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Section 8 Financing

Choosing Freddie Mac for your Section 8 project financing has become even more attractive with our recent program updates. In an effort to further broaden our Targeted Affordable Housing (TAH) lending capabilities, in early 2010 we began allowing Program Plus® Seller/Servicers, in addition to our existing TAH Seller/Servicers, to sell us cash mortgages supported by project-based Section 8 contracts.

Section 8 Policy Updates

In response to customer feedback, we revised the Freddie Mac Delegated Underwriting for Targeted Affordable Housing Guide (TAH Guide) on AllRegs® to improve access to Section 8 financing by:

  • Removing our requirements for renewal and nonrenewal contracts and replacing them with requirements for long term and short term Section 8 housing assistance payments (HAP) contracts
  • Permitting debt coverage ratios of 1.20x for acquisition and no cash-out transactions, or 1.25x for cash-out refinance transactions, in certain circumstances

For a complete list of the updates and more detailed information, please refer to the updates to Chapter 24 of the TAH Guide in the July 6, 2010 TAH Guide Bulletin.

Securitization of Section 8 Loans

  • Realize the benefits of securitization for your Section 8 deals through our Capital Markets ExecutionSM (CME) option, including more competitive pricing over our current portfolio execution in most cases.
  • To find out if securitization is right for your Section 8 transaction, we encourage you to review the materials in the CME Toolkit available on MultiSuite®.

Origination Guidelines for Affordable Products

As of January 2010, Program Plus Seller/Servicers can sell certain TAH loans to Freddie Mac. Refer to the chart below for a description of the types of transactions available to both TAH Seller/Servicers and Program Plus Seller Servicers.

Affordability Component TAH Seller/Servicer Program Plus Seller/Servicer
Credit Enhancement of Tax-Exempt Bonds X  
Low-Income Housing Tax Credit (LIHTC) (during years 1-15 of compliance period) X1  
Interest Reduction Payments (IRPs) X  
Cash Mortgages with Section 8 contracts (any units) X X
(If Seller is approved for both TAH and Program Plus, loan must be processed through the Seller’s TAH group)
Cash Mortgages with Section 8 vouchers any units)   X2
Land Use Restriction Agreements (LURAs)   X2
LIHTC after compliance period (after year 15)   X2
Tax Abatements   X2

1A Program Plus Seller/Servicer may request a waiver to process a LIHTC cash mortgage in years 11-15 by contacting their Freddie Mac regional representative
2A TAH Seller/Servicer may request a waiver to process these loans by contacting their Freddie Mac TAH representative

If you have any questions about our Section 8 financing options please contact your Freddie Mac relationship manager for more information.

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