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Perspectives Blog

Supporting Underserved Markets with $1.5 Billion in LIHTC Equity Investments

March 18, 2021
Dana Brown
Dana Brown

Vice President, Multifamily Customer Engagement

At Fannie Mae, our mission is our motivation. The challenges of the COVID-19 pandemic have underscored the importance of housing for all families and individuals, including renters with low and very low incomes. Low-Income Housing Tax Credit (LIHTC) investments will continue to help provide reliable capital and stability for the creation and preservation of affordable housing for those who need it most.

Fannie Mae's equity investments in the LIHTC market bring housing options to hard-to-reach places like Native American communities, small rural towns, and farmworker communities. In 2020, Fannie Mae reached a significant milestone of $1.5 billion in equity investments since re-entering the LIHTC market in 2018. Our investments have supported the creation and preservation of nearly 600 affordable multifamily properties and over 43,000 units in 46 states and the District of Columbia.

About LIHTC Equity

LIHTC is a federal program that provides an incentive for private equity investments to create and preserve affordable rental housing. It serves low-income and very low-income households by awarding tax credits to affordable housing developers. The developers then exchange the tax credits for funding from investors like Fannie Mae.

LIHTC is a key source of capital for affordable housing – and it's been a primary driver of new affordable housing production and preservation in the U.S. for the last three decades.

Fannie Mae & LIHTC

The Federal Housing Finance Agency (FHFA) approved our re-entry to the LIHTC equity market in late 2017, and we initiated investments in 2018, with a cap from FHFA of $500 million per year. These investments – structured by our syndicator partners in both proprietary (sole investor) and multi-investor funds – provide housing stability and affordability in places where it is sorely lacking.

Our program focuses on underserved populations and areas that are often overlooked due to their size or complexity. Many of the properties we help finance offer supportive services to residents, help families that have experienced homelessness, or are in rural areas where there is significant need. Of the 600 properties in which we have invested to date, more than 200 are in rural areas, and 50 serve high-needs rural regions and populations.

Over the past three years, we've taken advantage of countless opportunities to learn what we can do with LIHTC investments, and we've been part of 600 success stories serving over 43,000 seniors, families, and formerly homeless adults.

Here are just a few of the stories behind the $1.5 billion in equity investments:

  • Grace Garden in West Fargo, ND, provides 30 units of housing to individuals and families, many of whom are formerly homeless and survivors of domestic violence. Residents are also provided with supportive services through the YWCA, including childcare, counseling, and job training.
  • In rural communities, it is often difficult for seniors to remain in their communities as they age. The development of Traditions at Lafayette in Lafayette, CO, will provide 133 units for seniors earning up to 60% AMI to help them remain in their community as they age.
  • With construction complete at Mino-Bimaadizwin, residents are moving into the 110 units of affordable housing. The Minneapolis property was developed by the Red Lake Band of Chippewa Indians to provide housing and services for Native Americans and other members of the Minneapolis community. Of the 110 units, 24 provide permanent supportive housing for the chronically homeless.

We're driven to preserve and grow the country’s supply of safe, affordable, and sustainable homes and rental properties, and every day, our work helps us realize that mission. We look forward to continuing our work with FHFA and our LIHTC partners to support renters' needs in underserved communities across the country.

Dana Brown, Vice President, Multifamily Customer Engagement

March 18, 2021