FHFA Final Rule Allows Fannie Mae, Freddie Mac Some LIHTC Equity Investment

Wednesday, December 14, 2016 - 9:15am

The Federal Housing Finance Agency (FHFA) Tuesday issued a final rule allowing Fannie Mae and Freddie Mac (the Enterprises) to provide low-income housing tax credit (LIHTC) equity in rural areas, subject to FHFA approval. The FHFA’s duty to serve underserved markets provisions also permit the Enterprises to service debt–but not provide equity–on LIHTC investments in non-rural areas. Fannie and Freddie have been absent from the LIHTC equity market since going into conservatorship in 2008. The final rule also encourages Enterprise participation in servicing debt in the U.S. Department of Housing and Urban Development’s (HUD’s) Choice Neighborhoods Initiative and Rental Assistance Demonstration (RAD) program. The final rule covers provisions to assist in affordable housing, manufactured housing and rural housing.