Freddie Mac has announced that it has rejoined the Low-Income Housing Tax Credit, a federal program that urges the investment of equity in affordable rental housing. The program supports the creation and preservation of affordable rental housing for low-income households. Freddie says it plans to close its first LIHTC investment in January 2018.
“We are excited to resume investing in Low-Income Housing Tax Credits, which will expand our affordable housing efforts and help provide stability to this market,” says David Brickman, head of Freddie Mac’s multifamily division. “Few programs are as mutually beneficial as LIHTC. It incentivizes private investment in affordable housing, delivers much-needed cash equity to owners of affordable properties, and most importantly, it encourages the development and preservation of critical affordable housing in underserved areas throughout the country.”
Under the program, qualified properties are allocated federal tax credits, and investors are able to invest in those properties in order to take advantage of the tax credit, Freddie Mac explains. “The LIHTC program infuses cash equity into low-income housing properties, which reduces the debt burden for the development of new—or the rehabilitation of existing—affordable properties. As a result, private investors take the risk so U.S. taxpayers do not.”
Freddie says its LIHTC investment initiative will focus on affordable housing preservation, rural housing, markets with uneven or unpredictable liquidity, and additional underserved areas. The Federal Housing Finance Agency has authorized Freddie to invest in LIHTC equity up to an annual cap of $500 million.
Source: Freddie Mac
