The government-sponsored enterprises are finally getting the green light to return to the low-income housing tax credit market, but they must stay within certain investment limits as they do.
"This decision demonstrates our commitment to supporting affordable rental housing in a controlled and thoughtful manner intended to stabilize the market and not to compete with private investors,” Federal Housing Finance Agency Director Mel Watt said in a press release Thursday. “Most of the enterprises' investments will be used to facilitate transactions that support underserved markets and complement
The possibility that the GSEs "could provide a countercyclical role in the LIHTC market in the future if needed" contributed to the FHFA's decision, according to the release.
Both Fannie Mae and Freddie Mac will be able to invest up to $500 million in the tax credits per year, which would equate to less than a 5% market share for each. Any investments above $300 million would have to be allocated specifically to markets the FHFA identifies as having difficulties in attracting investors. The program will be re-evaluated annually.
The announcement came the same day the House passed a tax bill that would cut the corporate tax rate to 20% from 35%, a move that
Fannie and Freddie originally exited the LIHTC market after they went into conservatorship in 2008.