Today, the Federal Housing Finance Agency issued a Statement of Support for Fannie and Freddie’s affordable housing business. FHFA stated:
FHFA recognizes the importance of all aspects of the Enterprises’ multifamily businesses-including the LIHTC (low-income housing tax credit) area and liquidity facilities for remarketed mortgage revenue bonds - for a healthy secondary market and housing affordability. In particular, support for multifamily housing finance is central to the Enterprises’ public purpose.
Importantly, the Statement goes on to note "We also do not expect either company to liquidate its portfolio of LIHTC or mortgage-revenue bonds." This Statement was apparently intended to alleviate concerns voiced over the past several days in the marketplace that the conservatorship of Fannie and Freddie could result in the "dumping" of tax credits that might further impact the already shaky tax credit equity marketplace. Neither Fannie nor Freddie had been a significant player in the tax credit equity markets recently and thus the primary concern has been on the possibility of dumping large blocs of credits. It is to be hoped that these recent developments will provide needed comfort and stability to the affordable housing markets.
Please do not hesitate to contact Steve Ryan (415.262.5150), Ofer Elitzur (415.262.5165) or Lisa Weil (415.262.5175) of our Affordable Housing Practice Group if you have any questions concerning this legislation.