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GSEs Return to LIHTC Market

Phil Hall
Nov 17, 2017
The delinquency rate for mortgage loans on one- to four-unit residential properties declined to a seasonally adjusted rate of 4.06 percent of all loans outstanding at the end of the fourth quarter of 2018

The Federal Housing Finance Agency (FHFA) is shifting its policy by enabling Fannie Mae and Freddie Mac (the Enterprises) to re-enter the Low Income Housing Tax Credit (LIHTC) market as equity investors on a limited basis.
The FHFA explained that this change is based on the government-sponsored enterprises’ (GSEs) mission to support affordable housing. Each GSE will be subject to an annual investment limit of $500 million, less than a five percent market share for each. Any investments above $300 million in a given year must be in areas 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. “Most of the Enterprises' investments will be used to facilitate transactions that support underserved markets and complement our Duty to Serve,” said FHFA Director Mel Watt, who added that his agency will evaluate the GSEs’ participation in the LIHTC equity market on an annual basis.
Mortgage Bankers Association (MBA) President and CEO David H. Stevens took to Twitter to respond to the news, tweeting: “Wow, GSE’s back into LIHTC.”

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