac were actively involved in the LIHTC market as both debt and equity investors until they went into conservatorship in 2008. FHFA, as conservator, had prohibited Fannie Mae’s and Freddie Mac’s participation as equity investors.

On several occasions, NAHB urged FHFA to allow Fannie Mae and Freddie Mac to participate as LIHTC investors. By allowing Fannie and Freddie to compete with private investment capital, NAHB argued this would increase competition for the credits and thereby increase the value of the credits, resulting in more capital and greater affordability for LIHTC projects.

For additional information, contact Michelle Kitchen at 202-266-8352.

 

Facebooktwitterlinkedinmail

Tags: , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *

Advertisement