Freddie Mac, Fannie Mae Report 2007 Housing Credit Investment Volume
By Caitlin Jones & A. J. Johnson
4 min read
FREDDIE MAC AND Fannie Mae, the two large government-sponsored enterprises (GSEs), in early February reported their low-income housing tax credit equity investment volume for calendar 2007.
Fannie Mae said it committed $1.1 billion in equity investments qualifying for the housing credit in 2007, as it announced it financed a record annual $60 billion in multifamily rental housing volume. The latter figure included $30.3 billion in debt financing delivered through Fannie Mae Delegated Underwriting and Servicing (DUS) lenders.
Fannie Mae, traditionally the largest single corporate investor in housing credits, made $2 billion in new LIHTC investment commitments in 2006.
Meanwhile, Freddie Mac announced more than $450 million in LIHTC investments in calendar 2007, which was down from $500 million in 2006. This was part of a record annual $44.7 billion in new multifamily business transactions that Freddie Mac said occurred in 2007.
Freddie Mac is currently in the process of making its plans for 2008 regarding low-income housing tax credit investment activity,W. Kimball Griffith, Vice President, Multifamily Affordable Housing Production and Investments, told the Tax Credit Advisor in an interview on 2/11/08.
“We’re starting with a place where we are trying to rebalance our low-income housing tax credit portfolio,” he said. He said Freddie Mac hasn’t sold any of its existing housing credit investments yet but is trying to decide whether or not to do so. Until it decides, he said, “we’re not going to be in a position” to buy, or to make new commitments to buy, new or existing housing credit investments.
He indicated that this set of decisions will be influenced in part by Freddie Mac’s fourth quarter 2007 earnings report, which hasn’t been released yet. Asked why Freddie Mac is trying to rebalance its housing credit portfolio, Griffith said, “We’re in the mortgage industry, and the mortgage industry and financial institutions generally have had less earnings in “˜07 compared to the past.” He noted Freddie Mac will be looking at 2007 actual earnings and projected earnings for 2008 and near-term future years to determine the “right level” of housing credits to have.
The LIHTC market has been roiled with uncertainty that has depressed housing credit prices in large part because of anticipation that Fannie Mae and Freddie Mac — plus a number of other financial institutions — that have traditionally been major investors in housing credits will curtail or suspend new investment commitments in 2008.
Griffith said he thinks the current LIHTC equity market “is trying to find the yield that is going to work for investors.”
Separately, Griffith said Freddie Mac’s record multifamily volume in 2007 included about $3.7 billion in targeted affordable housing business, including funding of multifamily mortgages and credit enhancement of multifamily bonds. Griffith said the targeted affordable volume for 2007 was an annual record by more than $1 billion, and included a $2.8 billion transaction securitizing tax-exempt multifamily bonds of Centerline Capital Group using Freddie Mac’s “TEBS” product. (For details of transaction, see Tax Credit Advisor, February 2008, p. 10.)
Centerline was the first company, last summer, to achieve Freddie Mac Delegated Underwriting for Targeted Affordable Housing lender designation. Griffith said Wachovia has also been approved as the only other fully delegated targeted affordable lender so far. He anticipated Freddie Mae will approve another three or four in the next few months, and is trying to eventually build a network of a total 10 to 12 “or so” fully delegated affordable lenders.
