Housing supply

Freddie Mac Multifamily set to expand affordable housing supply initiative

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MCLEAN, Va., Oct. 07, 2022 (GLOBE NEWSWIRE) — To help address the national rental housing shortage and affordability crisis, Freddie Mac (OTCQB: FMCC) Multifamily today announced that it increases funding that supports newly constructed or extensively rehabilitated multi-family housing. The company will take advantage of new flexibilities granted by the FHFA that allow for increased use of term commitments, which are agreements to purchase loans at a later date with certain funding conditions locked in today. The agreements provide greater certainty for construction lenders and real estate developers by limiting the risks they face when executing complex multi-family transactions in volatile markets. Freddie Mac has proposed greater use of term commitments in his housing fair finance plan.

“One of the most complicated factors in determining how, where and when to build or rehabilitate a multifamily property is market uncertainty, and that’s especially true right now,” said Steve Johnson, vice president of the production and sales at Freddie Mac Multifamily. “Our long-term engagement program can eliminate some of these concerns, enabling construction lenders, developers, nonprofits, municipalities and others working to support affordable housing to make the right calculations and move on. This move will help us add or preserve thousands of affordable multi-family units each year. »

The FHFA previously subject term commitments to Freddie Mac’s annual production cap ($78 billion for 2022), but will now exempt a certain amount ($3 billion for 2022) of term commitments from the cap. Separately, the FHFA is lifting its $500 million cap on term commitments for properties that do not qualify for a low-income housing tax credit (non-LIHTC term). The Company’s non-LIHTC futures business will instead be subject to the Annual Futures Exemption, as well as LIHTC futures.

Overall, the changes allow Freddie Mac additional space and flexibility to execute affordable housing and workforce projects. Freddie Mac has long used attackers to fund some of the nation’s most complex yet significant affordable housing developments:

Historic investment in TulsaIn 2017, Freddie Mac provided a term commitment of $13.7 million in 9% LIHTC to River West in Tulsa, Oklahoma. The property now offers 222 units in a community of walk-ups and townhouses. More than three quarters of these units are limited to 50-60% regional median income (AMI). The 21 unrestricted units will have asking rents in line with AMI’s 60% rent levels. LIHTC units will benefit from project-based Section 8 vouchers that limit rents to 30% of a tenant’s annual income. There will be six phases of housing development. Freddie Mac invested $40 million in LIHTC stock in the first four rounds through its syndicator RBC Community Investments LLC. Read more.

Hope for the Homeless in the City of AngelsIn 2021, Freddie Mac provided a $50 million tax-exempt loan to fund Hope on Avalon, along with two sister projects, Hope on Broadway and Hope on Hyde Park. Once completed, the properties will provide permanent supportive housing and transitional units, with three managers on site, for 294 former homeless residents. The properties will be located in South/Central Los Angeles, approximately 11 miles south of the central business district. Read more.

In June, Freddie Mac announced its first Fair Housing Finance Plan designed to promote equity and increase opportunities for sustainable homeownership and rental. The plan is an important part of Freddie Mac’s extensive mission-driven work to responsibly provide liquidity, stability and affordability in all communities and through all market cycles. The plan’s multifamily provisions include efforts to expand access to capital for diverse multifamily developers, which benefits traditionally underserved owners and operators; measures to preserve and encourage the construction of affordable multi-family housing; and an expansion of existing initiatives to encourage rent reduction and standardize tenant protections. More information about the plan is available on the Freddie Mac website.

Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our founding by Congress in 1970, we have made housing more accessible and affordable for buyers and renters in communities nationwide. We are building a better housing finance system for buyers, renters, lenders and ratepayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog, FreddieMac.com/blog.

MEDIA CONTACT: Mike Morosi(703) 918-5851[email protected]

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Source: Freddie Mac