New Freddie Mac Plan to Boost Financing for Tax-Exempt Sites
To keep affordable rental housing a viable option for low-income families, Freddie Mac has announced a new initiative to increase co-effective financing for tax-exempt multifamily properties. The initiative, which is being labeled as the “Direct Purchase of Tax-Exempt Loans,” will involve Freddie Mac Multifamily purchasing its Targeted Affordable Housing (TAH) lender network multifamily tax-exempt loans, and aggregating and securitizing them into a new series called M-Deals.
Because these tax-exempt loans are issued by federal and state-funded housing entities, this new option will ensure that borrowers are getting deals that cost less than publicly offered credit-enhanced bonds. Some of the benefits of Freddie Mac’s Direct Purchase of Tax-Exempt Loans execution are minimized legal fees from simplified documents and processes, private purchase efficiencies that lead to a 40 percent reduction in typical closing costs, and identical underwriting and credit standards to the Freddie Mac credit-enhanced 4 percent LIHTC bond financing.