Fannie Mae, Freddie Mac up low income housing tax credit cap

Fannie Mae and Freddie Mac’s regulator announced additional leeway for them to invest more heavily in low-income housing tax credits in line with the passage of recent legislation.

Each can now invest up to $2 billion for a total of $4 billion per year, twice the previous limit, according to a press release from U.S. Federal Housing. Half of the amounts must go to underserved markets and at least 20% of that will go to Duty to Serve rural areas.

The move by the entity previously known as the Federal Housing Finance Agency is based on LIHTC expansion in the new tax law. 

The history of low-income housing tax credits and the GSEs

The market for these credits did prove vulnerable to stress during the Great Financial Crisis when the government-sponsored enterprises went into conservatorship,…