Fannie Mae and Freddie Mac to Reenter the LIHTC Market

The Federal Housing Finance Agency (FHFA) recently announced that Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs), will be allowed limited re-entry into the LIHTC market as equity investors, effective immediately.

The GSEs have been absent from the LIHTC market since September 2008 when they were placed into government conservatorship. Prior to the financial crisis, the GSEs provided roughly 40 percent of annual equity investments in LIHTC sites.

Moving forward, each GSE will be subject to an annual investment limit of $500 million, less than a 5 percent market share, and any investments above $300 million in a given year will be required to be in markets identified by FHFA as having difficulty attracting investors.