LIHTC Suffers Greatly in Housing Crisis

By Anuradha Kher, Online News EditorWashington, D.C.–Affordable housing has become one of the silent victims in the ongoing housing crisis. While multifamily industry experts have largely been optimistic about apartments, this is not the case with low-income housing.“The Low Income Housing Tax Credit program (LIHTC) has suffered greatly because banks have faced great losses recently and this has diminished their appetite for LIHTC funding,” Mary Jo George, an attorney in the real estate department at Ballard Spahr Andrews & Ingersoll, tells MHN. George represents lenders in regards to multifamily housing, senior facility housing, and manufactured housing communities. “Among the deals that are happening, I have seen several of them fall apart at the last minute,” she adds.Deals involving a long relationship between the developer and LIHTC investor are being closed, according to George. In any case, many affordable housing developers are forced to find multiple sources of funding for a single project, which is making deals complicated. In this climate, the pressure to close a deal is also very high. “LIHTC investors were used to a lot of delays, but that has changed now. The turnaround time is very short,” says George.Just as for market rate projects, Fannie Mae, Freddie Mac and Federal Housing Administration (FHA) loans are the predominant sources of finance in the affordable housing sector as well. “That business is definitely super charged. There has been a three-fold increase in lending from these three since the beginning of the year,” says George, adding, “conduit securitization will recover at some point. I don’t know when and I don’t know in what situation it will be when it does.” The single-family housing crisis, though devastating, has some positive aspects, according to George. “One market’s loss is another market’s gain. The crisis has shifted the focus to multifamily housing. In recent years, too much effort has been applied to single-family homeownership. This crisis has caused a more balanced view of single-family and multifamily housing, making rental multi-housing more viable,” George says.