The Federal Housing Finance Agency (FHFA) will double the permissible amount the government-sponsored enterprises (GSEs) can invest in Low Income Housing Tax Credit (LIHTC) properties in an effort to expand the available affordable housing supply.
The move will increase the annual LIHTC investment cap from $1 billion to $2 billion apiece for Fannie Mae and Freddie Mac. The change aligns with a provision of the Republican-led federal spending legislation, which was signed into law in July.
“Today’s increase means that, in a safe and sound manner, 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 percent of that half will be Duty to Serve Rural Communities,” the FHFA said in a press release.
Mortgage Bankers Association President and CEO Bob Broeksmit released a statement saying the increase in LIHTC investments could help boost construction of affordable rental housing.
“The LIHTC program is the federal government’s most successful tool to support the construction and rehabilitation of housing for low- and moderate-income households,” Broeksmit said. “FHFA’s doubling of the GSEs’ cap on LIHTC investment to $2 billion comes on the heels of program improvements included in H.R. 1 (now Public Law 119-21), both of which will help to increase rental housing supply. We look forward to continuing to work with [FHFA] Director (Bill) Pulte and his staff, the GSEs, Congress, and other federal agencies on efforts and initiatives that improve housing supply and affordability for all Americans.”