NLIHC joined a letter with 14 other national housing advocacy organizations to Federal Housing Finance Agency (FHFA) Director Sandra Thompson urging FHFA to prohibit the Government Sponsored Enterprises (Fannie Mae, Freddie Mac, and the Federal Home Loan Banks) from funding Low-Income Housing Tax Credit properties in which the property owner has not waived their “Qualified Contract” rights. The “Qualified Contract” loophole allows for properties to prematurely end their affordability requirements, and the use of this loophole results in the loss of approximately 10,000 affordable housing units annually. NLIHC joined the letter to promote preservation of affordable housing developed by the LIHTC program, which remains the primary source of federal funding for the construction and preservation of affordable housing.
The Low-Income Housing Tax Credit is the largest source of federal financing for the construction and preservation of affordable housing, but LIHTC on its own rarely builds or preserves homes affordable to households with the lowest incomes. As a subsidy for housing developers, LIHTC requires developers to maintain affordability for 30 years. However, the “Qualified Contract” (QC) provision in the LIHTC regulation allows developers to waive these affordability requirements after only 15 years. The QC loophole is a threat to long-term affordability in the LIHTC program. Research from NLIHC and the Public & Affordable Housing Research Corporation (PAHRC) estimates that more than 100,000 LIHTC units have been lost to the QC loophole since 1990. The National Council of State Housing Agencies (2021) cites similar estimates.
The letter urges FHFA to take regulatory action to prohibit the Government Sponsored Enterprises from providing financing “for properties that could or did take advantage” of the QC loophole. The Biden administration has supported such efforts in the past, such as recent action by the U.S. Department of the Treasury to require LIHTC owners to waive their QC rights when using State and Local Fiscal Relief Funds for LIHTC development.
Read the letter at: https://tinyurl.com/4u3ep8rw
Read more about SLFRF funds on NLIHC’s webpage here.