Freddie Mac today announced its re-entry into the Low-Income Housing Tax Credit (LIHTC) market as part of the newly launched Duty To Serve program, an initiative geared toward addressing persistent affordable housing problems by preventing foreclosures, responsibly expanding credit, educating future borrowers, counseling current borrowers and supporting affordable rental housing.
Freddie Mac’s first investment is expected to close in January 2018, with a $500 million annual investment cap. Freddie Mac will partner with and invest through experienced LIHTC syndicates, focusing mainly on markets that are often overlooked of underserved by most investors.
The LIHTC program provides incentives to multifamily property owners and investors to build and maintain quality affordable housing for low and very low-income households across the United States.
Property owners with qualifying properties will be given federal tax credits, and investors will have an opportunity to buy into those properties in order to take advantage of the tax credit as well.
The program puts cash equity into low-income housing properties, which reduces the debt burden for the development of new properties or the rehabilitation of existing affordable properties.
“Our LIHTC investment initiative will focus on affordable housing preservation, rural housing, markets with uneven or unpredictable liquidity, and other underserved areas that have been identified in our Duty to Serve plan,” said David Leopold, vice president of targeted affordable sales and investments at Freddie Mac Multifamily, in a statement.
“Doing so will have a significant positive impact on communities with some of the most serious affordable housing needs.
“Ultimately, we seek to provide better access to investment capital for developers, particularly those operating in underserved areas that are overlooked by other investors,” he added.