FHFA Request for Input on Fannie Mae’s Proposed Modification to Rural Housing Investments

The Federal Housing Finance Administration (FHFA), the conservator of Fannie Mae and Freddie Mac, is seeking public input on Fannie Mae’s request that their rural investment goals in the Duty to Serve program be adjusted (rolled back). While not stated outright, the reason for this request due to Fannie's inability to be included in LIHTC multi-investor funds. The issue is whether Fannie and Freddie are tax-exempt or taxable entities. Some of us in the affordable housing industry have been working to resolve the tax status of the GSE’s and a letter recently was sent to Treasury Secretary Yellen from a group of bipartisan Senators seeking the Secretary’s efforts to resolve this issue in a way that would preserve the GSE’s ability to invest in LIHTC developments.

We want to make you aware of this issue and the ability to submit comments to FHFA by July 21st, describing and demonstrating the adverse effect rolling back investment in rural areas would have on the development of affordable housing.  To be clear, it is not Fannie Mae’s desire to limit their investment in rural areas, but without a determination from the Internal Revenue Service that the GSE’s are indeed, taxable entities, which we believe them to be, they will have little choice but to limit their investments.

The issue is well explained in the request for public input and the Senate letter to Secretary Yellen but if you would like to discuss this in more detail please feel free to reach out to David at dgasson@housingadvisorygroup.org.