NAHMA Update: Administration Announces Cross-agency Actions to Preserve and Increase Affordable Housing Supply ( LIHTC, MF Risk-Sharing, and ADUs)
Administration Announces Cross-agency Actions to Preserve and Increase Affordable Housing Supply
( LIHTC, MF Risk-Sharing, and ADUs)
Today the Administration announced several cross-agency actions it is taking as part of President Biden's plan to preserve, construct and sell nearly 100,000 additional affordable homes over the next three years. Today's announcement includes:
- Increasing Fannie Mae and Freddie Mac's LIHTC Investment Cap
- Relaunching the multifamily Federal Financing Bank (FFB) and HUD Risk Sharing Program
- Participate in listening and learning session on using Accessory Dwelling Units (ADUs) to increase housing supply
For more information, please view the announcements below.
FHFA Announces Increase in the Enterprises' LIHTC Cap
The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the Enterprises) can each invest up to $850 million annually in the Low-Income Housing Tax Credit (LIHTC) market as equity investors, effective immediately, to support underserved markets. Previously, each Enterprise was limited to $500 million of investment annually in the LIHTC market. Within this $850 million annual funding cap, any investments above $425 million each year are required to be in areas that have been identified by FHFA as markets that have difficulty attracting investors. This marks an increase in the amount of investments under the cap that must be made in targeted transactions that either support housing in Duty to Serve-designated rural areas, preserve affordable housing, support mixed-income housing, provide supportive housing, or meet other affordable housing objectives. FHFA will continue to evaluate the Enterprises' participation in the LIHTC equity market on an ongoing basis. “The severe shortage of affordable housing in America requires coordinated government action. As part of the federal government's response, FHFA is instructing Fannie Mae and Freddie Mac to boost the housing supply in communities across the country by significantly increasing their Low-Income Housing Tax Credit investments and by expanding opportunities for local families to access affordable homeownership and rental housing. In addition, FHFA will begin to study the interaction between exclusionary zoning and our regulated entities,” said Acting Director Sandra L. Thompson today. FHFA will also increase the Duty to Serve rural/targeted investment requirement from 40% to 50% of each Enterprise's total LIHTC investment capacity, or $425 million in targeted investment and $425 million in unrestricted investment.
HUD Announces Restart of the Housing Finance Agency Risk-Sharing Program with the Federal Financing Bank
To expand the supply of affordable multifamily rental housing, Treasury and HUD have finalized an agreement to restart the Federal Financing Bank's support of the Section 542(c) Housing Finance Agency (HFAs) Risk-Sharing program, which was suspended in 2019. The agreement allows eligible Housing Finance Agencies (HFAs) to enter into contracts with HUD that provide Federal Housing Administration (FHA) insurance on multifamily mortgages for properties with affordable housing units underwritten by an HFA, and where HUD and the HFA share the risk of any potential loss if the mortgage defaults. With the FHA insurance credit enhancement, the Federal Financing Bank will purchase the mortgage, generating capital funds for the HFA to lend to private developers building or rehabilitating multifamily properties that provide affordable rental homes, including refinance of properties for low, very-low, and extremely-low income individuals. FHA encourages qualified HFAs across the country to apply to participate in the program's restart and anticipates that approximately 20,000 affordable rental units will be created or preserved through the program through 2027.
To view the press lease, click here.
Listening Sessions on Using Accessory Dwelling Units to Increase Housing Supply
The White House, HUD, and FHFA announced they will begin to convene state and local officials and stakeholders for a series of virtual peer learning and listening sessions. These sessions will allow for the exchange of best practices on locally led zoning reform to address supply and affordability challenges. The sessions will also identify the obstacles to implementation that remain, which the President's Build Back Better Agenda and potentially federal administrative action, can help address. The first virtual session will focus on accessory dwelling units and will be hosted by FHFA on September 14th, 1:00 PM (EST).
For more information on how to participate in the FHFA session, click here.