1. The Multifamily Special Affordable Goal is to be established as a single annual goal, by either unit or dollar volume, of purchases by each enterprise of mortgages on multifamily housing that finance units affordable to low-income families.
   
   NAHB does not have a preference as to whether the goal is set based on units or dollar volume, but there should be a benchmark to past performances to assure that no incentive is created to reduce volumes.
   
   
2. The multifamily goals should be challenging, but there needs to be a balance between meeting the affordable housing mission and providing liquidity for market-rate multifamily financing. In the current environment, Fannie Mae and Freddie Mac are financing the majority of multifamily loans. Most experts do not believe the CMBS market will be back to higher volumes for many months, possibly not even until 2010. With conduits out of business and life companies on the side lines because of the market volatility, Fannie and Freddie are critical to getting multifamily financed.
   
   
3. NAHB would support additional goals that focused on small multifamily properties (5 to 50 units) and on multifamily properties in rural areas. Such properties typically are more difficult to finance, are not easily aggregated into larger pools, and thus not as favored in the secondary market.
   
   
4. Fannie and Freddie have been major purchasers of Low Income Housing Tax Credits (LIHTCs), which is the nation’s largest and most important affordable housing production program. Their investments, along with those of other financial institutions, have been declining due to the absence of profits to which such credits can be applied. A dollar of LIHTC previously had a purchase price of 90 cents or more in the syndication market.  Today the price is less than 75 cents.This fall in credit prices results in less equity in LIHTC developments, and therefore leaves affordable housing projects with less stable financing.

NAHB is concerned about the fall off in Fannie Mae and Freddie Mac’s LIHTC purchases, but a more immediate concern is speculation that the GSEs may sell sizeable portions of their existing credits to raise capital from their stock of deferred tax assets. Such a sale could cause credit prices to fall even further and impede efforts to produce affordable housing. NAHB urges FHFA to bring full consideration of Fannie and Freddie’s affordable housing mission to decisions on disposition of their tax credit holdings.

For more information, e-mail David Ledford, or call him at 800-368-8265. [return to top]