The Federal Housing Finance Agency (FHFA) has announced it will allow Fannie Mae and Freddie Mac, the two government sponsored enterprises (GSEs) it serves as chief regulator of, to invest up to $2 billion each in the Low-Income Housing Tax Credit (LIHTC) market as equity investors. The move increases the existing cap on LIHTC investments from $1 billion to $2 billion.
FHFA touts the LIHTC as one of America’s most important sources of affordable housing supply, adding that Fannie and Freddie are important investors in LIHTC bonds, which help provide the cash developers need to build and renovate low/moderate income properties. FHFA says increase means that Fannie and Freddie can together now deploy $4 billion each year in support of the affordable housing tax credits—half of which will be reserved for difficult to serve LIHTC markets and at least 20% of that half will be Duty to Serve Rural Communities, a program that mandates Fannie Mae and Freddie Mac increase financing in traditionally underserved housing markets.
NAR commended the decision to raise the caps in a statement released this week.
“We thank (FHFA) Director (Bill) Pulte and his team for taking action to expand the supply of housing and break down barriers to homeownership,” said Shannon McGahn, NAR executive vice president and chief advocacy officer. “These are important efforts that we have long supported. Doubling the contributions to the development of LIHTC properties provides incentives to investors to support housing development, while the developer gets access to critical capital for construction. This is an important step to ease cost burdens in low-and moderate-income areas and we appreciate the Director’s leadership role in this market.”
