Our multifamily line of business is already one of the nation's largest backers of rental housing affordable for low- and moderate-income families. Yesterday, we announced a significant expansion of this effort, by resuming our support for one of the largest and most effective federal programs encouraging the creation and preservation of rental housing for low- and very low-income families.
"Few programs are as mutually beneficial as the Low-Income Housing Tax Credit program. It incentivizes private investment in affordable housing, delivers much-needed cash equity to owners of affordable properties and, most importantly, encourages the development and preservation of critical affordable housing in underserved areas throughout the country."
The Low-Income Housing Tax Credit (LIHTC) program is a win-win for apartment developers, investors and tenants alike. It gives investors a dollar-for-dollar reduction in their federal tax liability in exchange for investments in affordable housing. Investors like it because they get a tax credit. Developers like it because they receive much-needed cash for their rental properties, which keeps them from having to take on more debt. And tenants like it because it leads to more rental units that are—and that stay—affordable.
We're focusing our investment on the communities that need it most – those that are underserved by current investors in LIHTC, and those with some of the most serious affordable housing needs, e.g., rural communities. Our goal is to encourage developers to create and maintain affordable housing properties in these areas.
Our strategy was developed as part of our Duty to Serve plan, which is intended to address some of the country's most persistent affordable housing problems.
David Leopold, Multifamily's vice president of Targeted Affordable Sales & Investments, explained our strategy: "Our LIHTC investment initiative will focus on affordable housing preservation, rural housing, and other underserved areas that have been identified in our Duty to Serve plan. Doing so will have a significant positive impact on communities with some of the most serious affordable housing needs."
The Federal Housing Finance Agency has authorized Freddie Mac to invest in LIHTC equity up to an annual cap of $500 million, subject to certain conditions. We expect to close our first investment in January, 2018.
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